USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________

No. 97-1175

DEWELDON, LTD.,

Plaintiff - Appellant,

v.

ROBERT MCKEAN,

Defendant - Appellee.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

[Hon. Ernest C. Torres, U.S. District Judge]

___________________

____________________

Before

Lynch, Circuit Judge,

_____________

Hill* and John R. Gibson,** Senior Circuit Judges.

_____________________

_____________________

Keven A. McKenna,
_________________

with whom

Karen A. Clark and

_______________

McKenna, P.C. were on brief for appellant.

_____________
Matthew T. Oliverio for appellee.
___________________

____________________

Keven A.
________

September 24, 1997

____________________

____________________

Of the Eleventh Circuit, sitting by designation.

**

Of the Eighth Circuit, sitting by designation.

HILL, Senior Circuit Judge.

HILL, Senior Circuit Judge.
_____________________

DeWeldon,

Ltd. sued

in

district court to

possession

After

of Robert

a bench

entitled

recover three paintings it alleges

McKean but

trial, the

to retain

district court

possession

judgment for McKean.

to which

of

the

he is

are in the

not entitled.

ruled that

paintings

McKean is

and

entered

This appeal ensued.

I.

Felix

collector.

displayed

He

DeWeldon

is

owned three

these, and

declared

bankruptcy in 1991.

trustee.

DeWeldon's

In

DeWeldon, Ltd.,

1993,

Rock, in Newport,

sold all her

and

art

$26,000.

He

paintings, on

the

Rhode Island.

He

In 1992, Deweldon, Ltd. purchased

personal

Nancy

sculptor

valued at

other collection-grade

his home--Beacon

Felix

well-known

paintings

walls of

all

property

Wardell,

the

from

the

sole

shareholder

DeWeldon, Ltd. stock to

bankruptcy

of

the Byron

Preservation Trust, which

to repurchase the

to retain

in turn sold Felix DeWeldon

paintings and a contractual

possession of the paintings until

an option

right to continue

the option expired.

At all times, Felix DeWeldon continued to possess and display the

paintings

at Beacon

Rock.

In 1994,

Robert McKean, an acquaintance, and

interested

in selling some

his son

Byron approached

told him that his father was

of his paintings.

McKean viewed the

paintings at Beacon Rock and subsequently purchased the paintings

at issue for

$50,000.

recover the paintings.

McKean.

DeWeldon, Ltd. sued in

district court to

The district court entered

For the following reasons, we affirm.

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judgment for

II.

We conclude that the evidence sufficiently

the following facts found by

the district court.

was a "well-known artist" and "collector."

establishes

Felix DeWeldon

After DeWeldon, Ltd.

purchased Felix DeWeldon's paintings from his

bankruptcy estate,

Frederick Crevoiserat, director of DeWeldon, Ltd., entrusted

paintings to Felix DeWeldon as custodian.

the

DeWeldon, Ltd. allowed

Felix DeWeldon to maintain possession of the paintings; it put no

signs

on the

premises,

themselves to

paintings.

tags or

indicate that Felix

labels

on the

paintings

DeWeldon no longer

owned the

The paintings remained on the walls of Beacon Rock.

McKean

Rock.

nor

The only

viewed the

paintings on

tags on the back of the

Christie's--the auction house.1

of the paintings

Beacon

of Christie's,

had not sold at auction

"re-purchased" them.2

appraised value

walls at

paintings were those of

McKean inquired

and was informed that the paintings

DeWeldon had

the

McKean paid

more than

and Felix DeWeldon gave

and

the

him a

bill of sale.

In June of 1993, a

in

Newport, Rhode

paintings.3

The

Island

Mr. Panteleakis recorded a UCC lien

claiming a

security interest

lien had been granted by DeWeldon,

in the

Ltd. of 646

____________________

At some time prior to the filing of bankruptcy, Felix DeWeldon

had commissioned Christie's to auction the paintings.

This term of

art in the trade

means that DeWeldon had taken

the paintings back when they did not sell at auction.

Apparently

Mr. Panteleakis had underwritten

DeWeldon, Ltd.'s

purchase of DeWeldon's personal property.

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Bellevue Ave, not by Felix

DeWeldon of 145 Harrison Ave.

There

is

no

evidence

of

any

recorded

interest

in the

paintings,

security or otherwise, having been granted by Felix DeWeldon.

In December of 1993, DeWeldon, Ltd. sued Felix DeWeldon

seeking possession

denied

the

of the

relief

repurchase and right

paintings.

based

upon

Felix

The

Rhode Island

DeWeldon's

of possession, but enjoined

court

option

to

Felix DeWeldon

from transferring or removing the paintings from Beacon Rock.

III.

The

DeWeldon,

McKean, its

review

district court

Ltd.

concluded

is equitably

estopped

ownership interest

this holding,

as we

from

from

these facts

asserting, against

in the paintings.

conclude that

that

We

the judgment

need not

of the

district court may be affirmed on other grounds under the laws of

Rhode Island.4

As

than he has

(UCC)

a general rule,

himself.

as adopted

entrusts

Nevertheless, the

by Rhode

items to a

a seller cannot

Island

merchant who

pass better title

Uniform Commercial Code

provides that

deals in

an owner

goods of

who

that kind

gives him or her power to transfer all rights of the entruster to

a buyer in the ordinary course of business.

2-403(2).5

"'Entrusting'

includes

any

R.I. Gen. Laws

delivery

and

6A-

any

____________________

We may

ground

affirm the judgment

on any

established by the record of

York, Inc.
__________

v. Alioto, 26 F.3d 201,

______

independently sufficient

the case.

Ticketmaster-New
________________

204 (1st Cir. 1994); Inmates

_______

of Suffolk County Jail v. Rufo, 12 F.3d 286, 291 (1st Cir. 1993).
______________________
____

Rhode Island law applies to this diversity action.

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acquiescence

condition

in

retention

expressed between

acquiescence and

of

the

regardless of

possession,

parties

regardless

to

whether the

the

Under

course of business

this provision, a

will prevail

or

the

R.I. Gen. Laws

buyer in

over the claim

any

goods have been

be larcenous under the criminal law."

6A-2-403(3).

delivery

procurement of

entrusting or the possessor's disposition of the

such as to

of

the ordinary

of a party

who

entrusted such items to the merchant.

protected by

In order for

6A-2-403, DeWeldon, Ltd. must

McKean to be

have allowed Felix

DeWeldon to retain possession of the paintings.

McKean must have

bought the paintings in the ordinary course of business.

have

given

constructive

them.

value

notice of

Finally,

defined

by R.I.

goods of the kind

the

paintings,

DeWeldon Ltd.'s

Felix DeWeldon

Gen. Laws

merchant is one who

him

for

must

without

claim

have been

6A-2-104.

to

a merchant

as

Under this

of

the

section, a

found by the district

paintings

is

deals in

holds

or skill peculiar to the

practices or goods involved in the transaction. . . ."

Under the facts

or

of ownership

his or her occupation

or herself out as having knowledge

purchase

actual

has special knowledge or skill and

or "otherwise by

He must

protected

by

Id.
___

court, McKean's

the

entrustment

doctrine.

DeWeldon.

acquiesced

First, DeWeldon, Ltd. entrusted the paintings to Felix

After

in

DeWeldon, Ltd.

Felix

purchased

DeWeldon's retention

the

of

paintings, it

them.

Although

DeWeldon, Ltd. made some late efforts to regain possession of the

paintings, these efforts

were frustrated by its

own prior grant

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to Felix

DeWeldon of an option and right of possession until the

expiration of the option.

Second, McKean was

business.

sell

Byron informed

some paintings.

DeWeldon's

the ordinary course

McKean that Felix

The

paintings

of

DeWeldon wished to

were

hanging

in

Felix

home when McKean viewed and subsequently bought them.

He knew that Felix

before.

a buyer in

DeWeldon had sold paintings

McKean gave value for

the paintings.

out of his

home

In fact, he

paid

more than their appraised value.

McKean had no actual notice

longer

the true

nothing to

It did

owner of

the

paintings.

shield the paintings

not place

that Felix DeWeldon was no

markings on the

DeWeldon, Ltd.

did

in the cloak of

its ownership.

paintings, as

Christie's had

when the paintings were in its possession; it posted no notice of

ownership

by

injunction

permitted

removal

the

paintings;

it

failed to

post

the

it secured against transfer of the paintings by Felix

DeWeldon; it

DeWeldon's

or near

posted, but

residence

in the

of the

then terminated,

despite

such

injunction;

it

paintings from

the

a security

a guard's

posted

no

residence.

being

warnings

guard at

expressly

against

There were

no

markings on the paintings or

other notice that Felix DeWeldon no

longer owned the paintings.

The paintings were hanging in Felix

DeWeldon's home.

Neither

did McKean

have

any

constructive notice

another's ownership interest in the paintings.

by Mr. Panteleakis

did not constitute such

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of

The lien recorded

notice because there

was

no way

inquiry.

McKean could

as a

Commercial

it upon

a reasonable

It was not granted by Felix DeWeldon.

Third, under

acted

have discovered

merchant

Code.

the facts

within

Under

the

of this

the meaning

Code,

case, Felix

of

DeWeldon

the Rhode

"merchant"

is

Island

given

an

expansive definition. Providence & Worcester R. Co. v. Sargent &

______________________________
_________

Greenleaf, Inc., 802 F.

_______________

Supp. 680, 684 n.2

(D.R.I. 1992).

The

Code provides that a merchant is "one who . . . by his occupation

holds himself

out as having

knowledge or skill peculiar

practices . . . involved in the transaction

Laws

every

6A-2-104.

person in

'merchant'."

Comment

. . . ."

2 to this section notes that

business would,

therefore, be

to the

R.I. Gen.

"almost

deemed to

be a

Id.
___

The entrustment

provision of

the UCC

is designed

to

enhance the reliability of commercial sales by merchants who deal

in the kind of goods sold.

1981) (art

dealer is

kind--paintings).

Porter v. Wertz, 421 N.E.2d 500 (N.Y.

______
_____

a merchant when

It shifts

the risk of resale

leaves his property with the merchant.

Atlas Auto Rental Corp. v.

_______________________

dealing in

goods of

the

to the one

who

Id. at 500-01.
___

See also
________

Weisberg, 281 N.Y.S.2d 400 (N.Y. City

________

1967).

The

district court

"well-known" artist

"collector."

He had

occupation

whose work was

There was art

recently sold

he held

found that

Felix

DeWeldon was

for sale commercially

and a

work all over Felix DeWeldon's home.

paintings to a

himself out

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European buyer.

as having

knowledge and

By his

skill

peculiar

to art and the art trade.

McKean viewed him as an art

dealer.

We conclude from

these facts that Felix DeWeldon was a

"merchant" within the meaning of the entrustment provision of the

UCC as adopted by the Rhode Island Commercial Code.

When

possession

a person knowingly delivers his property into the

of a

merchant dealing

person assumes the

by

selling

the

risk of the merchant's

property

entrustment provision places

the

in goods

merchant with

apparent good title.

the

to

an

of that

acting unscrupulously

innocent

the loss upon the

ability to

kind, that

transfer

purchaser.

The

party who vested

the property

with

The entrustor in this case, DeWeldon, Ltd.,

took that risk and bears the consequences.

V.

DeWeldon, Ltd. entrusted three paintings to the care of

Felix DeWeldon.

Felix

sold paintings.

Robert McKean

course

of

business who

notice of any

Rhode

DeWeldon was a

paid

was a purchaser in

value for

claim of ownership by

Island, McKean

took good

merchant who

the

another.

title

to the

judgment of the district court is affirmed.

affirmed
________

bought and

the ordinary

paintings without

Under the

paintings.

law of

The

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