Selling something not-owned?
In US law, what happens if I lease something to someone, and then they sell it to someone else?
Example:
I lease a box to someone. It says "Property of brettkushner" on it. That person sells the box to someone else. I charge the leasee for not returning the box.
a) The buyer of the box. Is it legally his now?
Answers:
I can give you a real world example. I work for a company that uses all kinds of electronic equipment interconnected ... computers, fax machines, printers, etc.
We bought, through a 3rd party place that buys sells leases used equipment, an IBM printer for one of our IBM computers. There were some problems in it working right & we had to call IBM service. IBM said it was not yet on maintenance, so the 3rd party place had to pay IBM service. This is because we had purchased the printer on condition that it be in good enough condition to qualify for IBM continuing support.
After a week and it was not on IBM tech support, I called the IBM maintenance supervisor to ask for clarification. In the past, at many employers, when we got an IBM printer, it was usually on IBM tech support the same day we got it, or the day after.
It was explained to me that when we told IBM the serial # of the printer we had bought, and they looked it up in their maintenance records, they found that it had been leased by IBM to an Insurance company in New York State (I was never told the name, but from the city I had my suspicions ... it was city of national HQ of a major insurance firm), then there had been a change in management in that office, and the new management said to get rid of certain hardware, replace with other hardware, and the persons involved were ignorant of the fact that some of the equipment was actually on lease.
IBM lawyers were now talking to the lawyers of the insurance firm, to organize an inventory of all the equipment that on IBM books were leased to that Insurance firm, and arrange "buy out" so as to legalize the "sales" that the new management had made.
I was told that this kind of thing happens very often, and IBM tries to get it resolved aimicably, because they want to continue doing business with the kind of company that might have future use for IBM equipment.
We also had this go in the other direction. We got new management. They wanted to see the equipment that we were paying rather expensive leasing costs on. Come to find out, some earlier employees had been told to get rid of some equipment we weren't using any more, and they had not known the equipment was on lease. They thought it was property of the company.
We resolved this, by buying (taking legal ownership of) the equipment that had been on lease.
That's examples with a "happy" ending. Now let me give you examples with unhappy ending.
Automobile gets stolen. It gets sold to a second person, who pays $ XX,XXXX.00 for the auto. Police track it down, confiscate from second person, return it to original owner. Police still searching for the thief. There is no insurance for the person who paid $ XX,XXX.00 for the auto.
Is lesson from this that you should be very careful about risk of forged ownership papers and only deal with reputable auto dealers? Well, there was another story where the police and DMV knew that titles were phony, did not take immediate action, because the investigation was trying to track down the stolen auto crime ring, so when auto dealers called DMV to verify paperwork, they were told it was OK, when in fact it was false, and DMV knew it was false.
The buyer could be charged with receiving stolen property, although if the leasee has paid you for it, I believe that would no longer be the case.
You could do one of two things:
1) Sue the leasee for not returning to box as well as property damage. If you already collected, however, you cannot do that. You could, by theory, say that it was stolen.
2) It is legally his now, unless the leasee did not pay you the full amount of the "box" that was sold in the first place. If the box is worth $30, he sold it for $50 and you gathered for $30, then you MAY be entittled to the difference. Talk to a lawyer.
I know here in the UK if you sell items to a second hand store which is still under a hire-purchase agreement then you get into a whole lot of trouble because the product was never legally your property to sell until the lease is paid off in full. So I guess the same rule applies to what you're asking!
Selling what you do not own is a no-no. Legally, it is called conversion, not sale. Conversion means "converting" an asset from one tangible form into another form. When you sell a "car" not your own, you are "converting" it to cash with the intent to personally use or spend that cash. Another legal term for that is "appropriation" which means using the cash you get from other people - this time, from an unauthorized sale of a car you don't own. In spiritual/biblical parlance, an unauthorized sale of what you don't own and keeping or using the proceeds therefrom is called plainly "theft." Either way you look at it, tampering with what you do not own is BAD AND WILL HAVE CONSEQUENCES.
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