[1919] 2 KB 243
On 15 April 1918 North entered Phillips's shop and asked to see some pearls and some rings. He selected pearls at the price of £2550 and a ring at the price of £450. He produced a cheque book and wrote out a cheque for £3000. In signing it, he said: 'You see who I am, I am Sir George Bullough', and he gave an address in St James's Square. Phillips knew that there was such a person as Sir George Bullough, and finding on reference to a directory that Sir George lived at the address mentioned, he said, 'Would you like to take the articles with you?' to which the man replied: 'You had better have the cheque cleared first, but I should like to take the ring as it is my wife's birthday to-morrow,' whereupon Phillips let him have the ring. The cheque was dishonoured. North was subsequently convicted of obtaining the ring by false pretences. In the meantime on 16 April 1918, North, in the name of Firth, had pledged the ring with Brooks who, bona fide and without notice, advanced £350 upon it. Phillips sued Brooks, who were pawnbrokers, for the return of a ring or, alternatively, its value, and damages for its detention.
The issue before the court was whether the contract between Phillips and North was void for mistake or merely voidable.
Horridge J
... 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, and who was not Sir George Bullough, but a man of the name of North, who obtained the sale and delivery by means of the false pretence that he was Sir George Bullough...
After obtaining the ring the man North pledged it in the name of Firth with the defendants, who bona fide and without notice advanced £350 upon it. The question, therefore, in this case is whether or not the property had so passed to the swindler as to entitle him to give a good title to any person who gave value and acted bona fide without notice. This question seems to have been decided in an American case of Edmunds v Merchants' Despatch Transportation Co. The headnote in that case contains two propositions, which I think adequately express my view of the law. They are as follows: (1) 'If A, fraudulently assuming the name of a reputable merchant in a certain town, buys, in person, goods of another, the property in the goods passes to A.' (2) 'If A, representing himself to be a brother of a reputable merchant in a certain town, buying for him, buys, in person, goods of another, the property in the goods does not pass to A.'
The following expressions used in the judgement of Morton CJ seem to me to fit the facts in 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.'
Further on, Morton CJ says:
'In the cases before us, there was a de facto contract, purporting, and by which the plaintiffs intended, to pass the property and possession of the goods to the person buying them; and we are of opinion that the property did pass to the swindler who bought the goods.'...
... I think, there was a passing of the property and the purchaser had a good title, and there must be judgement for the defendants with costs.