Daily Development for
Monday, July 15, 1996

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

PERSONAL PROPERTY; ADVERSE POSSESSION; DISCOVERY RULE: California courts dispute application of "discovery rule" statute of limitations on causes of action for return of stolen personal property. Naftziger v. American Numismatic Society, 49 Cal. Rptr. 2d 784 (Cal. App. 1996); Society of California Pioneers v Baker, 50 Cal.Rptr.2d 865, (Cal. App. 1996).

The two cases involve the typically bizarre fact patterns that emerge in cases in which parties dispute over valuable personal property that has been stolen long ago.

In Naftziger, at some time prior to 1970, certain valuable copper coins were stolen from the museum of the New York Numismatic Society by the device of replacing them with identical coins of lesser quality. The museum claimed that it did not discover the theft until December, 1990. It located some of the coins in the hands of a California coin collector and demanded their return in February of 1993. The collector promptly sued to quiet title to the coins, claiming that he had no knowledge that they had been stolen, and that the three year statute of limitations on actions to return stolen personal property ran against the museum in 1973. (Interestingly, the court never tells us when the collector got the coins, but apparently it must have been some time in the 1970's).

The California statute of limitations on actions for return of stolen property was three years. In 1983, the California legislature amended this statute to impose a "discovery" exception, tolling the statute until the owner of the stolen property had knowledge of its whereabouts. The exception applies only to property of historical, interpretive, scientific or artistic significance. Apparently the three years would have run in this case prior to the effective date of the statute, so the discovery exception did not literally apply. Nevertheless, the court held that the earlier statute implicitly had such an exception (one never before identified by California courts) and that it applied broadly to all forms of personal property. Consequently, the 1983 amendment, in the view of this court, did nothing more than narrow the exception.

The court also states that California law has never really recognized an adverse possession concept in personal property law, and that consequently it might be possible for someone to be subject to criminal prosecution for dealing in or failing to return stolen personal property even when the civil statute of limitations for actions compelling its return had expired. The court indicated that it would not attempt to resolve that confusion here. In fact, at least according to Witkin - a generally acknowledged authority - California law does recognize that title to personal property will pass to the possessor following the running of the three year limitations period.

Society of California Pioneers v Baker, is equally curious, and disturbingly critical of Naftziger. The case involves an engraved cane gold handle dating back to Gold Rush days. It was allegedly stolen in 1978, but in 1980 an elderly antique dealer presented it to her son, who sold it to Baker in 1991for $20,000 after pawning and redeeming it a number of times over the years. That same year a representative of the Pioneers demanded return of the item from Baker. Baker alleged estoppel, in that he claimed to have checked with this very representative prior to acquiring the item, but the trial court found against him on the factual issues on that score. But Baker nevertheless pressed the statute of limitations.

Baker first alleged that the pre-1983 statute ought to apply to his predecessor and that he was "sheltered" under that title. The court took note of Nafziger and was sharply critical of that court's engrafting of a discovery rule on the old statute, finding such an approach inconsistent with both law and policy. Further, the court refused to apply the post 1983 statute retroactively. But it then proceeded to pull the chair out from Baker by holding that the new statute would apply to any possessions that had not been completed by the time of the effective date of the new stautute, January 2, 1983. As Baker's predecessor claimed to have received possession from his mother some time in 1980, the statute had not run, and consequently the new discovery rule exception applied.

Savvy readers may raise the issue of "tacking." Wouldn't Baker's predecessor have been able to tack his own possession to that of his mother? (The court is unclear as to whether anyone knew when the mother got possession, but assumes that this predated 1980 - it apparently did not believe the mother to be the thief). Answer: according to this court, California does not recognize the "tacking" rule in adverse possession cases.

This court also suggested that there is no adverse possession of personal property in California. It then proceeded to hold that the fact that the Society made no real effort to search for the cane after the theft, and even elected to stay "mum" about it, to protect it's reputation, made no difference. The Society had notified the police, and the court concludes that anything else it might have done would not have resulted in its discovering location of the item any sooner.

Comment 1: The Witkin Summary of California Law, on which both courts rely as authority, indicates that California law probably does recognize adverse possession for personal property. One case that has caused trouble in the past is San Francisco Credit Clearing House v. Wells, 239 P. 319 (Cal. 1925). That case indeed does cast some doubt on whether the California Supreme Court in 1925 would have recognized the tacking doctrine in personal property cases. But the case is certainly dicta on the point, and, of course, very old. It clearly does not reject the doctrine of tacking in real property adverse possession cases, although the footnote in Society of California Pioneers might lead one to conclude otherwise.

Comment 2: A more fundamental problem with adverse possession cases of personal property is the question of "open and notorious" possession. Although someone might possess a gold cane head as openly as any one else would, is this possession sufficiently "open and notorious" to satisfy the policies of the adverse possession doctrine? San Francisco Credit had something to say on this issue as well, when it noted that adverse possession should not arise in favor of one who is secretive about possession. But most possession of chattels is more or less "secretive." One could know someone else for a long time without becoming aware of his or her copper penny collection. Until this moment, only my family has known about my antique American Flyer train set. If my father stole it in 1947, instead of buying it, should I be the adverse possessor owner? Note that it's unlikely the train set would fall within the "discovery rule exception" to the California statute.

Comment 3: If adverse possession of personal property makes sense at all, then of course the notion of taking ought to be permitted. The fundamental concept of adverse possession is that one builds a title by treating property as if one were the owner for a substantial period of time. Transferring ownership to another is a clear claim of ownership, and it makes no sense to deny the claim as built by both transferror and transferree. The real problem in California is not the tacking doctrine, but the three year statute of limitations. Three years is a very short time by which to acquire title.

Comment 4: If the editor were king, adverse possession of personal property probably would include a requirement for good faith belief in ownership. Even though such things as good faith beliefs are hard to prove and hard to contest, the fact is that thievery and chicanery is a more likely explantion for wrongful possession of personal property than it is with regard to real property. The editor is more concerned about rewarding thieves, and less concerned about protecting a building title.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last five years, these Reports annually have been collated, updated, indexed and bound into the Annual Survey of Developments in Real Estate Law, volumes 1-5, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Laprica Mims at the ABA. (312) 988 6233.

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.