Dennant v Skinner and Another

[1948] 2 All ER 29

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(Judgment by: Hallett J)

Between: Dennant
And: Skinner and Another

Court:

Judge:
Hallett J

Subject References:
Auction
Passing of property
Unconditional sale
Representations made after fall of hammer
Subsequent undertaking that property should not pass until cheque honoured
Sale of Goods Act, 1893 (c 71), s 58(2)

Case References:
Lake v Simmons - [1927] AC 487; 35 Digest 97, 64
Smith v Wheatcroft - (1878), 9 ChD 223; 47 LJCh 745; 39 LT 103; 35 Digest 98, 71
Phillips v Brooks Ltd - [1919] 2 KB 243; 88 LJKB 953; 121 LT 249; 24 Com Cas 263; 39 Digest 533, 1451
Heap v Motorists Advisory Agency Ltd - [1923] 1 KB 577; 92 LJKB 553; 129 LT 146; 67 Sol Jo 300; 39 Digest 531, 1441
Folkes v King - [1923] 1 KB 282; 92 LJKB 125; 128 LT 405; 67 Sol Jo 227; 28 Com Cas 110; 86 JP Jo 552; Digest Supp
London Jewellers Ltd v Attenborough, London Jewellers Ltd v Robertsons (London) Ltd - [1934] 2 KB 206; 103 LJKB 429; 151 LT 124; 78 Sol Jo 413; 39 Com Cas 290; Digest Supp

Hearing date: 4 May 1948
Judgment date: 5 May 1948

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Judgment by:
Hallett J

This case raises questions of some interest, but not, I think, having regard to the evidence called before me, of any real difficulty. The plaintiff, George Edward Kenneth Dennant, carries on business as the South London Motor Auctions and is a certificated auctioneer. On 8 November 1946, he held an auction sale at which there were some 35 motor vehicles for sale and some 150 people present as prospective buyers. A Standard saloon motor car was knocked down by the plaintiff to a man named George Albert King for £345. After the sale the plaintiff delivered that car to King in exchange for a cheque for £1,190 which represented the price of the car together with five other vehicles which had also been knocked down to King by the plaintiff at the sale. The cheque was dishonoured on presentation, and, on 12 April 1947, King was convicted at Surrey Quarter Sessions at Croydon, of obtaining the six motor vehicles from this firm by false pretences with intent to defraud and was sent to prison. Subsequently, the plaintiff discovered that the Standard motor car was in the possession of the defendant in this action, Mr Leslie Cecil Skinner, and on 14 February and again on 21 February 1947, by his solicitor he demanded delivery up to him of the car. The defendant having refused delivery, this action was started for the return of the car or its value. The defendant, on whose good faith there has been no reflection whatever, had bought the car from a Mr Collom, with the warranty of good title implied by virtue of the Sale of Goods Act, 1893, and, accordingly, the defendant brought in Mr Collom as a third party. There was no inputation against the third party's good faith.

The plaintiff having knocked this car down to King and delivered it and allowed him to take it away, the onus is on him (the plaintiff) to establish to the satisfaction of the court that he was still entitled to possession of the car at the time when he demanded possession from the defendant. He seeks to discharge that burden in three ways. In the first place, he says that the transaction which led to King having possession of the car amounted to what is sometimes known as "larceny by a trick." Although King was convicted of obtaining that car and five others by false pretences, the view taken in the criminal proceedings is not in any way binding on or even helpful to me for various reasons. King ultimately pleaded Guilty, and in any case, as is pointed out in Archbold's Criminal Pleading Evidence and Practice, the distinction between larceny by a trick, on the one hand, and obtaining by false pretences, on the other, has now for the purpose of criminal cases, become of little importance, because of the provisions of the Larceny Act, 1916, s 44. In this case, however, the distinction is of vital importance and in some cases there is no doubt that the distinction between the two offences is very difficult to draw. At p 503 of Archbold, 31st ed, it is suggested that the most intelligible distinction is as follows:

In larceny the owner of the thing stolen has no intention to part with his property therein to the person taking it, although he may intend to part with the possession; in false pretences the owner does intend to part with his property in the money or chattel, but it is obtained from him by fraud.

Certain other tests have been suggested, however, in various cases, for instance, in Lake v Simmons where Lord Haldane ( [1927] AC 501 ) cites the passage which was adopted by Fry J in Smith v Wheatcroft (9 ChD 230):

"Does error in regard to the person with whom I contract destroy the consent and annul the agreement? I think that this question ought to be decided by a distinction. Whenever the consideration of the person with whom I am willing to contract enters as an element into the contract which I am willing to make, error with regard to the person destroys my consent and consequently annuls the contract ... On the contrary, when the consideration of the person with whom I thought I was contracting does not enter at all into the contract, and I should have been equally willing to make the contract with any person whatever as with him with whom I thought I was contracting, the contract ought to stand."

There was no catalogue of this auction, but certain printed terms or conditions of sale are said to be exhibited in the auction room, and I have been furnished with a copy of that document. I feel considerable doubt how far it is satisfactorily proved that those conditions of sale were brought to the notice of the bidders so as to render it right to incorporate them in the contract of sale, but I do not propose to allow that doubt to influence me in my decision which proceeds on other grounds.

During the sale the plaintiff offered a vehicle called a Commer van for which the highest bid was made by King. The plaintiff had never seen him before and did not know who he was. The plaintiff said:

"I sold the van to him. When I knocked it down I asked his name."

It is agreed by counsel for the plaintiff that on a sale by auction a contract is completed on the fall of the hammer, and it is agreed also that prima facie the property in the lot knocked down then passes to the bidder. In so far as the printed conditions have any relevance, condition 3 provided that on the fall of the hammer the lot, with all errors of description, was to be at the risk and cost of the buyer. Up to that time the plaintiff had not inquired the name of the bidder or concerned himself in any way with his identity. He had knocked down that Commer van, or, in his own language, he had sold it, to the man who had made the highest bid irrespective of his identity. When asked his name, the man said it was King, and he was from King's Motors of Oxford, and, in fact, was the son of the proprietor of that firm. King's Motors of Oxford is well known to the plaintiff as a highly reputable firm in the motor vehicle trade, and the plaintiff accepted these statements. They were untrue, and George Albert King has no connection with the firm and is not the son of the proprietor. The plaintiff knocked down five more vehicles to George Albert King, including the Standard motor car with which I am concerned, and when the sale was over King went to the plaintiff's office in the usual way to arrange for payment and removal. At this time, subject to the second aspect of the matter which I shall discuss presently, the property in the Standard car, to my mind, had passed to King. The contract of sale had been made with King, and there seems to me to be no ground whatsoever on which I could properly hold that the consideration of the person with whom the plaintiff was willing to contract entered as an element into the contract which he was willing to make. At an auction sale, apart from any question of the reserve price, the lot is knocked down to the highest bidder, whoever the highest bidder may happen to be.

When it comes to removing the lot without paying cash for it, other questions arise, but, so far as the contract is concerned and the passing of the property in the object sold, ordinarily the identity of the buyer does not enter into the question any more than it ordinarily does on the sale of an article in a retail shop. In these days the identity of the customer may influence the willingness of the shopkeeper to sell something to him where, for instance, goods are kept for registered customers, but in normal and sane times the shopkeeper is not concerned with the identity of the customer in deciding whether to sell goods to him, although he is concerned in deciding whether, having effected the sale, he should give the purchaser credit. When King went to the plaintiff's office the plaintiff asked him how he meant to pay, and King replied that he would like to pay by cheque, to which the plaintiff rejoined that it was not his normal practice to accept cheques from people he did not know. King had appeared to be in possession of trade plates, which would suggest he was in the business, and he had some drivers there to drive away the vehicles. King repeated that he was of King's of Oxford, was running the Portsmouth branch, and that he was the son of the proprietor, and he showed to the plaintiff the counterfoils in his cheque book, according to which he had been paying away large amounts to other well known auctioneers. The plaintiff believed those representations and took the cheque for £1,190 to which I have referred.

Two sentences from the plaintiff's evidence seem to me to crucial. He said:

When I took the cheque from King I believed him to be King's of Oxford. If I had not so believed him I should not have accepted the cheque.

That seems to be really important on the question of the effect the verbal representation had on the plaintiff's mind. There is no evidence, it seems to me, that the plaintiff was induced to sell the car to King in the belief that King was connected in the manner which he had described with this highly reputable firm. That seems to have been entirely immaterial from the point of view of selling the car; The Commer van had been sold before King's identity was mentioned at all, and the mention of his identity was ony made in the ordinary way, as I interpret the evidence, for the purpose of the plaintiff's completing the auctioneer's memorandum. The effect which the misrepresentation had on the plaintiff's mind was to induce him to accept the cheque instead of requiring cash to be paid before the vehicle was delivered. The conditions again, if they are of any relevance, which I doubt, provided that the entire purchase money was to be paid before the lots were removed on the day of the sale, and conditions 10 and 11 dealt with cheques being tendered in payment, it being stated that: "Cheques tendered in payment will not be accepted unless satisfactory references are given." When the plaintiff, persuaded by those lies, consented to take the cheque for £1,190, he procured the signature by this man King to a form which is before me:

I hereby certify my cheque No. will be met on presentation at my bank. Furthermore, I agree that the ownership of the vehicles will not pass to me until such time as the proceeds of my cheque have been credited to South London Motor Auction account at Lloyds Bank.

I can now express my judgment at once on the question whether the transaction by which this car passed into the possession of King amounted to larceny by a trick. To my mind Phillips v Brooks Ltd is in principle indistinguishable, and so far as I am aware the correctness of that decision has never been judicially in question. There have, of course, been many cases since then where questions as to the distinction between larceny by a trick and obtaining by false pretences have been considered, but my attention has not been called to any case which is as much in point as Phillips v Brooks Ltd . The case was mentioned in Lake v Simmons already cited, and in his speech, immediately after the passage of Fry J which I have already quoted, Lord Haldane deals ( [1927] AC 501 ) with Phillips v Brooks Ltd . I can see nothing there to suggest that he doubted the correctness of the earlier decision. Counsel for the plaintiff, however, have drawn my attention to what is said in the well known text book, Anson On The Law Of Contract. In the 17th ed, published in 1929, given to me in the first instance, at pp 158 and 159, the learned authors of that edition, Sir John Miles and Professor Brierley, dealing with Phillips v Brooks Ltd in a footnote say:

This case does not appear to be affected by the decision in Lake v. Simmons , for in that case when the jeweller handed the goods to the swindler he did so merely to enable her to show them to a supposed intending purchaser. He intended to make her his bailee and not to enter into a contract of sale with her.

I respectfully agree with that note. I think if one looks at some of the cases on which the plaintiff here might seek to rely, the distinction between them and the present case is obvious. In Heap v Motorists Advisory Agency Ltd the plaintiff never gave any real consent to the fraudulent person having or passing the property in the motor car in question. The car was put into the possession of the fraudulent person, and Lush J had to consider, as I have to consider, the difference between larceny by a trick and obtaining goods by false pretences. Lush J came to the gist of the whole matter in three sentences: ([1923] 1 KB 583):

It is said by counsel for the defendants that it is a case of obtaining a car by false pretences, and not by larceny by a trick. In order to make that out he has to establish that the plaintiff intended to part with the property in the car to North. If he can establish that then he is right, but if he cannot he is wrong.

The learned judge held on the facts of that case that the plaintiff never intended to part with the property in the car to North, but merely intended to let North have the custody of the car in order that he might drive it to Uxbridge, show it to the entirely imaginary person named Hargreaves, and if possible sell it to Hargreaves for £210. There never was a Hargreaves. There was no question of passing the property, according to the intention of the plaintiff, to a person called Hargreaves who just did not exist, and to whom the car was going to be shown by the fraudulent person, North. Such a case seems to me to be very easy to explain. I have read what is said in regard to Phillips v Brooks Ltd in the 17th ed of Anson On Law Of Contract, but in the 19th ed of that work, published in 1945, where Professor Brierley is the sole editor, he appears to have taken a different view (p 158). I need not read what he says, but he clearly suggests that Phillips v Brooks Ltd is a wrong decision, and that Lord Haldane's decision in Lake v Simmons is a right decision on the wrong grounds. I am not, however, bound in any way by the opinion of text book writers, however eminent they may be, and, indeed, I prefer to decide this case not on authority so much as on principle. Two more cases I will mention: Folkes v King and London Jewellers Ltd v Attenborough. While those cases deal with other points which do not arise here, on the essential points they seem to me to indicate where I should be if I relied solely on Phillips v Brooks Ltd . In London Jewellers Ltd v Attenborough Scrutton LJ refers ([1934] 2 KB 217) to Phillips v Brooks Ltd , but without expressing any opinion about the decision and saying merely that the effect of the statement between the parties may have to be considered at some future time. In the present case, I am of the opinion, on the evidence, that there was no mistake as to the contracting parties at the time the contract of sale was made and so no mistake affecting the plaintiff's assent to the sale and the passing of the property. Accordingly, the plaintiff's case, as far as it depends on the contention that this was larceny by a trick, in my judgment, fails.

The second point on which the plaintiff relies is that the property in the circumstances of this case did not pass until the price was paid by the cheque being in order or cash substituted for it. A contract of sale is concluded in an auction sale on the fall of the hammer, and, indeed, the Sale of Goods Act, 1893, s 58(2), so provides. Section 18 provides:

Rule 1: Where there is an unconditional contract for the sale of specific goods, in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery or both be postponed.

Accordingly, on the fall of the hammer the property of this car passed to King unless that prima facie rule is excluded from applying because of a different intention appearing or because there was some condition in the contract which prevented the rule from applying. In my view, this was clearly an unconditional contract of sale, and I can see nothing whatever to make a different intention appear. The only evidence on which it was ever suggested to exist was the printed conditions, but I can see nothing in those conditions to negative an intention that the property should pass on the fall of the hammer. I think the conditions are entirely consistent with such an intention. If, however, the conditions are to be regarded as incorporated in the contract of sale, as to which I have some doubt, that makes no difference to the claim of the plaintiff. By the Sale of Goods Act, 1893, s 28:

"Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions,"

and, finally by s 39(1)(a) and (c), an unpaid seller of goods has a lien on the goods or right to retain them for the price while he is in possession of them and he also has a right of re-sale as limited by the Act. However, the passing of the property and the right to possession are two different things. Here, in my judgment, the property had passed on the fall of the hammer, but still the plaintiff had a right to retain possession of the goods until payment was made. If, when he was ready to deliver the goods, payment was not made, he could have sued for the price, or he could have exercised powers of re-sale, and he could have secured himself by way of lien on the goods for the price, but once he chose, for reasons good, bad, or indifferent, as a result of statements fraudulent or honest, to part with the possession of the vehicle by giving delivery of it, he then lost his seller's lien and he no longer had a right to possession of the vehicle. He had a right until it was delivered, but as the right of retainer was not exercised he had no right in the vehicle. The property in the vehicle had passed to King. In my view, therefore, the second contention for the plaintiff also fails. His right to the property had gone and his right to possession had gone.

There was a third aspect of the matter arising out of the document which I have read. The document contemplates that the ownership of the vehicle has not passed to the bidder, but, as I have already said, in my judgment, it had passed on the fall of the hammer, and, if subsequently the bidder executed the document acknowledging that the ownership of the vehicle would not pass to him, that could not have any effect on what had already taken place. Accordingly, the only way it seems to me in which this document could be used to satisfy the plaintiff's argument is to find that it had the effect of divesting the property from King and re-vesting it in the plaintiff, the seller. I do not think that such a view of the document is sound. In my view, the property had passed on the falling of the hammer. The right to possession had passed when the plaintiff, persuaded and misled by King's lies, parted with his seller's lien, and there was nothing left on which he could found a claim in detinue against some third person, in this case the defendant, who was thus put in possession of the vehicle. The result seems to me to be that there must be judgment for the defendant with costs. As regards proceedings between the defendant and the third party, the third party is entitled to judgment against the defendant with costs.

Since the plaintiff knew perfectly well that he had not sold the car to the defendant, he must have contemplated when these proceedings were pending that the defendant had acquired the car from somebody else, a third party, and in those circumstances it was at least highly probable that, if the defendant were sued, he would desire to bring in that third party, whoever it might be, for his own protection. Secondly, I think it was obviously reasonable for the defendant here to take proceedings against the third party to protect himself in the light of the claim which had been brought against him by the plaintiff, and which in the result has been shown to be unsustainable. If a defendant incurs costs reasonably to protect himself against a claim by a plaintiff which fails, it seems to me there are good grounds on which a judge, exercising his judicial discretion, should say that those costs incurred by the defendant should be borne by the plaintiff. Accordingly, in this case I propose to add to my order that the costs payable by the plaintiff to the defendant should include all costs properly incurred by the defendant in the third party proceedings.

Judgment for the defendant against the plaintiff with costs. Judgment for the third party against the defendant with costs. Order for defendant's costs against the plaintiff to include all party and party costs of defendant and third party proceedings.