11.1: Prewitt v. Numismatic Funding Corp., 745 F.2d 1175 (8th Cir. 1984).

Facts: Prewitt received coins from Numismatic on an approval basis. Prewitt shipped them back, but Numismatic did not receive them. Prewitt had previously sent bad coins by another method. Numismatic claims the parties agreed upon the previously used method by implication, and Prewitt was obligated to use it.

Issue: Who had the risk of loss?

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Case 11.2: Buyer in the Ordinary Course of Business:Lindholm v. Brant, No. X05CV020189393, 2005 Conn. LEXIS 2366, at *1 (Super. Ct. Aug. 29, 2005), aff'd, 925 A.2d 1048 (Conn. 2007). Facts: In 1962, Andy Warhol, a famous artist, created a silkscreen on canvas entitled "Red Elvis." Kerstin Lindholm was an art collector who, for thirty years, had been represented by Anders Malmberg, an art dealer. In 1987, with the assistance and advice of Malmberg, Lindholm purchased Red Elvis for $300,000 134 Copyright 2020 Pearson Education, Inc. In 1996, the Guggenheim Museum in New York City contacted Malmberg to see if Lindholm was willing to lend Red Elvis to the Exhibition. Lindholm agreed and Red Elvis was placed in the Gugenheim's Exhibition. Once the Guggenheim Exhibition was completed in 2000, Malmberg told Lindholm that he could place Red Elvis on loan to the Louisana Museum in Denmark if Lindholm agreed. By letter dated March 20, 2000, Lindholm agreed and gave permission to Malmberg to obtain possession of Red Elvis from the Guggenheim Museum and place it on loan to the Louisana Museum. Instead of placing Red Elvis on loan to the Louisana Museum, Malmberg, claiming ownership to Red Elvis, immediately contracted to sell Red Elvis to Peter M. Brant, an art collector, for $2.9 million. Brant had his lawyer do a UCC lien search and search of the Art Loss Registry related to Red Elvis. These searches revealed no claims or liens against Red Elvis. Brant paid $2.9 million to Malmberg and received an invoice of sale and possession of Red Elvis. Subsequently, Lindholm discovered the fraud.

Lindholm brought a civil lawsuit in the State of Connecticut against Brant to recover Red Elvis. Brant argued that he was a buyer in the ordinary course of business because he purchased Red Elvis from an art dealer to whom Lindholm had entrusted Red Elvis, and there he had a claim that was superior to Lindholm's claim of ownership.

Issue: Was Brant a buyer in the ordinary course of business who had a claim of ownership to Red Elvis that was superior to that of the owner Lindholm?

• For Case 11.1, Conditional Sale, do you agree with how the UCC assesses the risk of loss in the sale on approval transactions? Why or why not?
• For Case 11.2, Buyer in the Ordinary Course of Business, what does the rule of the ordinary buyer in the course of business provide regarding the purchase of stolen property? Explain.