## Facts

- Samuel Porter and his corporation co-owned a Maurice Utrillo painting, *Chateau de Lion-sur-Mer*.
- Porter had prior art dealings with Harold Von Maker, who used aliases including “Peter Wertz.”
- Porter temporarily allowed Von Maker to take the Utrillo to hang in Von Maker’s home while Von Maker decided whether to purchase it.
- After Von Maker failed to return the painting and defaulted on unrelated payment obligations to Porter, Porter learned Von Maker had an extensive fraud and criminal history.
- Porter (through counsel) and Von Maker entered a written agreement acknowledging Porter’s ownership and requiring Von Maker, within 90 days, to either pay $30,000 or return the Utrillo (with a substitute-transfer remedy if he did neither).
- Von Maker neither paid nor returned the painting and arranged for the real Peter Wertz—who was not in the art business and worked in a delicatessen—to act as the named seller to the Richard Feigen Gallery entities (Feigen), professional art dealers.
- Feigen purchased the Utrillo for $20,000 through Wertz and quickly resold it through a gallery employee; it ultimately was sold to a purchaser in Venezuela and could not be recovered in kind.
- Feigen made no meaningful inquiry into Wertz’s identity, authority, background, or status as an art merchant.

## Issues

1. Whether U.C.C. § 2-403’s entrustment rule cut off the owner’s title because Feigen allegedly purchased in the ordinary course from a merchant who deals in goods of that kind.
2. Whether Porter was equitably estopped from asserting title because his conduct allegedly clothed Von Maker/Wertz with apparent authority or indicia of ownership on which Feigen reasonably relied in good faith.

## Decision

- The Appellate Division reversed the judgment dismissing the complaint against Feigen.
- The court held U.C.C. § 2-403 did not vest good title in Feigen because the sale was not by a merchant who deals in goods of that kind and Feigen did not meet the trade’s good-faith standards.
- The court held equitable estoppel did not bar Porter’s claim because Porter did not create indicia of authority to sell, and Feigen did not act with reasonable, good-faith reliance.
- Judgment was directed for Porter against Feigen, and the matter was remanded to determine damages given the painting’s export and unavailability.

## Legal Principles

- U.C.C. § 2-403(2) protects a buyer in ordinary course only when goods were entrusted to a merchant who deals in goods of that kind; the protection does not apply when the purported seller is not such a merchant.
- For professional dealers, “good faith” includes observance of reasonable commercial standards of fair dealing in the trade; a failure to make basic inquiries into a seller’s authority and legitimacy can defeat buyer-in-ordinary-course status.
- Equitable estoppel against a true owner requires proof that (1) the owner’s conduct created indicia of ownership or authority to sell in another, and (2) the purchaser reasonably and in good faith relied on those indicia to its detriment.
- Temporary possession for display or evaluation, without a consignment to an art merchant or other owner-created holding out of sales authority, does not by itself supply the indicia necessary to estop the true owner.

## Conclusion

The court held that an art dealer who buys from an unauthorized seller cannot rely on U.C.C. § 2-403 or equitable estoppel where the owner did not entrust the work to a merchant in the art trade and the dealer failed to act in good faith by neglecting basic verification of the seller’s authority; the owner was entitled to recover the painting’s value as damages.


Porter v. Wertz, 68 A.D.2d 141, 416 N.Y.S.2d 254 (App. Div. 1st Dep’t 1979)