Lindholm v. Brant

Facts

Plaintiff had loaned her Andy Warhol’s Red Elvis painting to the Guggenheim Museum for display with the help of her trusted art dealer, Malmberg. Malmberg then sold the painting to Defendant, a professional art dealer, without Plaintiff’s knowledge or permission. Before completing the transaction, Defendant, concerned that Plaintiff or her husband might have a claim to the painting, hired counsel to conduct a lien search on the painting and to draft a contract where Malmberg would assure he had a clean title to the painting. The search revealed no competing claims to the painting, although Defendant’s counsel cautioned him that the search could only give “minimal assurances” as to whether any encumbrances to the title of the painting existed. Malmberg attempted to further assure Defendant he had title by offering to have the Red Elvis transferred to a bonded warehouse in Denmark. Malmberg arranged this by convincing Plaintiff that the painting should be sent to a museum in Denmark, getting her to authorize the painting’s release from The Guggenheim to entrust under UCC § 2-403(2) in Malmberg’s custody. The Guggenheim’s policy was to release paintings in its possession only to the painting’s verified owner. Defendant purchased the painting from Malmberg while in Denmark. Later, Plaintiff would sue Defendant to recover the painting, arguing that Defendant had not acted as a buyer in the ordinary course of business due to failing to exercise diligence in determining whether Malmberg was authorized to sell the painting.