A Treatise on the Effect of the Contract of Sale on the Legal Rights of Property and Possession in Goods, Wares and Merchandise

"the goods in question from the defendants, nor gives the "latter a counterclaim for the money which they have "advanced to Hoffman on the security of the goods " (a).

The Factors Act, 1889, which, with a slight variation, is reproduced by section 25 of the Sale of Goods Act, provides in section 9 that "where a person having bought or agreed "to buy goods, obtains with the consent of the seller posses"sion of the goods, or the documents of title to the goods, the "delivery or transfer, by that person or by a mercantile agent "acting for him, of the goods or documents of title, under any sale, pledge, or other disposition thereof, or under any "agreement for sale, pledge, or other disposition thereof, to any person receiving the same in good faith and without "notice of any lien or other right of the original seller in respect of the goods, shall have the same effect as if the person making the delivery or transfer were a mercantile agent in possession of the goods or documents of title with "the consent of the owner."

It should be noticed that a person who has "agreed to buy 'goods" means a person who has actually bound himself by agreement to buy, and does not include a person having an option to buy (b).

Section 2 (1) of the Factors Act, 1889, indicates the effect of a delivery or transfer by a mercantile agent in possession by consent of the owner: "Where a mercantile agent is, with "the consent of the owner, in possession of goods or of the "documents of title to goods, any sale, pledge or other disposi"tion of the goods, made by him when acting in the ordinary "course of business of a mercantile agent, shall, subject to the

provisions of this Act, be as valid as if he were expressly "authorized by the owner of the goods to make the same;

provided that the person taking under the disposition acts "in good faith, and has not at the time of the disposition

(a) See also the remarks of Coleridge, C. J., in Cole v. North Western Bank, 43 L. J. C. P. 198; 9 C. P. 488.

(b) Helby v. Matthews, 64 L. J. Q. B. 465; [1895] A. C. 471; and see also Lee v. Butler, 62 L. J. Q. B. 591; [1893] 2 Q. B. 318; Shenstone v. Hilton, 63 L. J. Q. B. 452; [1894] 2 Q. B. 452; and Hull v. Adams, (1896) 65 L. J. Q. B. 114.

"notice that the person making the disposition has not authority to make the same."

Section 10 of the Act deals with the effect of the transfer of documents on the seller's lien or right of stoppage in transitu, "Where a document of title to goods has been lawfully transferred to a person as a buyer or owner of the "goods, and that person transfers the document to a person "who takes the document in good faith and for valuable consideration, the last-mentioned transfer shall have the "same effect for defeating any vendor's lien or right of stoppage in transitu as the transfer of a bill of lading has "for defeating the right of stoppage in transitu."

This section is substantially embodied in section 47 of the Sale of Goods Act (a).

The following are the definitions contained in section 1 of the Factors Act, 1889, apart from the definitions of documents of title already quoted :

"(1.) The expression mercantile agent' shall mean a "mercantile agent having in the customary course of his "business as such agent either authority to sell goods, or to "consign goods for the purpose of sale, or to buy goods, or to "raise money on the security of goods:

"(2.) A person shall be deemed to be in possession of goods "or of the documents of title to goods, where the goods or "documents are in his actual custody or are held by any other person subject to his control or for him or on his behalf: "(3.) The expression 'goods' shall include wares and "merchandise: "

"(5.) The expression 'pledge' shall include any contract "pledging, or giving a lien or security on goods, whether in "consideration of an original advance, or of any further or continuing advance, or of any pecuniary liability :

"(6.) The expression person' shall include any body of persons corporate or unincorporate."

In Hastings v. Pearson (b), in 1893, the plaintiffs, who were

(a) Ante, p. 417.

(b) Hastings v. Pearson, 62 L. J. Q. B. 75; [1893] 1 Q. B. 62.

a firm of jewellers, employed an agent at a salary and commission on cash collected, to sell goods for them at private houses. From time to time the agent was intrusted with goods to sell; it was his duty to account weekly for such goods to the plaintiffs, and he had no authority to pawn them. He, however, pawned a quantity of these goods with the defendant, who took the goods in the ordinary course of business and in the bona fide belief that they were the agent's own property. In an action of detinue by the plaintiffs against the defendant, the Divisional Court overruled the decision of the County Court judge, who had held that the agent was a "mercantile agent" within the meaning of the Factors Act, 1889, and Mathew, J., pointed out that the contention of the defendant would strike out from section 2 the important and material words, "when acting in the ordinary course of "business as a mercantile agent," there being no such business as that of an agent to pledge with pawnbrokers small articles of jewellery for the purpose of raising money for the employer of the agent.

In De Gorter v. Attenborough (a), in 1904, the plaintiff, a dealer in diamonds at Amsterdam, sent some diamonds. to a diamond broker in London, for sale. The broker, without the authority of the plaintiff, asked a friend of his to pledge the diamonds for him, and accordingly the friend pledged them with the defendants, who were pawnbrokers. The defendants took the diamonds in good faith and without notice that the diamonds were pledged without the authority of the owner. In an action to recover the diamonds, it was held by Channell, J. that although the broker was a mercantile agent within the meaning of the Factors Act, 1889, it was not the ordinary course of business of a mercantile agent to ask a friend to pledge goods entrusted to him, but to pledge them himself, and that therefore the defendants were not protected by section 2 (1) of the Act.

Again, in Oppenheimer v. Attenborough (b), in 1906, the

(a) De Gorter v. Attenborough, 21 T. L. R. 19.

(b) Oppenheimer v. Attenborough, [1907] 1 K. B. 510; [1908] 1 K. B. 221.

question was whether a broker who had been intrusted with goods for sale, but had pledged the goods, was acting in the ordinary course of business as a mercantile agent. Evidence was given that in the particular trade in question (the diamond trade) it was no part of a broker's duty to pledge diamonds, his sole duty being to find customers who would purchase them; but Channell, J., did not think the practice in the particular trade made any difference, unless the want of authority to pledge was so notorious that persons dealing with the broker must have known and did know it. He was of opinion that the expression "in the ordinary course of "business of a mercantile agent" in section 2 meant "of "a mercantile agent " and not "of the mercantile agent " («).

(a) See also Waddington v. Neale, 23 T. L. R. 464; Oppenheimer v. Frazer and Wyatt, [1907] 1 K. B. 519, in part reversed by C. A. in [1907] 2 K. B. 50.

CHAPTER III.

ON THE EXTENT OF THE UNPAID SELLER'S RIGHTS WHILST IN POSSESSION AND OF THE RIGHT TO RESCIND THE CONTRACT.

An unpaid seller is defined by section 38 of the Sale of Goods Act, which provides:

"(1.) The seller of goods is deemed to be an 'unpaid "seller' within the meaning of this Act

"(a.) When the whole of the price has not been paid or "tendered;

"(b.) When a bill of exchange or other negotiable instru

"ment has been received as conditional payment, and "the condition on which it was received has not been "fulfilled by reason of the dishonour of the instrument "or otherwise.

(2.) In this part of the Act the term 'seller' includes any person who is in the position of a seller, as, for instance, "an agent of the seller to whom the bill of lading has been "indorsed, or a consignor or agent who has himself paid, or "is directly responsible for, the price."

The unpaid seller's rights are declared by section 39:

"(1.) Subject to the provisions of this Act, and of any "statute in that behalf, notwithstanding that the property in "the goods may have passed to the buyer, the unpaid seller "of goods, as such, has by implication of law

' (a.) A lien on the goods or right to retain them for the "price while he is in possession of them;

"(b.) In case of the insolvency of the buyer, a right of "stopping the goods in transitu after he has parted "with the possession of them;

"(c.) A right of re-sale as limited by this Act.

"(2.) Where the property in goods has not passed to the buyer, the unpaid seller has, in addition to his other "remedies, a right of withholding delivery similar to and

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A Treatise on the Effect of the Contract of Sale on the Legal Rights of ...