Kotis v. Nowlin Jewelry, Inc.

Facts

Steve Sitton obtained a gold rolex watch from Nowlin Jewelry, Inc., Plaintiff, in a fraudulent manner by forging a check to purchase the watch in the amount of $9,438.50. Eddie Kotis, Defendant, a used car dealer, bought the watch from Sitton for $3,550 in Defendant’s car lot. Upon a Defendant’s friend’s advice, Defendant spoke to Plaintiff to find out whether Sitton had financed the watch. Further, Defendant spoke with Cherie Nowlin, who was the wife of Nowlin’s president, John Nowlin. At first, Defendant did not identify himself or reveal the price Sitton’s was asking for the watch. Additionally, Defendant stated that he did not have the watch nor want it. Once John Nowlin became aware that Sitton’s check would not be honored by the bank, John Nowlin called Defendant. Defendant refused to speak to John. Instead, Defendant referred John to Defendant’s attorney. Later, Sitton was indicted for forgery and theft. Plaintiff brought a declaratory action seeking the court to finds that it was the watch’s sole owner. Defendant filed a counterclaim seeking the court to find that he was a good faith purchaser of the watch, thus, being entitled to possess and hold title to the it. The trial court found that Plaintiff was the only owner of the watch. Additionally, the court held that Sitton did not obtain the watch through a “transaction of purchase,” within the meaning of Tex. Bus. & Com. Code Ann. § 2.403(a), with Plaintiff. Under the statute, a person with voidable title is entitled to transfer good title to a good faith purchaser for value only if the goods were delivered through fraud, provided the goods were delivered under a “transaction of purchase.” On appeal, Defendant asserted that the trial court improperly found that Sitton did not obtain the watch through a transaction of purchase with Plaintiff, Sitton did not have voidable title, and Defendant did not have good title because he was not a good faith purchaser.