The rule is a reasonable and just one, that an innocent purchaser of personal property from a wrongdoer shall first be informed of the defect in his title, and have an opportunity to deliver the property to the true owner, before he shall be made liable as a tort feasor for a wrongful conversion. This was followed by such cases as Cohen v. M. Keizer, Inc., 246 App. Div. 277, 285 N.Y.S. 488 (1st Dep't. 1936), 285 N.Y.S. 488 at 489: However, [defendant's] possession having been lawful and not tortious in the first instance, a demand upon him and his refusal to surrender possession before the commencement of the suit was necessary.
Until the refusal the purchaser is considered to be in lawful possession. MacDonnell v. Buffalo L., T. S.D. Co., 193 N.Y. 92, 85 N.E. 801 (1908); Gillet v. Roberts, 57 N.Y. 28 (1874) (conversion); Menzel v. List, 22 A.D.2d 647, 253 N.Y.S.2d 43 (1st Dept. 1964) and 267 N.Y.S.2d 804, 49 Misc.2d 300 (Sup.Ct.N.Y.Co. 1966), modified on other grounds, 28 A.D.2d 516, 279 N.Y.S.2d 608 (1st Dept. 1967), modification rev'd, 24 N.Y.2d 91, 298 N.Y.S.2d 979, 246 N.E.2d 742 (1969) (conversion); Cohen v. M. Keizer, Inc., 246 A.D. 277, 285 N.Y.S. 488 (1st Dept. 1936) (replevin); Restatement (Second) of Torts, § 229 (comment h); W. Prosser, The Law of Torts 84 (4th ed. 1971). Where the demand requirement is substantive, that is, where a demand and refusal are requisite elements of the cause of action, it accrues and the statute of limitation begins to run only after such demand and refusal.
The legal principle underlying the rule that the demand and refusal are substantive elements of the cause of action against the bona fide purchaser is that the bona fide purchaser's possession is initially lawful, and only becomes unlawful once he has refused, upon demand, to return the property to the true owner. Tompkins v. Fonda Glove Lining Co., 188 N.Y. 261, 80 N.E. 933 (1907); Cohen v. Keizer, Inc., 246 A.D. 277, 285 N.Y.S. 488 (1st Dep't. 1936). Possession by a bona fide purchaser "is not in itself a sufficiently serious interference with the owner's rights to amount to conversion."
Relief to be afforded, pursuant to section 279 Debt. Cred. of the Debtor and Creditor Law, must be molded in accordance with the circumstances presented in an action brought by a defrauded creditor or creditors. A judgment restoring the personalty to the possession of the defendants could be predicated only on a demand and refusal as a prerequisite to the maintenance of an action. ( Cohen v. Keizer, Inc., 246 App. Div. 277; Employers' Fire Ins. Co. v. Cotten, 245 N.Y. 102.) In addition, if it be assumed that article 10 of the Debtor and Creditor Law may be invoked by way of counterclaim, the defendants failed to show insolvency at the time of the transfer, an essential element, the existence of which cannot be implied as there was forbearance on the part of the innocent transferee.