I was pretty sure the staff of herding "can't be sold". http://www.diablowiki.net/images/9/9f/StaffofHerding.jpgDukeTyrion
More likely he was running along and decided to throw all the white stuff out of his inventory that he thought he had accidentally picked up.
Good question. Perhaps you should ponder it.
It wasn't a question, I was just suggesting there are other ways to lose a 'no sale' item other that vendoring.
I seem to recall in another game there was a way of 'locking' an item you didn't want to sell. Might have been WoW or Rift or such, I can't remember which.