are. A question may here arise whether ss. 4 and 5 of the Factors Act, 1889, are incorporated with ss. 8 and 9, the "seller and buyer" sections of that Act, i.e., with s. 25 of this Act. Lord Esher, M.R., in Lee v. Butler (b), appears to treat these sections as independent of the rest of the Factors Act, and so they logically But in that case no mercantile agent was employed; and the difficulty springs from the use of the term in this section. If s. 4 of the Factors Act is incorporated with the "seller and buyer" sections, then the seller's mercantile agent, pledging for an antecedent debt of the agent's, would divest the buyer's rights only to the extent of the agent's lien. So, if s. 5 of the Factors Act is incorporated, the pledge would be good only to the extent of the goods taken in exchange. It is also doubtful whether such a transaction as last mentioned may not be "a disposition " under the express words of the present section: see p. 163, supra. S. 25 (1). (iii) The second buyer, &c., must act in good faith In good faith and without notice. The third condition is the good faith of, and absence of notice in, the second buyer or pledgee. "In good faith” is defined in s. 62 (2) as "honestly, whether and without notice of previous sale. "Notice" here probably means knowledge, actual or imputed, as in the case of a negotiable security, or under the Bankruptcy Acts. "Notice and knowledge," says Parke, B., in May v. Chapman (c) (a case of a bill), " means not merely express notice, but knowledge, or the means of knowledge, to which the party wilfully shuts his eyes." And Lord Bramwell says, in Meaning of Sheffield v. London Joint Stock Bank (d), "Notice of the infirmity notice. of the pledgor's title, or of such facts and matters as made it reasonable that enquiry should be made into such title." See further the cases in the note (e). The second buyer or pledgee may then be fixed with notice of the earlier sale either (1) directly, from communication, or from the fact of the goods being marked or otherwise appropriated to the first buyer, or from the document of title itself, when the goods are transferred by means of a document; for the subsequent disposition will be valid only when it appears on the face of the document that the goods are deliverable to the seller; or (2) indirectly, from knowledge of circumstances which would (b) [1893] 2 Q. B. 318. (e) (1847), 16 M. & W. 355, 361, followed by Willes, J., in Raphael v. Bank of England (1855), 17 C. B. 161; Jones v. Gordon (1877), 2 Ap. Ca. 125. (d) (1888), 13 App. Ca. at p. 346. (e) Factors Act, Navulshaw v. Brownrigg (1852), 2 De G. M. & G. 441; Bankruptcy Acts, Ex parte Snowball (1872), 7 Ch. Ap. 549; question for jury, Gobind Chunder Sein v. Ryan (1861), 9 Moo. Ap. 140. S. 25 (1). (2) The effect of the trans action. S. 25 (2). Dispositions by a buyer. lead a reasonable man of business to the conclusion that a sale of the goods had already taken place (ƒ). Shall have the same effect as if.-When the necessary conditions, as above stated, have been duly fulfilled, the transaction is to "have the same effect as if the person making the delivery or transfer were expressly authorized by the owner of the goods to make the same;" that is to say, that person is treated as the buyer's mercantile agent under s. 2 of the Factors Act, 1889, that being the authority of such an agent under that section. ILLUSTRATION. A. sells tobacco lying in bond in his name to B. B. pays the price, but leaves the tobacco in bond in A.'s name, and the documents of title thereto in A.'s hands. A. fraudulently pledges the documents of title to C., who receives them in good faith and without notice of the previous sale. C. has a good title to the tobacco as against B. See Johnson v. The Crédit Lyonnais (1877), 3 C. P. D. 32. Where a person having bought or agreed to buy goods, &c.This sub-section reproduces verbatim-save with the omission after the words "or other disposition thereof," of the words “or under any agreement for sale, pledge, or other disposition thereof "-s. 9 of the Factors Act, 1889, which in its turn substantially reproduced s. 4 of the Factors Act, 1877, with this difference, that it applied to the possession of the goods as well as of the documents; and added the further conditions, that such possession should be "with the seller's consent," and that the sale, pledge, or other disposition should be executed by the delivery or transfer of the goods or documents to the second buyer or the pledgee. The sub-section provides for the case the converse of that provided for by the preceding sub-section-of a buyer allowed by the seller to obtain possession of the goods sold or of the documents of title thereto; and it confers upon a bona fide buyer, or pledgee who obtains a legal title from the original buyer, a good title as against the original seller. The three earliest Factors Acts did not provide for this case, and under them it was held that " an agent entrusted" did not include a buyer, because he held, not as agent, but in his own right (g). Having bought or agreed to buy.-A person may be a buyer under this sub-section, though the contract under which he has obtained possession is unenforceable under s. 4 of this Act. All (f) Evans v. Trueman (1830), 1 Moo. & Rob. 10, per Lord Tenterden; as to "constructive" notice, see Kaltenbach v. Lewis (1883), 24 Ch. D. 54. (g) See Jenkyns v. Usborne (1844), 7 M. & G. 678; Van Casteel v. Booker (1848), 2 Ex. 691. ... that is necessary is a de facto contract of sale, and possession taken with consent under it (h). "The intention is," says Bowen, L.J., "to enable intending purchasers to deal freely and boldly with persons claiming to be vendees of goods who are in possession of the documents of title to the goods [or of the goods]. The section . . . is dealing with the mercantile rights of the parties as resulting from the original contract, apart from any question of proof or procedure in an action on the contract." And an "agreement to buy" is none the less within this subsection, though the contract may be subject, in the buyer's favour, to a defeasance, as when he has the option to return the goods (i). S. 25 (2). It should be noticed that sub-s. 2 gives to the buyer the same rights whether he has bought, or only agreed to buy, the goods, whereas under sub-s. 1 the seller has no similar rights unless he has "sold" the goods. "It is evident that this section [i. e., s. 9 of the Factors Act, 1889] contemplates both a seller, who has sold or agreed to sell, as also a buyer, who has bought or agreed to buy; for there cannot be a buyer who has 'bought or agreed to buy,' which are the words of the section, without there also being a seller who has sold or agreed to sell" (k). The corresponding words with regard to the seller are here omitted, because "it is the acts of the person who has bought or agreed to buy with which the section is dealing" (1). The necessary conditions precedent to the validity of the (1) The buyer's disposition are: (1.) Possession of goods, &c. with the seller's consent: (2.) Execution of the transaction by delivery or transfer of the goods or documents: (3.) Good faith, and absence of notice to the second buyer or the pledgee. necessary conditions. or documents. Obtains.... possession of the goods or the documents of title. (i) Possession The first condition is that the buyer must obtain possession. As of the goods the possession of the goods ipso facto divests the seller's lien, this sub-section would be (so far as regards the lien) nugatory, unless it be treated as applying to cases where the buyer obtains possession of the goods as the seller's bailee "for a special purpose, or in a character different from that of buyer”(m). (h) Hugill v. Masker (1889), 22 Q. B. D. 364. (i) Helby v. Matthews, [1894] 2 Q. B. 262. (k) Per Smith, L.J., in Helby v. Matthews, [1894] 2 Q. B. at pp. 268, 269. (1) Per Lord Esher, M.R., ibid. at p. 266. (m) Benj. p. 817, quoting Tempest v. Fitzgerald (1820), 3 B. & Ad. 680; Marvin v. Wallace (1856), 6 E. & B. 726; Reeves v. Capper (1838), 5 B. N. C. 136. For a similar reason, the "other right" of the seller cannot in such a case be a right of stoppage in transit. With regard to the buyer's possession of the document of title, this sub-section should be read in connection with s. 47, which covers part of the same ground. (See the notes to that section, post, p. 261.) Under the latter section, the buyer must be the "lawful transferee" of the document of title (which phrase means, it is submitted, that the transferor should have a good title to the goods represented thereby) (n), and the second transferee must take the document "in good faith and for valuable consideration." The present sub-section, therefore, contains a proviso as to notice which is not contained in s. 47. Now notice that the goods have not been paid for is not inconsistent with good faith (o), and such notice would not prejudice the rights of the second transferee under s. 47, whereas under the present sub-section it would be fatal. Again, under s. 47, the transfer of a document of title by way of pledge will defeat the seller's rights there mentioned only to the extent of the pledge; those rights being exerciseable subject to the rights of the transferee. Under the present sub-section the transfer is to have the same effect as if the person making the transfer were a mercantile agent in possession with the consent of the owner, i.e. (under s. 2 of the Factors Act, 1889), as if he were expressly authorized to pledge. But the owner has, under s. 12 (2) of the Factors Act, a right to redeem the goods before sale, and to recover the surplus of the price after sale. If, therefore, s. 12 (2) of the Factors Act is to be deemed incorporated with this sub-section, the seller's rights under the latter would appear substantially the same as under s. 47; whereas, if there is no such incorporation, the seller's rights under this sub-section will apparently be totally defeated in the case of a pledge, and under s. 47 only defeated pro tanto. The question is full of difficulty, and requires judicial decision. With the consent of the seller.-As to the seller's consent, we have seen from Hugill v. Masker, supra, p. 167, that consent under a de facto contract is sufficient, though the contract is, between the immediate parties, unenforceable by action. But it would seem doubtful whether the sub-section could be construed to apply to a case where, as in Cundy v. Lindsay (p), the possession of the goods has been obtained under a trick; when, in fact, the buyer has not a voidable title, under s. 23, but no title at all (q). The (n) See per Lord Campbell in Gurney v. Behrend (1854), 3 E. & B. at p. 634. (0) Cuming v. Brown (1808), 9 East, 506. (p) (1878), 3 Ap. Ca. 459. (2) Cf. Reg. v. Buckmaster (1887), 20 Q. B. D. 182. ratio decidendi of such cases is that there is no real consent to the contract at all, and accordingly there would be no consent to the buyer's possession of the documents or goods. Lord Esher says (r) (with reference to the words "sold or contracted to be sold" in s. 4 of the Factors Act of 1877, which contained no provision as to consent): "I think these words mean only that there must have been a contract of sale in fact, and a vendee in fact, to whom, under the contract, the property passes, or to whom it is intended that the property in the goods shall eventually pass." So, in similar circumstances, under the earlier Factors Acts, "it has repeatedly been held that where either the goods or the documents of title are obtained from the owner. . . by some trick, a purchaser or pledgee acquires no title, for the trickster is not an 'agent entrusted' with the possession" (s). one. Delivery or transfer.-The second condition is here, as also under sub-s. 1, that the transaction should be an executed This requirement differentiates both these sub-sections from ss. 3 and 4 of the Factors Act, 1877, as was pointed out on p. 163, supra. In good faith and without notice.-Thirdly, there must be good faith and absence of notice. See, as to the former, s. 62 (2); and as to the latter, supra, p. 165. Of any lien or other right. The "other right" of the seller may be, e.g., a right of property, or a right to resume possession (t). It would seem that it should also include a right to avoid the contract under s. 23 on the ground of fraud (u). See notes to that section, ante, p. 155. Shall have the same effect as if.-Lastly, with regard to the effect of the sale, pledge, or other disposition. This is to be the same as if the person making the delivery or transfer were a mercantile agent in possession with the consent of the owner, under s. 2 of the Factors Act, 1889, i.e., is to be as good as if it were "expressly authorized" by the owner. The effect of cases under this sub-section is therefore the same as that under sub-s. 1, ante, p. 166. When the delivery or transfer is made by the buyer's mercantile agent, we have seen, under sub-s. 1, that a question may arise whether the "goods" delivered should or should not be such as he is accustomed in the way of his trade to deal with, whereas, when the delivery or transfer is made by the buyer (r) Hugill v. Masker (1889), 22 Q. B. D. at p. 370. (s) Cole v. N. W. Bank (1875), L. R. 10 C. P. at p. 373. (t) Lee v. Butler, [1893] 2 Q. B. 318; Helby v. Matthews, [1894] 2 Q. B. 262. (u) See per Smith, L.J., in Helby v. Matthews, supra, at p. 269. S. 25 (2). (ii) Trans action must be executed. (iii) Good faith of notice and absence to second buyer, etc. (2) Effect of the sale or pledge, &c. |