In 1962, Andy Warhol, a famous artist, created a silkscreen on canvas titled Red Elvis. Kerstin Lindholm was an art collector who, for 30 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.

In 2000, Malmberg told Lindholm that he could place Red Elvis on loan to the Louisiana 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, which he did. Instead of placing Red Elvis on loan to the Louisiana 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 paid $2.9 million to Malmberg and received an invoice of sale and possession of Red Elvis.

Subsequently, Lindholm made arrangements to sell Red Elvis to a Japanese buyer for $4.6 million. Shortly thereafter, 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 he had a claim that was superior to Lindholm's claim of ownership. The superior court of Connecticut issued a memorandum opinion that awarded Red Elvis to Brant.

Issue Is Brant a buyer in the ordinary course of business who has a claim of ownership to Red Elvis that is superior to that of the owner Lindholm?

Language of the Court Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business. Once K. Lindholm entrusted Red Elvis to Malmberg she gave him the power to transfer all of her rights as the entruster to a buyer in the ordinary course. Accordingly, because Brant has proven his special defense of being a buyer in the ordinary course, judgment will enter in favor of the defendant on all counts.

Decision The trial court held that Brant was a buyer in the ordinary course of business who obtained ownership to Red Elvis when he purchased the stolen Red Elvis from Malmberg. Lindholm appealed the decision of the trial court to the supreme court of Connecticut, which affirmed the decision of the trial court and awarded the Red Elvis to Brant. A court in Sweden convicted Malmberg of criminal fraud and sentenced him to 3 years in prison. A Swedish court awarded Lindholm $4.6 million in damages against Malmberg.

What is the Entrustment Rule? Do you agree with this rule? Why or why not? Do you agree with the court's ruling in this case? Why or why not?

Do you think Lindholm will be able to collect $4.6 million from Malmberg? What could Lindholm have done to avoid being in this position?