## Facts

- A motorcycle dealer sold a motorcycle to a retail customer in exchange for a check.
- The dealer delivered possession, a signed bill of sale marked paid in full, and vehicle registration in the customer’s name, and it applied for an original certificate of title under New York’s motor-vehicle title law.
- The next day, the customer resold the motorcycle to a used-vehicle dealer for $2,000, delivering the motorcycle and signing over the registration; the customer promised to deliver the certificate of title when received.
- Before buying, the used-vehicle dealer reviewed the customer’s paperwork and telephoned the original dealer, which confirmed the customer’s purchase (before the original dealer learned the check was dishonored).
- The original dealer later learned the check was dishonored, notified the state, and processing of the certificate of title was interrupted; the customer disappeared and never delivered title documents to the used-vehicle dealer.
- The original dealer sued the used-vehicle dealer to recover the motorcycle; a preliminary order placed the motorcycle with the original dealer pending resolution.
- Both parties moved for summary judgment on superior rights to the motorcycle.

## Issues

1. Whether the original buyer who obtained the motorcycle by a check later dishonored acquired title sufficient to transfer ownership to a subsequent purchaser.
2. Whether a good-faith purchaser for value can obtain good title to a motor vehicle under U.C.C. § 2-403 when the state has not issued a certificate of title to the intermediate seller.
3. Whether New York’s motor-vehicle certificate-of-title statute controls over U.C.C. § 2-403 when the two would yield different results.

## Decision

- The court granted summary judgment to the original dealer and denied the subsequent purchaser’s motion.
- The court held that the motor-vehicle certificate-of-title statute controlled over the general U.C.C. provision in this context.
- Because a certificate of title was never issued to the original buyer, the original buyer lacked title recognized by the specialized motor-vehicle title regime and could not pass good title to the subsequent purchaser.
- The original dealer had superior rights to possession of the motorcycle.

## Legal Principles

- Under U.C.C. § 2-403, a person who receives goods in exchange for a check later dishonored generally has voidable title and can transfer good title to a good-faith purchaser for value.
- Where a specific statutory scheme governs title to a particular category of property (motor vehicles), that specific scheme controls over general commercial provisions to the extent of conflict.
- Absent compliance with the governing certificate-of-title requirements, a transferor may lack the legally operative title necessary to convey good title to a later purchaser, even if the later purchaser acts in good faith and pays value.

## Conclusion

The court placed the loss on the subsequent purchaser, ruling that New York’s motor-vehicle certificate-of-title statute limited the effect of U.C.C. § 2-403 and prevented a bad-check buyer from passing good title where no certificate of title issued to that buyer.


Sheridan Suzuki, Inc. v. Caruso Auto Sales, Inc., 110 Misc. 2d 823 (N.Y. Sup. Ct. 1981)