Toby and Rita Kagen donated some used clothing to Community Charities, Inc which

Question

Toby and Rita Kagen donated some used clothing to Community Charities, Inc which sells used clothing and household items to raise money for charitable programs.  They were not aware that a small bag containing their sterling silver had been accidentally included within one of the bags of donated clothing.  The silverware, which was valued at over $3,500, had been given to them twenty-seven years earlier by Rita’s father as a wedding present and had great sentimental value for them.

The Kagens realized what had happened shortly after Toby returned from Community Charities, but when Toby called Community Charities, he was told that the silver had immediately been sold to a customer, Karen Makefield, for $15.  Although Community Charities called Makefield and asked her to return the silver, Makefield refused to return it.  The Kagens then brought an action against Makefield to regain the silver, claiming that Makefield did not have good title to it.  If the silver is lost property, the Kagens will be entitled to the return of the silver.  If the silver is deemed to be entrusted to Community Charities and Makefield is a good faith purchaser, the Kagens will not have the right to recover the silver from Makefield.

(1) Categorize the ethical dilemma(s), (2) examine the matter from the various parties’ perspectives, and finally, (3) discuss whether or not the entrustment rule can be justified from an ethical point of view.

Explanation / Answer

1. The ethical dilemma is that according to law, Karen Makefield has acquired good title to the silver as she bought the same under good faith and silver is not a theft good. Hence Karen Makefield can retain the goods. But Kagens have donated the silver along with the used clothes and community items by mistake and had great sentimental value for the silver. Monetary damages cannot satisfy their injuries without regaining the silver. Kagens would have the title if the silver is a lost property. But Kagens cannot establish the same as it is not a theft good or leased one and it would be unethical to place Community Charities in trouble to regain the silver.

2. If we examine the matter from Kagens’ perspective, it is unethical on Karen Makefield’s part to retain the silver. She could have returned the silver and can get paid amount of $15 back as there is no emotional attachment towards the silver. If we examine from Community Charities perspective, there is nothing wrong on their side as they received the silver along with the items donated by Kagens and are supposed to have good title over all the goods received. They cannot blame Makefield also because she purchased the good from them out of good faith. Makefield also has not done anything unethical on her own perspective as she has purchased the same paying the amount. If we consider the case from other people perspective also the ethics lies with Makefield as the customer who purchased the goods under good faith should have the right to retain them else it may lead to misuse if the law in future.

3. The entrustment rule can be justified here which provide the Community Charities, the power to transfer all the rights to Makefield and help Makefield to obtain legitimate title to the silver because all the issues happened due to the ignorance from the side of Kagens and others should not be held liable for the same. Both Community Charities and Makefield have good title to the silver and have valid reason to believe so. Makefield has not done anything unethically or against law as per majority’s point of view except the Kagens which justifies the ethicality of entrustment rule in this case.

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