Voidable Title Doctrine OCGA 11-2-403
The "voidable title" doctrine is codified at OCGA 11-2-403 and provides in pertinent part:
(1) a purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased.
A person with voidable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though:
(a) the transferor was deceived as to the identity of the purchaser; or
(b) the delivery was in exchange for a check which is later dishonored; or
(c) It was agreed that the transaction was to be a "cash sale"; or
(d) the delivery was procured through fraud punishable as larcenous under the criminal law.
(2) Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business.
(3) "Entrusting" includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goods have been such as to be larcenous under the criminal law.
In Mitchell Motors v. Barnett, 249 Ga. App. 639, 642 (549 SE2d 445) (2001), the Court explained the above Code section as follows:
The "voidable title" doctrine evolved to ameliorate the harshness of the basic rule that a seller can convey no greater title than that seller has to convey.
The doctrine attempts to reconcile the rights of a "true owner" who was fraudulently induced to transfer title in goods to a "wrongdoer" with the rights of an innocent purchaser from the wrongdoer.
Title in the wrongdoer is "voidable" because the true owner is entitled to rescind the transaction and recover the goods from that individual.
The right of rescission is cut off, however, by a transaction to a "good faith purchaser." Id.