"Passing the buck" - those who deal in stolen goods should pay

It's rare to have a collection case where the subject is stolen goods, but I just had a trial on the topic, and thought I would pass along the gems the trial judge included in her written opinion on the case.

Our debtor didn't regularly deal in stolen goods, in fact, was generally an honest used car dealer.  However, when he received a call from the local police that one of the cars on his lot was suspected of being stolen, he reacted badly....instead of turning the car over (which would have resulted in a financial loss of about $8,000), he rushed over to a car auction house and had the car sold at auction, providing the auction house with the car, good title (the original theif had managed to obtain good title before unloading the hot car on the used car dealership), and as far as the auction was concerned, everthing was in order.

What is important here is that 3 days before the used car dealer attempted to auction off the car, he was informed by the police the car was potenially stolen.

The used car dealer failed to tell the auction company about the call from the police.  However, the auction did learn of the theft and, upon learning the car may have been stolen, quickly reinbursed the party who innocently purchased the car at the auction, and then looked to the used car dealership for reimbursement of its loss (again, about $8,000).

Making a long story short: the court found that even though the used car dealership purchased the car from a theif in good faith, and did receive good title to it, all good faith was wiped out, and the dealer turned into a lawless criminal committing fraud on the auction house when, three days after being informed a car may have been stolen, sold the car off in a rush through an auction.

Bottom line: the court found fraud EVEN THOUGH, at the time the used car dealer took the car in, he didn't know the car may have been stolen.  So, even where the seller is a good faith dealer in goods, that good faith is wiped out the minute he learns the item is "hot."  From that point forward, he is obligated to protect innocent third parties from paying good money for the item, knowing they may suffer loss.