(1897) 14 TLR 98
Court of Appeal
King's Norton received a letter purporting to come from Hallam and Co, Sheffield, at the head of which was a representation of a large factory with a number of chimneys, and in one corner was a printed statement that Hallam and Co had depots and agencies at Belfast, Lille, and Ghent. The letter contained a request by Hallam and Co for a quotation of prices for brass rivet wire. In reply King's Norton quoted prices, and Hallam and Co then, by letter, ordered some goods which were sent off to them. These goods were never paid for. It turned out that a man named Wallis had adopted the name of Hallam and Co in order to fraudulently obtain goods. Wallis sold the goods that he had obtained from King's Norton to Edridge who bought them bona fide, and with no notice of any detect of title in Wallis. It appeared that King's Norton had been paid for some goods previously ordered by Hallam and Co, by a cheque drawn by 'Hallam and Co'. King's Norton brought an action to recover damages for the conversion of their goods. At the trial, the learned Judge found against King's Norton upon the ground that the property in the goods had passed to Wallis, who sold them to Edridge before King's Norton had avoided the contract.
The issue before the court was whether the contract between King's Norton and Wallis was void for mistake or merely voidable.
Smith LJ
... the case was a plain one. The question was whether the plaintiffs, who had been cheated out of their goods by a rogue called Wallis, or the defendants were to bear the loss. The law seemed to him to be well settled. If a person, induced by false pretences, contracted with a rogue to sell goods to him and the goods were delivered the rogue could until the contract was disaffirmed give a good title to the goods to a bona fide purchaser for value. The facts here were that Wallis, for the purpose of cheating, set up in business as Hallam and Co, and got note-paper prepared for the purpose, and wrote to the plaintiffs representing that he was carrying on business as Hallam and Co. He got the goods in question and sold them to the defendants, who bought them bona fide for value. The question was, With whom, upon this evidence, which was all one way, did the plaintiffs contract to sell the goods? Clearly with the writer of the letters. If it could have been shown that there was a separate entity called Hallam and Co and another entity called Wallis then the case might have come within the decision in "Cundy v Lindsay." In his opinion there was a contract by the plaintiffs with the person who wrote the letters, by which the property passed to him. There was only one entity, trading it might be under an alias, and there was a contract by which the property passed to him.