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LA313 - Commercial Law - Cases




[1926. L. 744]

Factor-Mercantile Agent-Possession of Goods-Consent of Owner-Property in Goods-Fraud of Agent-Bona fide Purchaser-Factors Act, 1889 (52 & 53 Vict. c. 45), ss. 1, 2.

The plaintiff, wishing to sell furniture together with certain tapestry known as the "Aubusson" tapestry, stored it in a house and engaged one Prior, an art dealer Who had an antique shop near by, to sell it for him on commission. Prior lived in the house and brought customers to see the tapestry. Customers dealt with Prior only and knew nothing of the plaintiff, but Prior had no authority to complete a sale without plaintiff's sanction. Prior falsely represented to the plaintiff that he had sold the tapestry to one W. for 525l. and so obtained plaintiff's consent to the removal of the tapestry for sale and delivery to W. Prior then sold it to defendant in fraud of the plaintiff for 250l. The defendant acted in good faith in the usual course of business, and had no notice of the plaintiff's title:-

Held, that Prior was a mercantile agent and not a mere servant or shopman; that a mercantile agency under the Factors Act, 1889, may exist although the agent, as here, is acting for one principal only and has no general occupation as agent; that Prior was not in possession of the tapestry in virtue of his residence in the house, but that he came into possession of it as mercantile agent, when he was allowed to take it away under colour of the alleged sale to W., even though the plaintiffs sanction was obtained by fraud; that the sale to the defendant took place in the ordinary course of Prior's business as a mercantile agent within the meaning of the Factors Act, 1889, and that the defendant was therefore not liable for conversion.

ACTION tried by Wright J. without a jury. The following statement of facts is taken from the judgment of Wright J.-

"This is an action brought by the plaintiff, Colonel Claude Lowther, to recover damages from the defendant, Lionel Harris, carrying on business as an art dealer under the name of the Spanish Art Gallery. The claim is pleaded in the alternative as for detinue or conversion, but the plaintiff's counsel elected to proceed as for conversion. The subject matter consisted of two pieces of tapestry, one consisting of three panels, described as Aubusson tapestry, and the other a single piece, described as the Leopard tapestry (also as a hunting scene). The defendant relied on the Factors Act, 1889, or, in the alternative, on estoppel at common law. The circumstances in regard to the two pieces were in some respects different.

Colonel Lowther early in 1923 had a large quantity of valuable furniture and antiques for disposal. He had as secretary a Mr. Urwin. In March, 1923, he went into an antique shop in Ebury Street where one Barton Prior dealt in antiques in a small way, principally glass and china. The plaintiff made some purchases, and after some conversations came to an arrangement with Barton Prior that Prior should act as his agent for the disposal of the furniture and antiques. Among the articles so to be dealt with were the Aubusson tapestry, which had been bought in 1919 for 900l, and the Leopard tapestry, which about the same time had cost 771l. The plaintiff took a house, 10 Palace Street, a few minutes' distant from Prior's shops in Ebury Street, and there the plaintiff's furniture and antiques were stored. Mr. Urwin was the lessee, but this was in his capacity as agent for the plaintiff, and he had an office on the first floor. Prior was allowed to live in a flat on the top floor and, to use as a sitting room a room on the floor below. He retained his business in Ebury Street, where he had two shops at Nos. 5 and 9, and his business was registered under the Registration of Business Names Act, 1916, as 'Period.' Towards the end of 1923 he also had a telephone address at 10 Palace Street, under the name 'Period,' with an extension to Ebury Street, but that was a private telephone of his own. Customers used to come to his shops in Ebury Street and he used to bring them round to see the furniture on view as for sale at 10 Palace Street, and in most, if not all, cases customers were not told that the furniture was the property of the plaintiff, or that Prior was merely selling on the plaintiff's behalf. He was left to make out invoices for goods sold as for 'Period' 5 and 9 Ebury Street, and he collected the price by cheques made to himself; he accounted to the plaintiff by paying cash, at least during the time material to this case. As between the plaintiff and Prior, the plaintiff's authority was strictly limited. The books were kept by Mr. Urwin, who was in the office at 10 Palace Street during business hours. Prior had no authority to complete a sale or make a delivery without first getting the sanction of the plaintiff, whom he used to see about four times a week, or, if the articles were of less value than 100l, the sanction of Mr. Urwin. Prior had no authority to remove any goods from 10 Palace Street without such sanction. Trouble began about the middle of 1924, or a little earlier in that year, between Prior and the plaintiff, who complained that money for goods sold was not coming in properly. Alterations in procedure were discussed, and in August, 1924, heads of agreement for the protection of the plaintiff as against Prior were signed. A little later, in October, 1924, it was discovered that various articles of value had been disposed of by Prior. He was arrested and was tried, and convicted of larceny at the Central Criminal Court. As a result of what was discovered by the plaintiff, this action was brought in respect of two of the articles which Prior had dishonestly made away with.

I find the following facts with reference to the Aubusson tapestry. Prior falsely pretended to the plaintiff about August, 1923, that he was able to sell this tapestry to one Corbel Woodhall for 525l. ; the plaintiff, after protesting that the price was too small, agreed to the sale on the representation that Woodhall was a valuable customer. After this consent, given in the presence of Mr.Urwin, the latter permitted Prior to remove the tapestry in order to make delivery and complete the sale as authorized by the plaintiff. This happened in August, 1923; I think the entry in the plaintiff's book as of December, 1923, was direct bad bookkeeping. In fact, Prior had not sold the tapestry to Woodhall at all, and his story was a mere fiction in order to enable him to get possession of the tapestry, which he did, with the intention of disposing of it in fraud of the plaintiff. Having thus got the tapestry, he sent it in a van or cart by means of his brother, William Prior, who was merely acting on his instructions, to the defendant's place of business and offered it for sale. The tapestry had actually been offered to the defendant about a month before in the same way for 300l. The defendant had had some small dealings with Prior a little previously, and offered 250l. for the tapestry. The defendant and his son recognized the tapestry as having been offered by the plaintiff at Christie's in the preceding March, and on inquiry were told by William Prior that it was being, sold on behalf of the plaintiff. They knew nothing of Barton Prior's general connection with the plaintiff or of the premises at 10 Palace Street. They dealt with Prior as a commission agent carrying on business under the name of 'Period', at 5 and 9 Ebury Street', and when the price was agreed at 250l. they gave their cheque for that sum to Barton Prior, obtaining a receipt signed B. Prior on paper headed 'Period' 5 and 9 Ebury Street', and took the tapestry. A few days later they sold it to Simmons, of New York., for 350l.which I find to be its true value at that time. In January,1924, the same man, W. Prior, came again with the other piece of tapestry, the Leopard tapestry, on a van and offered it for sale. The defendant bought it for 200l, paid a cheque in favour of B. Prior, and took a receipt headed 'Period, 5 and 9 Ebury Street,' and signed by William Prior for Barton Prior. The defendant did not know or question whether Prior was selling for himself or for a principal, nor had he any knowledge that the tapestry was the property of the plaintiff. In fact, Prior had simply stolen the tapestry from 10 Palace Street, without the knowledge or consent of the plaintiff or Mr. Urwin, who thought that it was still lying folded upon a shelf. It was not till October, 1924, that the theft was discovered along with the other frauds. The defendant sold the tapestry to Cardinal and Harford almost at once for 300l., less commission. I place its value at that date at 270l. No suggestion is made that the defendant acted otherwise than in good faith. I find that it was in the usual course of business in fine art dealings for a dealer, whether acting for himself or as agent for a principal, to bring for sale to other dealers articles which, if sufficiently bulky, would be carried in a van or motor car."

Stuart Bevan K.C. and van den Berg for the plaintiff.
Greaves-Lord K.C. and L. W. J. Costello for the defendant.

[The arguments sufficiently appear from the judgment.]

Cur. adv. vult.

Nov. 4. WRIGHT J. read the judgment, which after the above statement and findings of fact, continued: Unless the defendant has a defence under the Factors Act, 1889, or on the ground of common law estoppel, it is clear that he is liable in damages for conversion, which damages, if recoverable by the plaintiff, I fix at 350l. in the case of the Aubusson tapestry, and at 270l. in the case of the Leopard tapestry. The circumstances relating to the two pieces of tapestry are different and require separate consideration I shall first deal with the Aubusson tapestry, and shall first consider the defence based on the Factors Act, 1889, in order to ascertain if the conditions of the Act are fulfilled. The first question is whether Prior was a mercantile agent that is, an agent doing a business in buying or selling, or both, having in the customary course of his business such authority to sell goods. I hold that he was. Various objections have been raised. It was contended that Prior was a mere servant or shopman, and had no independent status such as is essential to constitute a mercantile agent. It was held under the earlier Acts that the agent must not be a mere servant or shopman: Cole v. North Western Bank1; Lamb v. Attenborough2; Heyman v. Flewker.3 I think this is still law under the present Act. In my opinion Prior, who had his own shops, and who gave receipts and took cheques in his own registered business name and earned commissions, was not a mere servant but an agent, even though his discretionary authority was limited. It is also contended that even if he were an agent he was acting as such for one principal only, the plaintiff, and that the Factors Act, 1889, requires a general occupation as agent. This, I think, is erroneous. The contrary was decided under the old Acts in Heyman v. Flewker4, and I think the same is the law under the present Act. In Weiner v. Harris5 it appears that the agent was not acting for any other principal than the plaintiff, and this was so also in Hastings, Ld. v. Pearson6, in respect of which case the Court of Appeal, in Weiner v. Harris7, held that the agent was a mercantile agent. It is also clear that pictures, as objects of purchase and sale, constitute those who deal in them on commission mercantile agents within the Factors Acts: see under the old Act Heyman v. Flewker8 and under the present Act Turner v. Sampson.9

The next question is whether Prior was in possession of the Aubusson tapestry, and, if so, with the consent of the plaintiff, and, if he had such possession, whether it was in his capacity as mercantile agent. I add the last consideration because I think that, just as such a condition was imported in the old Factors Acts (see Cole v. North Western Bank10 and cases there cited), the same condition must be satisfied under the Factors Act of 1889. For the defendant it was contended that the tapestry, while lying at 10 Palace Street, was in the possession of Prior, relying on the facts that Prior had the use for residence of the top floor and the sitting room below, and further that he had disposing control over the goods in the house. As to Prior's residence in the house, I hold that the furniture in it, including the tapestry, was in the possession of the plaintiff, because Mr. Urwin, who was the lessee and occupier of the house, and who was in attendance during business hours, was merely a servant of the plaintiff, so that his possession was the plaintiffs possession. I adopt the language of Pollock and Wright on Possession, p. 38: "It will hardly be denied that a man is in possession in fact, as well as possessor in law, of his own goods in the house which he occupies, whether he be in the room at a given moment, or even in the house, or not." The plaintiff did all in his power to exclude any unauthorized dealing with the goods by Prior while they were in the house. As to Prior's use of the top floor and sitting room, I think Prior was merely in the position of a licensee, and perhaps caretaker, but never in possession of the plaintiff's goods in 10 Palace Street. Counsel for the defendant also contended that Prior had Possession of the goods because he was in a position to dispose of them by a sale enforceable by specific performance. Assuming that he was able to do so, though as I find he was forbidden to sell without specific authority, possession would not thereby be established, any more than if the goods had been in an independent warehouse. But I do hold that Prior became in possession of the Aubusson tapestry when he was allowed to take it away in the van after the plaintiff had sanctioned a sale to Woodhall. It is true that no such sale had in fact been made or was intended to be made, and that the possession was obtained by the fraud of Prior. Possession, however, was in fact obtained by Prior, and obtained by him in his capacity as mercantile agent. For the plaintiff it was contended that Prior obtained the tapestry under colour of an actually completed sale, and merely for purpose of delivery and as a sort of carrier between vendor and vendee. I think that is erroneous. Prior's functions as a mercantile agent were not completed even if. a bargain had been concluded, but extended to the delivery of the goods, the collecting of the price, and the giving of a receipt and a subsequent accounting to the plaintiff. Delivery of possession to Prior was a necessary step to enable him to complete his office. The same point was raised under the old Acts in Baines v. Swainson11 and in Vickers v. Hertz12, referred to in Cole v. North Western Lank13, in which case it was held that possession given to the agent in similar circumstances was possession given to him in his capacity as a mercantile agent. I think that is still the law. But it must further be determined if the possession was obtained with the consent of the plaintiff. It is not necessary here to rely on the presumption expressed in the Factors Act, 1889, s. 2, sub.s. 4, because I hold that the plaintiff did consent to the possession. It is true that the consent was obtained by fraud, and that in any event the plaintiff's sanction to Prior's selling was limited to a selling at a definite price and to a definite purchaser, and for the plaintiff reliance was placed on certain observations of Wills J. in Biggs v. Evans14, stated to be to the effect that there was no intrusting for sale within the old Factors Acts, because the principal gave only a partial or limited authority to sell. If that were the effect of that judgment, it would seem inconsistent with the principles laid down in the cases relating to the old Factors Acts and would clearly be contrary to the language and purpose of the Factors Act, 1889, and to the cases decided under it. But it is said that there was no consent in law, because Prior obtained the tapestry under circumstances which rendered him guilty of larceny by a trick. I do not think he was guilty of that offence. When Prior obtained possession of the tapestry, the plaintiff intended not merely to part with possession but also to confer a power to pass the property; it is clear that in such a case the misappropriation is either larceny by a bailee or obtaining goods by false pretences on the principles explained in Whitehorn Bros. v. Davison15 and Folkes v. King.16 But a fraud of that character, such as not to amount to larceny by a trick, does not vitiate the consent of the owner to the agents possession. Whether even larceny by a trick can, consistently with the policy and purpose of the Factors Act, 1889, which was passed to protect innocent purchasers for value, be held to vitiate consent in fact given and intended by the principal remains the subject of two conflicting decisions of the Court of Appeal-namely, Oppenheimer v. Frazer17 and Folkes v. King.18 I do not, on my view of the facts, consider that the particular question arises in this case.

I accordingly hold that Prior obtained possession of the Aubusson tapestry in his capacity as a mercantile agent and with the consent of the plaintiff; having such possession, he made (as I have found above), in the ordinary course of business of a mercantile agent, a sale to the defendant, who, it is not contested, acted in good faith and with no notice of Prior's want of authority. I hold that the defendant establishes his defence as regards the Aubusson tapestry under the Factors Act, 1889. This conclusion renders it unnecessary to discuss the plea based on estoppel at common law. I merely observe that on the facts established the defendant had no notice of the actual relations between the plaintiff and Prior, or how as between them business was conducted, and knew nothing except that the tapestry belonged to the plaintiff, and that Prior, whom the defendant regarded as a commission dealer, stated he was selling it on behalf of the plaintiff.

[His Lordship then dealt with the sale of the Leopard tapestry, and held that as to this the defence under the Factors Act, 1889, failed, because Prior never had possession of it with the consent of the plaintiff, and therefore the conditions of the Act were not fulfilled. He held that as to this tapestry the plaintiff was entitled to recover.]

Solicitors for plaintiff : Windybank, Samuell & Lawrence.
Solicitors for defendant : Powell, Rogers & Merrick.


(1) (1875) L. R. 10 C. P. 354, 372.

(2) (1862) 1 B. & S. 831.

(3) (1863) 13 C. B. (N. S.) 519.

(4) Ibid.

(5) [1910] 1 K. B. 285.

(6) [1893] 1 Q. B. 62

(7) [1910] 1 Q B 62.

(8) (1863) 13 C.B. (N.S.) 519.

(9) (1911) 27 Times L. R. 200

(10) (1875) L. n. 10 C. P. 354,372.

(11) (1863) 4 B. & S. 270..

(12) (1871) L. R. 2 H. L. Sc. 113

(13) L.. R. 10 C. P. 354, 394

(14) [1894] 1 Q. B. 88.

(15) [1911]1 K. B. 463.

(16) [1923]1 K. B. 282.

(17) [1907] 2 K. B. 50.

(18) [1923] 1 KB 282.