Timothy Allen commissioned a custom motorcycle from Indy Route 66 Cycles, Inc. Indy built the motorcycle and issued a "Certi?cate of Origin." Two years later, federal law enforcement of?cers arrested Allen on drug charges and seized his home and other property. The of?cers also seized the Indy-made motorcycle from the garage of the home of Allen's sister, Tena. The government alleged that the motorcycle was subject to forfeiture as the proceeds of drug traf?cking. Indy ?led a claim against the government, arguing that it owned the motorcycle, as evidenced by the "Certi?cate of Origin," which the company still possessed. Indy claimed that it had been keeping the motorcycle in storage. The government ?led a motion to strike the claim, asserting that title to the motorcycle had passed when it was delivered to Allen.
Did ownership to the motorcycle pass at the time that Indy gave Allen possession and control over it?
Yes. The district court issued a ruling in the government's favor and granted the motion to strike Indy's claim.
Under UCC 2-401(2), "unless otherwise explicitly agreed, title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods." In the sales transaction in this case, the parties did not "otherwise explicitly agree" to different terms. Thus, the critical question was whether Indy had delivered the cycle to Allen. Testimony by Indy's former vice president, Vince Ballard, was "inconclusive" but implied that Indy had delivered the motorcycle to Allen. The cycle was found in Tena's garage, which also indicated that Indy had delivered it to Allen. Thus, Indy had given up possession of the cycle to Allen. This was suf?cient to pass title even though Indy had kept a "Certi?cate of Origin." As a consequence, the motorcycle was subject to forfeiture as the proceeds of drug traf?cking.
Suppose that Indy had given the "Certi?cate of Origin" to Allen and had kept the motorcycle. Would the result have been different ? Explain.