Defrauding Buyer Sells to Good-Faith Purchaser for Value

Marlow v. Conley

787 N.E.2d 490, (Ind. App. 2003)

Facts: In May 2000, Robert Medley attended a car show in Indianapolis. Henderson Conley attended the same car show and was trying to sell a 1932 Ford Truck. Conley told Medley that he operated a "buy here, pay here car lot," and Medley saw that the truck had a dealer license plate. Medley purchased the Truck for $7,500.00 as a gift for his wife. Conley gave Robert the truck's certificate of title, which listed the owner as "Donald Marlow." When Medley questioned Conley about the owner of the truck, Conley responded that Marlow had signed the title as part of a deal Conley had made with him, which was that Conley would pay Marlow for the truck by Marlow's delivery to Conley of $4500 and two other vehicles. Medley registered the truck. In December Marlow filed a complaint against Conley and the Medleys. At the bench trial, Marlow told a rather odd story, culminating in his relation that Conley stole the certificate of title for the truck from Marlow's house and stole the truck from his garage. Marlow testified that he then called the police. The trial court found this testimony that Conley stole the truck incredible; it determined that Marlow bought the truck from Conley, paying Conley $4500 plus two other vehicles which Marlow never delivered.

Procedure: Trial court ruled for Medley's on Marlow's claim for replevin; Marlow appealed.

Issue: Did the Medley's have good title to the truck?

Held: Yes. Judgment affirmed.

Reason: If the Medleys were good faith purchasers for value from a seller with a voidable title, under 2-403(1) they get good title. Here Marlow sold the truck to Conley in return for cash and two other vehicles. Before Marlow realized that Conley's considerationthe two other vehiclesfailed, Conley sold the truck to the Medleys. Conley had a voidable title, subject to being avoided by Marlow, but the sale to the Medleys intervened. They were good faith purchasers and cannot be required to surrender the truck. That the Medleys never got a proper certificate of title (the one offered by Conley still had Marlow's name on it) is irrelevant on the issue of whether they were good faith purchasers. Title passed to the Medleys under 2-402(2): when seller Conley completed his delivery. That Marlow was defrauded does not matter under the Code.

Case Questions

Question 1. The court determined Marlow was defrauded by Conley. How did Conley defraud Marlow?

Question 2. Why did Marlow think the Medleys should not be considered good-faith purchasers?

Question 3. Why would the UCC prevail over the state's certificate of title act?

Question 4. How was your experience reviewing and responding to the case? Were the resources helpful?