Legal Question in Business Law in New York

Liability for resale of stolen property

I bought a one-carat diamond ring from a man claiming that he is the owner for $18000. He assured him that the ring belonged to his grandmother and is really worth much more and the only reason he is selling it so cheaply is because he is behind on his car payments. I had no reason not to not believe differently and so I purchased the ring. Two months later,a jewelry collector which is also my neighbour admires the ring and offered to purchase it for $60000. I agree to sell the ring stating that he is transferring only such rights as I have in the ring. In a further two months, police confiscate the ring as property stolen in a burglary of another persons home. The person I sold the ring to is trying to hold me liable. What kind of legal actions or recourse can he take against me if any?


Asked on 7/21/06, 8:38 pm

1 Answer from Attorneys
Nancy Delain Delain Law Office, PLLC

Re: Liability for resale of stolen property

Can you now find the person who sold you the ring?

If you truly had absolutely no inkling (or reason for an inkling) whatsoever (the deep discount you got raises questions in my mind about that) that you were dealing with a stolen item (and perhaps even with the original thief), you are what is called a "holder in due course." If you are a holder in due course, you can go after person who sold the ring to you for money you paid to him.

Of course, your being a holder in due course means that the collector who purchased the ring from you is also a holder in due course and has the same right to go after you (his seller) for refund as you do to go after the person who sold to you. Even if you turn out not to be a holder in due course, the collector sounds like he bought the ring innocent of all inklings at a fair market price and thus gains holder in due course status for himself. If he had any suspicion about the history of the ring when he purchased it from you, of course, he loses his holder in due course status and his rights to go after you.

THE INFORMATION PRESENTED HERE IS GENERAL IN NATURE AND IS NOT INTENDED, NOR SHOULD IT BE CONSTRUED, AS LEGAL ADVICE. FOR SPECIFIC ADVICE ABOUT YOUR PARTICULAR SITUATION, CONSULT YOUR ATTORNEY.

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Answered on 7/22/06, 10:54 am


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