Bonhams 1793 Ltd v Lawson & Anor

Title to movable property is determined by the law of the place where the property was situated when title was transferred. Under Belgian law, a purchaser’s good faith is assessed at the time of acquisition, having regard to all the circumstances. Subsequent conduct may be relevant only as evidence of the purchaser’s state of mind at that time.

A settlement agreement governed by New York law was construed objectively and transferred all ownership rights in the vehicle, including associated spare parts. A broadly drafted power of attorney gave the agent actual authority to negotiate and conclude the settlement. The contractual choice of New York law excluded reliance on Ohio conflict-of-laws rules and Ohio title legislation.

Bonhams sought determination of a preliminary issue concerning title to a rare Ferrari chassis and associated spare parts before its auction. The competing claims were advanced by Ms Swaters and by Ms Lawson and Mr Ford, who claimed through Ms Lawson’s late father, Karl Kleve.

Ms Swaters relied on a 1990 Belgian sale and, alternatively, a 1999 Settlement Agreement governed by New York law. The defendants challenged the good faith of the 1990 purchaser, the validity and authority underlying the Settlement Agreement, its construction as including the spare parts, and the relevance of Ohio limitation and vehicle-title rules.

1. Belgian title. The lex situs governed the transfer of the chassis, which was in Belgium in March 1990. The evidence established that the Belgian seller had good title, alternatively that the purchaser acquired title under Article 2279 of the Belgian Civil Code. Good faith was a fact-intensive question assessed at acquisition. The purchaser was entitled to rely materially on the Belgian public prosecutor’s release of the chassis and acted in good faith. The subsequent failure to commence revindication proceedings within three years independently confirmed title by January 1992.
2. Settlement Agreement. The Agreement was authentic, valid and binding. The 18 August 1999 power of attorney gave Mr Daniels full authority to negotiate the settlement amount and convey title. It superseded any earlier limitation and remained effective when the Agreement was concluded on 2 September 1999. Alternatively, Mr Daniels had apparent authority. None of the alleged irregularities would have put a reasonable person on notice of a defect in his authority.
3. Construction and consideration. Applying New York law, the Agreement and Bill of Sale objectively transferred the Ferrari as a whole. The defined subject automobile therefore included the spare parts. The reduction in price reflected their absence, but did not exclude them from the transfer. Payment to the agent’s designated company was contractually contemplated and constituted consideration. Any non-payment by the agent to Mr Kleve was a matter between principal and agent.
4. Ohio law. The contractual choice of the internal law of New York excluded New York conflict-of-laws principles. Ohio probate time limits and the Ohio Certificate of Motor Vehicle Title Act were therefore irrelevant. In any event, the Act did not apply to property situated outside Ohio or to the spare parts, and an Ohio title certificate did not itself confer ownership.
5. The preliminary issue was answered in favour of Ms Swaters: as at 27 June 2014 she had title to the Car, including the spare parts.