C.A.

1901.

GIBSON

V.

TYREE.

him to make it absolutely clear to any reasonable man what part of the lump sum paid should be attributed to the purchase of the goods in respect of which he has to account. When, however, he has done this, and the actual profit has been thus ascertained, he is not liable beyond the amount of that profit.

There is absolutely no difficulty in the present case in ascertaining what a purchaser would have had to pay for the goods if he had bought them separately. Pannell tendered for them separately. Pannell's tender was not accepted. Neither Tyree nor any one else, therefore, could have got them for less than the amount of Pannell's tender. Nor is there any evidence which suggests that by purchasing the two lots of goods together he bought the goods which the firm had a right to purchase cheaper than he would have otherwise done. It is suggested that, as the purchase was a joint purchase of the two lots, and as the lots were sold separately, the purchasemoney of each lot should be considered as bearing the same proportion to the whole purchase-money as the price realised for each bore to the sum of the two prices realised. To do that, however, would give the partnership a share in the profits on the sale of the machinery, and Tyree is entitled exclusively to any profit made by the sale of the machinery.

If there had been no sale by Tyree either of the stock-intrade or of the machinery the partnership would have had the right to take over the stock-in-trade. If the partnership had asserted that right an inquiry would have been ordered for the purpose of ascertaining what Tyree paid for the stock-in-trade. If, owing to the purchase having been joint, it would have been impossible to ascertain this, the inquiry would have been directed to ascertain what the partnership ought to pay Tyree for the stock-in-trade. If the minimum sum that the partnership would have had to pay for the stock-in-trade if it had bought the stock from the original vendor as a separate parcel can be ascertained exactly, that sum would be the sum which the partnership ought to pay. Tyree has bought something which the partnership had a right to buy. If the partnership had exercised its right of purchase instead of Tyree, the minimum sum it would have had to pay is accurately ascertained. In the absence of evidence that Tyree had to pay less, this sum is what the partnership should pay Tyree. The fact that Tyree has sold the goods and the machinery does not, as it seems to me, alter this position.

I think, therefore, that the correct result has been arrived

at by the Court below, and that this appeal should be dismissed.

CONOLLY, J.

I am of opinion that this appeal should be dismissed; and it is hardly necessary to say more than that I agree with the reasons given by the learned Judge in the Court below for finding in favour of the respondents.

The evidence satisfies me that before any tenders were sent in Tyree and Pannell discussed the value of the stock, and Hopkins also discussed it with Pannell, and they all agreed that it was worth 12s. 6d. in the pound, or £1,521 1s. 5d. Pannell tendered at that price, and he says that he knew that Tyree's tender would be of the same amount. Pannell also states that they several times discussed the value of the machinery, and that he gave his opinion that it was worth 4s. or 5s. in the pound, which, therefore, would be £320 or £400. Suckling also, an apparently independent tenderer, tendered for the whole at £1,635, valuing the plant and machinery at £450 and the stock at £1,185. I attach little importance to the fact that Tyree sold the machinery and plant to the Excelsior Boot Company for £1,500, since, as pointed out by the learned Judge in the Court below, Tyree was both vendor and purchaser. Moreover, he did not receive cash, but shares in the company, which might or might not turn out to be of their nominal value.

EDWARDS, J.:

I am of the same opinion.

I have felt grave doubt as to whether or not, under the circumstances, the respondent should be allowed to set up - that what was one purchase was in effect two purchases. The respondent has, however, been decreed to account only for the profits made by the resale of the stock-in-trade. He is to put the appellants in the same position as if the purchase of the stock-in-trade had been so made that the appellants could elect to take advantage of it. The sale was a sale by trustees, and was by tender. Pannell, a bona fide tenderer, and a person of good credit, tendered the sum of £1,521 1s. 5d. for the stock-in-trade. If the respondent had, as he ought to have done, tendered separately for the stock-in-trade, he could not therefore have obtained it at a price below that tendered by Pannell. The minimum price of the stock-in-trade is therefore

C.A.

1901. GIBSON

V.

TYREE.

C.A.

1901.

GIBSON

v.

TYREE.

conclusively fixed, and what the appellants have been deprived of is the difference between that sum and the sum produced by the resale. For this the respondent has accounted.

I base my opinion entirely upon the fact that it has been conclusively shown that the appellants could not have purchased the stock-in-trade for less than the amount of Pannell's tender. But for this I should have thought that the case came within the principle that, where one having fiduciary relations with another confounds the property of both together so that they cannot be distinguished, then he shall account for the whole, except what he can conclusively prove to belong to himself. I do not think that it was admissible for the respondent to show by the figures upon which he based his tender that what was one purchase was in effect two purchases.

Appeal dismissed.

Solicitors for the appellants: Beswick & Harris (Christchurch).

Solicitors for the respondents: Garrick, Cowlishaw, & Fisher (Christchurch).

C.A.

1901.

Oct. 16, 17;

Nov. 4.

[IN THE COURT OF APPEAL.]

RIDDIFORD v. WARREN AND ANOTHER.

Sale of Goods-Contract for-Misrepresentation-Rescission-Rules of Common Law and Equity-"The Sale of Goods Act, 1895," Section 61, Subsection 2.

A contract for the sale of goods cannot be rescinded on the ground of an innocent misrepresentation inducing the contract unless the misrepresentation was of the nature defined in Kennedy v. The Panama, &c., Mail Company(1)--unless, that is to say, it was such that there is a complete difference in substance between the thing bargained for and the thing obtained, so as to constitute a failure of consideration.

The fusion of law and equity has not affected the law in regard to the effect of misrepresentation upon contracts for the sale of goods, the rules of equity in regard to the effect of misrepresentation upon contracts never having applied to contracts for the sale of goods. Subsection 2 of section 61 of The Sale of Goods Act, 1895," recognises and continues this.

The common-law rule, as stated in the above case, continues, therefore, to be the rule in the case of a contract for the sale of goods.

THIS

(1) L.R. 2 Q.B. 580.

HIS was an appeal from a decision of Stout, C.J., in an action in which the appellant sought to recover damages from

the respondents for breach of a contract for the sale of lambs by the respondents to the appellant.

C.A.

1901.

บ.

WARREN.

One of the defences set up was that the contract had been RIDDIFORD induced by a misrepresentation on the part of an agent of the appellant, who negotiated the purchase on his behalf, and that it had been rescinded by the respondents on that ground. It was admitted that the misrepresentation, if any, was made innocently. Stout, C.J., found that there had been a misrepresentation, though innocent, inducing the contract, and that the contract had been properly rescinded by the respondents, and gave judgment for the respondents. The point of law decided by the Court of Appeal was not raised in the Court below, nor considered by Stout, C.J., in his judgment, and, as the case is being reported upon that point only, it is unnecessary to set out His Honour's judgment. The Court of Appeal was unanimously of opinion, upon the facts, that there had been no misrepresentation on the part of the agent of the appellant, and that the appeal ought to be allowed on that ground, and this question was discussed at length in the judgments. These portions of the judgment are omitted as having no bearing upon the point for which the case is reported.

The facts bearing upon that point were shortly as follows: The respondents were two brothers carrying on business in partnership as sheep-farmers near Pahiatua. The appellant was also a sheep-farmer. An agent of the appellant negotiated with one of the respondents, W. A. Warren, for the sale to the appellant of 1,600 ewe lambs of the coming season from the respondents' sheep-run. The appellant's agent offered 7s. 6d. for the lambs. The respondent W. A. Warren said he wanted 8s. The appellant's agent thereupon said that he had seen a letter from a Hawke's Bay stock agent to a Wairarapa farmer quoting the respondents' lambs at 7s. 6d., and that he should telegraph to this agent and close for 7s. 6d. The respondent W. A. Warren thereupon said that if that was so his brother must have put them under offer at that figure, and that he would agree to sell at that price; and a contract for sale and purchase at that price was accordingly concluded in writing. The contest upon the facts was as to whether the statement made by the appellant's agent correctly gave the effect of the letter which he had seen. The respondents alleged that it did not, and this was the misrepresentation relied on.

The arguments are given only so far as they bear upon the point for which the case is reported.

C.A.

1901.

RIDDIFORD

v.

WARREN.

H. D. Bell and H. R. Cooper, for the appellant:

In the case of an innocent misrepresentation there must be a complete difference in substance, so as to constitute a failure of consideration: Kennedy v. The Panama, &c., Mail Company(1). Neither the Judicature Acts in England nor the Law Amendment Act in New Zealand has introduced the doctrine of equity into the sale of goods. Section 61 of "The Sale of Goods Act, 1895," saves the rules of the common law, and the law merchant in particular, as to fraud and misrepresentation. The rules of equity are treated as not applicable. The definition of "good faith" in subsection 2 of section 2 also shows that it is the rules of the common law and not those of equity which are applicable to sales of goods. Honesty is enough, and negligence is immaterial. The article by Sir F. Pollock on "Contract" in The Encyclopædia of the Laws of England(2) questions whether the wide rule in equity applies to the sale of goods. The point is raised, but not answered, in Ker and Pearson-Gee on the Sale of Goods Act(3) and Benjamin's Sale of Personal Property(4). maxim Caveat emptor has never been interfered with. The rule in America is that misrepresentation must be fraudulent to set aside a contract for the sale of goods: Southern Development Company v. Silva(5). The notes to Chaudelor v. Lopus(6) do not contemplate the rescission of a contract for the sale of goods for anything short of fraud.

Findlay, for the respondents :

The

Since the Judicature Acts, innocent misrepresentation inducing a contract is a ground for setting aside the contract; and the rule applies to contracts of every description: Anson on Contracts(7). Sir William Anson introduces no limitation because of the section of the Sale of Goods Act, although he states in his preface that he has had to examine it. The maxim Caveat emptor applies where the representation is as to the nature or quality of the thing sold, but not where it is as to something quite independent of the subject-matter. All the cases in the notes to Chaudelor v. Lopus (6) were cases of representations as to the nature or quality of the thing. In Benjamin's Sale of Personal Property(8) it is stated that the right to rescind a contract is now governed by equitable

(1) L.R. 2 Q.B. 580.

(2) Vol. iii. 344-45.

(3) p. 306.

(4) 4th ed. 394, note (p).

(5) 125 U.S. Rep. 247.

(6) 2 Sm. L.C. 52.

(7) 9th ed. 157 et seq. 159, 161.

(8) 4th ed. 394, 446. 448,