## Facts

- Lee Decker bought a repossessed 1975 Peterbilt truck and later transferred its title to South Dakota; the truck’s frame had apparently been altered and it had been wrecked previously.
- Decker acknowledged rebuilding the truck “from the frame up” and provided a written list of features to help John Colton obtain financing for purchase.
- Colton, who had driven the truck for Decker, purchased it for $22,000 with bank financing; the South Dakota title was transferred to Colton in March 1990.
- In August 1991, a Wyoming trooper found the VIN stamped on the frame rail did not match the VIN on the registration; the truck was impounded due to suspicion raised by conflicting VINs.
- Colton incurred expenses and lost use while attempting to recover the truck; during impoundment, the truck was dismantled and exposed to weather, allegedly deteriorating to an inoperable condition.
- A Wyoming court ultimately determined Colton was the true owner and ordered issuance of a new Wyoming title reflecting the correct VIN; however, the lender holding the South Dakota title as collateral refused to release it.
- Colton sued Decker under UCC Article 2 for breach of warranty of title (and also pleaded merchantability and express warranty theories).
- The trial court found Decker liable only for breach of warranty of title and awarded damages; Decker appealed liability and damages, and the Coltons cross-appealed aspects of damages.

## Issues

1. Whether a seller breaches the UCC warranty of title by selling a vehicle with multiple or conflicting VINs that leads to seizure and title litigation, even if the buyer is later adjudicated the true owner.
2. What categories and measure of damages are recoverable for breach of the warranty of title, including loss of use, recovery-related expenses, and claimed deterioration during impoundment.
3. Whether portions of the damages award were adequately supported by evidence and properly tied to the seller’s breach under UCC damage rules.

## Decision

- The Supreme Court of South Dakota affirmed the finding that Decker breached the UCC warranty of title.
- The court held that the VIN irregularities and resulting seizure and legal dispute constituted a title defect actionable under the warranty of title.
- The court affirmed some damages but reversed and remanded a portion of the damages award for recalculation or further findings consistent with UCC standards of proof and causation.

## Legal Principles

- Under UCC § 2-312, a seller warrants good and rightful title and delivery free of unknown liens or encumbrances; a buyer need not lose ultimate ownership to establish breach when a title defect substantially interferes with possession and quiet enjoyment.
- Conflicting identifying numbers that expose the buyer to seizure, investigation, and litigation can constitute a breach of the warranty of title.
- Consequential damages may be recoverable for breach of warranty of title when foreseeable and proven with reasonable certainty, and when causally connected to the seller’s breach.
- Appellate review may uphold liability while requiring reversal or remand of damage components that are inadequately supported, improperly calculated, or insufficiently linked to the breach.

## Conclusion

The court held that selling a truck with conflicting VINs that resulted in seizure and a title dispute breached the UCC warranty of title, and it affirmed liability while sending part of the damages award back to the trial court for reconsideration and proper support under UCC remedial standards.


Colton v. Decker, 540 N.W.2d 172 (S.D. 1995)