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Who has rights to stolen and then sold goods?
December 9, 2009 6:12 PM   Subscribe

You are not a lawyer, neither am I. (I've already asked two lawyers, but they couldn't answer anyway.) But, I've always been curious about this: Imagine Alice is a thief. She steals something from Bob, then sells it (eBay, CraigsList, through a pawn shop, whatever) to Dave. Coincidence of coincidences, Bob knows Dave, and sees his stolen object at Dave's house during Dave's Christmas party. Bob can provide proof this something was stolen from him, but Dave could not have been expected to know that's how Alice got it. Who has rights to this object?
posted by zachawry to Law & Government (48 answers total) 2 users marked this as a favorite
 
From the newspaper articles I've read about the recovery of stolen artwork, I would say it goes back to Bob. This happens pretty regularly.

Of course, Dave usually fights the return vigorously. But if Bob's originally ownership is clearly established, he gets it back.
posted by alms at 6:16 PM on December 9, 2009


Bob. I mean, it's a crime to steal, and it's a crime to receive stolen property, right? Two lawyers couldn't answer this? Man, no wonder our legal system is hinky.
posted by InsanePenguin at 6:19 PM on December 9, 2009 [1 favorite]


The answer is: it depends.

It belongs to Bob if the item is unique and Dave paid far less than what the item was really worth.

It belongs to Dave if the item is more common and Dave paid a reasonable price for it (bona fide purchaser for value).
posted by LOLAttorney2009 at 6:22 PM on December 9, 2009 [1 favorite]


The general rule is: "A thief cannot convey good title."
posted by Mr. X at 6:23 PM on December 9, 2009 [3 favorites]


Well, how can it be a crime for Dave to pay for something he has no idea is stolen?

I do agree about your latter point, though....
posted by zachawry at 6:23 PM on December 9, 2009


My husband and I bought a car off a friend who bought it from a garage sale where apparently, it was stolen goods. The car went back to the original owner. Caveat emptor. Bob owns it.
posted by b33j at 6:23 PM on December 9, 2009


In the UK at least, it belongs to Bob, always.
posted by bonaldi at 6:24 PM on December 9, 2009


Theft can't change the true ownership of an item. Dave is out the money. That's why you never want to buy something that might be stolen (e.g. that $10 DVD player the guy is selling off the back of the truck). You might have to give it back.
posted by musofire at 6:25 PM on December 9, 2009 [1 favorite]


A thief cannot convey good title.
posted by thejoshu at 6:25 PM on December 9, 2009


Dave could conceivably sue Alice for fraud to get his money back, but that's a separate issue from Dave's compulsory return of the stolen property to the rightful owner, Bob.
posted by Aquaman at 6:29 PM on December 9, 2009 [2 favorites]


But if Bob sees the painting hanging there, and then waits years to do anything about it, a few judges might say he has lost possession of it to Dave. There's a famous case about this having to do with the artist Georgia O'Keefe and the risk of waiting too long after you find out someone else has your property. She waited so long to recover her paintings that they became the other person's.
posted by Kirklander at 6:29 PM on December 9, 2009


Oh, and if you want to read a lot about a practical application of this question, google around for cases regarding the provenance of looted Holocaust art.
posted by thejoshu at 6:33 PM on December 9, 2009


Bob. Dave is receiving stolen goods - though he may have a defence to the charge.
posted by pompomtom at 6:40 PM on December 9, 2009


Bob. Alice's theft and fraud have nothing to do with the fact that Bob owns it. Alice has issues.

It is my understanding that, at least in the case of WWII looted artworks, the artist or artist's family have to prove that they have been attempting to recover the work. Hence, The Art Loss Register. Tell your lawyer friends to check out The Art Law Blog.

But I am artist, not a lawyer. BTW, Alice is a fool if she thinks she can mess with artists and their work. It is like messing with someone's kids.
posted by R. Mutt at 6:43 PM on December 9, 2009


Well, how can it be a crime for Dave to pay for something he has no idea is stolen?

It isn't. Dave is a victim of Alice, as is Bob. As others have already said, if Bob can prove ownership, he gets the item back and Dave is out the money. Dave didn't commit a crime and he wouldn't be charged with a crime unless there's clear and convincing evidence that he knew he was purchasing stolen property.
posted by amyms at 6:45 PM on December 9, 2009 [1 favorite]


Yeah I'd like to know which two lawyers were stumped by this question, because this an elementary scenario in every first year criminal law course.

As everyone as said, Bob is the rightful owner provided he can prove title. Dave is out of luck, and has no right to the object (so long as Dave recognizes the object as his and claims it back), though he could commence a civil suit against Alice in an attempt to recover his money.
posted by modernnomad at 6:55 PM on December 9, 2009 [6 favorites]


Yes, Dave loses in this situation and shouldn't really expect any compensation from the criminal Alice. This happens quite often.
posted by snsranch at 6:57 PM on December 9, 2009


It's Bob's, no question. A thief can't convey title even to a bona fide purchaser. The name of the legal action by which Bob can recover the goods from Dave is "replevin", in case you're interested.

There are a very few exceptions to this rule. For one, you can't replevy cash. So if Alice stole Bob's wallet and spent the money at Dave's liquor store, Bob can't go to the liquor store and get his money back. Another is "accession," where after (unknowingly) receiving stolen lumber (say) Dave uses it to build a house.
posted by lex mercatoria at 7:04 PM on December 9, 2009 [3 favorites]


bob owns it. IANTB (I am not that bob)..

this happened to an uncle who bought a cheap cadillac for his wife back in the 60's... the cadillac went back to the original owner...
posted by HuronBob at 7:13 PM on December 9, 2009


I don't know what the true legal answer is, but my laptop was stolen and many, many months later, I was emailed by someone who bought it online from a pawnshop. I sent him a portable usb drive & he sent me the remaining personal files he could fit on it. I never reported my laptop as stolen, so I figured it would be next to impossible to pursue a claim, and honestly, it wasn't his fault he bought stolen goods. So while the law may have been on my side (with serial numbers, etc), I didn't think it was ethically sound or worth the hassle to try to get it back. Maybe I gave up too easy, but the only person I harbor ill will towards was the thief & in this instance, I just figured I was SOL.
posted by katemcd at 7:20 PM on December 9, 2009


This is a first year property question. I can't believe that your two lawyers couldn't answer it. LOLAttorney for the win. If Dave purchased under circumstances which make it appear possible that the item was stolen, then Bob can claim the item back. However, if the item was purchased under circumstances that appear normal, then Dave is considered a "bona fide purchaser for value," a legal term of art for this very situation.

Thus the "whatever" of the sale is actually the key to the situation.

The Holocaust stuff is inapplicable here. The sales are international, and politics played a role, as well as the owners basically agreeing to turn over the paintings because having such art doesn't play well to the public.
posted by Ironmouth at 7:25 PM on December 9, 2009


First off this Alice is a bad seed. She needs to kick her crack habit and stealing to support it and start supporting her family. Her kids will grow up without a mother when Bob and Dave come to kick her ass. Dave because she stole his item and Bob because she stole his cash when he has to turn the item over to Dave. Or, the policeman will come and arrest her. Or maybe her husband ran off with his heroin habit and supplier/mistress and she is just trying to support the family. Even so...

It is Dave's. He didn't do anything but get it stolen. A sale by an unauthorized third party does not suddenly eliminate Dave's ownership.
posted by JohnnyGunn at 7:32 PM on December 9, 2009


It appears I was wrong about the receiving of (unknown) stolen goods. Of course it would be illegal if you knew the stuff was stolen. I always thought it was weird for you to get into trouble if you didn't know, not exactly sure why I thought it was illegal, though. Wonder where it came from.
posted by InsanePenguin at 7:36 PM on December 9, 2009


However, if the item was purchased under circumstances that appear normal, then Dave is considered a "bona fide purchaser for value," a legal term of art for this very situation.
Is this universal in the States, or does it vary by jurisdiction? It certainly isn't outside. Also, what's the definition of "appear normal"? A market stall? A car boot sale?
posted by bonaldi at 7:43 PM on December 9, 2009


The OP did not specify that his hypothetical takes place in the United States. The common law rule that a thief can never pass title, even to a bona fide purchaser for value, is not necessarily found outside the U.S. Take, for example, Swiss law:
Under Swiss law, a purchaser of stolen property acquires title superior to that of the original owner only if he purchases the property in good faith. Tr. 19 (von Mehren). A bad faith purchaser of stolen property never acquires title. Id. at 20. As Professor von Mehren explained at trial, to conclude that a purchaser did not act in good faith, a court must either find that the purchaser actually knew that the seller lacked title, or find that “an honest and careful purchaser in the particular circumstances would have [had] doubts with respect to the capacity of the seller to transfer property rights.” Id. at 24.

Swiss law presumes that a purchaser acts in good faith. Id. at 26. However, a plaintiff seeking to reclaim stolen property may overcome this presumption. Id. To do so he must show that suspicious circumstances surrounded the transaction which should have caused an honest and reasonably prudent purchaser to doubt the seller’s capacity to convey property rights. Id. If the plaintiff shows that the circumstances surrounding the transaction should have created such doubt, then the defendant purchaser has the burden of establishing his good faith. A purchaser establishes his good faith by showing that he took steps to inquire into the seller’s capacity to convey property rights and that such steps reasonably resolved such doubt. Id.
Autocephalous Greek-Orthodox Church of Cyprus v. Goldberg and Feldman Fine Arts Inc., 717 F. Supp. 1374, 1400 (S.D. Ind. 1989).
posted by Conrad Cornelius o'Donald o'Dell at 8:06 PM on December 9, 2009


Ironmouth/Lolattorney, I believe the common law rule is first in time, first in right--i.e., Bob, as everyone is saying. BFP status is, as I recall, a concept relevant only to recordation statutes. Of course, if this is a civil law jurisdiction, I have no idea what the outcome would be.
posted by Admiral Haddock at 8:15 PM on December 9, 2009


What everybody else said.

And by the way, you might have heard the expression "Possession is nine tenths of the law"...?

It doesn't exactly mean "It's in my possession, so it's mine", because as in this case, legal ownership remains with the original, true owner.

Possession is more about evidence - ie the person in possession of something is most likely the legal owner, unless the person claiming ownership can produce some better evidence (eg a purchase receipt).

PS - "finders keepers, losers weepers" is also legally incorrect. As with Bob, the loser remains the owner.
posted by UbuRoivas at 8:36 PM on December 9, 2009


Admiral Haddock, the problem with the BFP discussion is that it's generally irrelevant in (most) common law jurisdictions to this particular hypothetical. To be a BFP, the person attempting to convey title to you actually has to have title. A thief can pretty much never have title under the common law. Therefore, even if you might otherwise meet the criteria of being a BFP, it just doesn't matter - no title, no sale. This case excerpt is helpful:
In Newman v. Stuart, the Supreme Court of Mississippi stated “[i]n this state, as in most states, the law is that neither the thief of stolen property nor his transferees, can convey any title or property right to such property. A bona fide purchaser of stolen property acquires no title or interest therein.” [Citations omitted.] In sum, Mississippi case law indicates that whether an individual is a bona fide purchaser for value is irrelevant to a stolen property analysis. Even someone who parted with valuable consideration, and otherwise meets the requirements of a bona fide purchaser for value, cannot acquire proper title to stolen property.
Eisenberg v. Grand Bank for Savings, 70 Fed. App'x 765 (5th Cir. 2003).
posted by Conrad Cornelius o'Donald o'Dell at 8:44 PM on December 9, 2009


It depends. In the UK until about 1995, the rule of "marche ouvert" ("open market") meant that if thief Alice sold it to Dave between sunrise and sunset at a public market, Dave had clean title superior to Bob even if Dave knew it was stolen. We don't have this exception in the U.S.

A famous example of this was in the early '90s when several famous 19th century paintings were sold at UK public markets that still retained this status.
posted by webhund at 8:47 PM on December 9, 2009 [1 favorite]


I forgot to add that this is a great bar exam question. There's no right answer and there's no wrong answer - you just have to show that you can argue any angle to it.
posted by webhund at 8:49 PM on December 9, 2009


IANAL, this is not legal advice, purely just my speculation.

First of all, there is a difference with respect to personal property (chattels), and real property (land).

Our legal system originates from English common law.

[That is basically a system of judge-made law created by judges in their opinions, rather than a system of legislator-made law created by legislators writing statutes.

As time has gone by, our American judges have added to that judge-made law with their own opinions.

We have also had legislators writing new statutes.

Here in the US, the statutes that legislators make trump the decisions/rules/traditions that judges have made, when they conflict.]

Under English common law, there was indeed the previously mentioned rule of first in time, first in right.

What happens next depends on if we are talking about chattels or real estate.

1. For real estate, many states have come up with their own statutes, which have amounted to "first to RECORD, first in right."

This is, what I believe, what LOLAttorney was referring to.

In a "notice" jurisdiction, if the person who unwittingly bought the property had no notice that anything was wrong (e.g. if the seller had sold it to someone else the previous day and already collected money for it), it is theirs as long as they had no notice of/didn't know about the previous transacation.

In a "race" jurisdiction, the property belongs to whoever records their ownership first.

In a "race-notice" jurisdiction, the second purchaser has to both record first AND not know about the prior transaction.

2. For chattels (personal property), it's different.

Under both common law and statutory law (here the relevant statutory law would be the Uniform Commercial Code) you can't pass better title than you have. (Good title is essentially when nobody has more of a claim to something than you do). A thief doesn't have good title and therefore can't pass good title to someone else.

However, there are exceptions to this.

1. The statute of limitations.

2. The doctrine of adverse possession. (For chattels, adverse possession is someone possessing property that isn't theirs in a way that is hostile, actual, visible, exclusive, and continuous. If they do this for long enough, the property can become theirs.)

3. Situations where the title is void vs. voidable.

Void title would, again, be something that a thief would give. Because the thief can't transfer what he never possessed.

But a voidable title is different. It is codified in section 2-403 of the Uniform Commercial Code.

There, if someone has obtained the goods from the original owner by FRAUD instead of outright theft, they can pass title to a bona fide purchaser for value, even if their fraud was criminal.

However, the seller must be "in the business of selling goods of that time."

If the seller obtained the goods by fraud and is just a random schmoe off the street, UCC section 1-209(1) trumps section 2-403 and there's no valid title transfer.
posted by Ashley801 at 8:54 PM on December 9, 2009


Wait - Have you LawMeFites (who might not be lawyers and in any event are not my lawyers and are not giving legal advice) now agreed that bona fide purchasing is irrelevant and the property must be returned to Bob if we're talking about a common law country and personal property (maybe not cars or land) if Dave bought in a nonpublic transaction and not from someone in the business of selling such goods? My first googling gives,

"In the United States and other common law countries, a thief cannot pass title.[188] This means that absent other considerations an artwork stolen during World War II still belongs to the original owner, even if there have been several subsequent buyers and even if each of those buyers was completely unaware that she was buying stolen goods.[189]" The Innocent Buyer of Art Looted During World War II.

This passage doesn't say that it's limited to international art cases, but I haven't read the rest of the article or the footnoted authorities.
posted by Dave 9 at 9:07 PM on December 9, 2009


In the UK at least, it belongs to Bob, always.

I don't think this is quite true. In the UK, until this was abolished in 1994, if you were a bona fide purchaser for value and you bought something in London in a shop or a market during daylight, you had good title according the the law of "market overt." The catch to this was if you had an inkling that it is stolen, you weren't a BFP.

Also, the UK has the same "voidable title" exception the US has, if the buyer is buying in good faith and without notice.
posted by Ashley801 at 9:08 PM on December 9, 2009


Yes, but that was abolished 15 years ago, and effectively applied to only 20-odd markets by the end.

As for voidable title, while that comes into play with fraud, as others have said, thieves don't get title.

The police reclaiming stolen goods and returning them (esp cars) is common enough here to make sanity checks part of basic consumer advice; it's far from hypothetical. I don't know if it's similarly common in the US
posted by bonaldi at 9:23 PM on December 9, 2009


Aha, so it's not so simple after all, although this means that I don't get to rag on one of the original lawyers whom I asked, who happens to be my brother....
posted by zachawry at 9:32 PM on December 9, 2009


You can still rag on him, like other people said this is a first year property question.
posted by Ashley801 at 9:36 PM on December 9, 2009


Its still Bob's. Stolen property is still stolen and Dave has received it illegally. If Bob can prove it was his and stolen, then he has right to it. Whether Dave paid for it ( and how much) is irrelevant. If Dave wants to be reimbursed for his out of pocket money, he probably can take Alice to court.
posted by Taurid at 9:51 PM on December 9, 2009


I bought a car once from a car lot that turned out to be a stolen car. The police came and took the car back to the lady who actually owned it, and only my documents which showed that I had purchased it in good faith stood between me and a charge of grand theft auto. Fortunately the police were quite kind once they realized that I wasn't a giant car thief, but they surely did take the car away from me.

I tried to sue the car dealer for the price of the car, but it turned out that selling hot cars was the least shady thing this particular car lot was doing and I never saw a dime because I was at the end of a line of people suing, including the government.
posted by winna at 10:20 PM on December 9, 2009


I am a lawyer. This still isn't legal advice.

This scenario happens all the time. Item will go back to Bob. Alice will owe Dave restitution in the amount Dave paid for the item. (In other words what Taurid said)

While the property law recap Ashley801 gave is basically correct, in real life the civil property law questions will not be reached because criminal law/courts will handle the situation.
posted by falconred at 10:51 PM on December 9, 2009


Have you LawMeFites (who might not be lawyers and in any event are not my lawyers and are not giving legal advice) now agreed that bona fide purchasing is irrelevant and the property must be returned to Bob if we're talking about a common law country and personal property (maybe not cars or land) if Dave bought in a nonpublic transaction and not from someone in the business of selling such goods?

Again, not legal advice etc., but I just want to add that cars are personal property. And, even if the purchaser buys it from someone in the business of selling such goods, THAT person must also have good title (as above, they could have that if they obtained it through fraud, but not if they themselves got it from a thief). The "chain of title" can't include theft.

However, this is the common law and UCC rule. If the jurisdiction adopted/were to adopt different legislation to deal with this other than the UCC, and it conflicted with the common law, that legislation would trump the common law. (Although right now all states have adopted some version of the UCC).

Also regarding the international aspect, other nations can bring actions in US courts against stolen property holders.
posted by Ashley801 at 10:59 PM on December 9, 2009


Advance apologies for spamming up the thread so freakin much, but one last thing from me (again, TINLA):


Aha, so it's not so simple after all, although this means that I don't get to rag on one of the original lawyers whom I asked, who happens to be my brother....

I actually do think everyone else was right when they said it is simple. My answer being so longwinded might have made it look like it's not, but I made it so long largely to explain what legal terms mean, where they come from, difference btw real and personal property, etc.

Short version:

In the U.S., if it was personal property stolen from the original owner, it belongs to the original owner no matter how many people it passed through after that.

Exceptions:

1. If the statute of limitations expires.
2. If the property has been adversely possessed.

(Both vary by the state, and some states don't recognize adverse possession for chattels at all, only real estate).
posted by Ashley801 at 12:01 AM on December 10, 2009 [1 favorite]


For anyone who has read this far... this is why it costs so much to litigate. There are endless variations and approaches to resolving legal conflict, and even what appear to be straightforward solutions are highly influenced by the specifics of a given situation.

Seldom do two words, "It depends", have as much inherent complexity.

There's a common misconception that fair, just and legal are synonyms. The challenge for civilization is to make these concepts converge, and in one respect, IMO, this is one of the highest services of the law.
posted by FauxScot at 1:54 AM on December 10, 2009


Ashley801 confused matters a great deal by a long discussion of concepts that affect the ownership of real property (land) when that was obviously not at issue.

And that confusion was renewed by a mention of adverse possession. This is again a concept that relates solely to land, at least in the U.S. and Britain.

>some states don't recognize adverse possession for chattels at all

I am not aware of any that do.
posted by yclipse at 5:42 AM on December 10, 2009 [2 favorites]


From 63C Am Jur 2d Property § 34 (general analysis for all U.S. states):

"The theft of goods or chattels does not divest one who owns, or has title to, such property from his or her ownership of the property, since one cannot make good title to that which he or she does not own. The owner may follow and reclaim the stolen goods wherever he or she may find them, even if such goods have been changed or improved. If possession of the stolen goods by an innocent subsequent purchaser may be deemed lawful, it is rendered unlawful by his or her refusal to honor a demand by the true owner for their possession. Even though such a purchaser may be treated as having title and the right to possession as against everyone but the rightful owner, a sale by the thief or by any person claiming under the thief does not vest any title in the purchaser as against the owner, though the sale was made in the ordinary course of trade and the purchaser acted in good faith. However, one without knowledge that money transferred to him has been obtained through a felony, who receives it honestly and in good faith, although from the thief, acquires good title to it even as against the true owner.

The owner may, through an appropriate action or proceeding, recover the stolen goods, their proceeds, or their value, either from the thief, or from any other person who has not acquired such title and into whose possession they have come, whether innocently or otherwise."

It should also be noted that in many states the statute of limitations on recovering stolen property (and thus the SOL for adverse possession, if allowed in the case of chattels) does not begin to run until the true owner discovers the location of the property.

Despite the number of responses here, the fact that your lawyer bro couldn't answer this definitely DOES give you the right to tease him. Endlessly.
posted by melissasaurus at 6:05 AM on December 10, 2009


It belongs to Dave if the item is more common and Dave paid a reasonable price for it (bona fide purchaser for value).

Can someone explain this bit? In particular, unique vs. common. Is a car with a known VIN unique?
posted by smackfu at 6:38 AM on December 10, 2009


I disagree with those who say this is a complex or difficult question. The OP specified that the chattel was stolen. A thief cannot acquire title, barring some generally rare circumstances. None of this stuff about bona fide purchasers for value, or adverse possession, etc. are relevant here. Melissa's treatise excerpt should be the final word on this.

And of course, this is not legal advice and I am not the OP's lawyer.
posted by Conrad Cornelius o'Donald o'Dell at 6:46 AM on December 10, 2009


And that confusion was renewed by a mention of adverse possession. This is again a concept that relates solely to land, at least in the U.S. and Britain.

Well, this concept mostly just relates to land. But every now and then it gets applied to chattel, like in New Jersey. Check out O'Keeffe v. Snyder, 83 N.J. 478 (1980).

The story begins in 1946, when two of Georgia O'Keeffe's paintings disappear from a gallery called An American Place. She then waits about 25 years to report the theft to authorities. Another three years after that, and it's the mid-1970s. She now finds out two things. One, some guy is exhibiting her paintings, and another one is putting them up for sale!

To stop the sale, the elderly O'Keeffe now sues Barry Snyder, the seller. Snyder says the artist had her chance and it's too late.

The dispute reaches New Jersey's Supreme Court. The court considers applying the ancient English idea of "adverse possession." Adverse possession is one of those rules left over from the days when you could just invade someone else's fief with your vassals, Klingon style, and then say the land was yours. Under this concept, a squatter can actually take someone else's land away if the other guy knows about it, or should have known about it, and doesn't call you out on it. Part of the idea is to resolve property disputes early so there isn't doubt a hundred years later.

Mostly this is just for land and even then it doesn't come up a lot. But some courts have tried to apply this doctrine to stuff you can carry around, like artwork. This really did happen in New Jersey a couple of times.

In the O'Keeffe case, the appeals court applied the ancient adverse possession rule. But the judges said the the ingredients of adverse possession weren't in place until 1975, when O'Keeffe actually found out that someone was flagrantly exhibiting her personal property. At that moment, the adverse possession timer begins to tick. After a six year statute of limitations, she would no longer be able to claim possession of her property. The other person's possession would have ripened by then into actual ownership.

New Jersey's Supreme Court didn't like this idea, but came up with a related concept known as the Discovery Rule that weighed how diligent Georgia O'Keeffe had been in trying to reclaim her goods. The court also recognized a six year deadline to get her stuff back before it became someone else's. The judges wrote that their rule
permits an artist who uses reasonable efforts to report, investigate and recover a painting to preserve the rights of title and possession...History, reason and common sense support the conclusion that the expiration of the statute of limitations bars the remedy to recover possession and also vests title in the possessor.
A dissent called the ruling a shot in the arm for art thieves. This "common sense" was also rejected by New York courts and ones probably everywhere else. That is New Jersey for you.

Studying for a property final over here. This is all law school stuff, of course, and in real life the common law ideas from medieval England don't protect people like Dave. But every now and then it happens, is all I am saying.
posted by Kirklander at 2:07 PM on December 10, 2009 [1 favorite]


My intro torts course section on conversion says that if you buy something from someone who stole it, you have a right to the property against everyone but the true owner.
The Bob can come demand payment for it from Dave even though he paid Alice for it.
Dave would have a cause of action against Alice.
posted by ishotjr at 2:33 PM on December 10, 2009


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