BANKES L.J. Whatever doubt there may have been in former times as to legal rights of a purchaser in the position of the present plaintiff was settled by the Sale of Goods Act, 1893, by s. 12 of which it was provided that: “In a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is (1.) An implied condition on the part of the seller that...he has a right to sell the goods. “The facts are shortly these. The plaintiff bough a motor car at Brighton from the defendant in May, 1922. He took possession of it at once, drove it to his place of business at Blandford, where he exhibited it for sale in his shop, and ultimately sold it to a purchase. It was not discovered that the car was stolen car until September, when possession was taken of it by police. The plaintiff about four months. The plaintiff now brings his action to recover back the price that he paid to the defendant upon the ground of total failure of consideration. As I have said, it cannot now be disputed that there was an implied condition into a warranty the plaintiff is entitled to rescind the contract and recover back the money. The Sale of Goods Act itself indicates in s. 53 the circumstances in which a condition may be changed into a warranty: “where the buyer elects, or is compelled, to treat any breach of a condition on the part of the seller as a breach of warranty” the buyer is not entitled to reject the goods, but his remedy is in damages. Mr. Doughty contends that this is a case in which the buyer is compelled to treat the condition as a warranty within the meaning of that section, because, having had the use of the car for four months, he cannot put the seller in statu quo and therefore cannot now rescind, and he has refderred to several authorities in support of that contention. But when those are looked at I think it will be found that in all of them the buyer got some part of what he contracted for. In Taylor v. Hare (1) the question was as to the right of the plaintiff to recover back money which he had paid for the use of a patent which turned out to be void. But there the Court treated the parties, who had made a common mistake about the validity of the patent, as being in the nature of joint adventures in the benefit of the patent; and Chambre J. expressly pointed out that “The plaintiff has had the enjoyment of what he stipulated for.” The language there used by [Health J., thought it may have been correct as applied to the facts of that case, is much too with to be applied to such a case present. In Hunt v. Silk (1) Lord Ellenborough went upon the ground that the said: “Where a contract is to be rescinded at all, it must be rescinded in toto, and the parties put it statu quo. But here was an intermediate occupation, a part execution of the agreement, which was incapable of being rescinded.” And Lawes v. Purser (2) proceeded on the same ground, that the defendant had derived benefit from the execution of the contract. But in the present case it cannot possibly be said that the plaintiff received any portion of what he had agreed to buy. It is true that a motor car was delivered to him, but the person who sold it to him had no right to sell it, and therefore he did not get what he paid for – namely, a car to which he would have title; and under those circumstances the user of the car by the purchaser seems to me quite immaterial for the purpose of considering whether the condition had been converted into a warranty. In my opinion the plaintiff as entitled to recover the whole of the purchase money, and was not limited to his remedy in damages as the judge below held.
The appeal must be allowed.
SORRUTON L.J. The discussion which this case has received in the course of the argument has made it reasonably clear to me that the learned judge below came to a wrong conclusion. The plaintiff purchased a car from the defendant for 334l. he drove it from Brighton, where he bought it, to the place where he had a garage, painted it and kept it there for about two months. He then sold it to a third person who had it in his passion for another two months. Then came the police, who claimed it as the stolen car for which they had been looking. It appears that it had been stolen before the defendant became possessed of it, and consequently he had no title that he could convey to the plaintiff. In these circumstances the plaintiff sued the defendant for the price he paid for the car as on a total failure of consideration. Now before the passing of the Sale of Goods Act there was a good deal of confusion in the authorities as t the exact nature of the vendor’s contract with respect to his title to sell. It was originally said that a vendor did not warrant his title. But gradually a number of exceptions crept in, till as last the exceptions became the rule, the rule being that the vendor warranted that he had title to what he purported to sell, except in certain special cases, such as that of a sale by a sheriff, who does not so warrant. Then came the Sale of Goods Act, which re-enacted it as a condition, not as a warrant. Sect. 12 says in express terms that there shall be “An implied condition is broken the contract can be rescinded, and with the rescission the buyer can demand a return of the purchase money, unless he has, with knowledge of the facts, held on to the bargain so as to waive the condition. But Mr. Doughty argues that there can never be a rescission where a restitutio in integrum is impossible, and that here the plaintiff cannot rescind because he cannot return the car. To that the buyer’s answer is that the reason of his inability to return it-namely, the fact that the defendant had no title to it – is the very thing of which he is complaining, and that it does not kie in the defendant’s mouth to set up as a defence to the action his own breach of the implied condition that he founded, and it would, I think, be absurd to apply the rule as to restiutio in integrum to such a state of facts. No doubt the general rule is that a buyer cannot rescind a contract of sale and get back the purchase money unless he can restore the subject matter. There are a large number of cases on the subject, some of which are not very easy to reconcile with others. Some of them make it highly probable that a certain degree of deterioration of the goods is not sufficient to take away the right to recover the purchase money. However I do not think it necessary to refer to them. It certainly seems to me that, in a case of rescission for the breach of the condition that the seller had a right to sell the goods, it cannot be that the buyer is deprived of his right to get back the purchase money because he cannot restore the goods which, seller at all, and which the seller therefore has no right to under any circumstances. For these reasons I think that the plaintiff is entitled to recover the whole of the purchase money as for a total failure of consideration, and that the appeal must be allowed.
ATKIN L.J. agree. It seems to me that in this case there has been a total failure of consideration, that is to say that the buy has not got any part of that for which he paid the purchase money. He paid the money in order that he might get the property, and he has not got it. It is true that the seller delivered to him the de facto possession, but the seller had not got the right to possession and consequently could not give it to the buyer. Therefore the buyer, during the time that he had the car in his actual possession had no right to it, and was at all times liable to the true owner for its conversion. Now there is no doubt that what the buyer had a right to get was the property in the car, for the Sale of Goods Act expressly provides that in every contract of sale there is an implied condition that the seller has a right to sell; and the only difficulty that I have felt in this case arises out of the wording of s. 11, ©, which says that: “Where a contract of sale is not severable, and the buyer has accepted the goods...the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there be a term of the contract, express or implied, to that effect.” It is said that this case falls within that provision, for the contract of sale was not severable and the buyer had accepted the car. But I think that the answer is that there can be no sale at all of goods which the seller has no right to sell. The whole object of a sale is to transfer property from one person to another. And I think that in every contract of sale of goods there is an implied term to the effect that a breach of the condition that the seller has a right to sell the goods may be treated as a ground for rejecting the goods and repudiating the contract notwithstanding the acceptance, within the meaning of the concluding words of sub-s. (c); or in other words that the sub-section has no application to a breach of that particular condition. It seems to me that in this case there must be a right to reject, and also a right to sue for the price paid as money had and received on failure of the consideration, and further that there is no obligation on the part of the buyer to receive it. Under those circumstances can it make any difference that the buyer has used the car before he found out that there was a breach of the condition? To my mind it makes no difference at all. The buyer accepted the car on the presentation of the seller that he had a right to sell it, and insamuch as the seller had no such right he is not entitled to say that the buyer has enjoyed a benefit under the contract. In fact the buyer has not received any part of that which he contracted to received – namely, the property and right to possession – and, that being so, there has been a total failure of consideration. The plaintiff is entitled to recover the 334l. which he paid.
Appeal allowed.