Kotis v. Nowlin Jewelry, Inc. Court of Appeals of Texas. 1992. Facts: Steve Sitton fraudulently obtained a gold rolex watch from Nowlin Jewelry, Inc. (Nowlin’s) (plaintiff) by forging a check for the watch’s purchase price of $9,438.50. Eddie Kotis (defendant), a used car dealer, purchased the watch from Sitton for $3,550 in Kotis’s car lot. Upon a friend’s advice, Kotis contacted Nowlin’s to determine whether Sitton had financed the watch. Kotis spoke with Cherie Nowlin, the wife of Nowlin’s president, John Nowlin. Kotis did not initially identify himself or reveal Sitton’s asking price for the watch. Kotis also stated that he did not have or want the watch. After learning that Sitton’s check would not be honored by the bank, John Nowlin called Kotis. Kotis refused to speak and referred John to Kotis’s attorney. Sitton was subsequently indicted for forgery and theft. Procedural History: Nowlin’s sought a declaratory judgment that it was the watch’s sole owner. Kotis filed a counterclaim, seeking a declaration that he was a good faith purchaser entitled to possess and hold title to the watch. The trial court found that Nowlin’s was the watch’s sole owner. The court made several additional findings, including that Sitton did not obtain the watch through a “transaction of purchase” with Nowlin’s, within the meaning of Tex. Bus. & Com. Code Ann. § 2.403(a). The statute provided that a person with voidable title may transfer good title to a good faith purchaser for value if the goods were delivered through fraud, provided the goods were delivered under a “transaction of purchase.” On appeal, Kotis claimed that the trial court erred in finding that: (1) Sitton did not obtain the watch through a transaction of purchase with Nowlin’s, (2) Sitton did not have voidable title, and (3) Kotis lacked good title because he was not a good faith purchaser. Issue: Is a person who knows that he is buying stolen goods a good faith purchaser if the thief obtained the goods through a voluntary transfer from the rightful owner? Holding: No, a person who knows that he is buying stolen goods is not a good faith purchaser, regardless of whether the thief obtained the goods through a voluntary transfer from the rightful owner. Reasoning: A person who knows that he is buying stolen goods is not a good faith purchaser, regardless of whether the thief obtained the goods through a voluntary transfer from the rightful owner. Only a voluntary transaction may constitute a “transaction of purchase,” because a thief who wrongfully takes goods against the owner’s will is not a purchaser. Here, Sitton received the watch through a voluntary, though fraudulent, transfer from Nowlin’s. Accordingly, the trial court erred in finding that Sitton did not obtain the watch through a transaction of purchase and that he lacked voidable title. However, Kotis’s points of error regarding lack of good title are overruled, because Kotis was not a good faith purchaser. The test for good faith is a party’s actual belief and not the belief’s reasonableness. The facts indicate that Kotis did not believe that his purchase was lawful. When Kotis spoke with Cherie Nowlin, he initially refused to identify himself, did not reveal Sitton’s asking price, and stated that he did not have or want the watch. Kotis later refused to speak with John Nowlin and advised him to contact Kotis’s attorney. In addition, an unreasonably low price is evidence that the buyer knows that the goods are stolen. Kotis knew that $3,550 was an extremely low price to pay for the watch. There is sufficient evidence to uphold the trial court’s findings concerning Kotis’s lack of good faith. The trial court’s judgment is therefore affirmed.