Article by Boris Kozolchyk
It is not unusual for personal property to be sold or pledged by someone who is not its owner. At times the owner entrusts it to a friend or agent who betrays the owner's trust by selling it to a third party. At times it is stolen by someone who uses a suspecting or unsuspecting intermediary to sell the property to unsuspecting members of the public. More frequently, personal property is entrusted to commercial intermediaries who, although indebted to the owner, are empowered by him to sell or pledge it to third parties.
Present day regulations governing a nonowner's transfer of personal property protect bona fide purchasers who acquire goods from lawful possessors in possession either as the owner's agent or as an independent merchant. If an owner is allowed to recover, he is required to pay the bona fide purchaser the purchase price of the goods. The owner is only able to recover from the bona fide purchaser if the property was stolen, not entrusted.
The need to protect the bona fide purchaser who acquired from an entrusted intermediary is justified by market economics. Unless buyers are assured that they will not be deprived by an unknown owner or creditor of what they honestly acquired in the open market, they will be afraid to buy. On the other hand, unless the entrusting owners' expectations of recovering the value of entrusted property are protected, they will hesitate to entrust their property. These economic realities explain the apparent coexistence of the ancient Roman law maxim ‘Nemo dat quod non habet’ with the mercantilistic Bourjon principle of article 2279 of the French Civil Code of 1800.
From a legal standpoint, the coexistance of the owner's right of recovery and the bona fide purchaser's protected possession is usually explained by distinguishing between an owner's entrustment to a nonowner seller and a theft by the nonowner seller or by his transferor. The entrusting owner is assumed to have intended to transfer lawful possession to the person or entity entrusted with his property, thereby legitimizing the nonowner's transfer to a third party. In contrast, the owner-victim of the theft is assumed not to have intended to transfer lawful possession either to the thief or to the latter's subsequent transferees.
Upon close inspection, this explanation fails. It does not explain why a bona fide purchaser from an entrusted nonowner acquires, in many instances, a better right to possession than the owner intended to transfer to the entrusted intermediary, particularly when the property is consummable and is acquired by a consumer in good faith. In addition, the explanation presupposes that only one right to possession exists and that the entrusting owner and the victim of the theft must necessarily enjoy the same right. Such an identity disappears when one compares the possessory rights of the typical entrusting owners of our day—such as manufacturers, wholesalers, and retailers of goods, whose market value, raw materials, component parts, and manufacturing equipment are usually pledged to someone else—with the exclusive and not easily transferable or pledgeable rights of the Roman paterfamilias over his res mancipi. While the Roman paterfamilias's possessory rights over his res mancipi were inextricably tied to his status as a head of a family and therefore, could not be held simultaneously by another owner, rights to the possession of inventory and the proceeds thereof can be held simultaneously by manufacturers, wholesalers, and retailers as possessors, and by their nonpossessory lenders or suppliers.
Clearly then, both personal property ownership and possession entail different rights in Roman and in contemporary society. Furthermore, they seem to have different social functions. During nemo dat times, ownership was a tool to implement and preserve the power of the Roman paterfamilias over valuable family assets. It was not a device to encourage their marketability, but to keep them within the family fold to fend off nonfamily members' claims. What we presently understand as property, however is directly related to its marketability: the more certain or unconditional an owner's rights are, the more saleable, marketable, or property-like in nature. The value of contemporary property is, thus, inseparable from its marketability.
Yet, while the volume and variety of marketable property grows exponentially, the role of ownership and possession remains unclear. This uncertainty is compounded by an inexorable progression towards larger numbers of transfers by nonowners or by holders of qualified ownership rights. For example, should millions of consumers be encouraged to continue to buy from sellers who cannot prove with certainty their unqualified ownership? Or, should proof of the right to possession of what is sold or pledged be all that is required? What should be done about the need to expedite the transfer of personal property whose title is incorporated into a document that is not likely to reach the owner-transferor or the transferee for days or weeks? And as the twenty-first century approaches, the question looms, ‘what will constitute documentary evidence of title or of right to possession?’ This Article attempts to clarify the legal function of ownership and possession of personal property at this critical juncture through examining the sale or transfer of property by nonowners in different legal systems and cultures, in different times, and in different socio-economic contexts.
About the Author
Boris Kozolchyk. Professor of Law, University of Arizona College of law.
Citation
61 Tul. L. Rev. 1453 (1987)