Eastern Distributors Ltd v Goldring (Murphy, Third Party)
| Jurisdiction | England & Wales |
| Judgment Date | 06 June 1957 |
| Judgment citation (vLex) | [1957] EWCA Civ J0606-4 |
| Court | Court of Appeal |
| Date | 06 June 1957 |
[1957] EWCA Civ J0606-4
In The Supreme Court of Judicature
Court of Appeal
the Lord Chief Justice
(Lord Goddard),
Lord Justice Romer And
MR. JUSTICE DEVLIN.
MR P.M. DRAKE (instructed by Messrs Giffen, Couch & Gilmore, Agents for Messrs Giffen & Couch, St. Albans) appeared on behalf of the Appellant Defendant.
MR J. RAYMOND PHILLIPS (instructed by Messrs A. Russell Jones & Co., Hatfield) appeared on behalf of the Appellant Third Party.
MR C.L. HAWSER (instructed by Messrs Carr Sandelson & Co.) appeared on behalf of the Respondents (Plaintiffs).
THE LORD CHIEF JUSTICE. Mr Justice Devlin will give the Judgment of the Court.
MR JUSTICE DEVLIN: In 1955 the third party, Murphy, was in business, which he describes as that of a mobile greengrocer: and he owned a Bedford Utility van which he used in the business and which is the subject-matter of this action. He wanted to buy a Chrysler car from a motor dealer called Coker. But he had no money to pay for it - not even enough for a deposit under a hire-purchase contract. So Coker suggested that he should raise the deposit on the security of the Bedford van by means of a hire-purchase contract on it. If the money was simply borrowed on the security of the van, the necessary instrument would be a bill of sale and would have to be registered as such. But there is nothing to prevent the owner of a vehicle from selling it to a hire-purchase company, pocketing the price and paying it back by instalments; and provided the sale is a genuine one and not a sham, effect will be given to it as a hire-purchase contract. Murphy would then be in a position to buy the Chrysler on hire-purchase terrfis, using the price of the Bedford to cover the deposit.
Coker was in touch with the Plaintiffs, who are a hire-purchase company. The simplest way of carrying out the scheme, so far as it affected the Bedford, would have been for Murphy to have dealt direct with the Plaintiffs. But Coker - perhaps because he wanted the deposit for the Chrysler to go straight to him or possibly for Borne other reason - suggested a different arrangement, and Murphy acquiesced in it. This was, that Coker should pretend to the Plaintiffs that he was selling to Murphy the Bedford as well as the Chrysler. This involved also the pretence that Murphy had paid the deposit on both vehicles. Coker would then collect from the Plaintiffs the balance of the price of both cars, which would in effect he the money for which he was selling the Chrysler to Murphy, and by paying off the instalments on both care Murphy would pay the price of the Chrysler. In order to accomplish this plan, Murphy on 5th May, 1955, signed in blank four hire-purchase documents - namely, the proposal forms and the memoranda of agreement for the Chrysler and the Bedford respectively. He left these for Coker to fill in. He signed also on the same day a delivery note stating that he had taken delivery of the Bedford.
What happened afterwards is uncertain. Coker, whom the 1earnad Judge has found not to be fraudulent, was not available to give evidence. The records of the Plaintiffs were in confusion owing to a change of ownership. The Judge has found that the proposal for the Chrysler did not go through, Nevertheless, Coker proceeded with the proposal for the Bedford. He did this without Murphy's authority, for the essence of the scheme was that the Bedford transaction was only ancillary to the purchase of the Chrysler. The Judge has found that the Plaintiffs accepted the Bedford proposal as a genuine hire-purchase transaction and dealt with it accordingly. On 10th May, 1955, the Plaintiffs bought the Bedford from Coker, as recorded in a sales note, for £180 less an initial payment of £60. The memorandum of hire-purchase agreement was completed on 19th May, and the counterpart signed by the Plaintiff's was sent to Murphy the same day. Coker let Murphy have the Chrysler for a bit. But then it was taken away and Coker appears to have told Murphy that the whole transaction was cancelled. Murphy says that he regarded himself as the lawful owner of the Bedford. He advertised his greengrocery business for sale and on 24th June, 1955, he sold it, including the Bedford, to the Defendant for £200. It is not disputed that the Defendant bought in good faith and without any knowledge of Murphy's dealings with the Bedford.
Murphy paid no installments under the hire-purchase contract. On 22nd August, 1955, the Plaintiffs notified him that they would take possession of the Bedford. Later they ascertained that the Defendant had it and in January, 1956, they claimed it from him. He refused to give it up and they issued proceedings against him in the St. Albans County Court claiming the vehicle or £180 as its value. He joined Murphy as third party. On 31st January, 1957, judgment was given for the Plaintiff against the Defendant and for the Defendant against the third party. The Defendant says that his Judgment against the third party is worthless, and the Plaintiffs have not even bothered to sue him. So the case raises the familiar question of which of two innocent parties, the Plaintiffs or the Defendant, shall suffer for the misconduct of a third; and it is necessary to determine which of the two is in law entitled to the Bedford van.
The Plaintiffs depend for their title upon the transaction with Coker. If Coker had sold the van on behalf of Murphy and with his authority, that would dispose of the matter. So it would if Murphy had actually transferred the property to Coker so as to give him something which he could sell in his own name. But in fast Murphy never transferred the van to Coker; and although he gave a general authorisation to Coker to act in the way in which he did, he put, as the learned Judge has found, a specific limitation upon Coker's authority and one which indeed followed from the nature of the transaction contemplated: this was that the two proposals should go forward together. Coker, the Judge has found, had no authority to deal with the Bedford separately from the Chrysler. So the Plaintiffs cannot claim that they bought the van from the owner or from one who had his actual authority to sell.
But equally it is clear that as against Murphy the Plaintiffs acquired a good title to the Bedford. Coker represented & that the car was his, and Murphy was privy to that representation being made; so neither can be heard to say that Coker had not a good title to transfer to the Plaintiffs. Or, if the matter be looked at as one of principal and agent, the Plaintiffs being ignorant of the limitation placed on Coker's authority, are not affected by it
The Defendant's case is that, although estoppel will prevent both Coker and Murphy from aeserting that the property in the Bedford van did not pass to the Plaintiffs; it does not prevent anyone else from so doing. The Defendant, as an outside party quite ignorant of what Murphy and Coker had done, is, it is submitted, entitled to rely upon the reality of the transaction; and in reality the property never passed from Murphy. The Judge finds that Murphy intended to sell the car to Coker if the double transaction had gone through, but that he never in fact did so. The real position is, therefore, that Murphy never sold to Coker and Coker had no title to pass to the Defendants.
It is well established that an estoppel cannot affect the reality of the transaction. In ( Simm v. Anglo-American Telegraph Company 1879, 5 Queen's Bench Division, page 188), Lord Justice Brett at page 206 puts the principle as follows: "It seems to me that an estoppel gives no title to that which is the subject-matter of estoppel. The estoppel assumes that the reality is contrary to that which the person is estopped from denying, and the estoppel has no effect at all upon the reality of the circumstances.
If this is the true principle to be applied in this case, then the Plaintiffs never in truth and in fact acquired any title to the Bedford van? and the only question would be whether the Defendant, because he acquired the car from Murphy, by was bound by the estoppel which prevents Murphy from pleading the truth of the matter. An estoppel affects others besides the representor. The way it has always been put is that the estoppel binds the representor and his privies. But it is not easy to determine exactly who for this purpose is a privy. There can be no doubt that although the representation was actually made by Coker, Murphy on the facts of this case was privy to the making and is bound by it; see ( Downs v. Cooper 1841, 2 Queen's Bench, page 256). It would also appear that anyone whose title is obtained from the representor as a volunteer is a privy for this purpose. But it is very doubtful whether a purchaser for value without notice is bound by the estoppel. The point is fully discussed in Ewart on Estoppel (1900) at pages 199 to 203, and the author concludes that a purchaser for value without notice is not bound.
This part of the doctrine of estoppel has been worked out by Courts of Equity and chiefly in relation to the sale of land. There is no trace of its application to contracts for the sale of goods. Of course there are many cases of sale of goods where an agent has been held out or repreoented to have an authority to sell which he has cot in fact got and the solution of the difficulty so created might no doubt hare been found by the application of the doctrine of estoppel, but in fact the Courts of Common law approached the problem of the unauthorised sale from a different angle.
They began with the principle that no one could pass a better title than that which he had: nemo dat quod non habet. But to this general principle they admitted a number of exceptions,...
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