In the wake of the recent discovery in Sharon, Connecticut, of a 1958 Ferrari 250 PF Cabriolet that went missing from Spain some 15 years ago, SCM’s legal analyst John Draneas attempts to shine some light on where this confusing case may be headed:

The legal analysis begins with the seemingly simple question, “Which law applies?” And with which meaning, Spanish or U.S. law? After all, the Ferrari was stolen in Spain, but it is now in the United States.

If U.S. law applies, it is likely that the European owner can recover the Ferrari without any obligation to the current owner. The current owner would have clear recourse against his seller, and his seller against his seller, etc., until the chain gets all the way back to the thief, who ends up holding the hot potato.

But we do not have any uniform law in the United States. Each state adopts its own laws. Many times their laws are very much the same, but there can be differences. Each of the links in this litigation chain can be controlled by a different state’s laws, depending on where the seller and buyer reside and where the sale took place. There can be different abilities to recover, and different statutes of limitations could apply. The key points are that each link is separately analyzed, and once the chain is broken, there is no way to get back to an earlier link.

The Uniform Commercial Code generally provides that good title passes to a purchaser if he buys the property from a dealer who customarily sells such items of property. But this provision of the UCC has repeatedly been held inapplicable to stolen property. For the rule to apply, the property must be entrusted to the dealer by the owner, and the owner is the fellow in Europe.

Much time has passed here, and it would seem that a statute of limitations might apply. However, statutes of limitations generally run from the time of the discovery of the theft, or the discovery of who has the car. And there is generally no duty of “due diligence” imposed on the owner. That is, he doesn’t have to look very hard, and can generally just wait until the car pops up.

Very similar to a statute of limitations, a legal doctrine known as laches might apply. Generally stated, this legal theory would require that the owner make reasonable efforts to report the theft and locate the car, and if he sits around too long doing nothing, the court might refuse to order the return of the car. But this legal doctrine is very imprecise, and its application is difficult to predict. And if it were applied, it would be applied both ways. The purchaser would have to establish his own innocence, and that he made a reasonable investigation to determine the title of the car before he could expect a court to preclude the owner from recovering the car.

In this case, the same rumors and innuendos that should have helped the owner locate the car might also work to destroy the purchaser’s innocence sufficiently to prevent the application of the laches doctrine.

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