by the Bankruptcy Act of 1883,1 and statutory privileges and Sect. 21. disabilities are enacted by the Bills of Sale Act 1878.2 (g) Where, e.g., a pawnbroker sells unredeemed pledges. The circumstances of such a sale imply an assertion by the pawnbroker that the goods have been pledged to him and that they are unredeemed, but his warranty goes no further. If, however, a seller conceals a defect of title, it will amount to a fraud on the buyer.1 (h) As in a sale under a poinding or other judicial process Scotland. COMMENTARY. non habet. A breach of the maxim nemo dat quod non habet generally Nemo dat quod invalidates the title even of a bond-fide possessor. "The general rule of law," says Lord Herschell, " is that where a person has obtained the property of another from one who is dealing with it without the authority of the true owner, no title is acquired as against that owner even though full value be given." 5 Scottish rules Both in England and Scotland the owner of stolen English and goods may, as a rule, reclaim his property from an innocent as to stolen holder, even if that holder be a bona-fide purchaser for goods. value. In England, however, the rule is subject to the exception of market overt, and it also differs in some of its developments from the rule as applied to Scotland. 6 In Scotland an intermediate bond-fide purchaser is not liable to the true owner for the value of the goods by reason merely that they have passed through his hands. If the goods are recovered by the true owner from a bond-fide purchaser, the latter may have action for repayment of the price from an equally innocent seller, but such action would be founded on an implied undertaking as to title. No similar action could be maintained at the instance of the owner of the 1 46 & 47 Vict. c. 52, Sect. 44. See Coм., Sect. 17 ante, p. 83. 2 41 & 42 Vict. c. 31, Sect 4. 3 Morley v. Attenborough (1849), 3 Ex. 500. Per Cur in Morley v. Attenborough, supra. 5 London Joint Stock Bank v. Simmons [1892], App. Cas. 201 at p. 215. See also Mitchell v. Heys and Sons (1894), 21 Ret. 600, per Lord Kinnear, at 6 See Sects. 22 & 24 post. 7 See Sect. 12 (1). p. 610. Liability of intermediate purchaser. Sect. 21. Sect. 22. MARKET goods, unless the party dolo desiit possidere, or unless he had made a profit, and even then, only in quantum lucratus.1 In England, on the other hand, the true owner who has failed to recover the goods, may claim their value from an innocent purchaser although he, in turn, has parted with them by sale or otherwise.2 One exception exists to the last-mentioned. rule. If the innocent purchaser has bought in market overt, and has re-sold before the offender is prosecuted to conviction, he will retain his privilege of market overt notwithstanding the Larceny Act 18613 as amended by Sect. 24 of this Act.4 Illustrations of this section from the law of Scotland will be found in Appendix II. III. (3) post, p. 323. 22.-(1.) Where goods are sold in market overt, according to the usage of the market, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of any defect or want of title on the part of the seller. (2.) Nothing in this section shall affect the law relating to the sale of horses. (3.) The provisions of this section do not apply to Scotland. Influence of COMMENTARY. Market overt is confined to England and Ireland.5 The upon the law privilege, however, merits attention because of the reflex market overt of Scotland. 1 Scott v. Low (1704), Mor. 9123; Walker v. Spence and Carfrae (1765), Mor. 12802; Faulds v. Townsend (1861), 23 D. 437; M. P. Brown, p. 112; Bell's Com. i. 299; Bell's Prin., Sect. 527. 2 Benjamin, p. 7, and cases there cited. 4 See Coм., Sect. 24 post, p. 117. 5 The whole section was deleted by the select committee of the Commons, and the following substituted: "The buyer of goods in market overt shall not acquire any better or other title thereto than if the sale had taken place not in market overt. The original section was restored in committee of the whole House, apparently on the ground that so important a change in English law endangered the passing of the bill. influence it exercises upon Scottish law. Thus in Todd Sect. 22. Armour. v. Armour (1882) a horse was bought at Falkirk Tryst Todd v. The relaxation of the English rule where the thief has Relaxation of been prosecuted to conviction is referred to in connection English rule. with Sect. 24, COм. post, p. 117. Law of Scotland as to sales in open In Scotland a few early decisions seem to have given special effect to sales in open market, but the rule of Scots law has been amply established by the cases noted in market. Appendix II. III. (3) post, p. 323.5 19 Ret. 901. 22 & 3 Phil. & Mary, c. 7, and 31 Eliz. c. 12, the practical effect of which is to take horses out of the rule of market overt. 3 "I think our system of a vitium reale, which can never be removed, attaching to stolen property, is preferable to that obtaining in England and Ireland, of which indeed I consider this litigation a convincing illustration." -Per Lord Justice-Clerk Moncreiff, 9 Ret. at p. 906. For an explanation of the rules of market overt in England, see Benjamin on Sale, pp. 8 et seq.; Chitty on Contracts, 12th ed. p. 444; Smith's Mercantile Law, 10th ed. pp. 598 et seq. E.g. Gordon v. Menzies (1687), Mor. 9122, where conditional effect was given to a sale in public market of a stolen article. But see the still earlier case of Hay v. Elliot (1639), Mor. 6219, where a sale of corn in open market was denied effect, although the corn had not been stolen, it being subject to landlords' hypothec. See also Ersk. ii. 6. 60, and Dunlop and Co. v. E. Dalhousie (1828), 6 Sh. 626, Affd. (1830), 4 W.S. 420. 5 See also Ersk. iii. 1. 10 and 5. 10, and passages from Stair cited by Lord M'Laren in his notes to Bell's Com. i. 305. Bell says: "As possession pre Sect. 23. SALE UNDER 23. When the seller of goods has a voidable title(") thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice() of the seller's defect of title. Effect of fraud, NOTES. (a) "Voidable title." "Void" and "voidable" are not Scottish law terms, but they are convenient, and are now freely used in Scotland. "Void" corresponds to "null ab initio”; "voidable" to "reducible" or capable of being set aside by reduction or rescission.1 (b) "Avoided," i.e. reduced or rescinded. (c) "Good faith," explained Sect. 62 (2). (d) "Notice" means knowledge on the part of the buyer irrespective of any formal intimation.2 COMMENTARY. This section forms a modification of Sect. 21. Invalidating causes such as fraud, mistake, etc., do not of themselves render a contract void or prevent a legal transfer to a bonáfide third party. It is true that an owner of goods who has been defrauded or misled may in Scotland raise action for reduction of the contract, and in England sue in trover for sumes property in moveables, the general rule is that the purchaser of moveables at market or otherwise, in bona fide, acquires the right to them, although they may have been sold by one who is not the owner" (Bell's Com. i. 305). A passage from Stair is quoted as authority for this statement (Stair, iv. 40. 21), but, as pointed out by the learned editor of Bell's Commentaries, Stair is only dealing with a title obtained by fraud, and neither he nor Erskine gives the slightest countenance to the doctrine as applied to stolen goods. See further as to stolen goods and the effect of sales in public market-Bell's Prin., Sects. 527, 1320; Bell's Com. i. 307, and M'Laren's notes; Bell on Sale, p. 80; M. P. Brown on Sale, pp. 112 and 417 et seq.; and Coм., Sect. 21 ante, p. 111. 1 "An agreement or other act which is void has from the beginning no legal effect at all, save in so far as any party to it incurs penal consequences. A voidable act, on the contrary, takes its full and proper legal effect, unless and until it is disputed and set aside by some person entitled so to do." -Pollock on Contract, 6th ed. p. 8. 2 See Note (i), Sect. 25 post, p. 121. 3 The common-law effect of these is reserved by Sect. 61 (2). the goods, and that in either country he may, without a Sect. 23. judgment or decree of Court, repudiate and rescind the transaction, but unless some such step is taken before a sub-sale to an innocent person 3 the sub-buyer acquires a good title. In other words, if before actual reduction or duly intimated rescission, the holder has sold to a bond-fide third party, the sale is good.5 be a title But although the title may suffice to give a valid deriva- There must tive right, notwithstanding it is in itself voidable, no such though effect will flow from mere possession without title, or on voidable. some title short of ownership. "We must distinguish whether the facts show a sale to the party guilty of the fraud or a mere delivery of the goods into his possession induced by fraudulent devices on his part. . . . In the former case there is a contract of sale, however fraudulent the device, and the property passes; but not in the latter case." The bona-fide purchaser will not be protected if the person from whom he buys has merely a "special property "7 in the goods, such as that of a carrier or lessee.s Scotland The fact that in Scotland the property in goods sold Seller's title in may now pass to the buyer before delivery, extends the extended. range of cases in which the title, though voidable, is not void. A person may validly sell goods, the property in which has passed to him, though they still remain in the original seller's custody, and although the original contract of sale is subject to reduction. On the other hand, no title 2 Ibid. p. 422. 1 Benjamin, p. 412. 3 "The rescission takes date from the time at which the deceived party announces to the opposite party his election to reject the contract."-Benjamin, p. 422. "The fraud only gives a right to rescind. In the first instance the property passes in the subject-matter. An innocent purchaser from the fraudulent possessor may acquire an indisputable title to it, though it is voidable between the original parties."-Per Parke, B., in Stevenson v. Newnham (1853), 13 C. B. 285 at p. 302. See also Pease v. Gloahec (1866), L. R. 1 P.C. 220; Oakes v. Turquand (1867), L. R. 2 H.L. 325. 5"Where the sale has been induced by fraud, the seller is to be considered as having given his consent, but in consequence of the deceit that consent is held to be revocable to the effect of grounding an action for reduction and restitution, which, though not available against purchasers bona fide, is good against the buyer and his general creditors."-Bell's Com. i. 261. M. P. Brown on Sale, pp. 396, 416. 6 Benjamin, p. 412. 7 See ante, p. 5. 8 See note on this subject by M'Laren, Bell's Com. i. 261. See also 9 The rights given by this section and those flowing from Sect. 25 (2) re |