Okla. Stat. tit. 12A § 2-401
Each provision of this article with regard to the rights, obligations and remedies of the seller, the buyer, purchasers or other third parties applies irrespective of title to the goods except where the provision refers to such title. Insofar as situations are not covered by the other provisions of this article and matters concerning title become material the following rules apply:
Okla. Stat. tit. 12A, § 2-401
Oklahoma Code Comment
This section marks the major departure of the Commercial Code from previous law. At common law, which was codified into the Uniform Sales Act, the rights and liabilities of the buyer and seller, as well as the rights of third parties who dealt with the property, were dependent upon the location of "title" to the goods. Thus, the risk of loss, the rights of the seller to recover the purchase price, the rights of the buyer or seller's creditors to goods subject to a sales contract all turned upon whether or not title had passed to the buyer.
Under the Commercial Code, the question of "who has title" is, in the main, unimportant. The remedies of the buyer and seller, the placement of the risk of loss, the rights of the creditors of both the buyer and seller are detailed specifically without reference to title. However, in the event that the specific rules do not control all situations, particularly in cases in which the tax burden or regulatory statutes are involved, Section 2-401 sets out rules for the determination of title. These rules, as will be discussed herein, are basically consistent with previous Oklahoma law.
(1) "Title to goods cannot pass under a contract for sale prior to their identification to the contract . . . " The term "identification to the contract" is a new term, but Oklahoma has previously held, along with the majority of other states, that title could not pass until the goods are ascertained as the goods which were the subject matter of the agreement. Ogle v. Oklahoma City Horse & Mule Commission Co., 173 Okl. 34, 47 P.2d 130 (1935); Brooks v. Tyner, 38 Okl. 271, 132 P. 683 (1913).
". . . and unless otherwise explicitly agreed the buyer acquires by their identification a special property as limited by this Act." This is a change from previous Oklahoma law. Previously in Oklahoma, if the goods were specific goods, or if they had been appropriated to the terms of the contract, title passed to the buyer, but otherwise the buyer acquired no interest therein. Brooks v. Tyner, 38 Okl. 271, 132 P. 683 (1913).
"Any retention or reservation by the seller of the title (property) in goods shipped or delivered to the buyer is limited in effect to a reservation of a security interest." This, too, is a change from previous Oklahoma law. Previously in Oklahoma, goods shipped under a seller's order bill of lading draft attached, or sent COD remained the property of the seller, and no title passed until the purchase price was paid. BowerVenus Grain Co. v. Smith, 84 Okl. 105, 204 P. 265 (1922); E. M. Brash Cigar Co. v. Wilson, 32 Okl. 153, 121 P. 223 (1911).
"Subject to these provisions and to the provisions of the Article on Secured Transactions (Article 9), title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties." Previous Oklahoma law was in accord with the statement that title passes when the parties so agree. Kent v. Wright, 198 Okl. 103, 175 P.2d 802 (1946).
(2) "Unless otherwise explicitly agreed . . ." Under the Uniform Sales Act (not adopted by Oklahoma) the court must look first to the agreement of the parties to determine their intent as to the passage of title. If their intent can be ascertained by reference to the agreement, to the circumstances, to custom or usage, title would pass accordingly. Only upon the complete want of any evidence of intent will the court resort to "presumption" as to when title passes. Under the Commercial Code, title passes according to the rules set out herein unless the parties otherwise explicitly agree. Therefore, the court will look only to the contract to find an "explicit agreement ," and, failing to find one, apply the rules of the Commercial Code. This is a much simpler rule for it has been very difficult to ascertain intent of the parties in many cases.
". . . title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery etc." This sentence, in substance, provides that when the seller is required to deliver the goods, title passes upon delivery, and any reservation of title is for security only. Paragraphs (a) and (b) then state rules for shipment by common carrier. As already discussed in reference to F.O.B. shipments under Section 2-319 , previous Oklahoma law is in accord with the proposition that delivery to a carrier is equivalent to delivery to the buyer, and title passes at that time, unless the seller is required to deliver to buyer at destination. Oklahoma, however, previously held that the reservation of an interest, by shipping under a seller's order bill of lading, was a reservation of title, not merely a security interest. Bower-Venus Grain Co. v. Smith, 84 Okl. 105, 204 P. 265 (1922). This is therefore changed by the Commercial Code.
(3)(a) Previous Oklahoma law is in accord. Waldock v. FriscoLumber Co., 71 Okl. 200, 176 P. 218 (1918), in which the court said: "Where personal property is, from its character or situation, incapable of actual delivery, the delivery of the bill of sale, or other evidence of title, is sufficient to transfer the property and possession to the vendee." See, also, Holbird v. Harris, 197 Okl. 646, 174 P.2d 262 (1946); Kellams v. Helfenbein, 202 Okl. 415, 214 P.2d 894 (1950).
(b) Previous Oklahoma law is in accord, with qualifications. Previous Oklahoma decisions and the Uniform Sales Act (not adopted by Oklahoma) phrased the rule: title to specific goods in a deliverable state passes when the contract is made, even though delivery of possession and the payment of the purchase price is delayed to a future date. Pharaoh v. Burnett & Moore, 112 Okl. 188, 240 P. 743 (1925); Oklahoma Producing & Refining Corp. v. Pennok Oil Co., 118 Okl. 170, 247 P. 667 (1926). If the goods were not in a deliverable state, title did not pass until they were accepted. State National Bank v. Roseberry, 46 Okl. 708, 148 P. 1034 (1915). The Commercial Code makes no distinction between goods in a deliverable state and those which are not. In either event, title passes upon the making of the agreement. The omission in the Code was intentional, and based on the assertion that the problems created by the sale of goods not in a deliverable state involve rights of creditors or risk of loss, which is governed specifically by other sections.
(4) Previous Oklahoma decisions held a justified refusal of the goods revested title in the seller, Bower-Venus Grain Co. v. Norman Milling & Grain Co., 86 Okl. 152, 207 P. 297 (1922); Hurley Gasoline Co. v. Johnson Oil Refining Co., 118 Okl. 26, 246 P. 438 (1926). However, a wrongful rejection or return did not prevent the passage of title. See Johnson v. Curlee Clothing Co., 112 Okl. 220, 240 P. 632 (1925). The purpose of this section becomes clear in considering other portions of the Commercial Code. The Commercial Code restricts the recovery of the contract price, as distinguished from damages, to cases of actual delivery, except when goods shipped at the buyer's risk have been damaged in transit. Section 2-709 . Therefore, the buyer who rejects conforming goods is liable for damages for breach, but not for the purchase price, unless the goods were damaged in transit, or other exceptions within Section 2-709 are present.
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