Brief of the case
A man named North entered the plaintiff’s shop and selected some pearls and rings worth £3000. He produced a cheque book and wrote out the amount. While signing it he said ‘you see who I am. I am Sir George Bullough’. After taking on reference it was found in the directory that Sir George Bullough lived at the address mentioned thus plaintiff let him have a ring. The rouge promised to come for other articles after the cheque was cleared. Before the fraud could be discovered, North pledged the ring to defendants. The plaintiff sued the defendant for the ring. It was held that the sale induced by the fraud made it voidable and not void.
Facts of the case
On 15 April 1918, a man named Mr North entered Philip’s jewellery shop and said “I am Sie George Bullough”. He wrote a dud cheque for £3000 to ‘pay’ for some pearls and a ring. He said he lived in St. James Square. Mr Philips checked the phone directory, and found there was someone there by that name. Mr Philips asked if he would like to take the jewellery with him. Mr North said he would leave the pearls but take the ring ‘for his wife’s birthday tomorrow’. Mr North then pawned the ring to Brooks Ltd for £350. When the false cheque was dishonoured, Philips sued Brooks Ltd to get the ring back.
Note that there are conflicting reports, showing that Mr North only identified himself after the ring was sold as Viscount Haldane said in Lake V. Simmons, but others say that North identified himself straight away.
Legal issue raised
Whether the title was transferred to the defendant and sale was valid?
Judgment of the case
The earlier judgment of Cundy V. Lindsay had established that contracts could be automatically void for mistake to identity. Where this is the case, title does not pass to the fraudulent buyer, and the third party loses out in the entirety. This principle is different where parties contract face to face; Horridge J stated:
“I have carefully considered the evidence of the plaintiff, and have come to the conclusion that, although he believed the person to whom he was handing the ring was Sir George Bullough, he in fact contracted to sell and deliver it to the person who came into his shop”.
This outcome can be explained by putting it as such: Mr Philips hoped he was contracting with Sir George Bullough, but in reality he agreed to contract with whoever came into his shop, taking a risk that he was not who he said he was. It had the mere effect of making the contract voidable for fraud, meaning that title passed to the rogue and subsequently to the third party buyer:
The following expressions used in the judgment of Morton CJ seem to me to fit the facts of this case:
“The minds of the parties met and agreed upon all the terms of the sale, the thing sold, the price and time of payment, the person selling and the person buying. The fact that the seller was induced to sell by fraud of the buyer made the sale voidable, but not void. He could not have supposed that he was selling to any other person; his intention was to sell to the person present, and identified by sight and hearing; it does not defeat the sale because the buyer assumed a false name or practised any other deceit to induce the vendor to sell”.
Final decision
The defendant were not held liable to pay for the ring pledged to them. The sale was valid.
