Legal Updates

Under certain circumstances ownership of chattels passes regardless of its illegal removal a property right from original owner

May 6, 2018
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A car was sold against receipt of a bankers check.  Only after an attempt to deposit the check did the sellers that the check was not a bankers check but an ordinary check and it was rejected by the bank, but in the meanwhile the car was sold to a third party.

The Court held that in general, when an asset illegally exits its owners' possession, ownership there in does not pass and the recipient thereof is not entitled to ownership. However, preference shall be given to the later purchaser over the original asset owner only when the six conditions for the "Marché ouvert" are fulfilled - the asset is acquired under a contract with actual consideration; The asset is a chattel; The asset was purchased from a seller who sells assets of its type; The sale was in the ordinary course of business; The purchaser received the asset; and the purchaser acted in good faith. As to the good faith requirement, if the purchaser ignores signs indicating a real possibility that the seller's acquisition of the property was not "kosher", the disregard constitutes a "turning a blind eye" that negates the good faith requirement. Here, the purchaser did not purchase the vehicle from a car dealer in the ordinary course of business and turned his blind eye to suspicious circumstances of the transaction, and therefore the Marché ouvert rule does not apply, and the purchaser is to compensate the original owner.