Good Faith Purchase Study: True Owners and the Warehouse Lien

The commercial concept of good faith purchase has been an effective doctrine in the law of property and contract for facilitating changes necessary to a dynamic mercantile system. Today the concept finds itself under attack. Professor Gilmore, whose definitive review of the doctrine twenty-seven years ago has been required reading, now warns that the idea may have outlived its usefulness in some areas. He and others would, for example, restrict severely its application in the law of negotiable instruments. At its elementary level, the good faith purchase doctrine depends on the question of possession. That question, in turn, rests on the commercial value one accords possession and the way one perceives the commercial expectations that arise from it. Consistent, then, with the dissatisfaction that surrounds the doctrine of good faith purchase is the fact that we find controversy surrounding the role of possession in commercial law. The dissatisfaction and controversy, however, do not signal the demise of good faith purchase. The doctrine itself is a prerogative of the law for fashioning the stuff of the law\u27s correlative doctrine-security of property. That correlative precept teaches that no person may be deprived of property without consent and that a taker receives no greater interest than the transferor enjoyed. As commercial expectations change, the law must use good faith purchase differently, now invoking it, now staying it, and all with an eye to commercial reality. The debate we are witnessing over the roles of good faith purchase and of possession is indispensable to that process. This article reviews the doctrine of good faith purchase in a narrow and seldom considered context. The study is revealing in two ways. First, it demonstrates the nature of the doctrine itself as legislatures and courts utilize it to meet commercial exigencies. Second, the study attempts to explain the warehouse lien section of the Uniform Commercial (Code), a provision that harbors a number of technical problems