What happens when an innocent buyer spends his hard earned money buying a trailer from a seller without receiving a certificate of title? Well, the buyer runs the risk of being sued by the trailer's lawful owner, losing the trailer, and losing his money. The case of Duffy v. Elam focuses on this.
Duffy owned a trailer that was originally purchased for about $45,000. Duffy had a side business with Smith, who had been using the trailer for several years. Eventually, Duffy demanded that Smith return the trailer, but Smith claimed the trailer was stolen some time ago. Duffy called the police, who promptly located the trailer on the property of a Mr. Elam. Elam testified that Smith sold him the trailer and gave him a bill of sale, but no certificate of title transferring ownership. After making the purchase, Elam then invested about $20,000 in repairs and upgrades to the trailer. When Duffy asked Elam to return the trailer, Elam said no, claiming he was an innocent good faith purchaser. Ultimately, the court agreed with Duffy, finding that the trailer should be returned to him, but that Elam could remove improvements he made from the trailer so long as he didn't damage it.
What about Smith, the man who initially refused to return the trailer to Duffy, then claimed the trailer was stolen, but in fact had sold it to Elam? Nothing in this case. However, the court noted in passing that Smith was in bankruptcy and was under federal investigation.
Individuals and business buy and sell assets regularly. Many assets, such as cars or trailers can be transferred using a certificate of title. In situations involving the buying or selling of assets, it is important to document the transaction and make sure that all evidence of title is properly conveyed.