Same - As Against Third Persons

It follows from the principle that the contract is voidable, and not void, that, when innocent third persons have for value acquired^ rights under the contract, their rights are indefeasible. The rule is also said to be an application of the principle of convenience, that, se Curtiss v. Howell, 39 N. Y. 211; Neal v. Reynolds, 38 Kan. 432, 16 Pac. 785; Rigdon v. Walcott, 141 111. 640, 31 N. E. 158; Stanton v. Hughes, 97 N. C. 318, 1 S. E. 852; Handforth v. Jackson, 150 Mass. 140, 22 N. E. 634. See "Contracts," Dec. Dig. (Key-No.) § 266; Cent. Dig. § 1186.

seNeblett v. Macfarland, 92 U. S. 101, 23 L. Ed. 471; Flynn v. Allen, 57 Pa. 4S2; Hammond v. Pennock, 61 N. Y. 145; Henninger v. Heald, 51 N. J. Eq. 74, 26 Atl. 449; Groff v. Hansel, 33 Md. 161. See "Contracts," Dec. Dig. (Key-No.) § 266; Cent. Dig. § 1186.

87 Fitz v. Bynum, 55 Cal. 459; Wicks v. Smith, 21 Kan. 412, 30 Am. Rep. 433; Babcock v. Case, 61 Pa. 427, 100 Am. Dec. 654. If the things received are capable of serving any purpose of advantage by their possession or control, or if their loss would be a disadvantage in any way, they must be returned. "This rule is held with great strictness in actions at law, as in the case of the casks that contained worthless lime (Conner v. Henderson, 15 Mass. 319, 8 Am. Dec. 103), and the sack that covered the rejected bale of cotton (Morse v. Brackett, 98 Mass. 205; Id., 104 Mass. 494)." Bassett v. Brown, 105 Mass. 558. And see Evans v. Gale, 17 N. H. 573, 43 Am. Dec. 614. See "Contracts," Dec. Dig. (Key-No.) § 266; Cent. Dig. § 1186.

88 Masson v. Bovet, 1 Denio (N. Y.) 69, 43 Am. Dec. 651; Hammond v. Pennock, 61 N. Y. 145; Guckenheimer v. Angevine, 81 N. Y. 394; Gates v. Raymond, 106 Wis. 657, 82 N. W. 530. And see John V. Farwell Co. v. Hilton (C. C.) 84 Fed. 293, 39 L. R, A. 579. See "Contracts," Dec. Dig. (Key-No.) i 266; Cent. Dig. § 1186.

89 Veazie v. Williams, 8 How. 134, 158, 12 L. Ed. 1018; Neblett v. Macfarland, 92 U. S. 101, 104, 23 L. Ed. 471; Baker v. Lever, 67 N. Y. 304, 23 Am. Rep. 117; Gatling v. Newell, 9 Ind. 574; Goodrich v. Lathrop, 94 Cal. 56, 29 Pac. 329, 28 Am. St Rep. 91. See "Contracts," Dec. Dig. (Key-No.) § 266; Cent. Dig. § 1186.

90 Farris v. Ware, 60 Me. 482. See "Contracts," Dec. Dig. (Key-No.) § 266; Cent. Dig. § 1186.

when one of two innocent persons must suffer from the fraud of a third, the loss should fall on the one who enabled the third party to commit the fraud.91 Hence, a sale of land or goods cannot be rescinded so as to revest the property in the vendor if the vendee has in the meantime sold them to a bona fide purchaser.92 The seller's remedy is by an action for damages.93 The purchase must be for value, and hence the protection does not extend to attaching creditors,94 to an assignee in bankruptcy,95 or to a person taking the property in payment of an existing indebtedness.98

A sale, however, is to be distinguished from mere delivery of possession induced by fraud; for in the latter case the person obtaining possession acquires no property in the goods, and can pass none to a third person, however innocent. Thus, where a person obtains goods by fraudulently impersonating a third person,97 or by pretending to be the agent of a third person,98 to whom the owner supposes he is selling, the person thus obtaining the goods acquires no title, and a bona fide purchaser from him stands in no better position. In such case there is no contract at all, as the seller never consented to sell to the person to whom he delivered the goods.

91 Pollock, Cont. (3d Ed.) 556; Tiffany, Sales, 122.

92 ROWLEY v. BIGELOW, 12 Pick. (Mass.) 307, 23 Am. Dec. 607, Throckmorton Cas. Contracts, 196. See "Vendor and Purchaser," Dec. Dig. (Key-No.) § 239; Cent. Dig. §§ 583-600.

93 Babcock v. Lawson, 4 Q. B. Div. 394; ROWLEY v. BIGELOW, 12 Pick. (Mass.) 307, 23 Am. Dec. 607, Throckmorton Cas. Contracts, 196; Hoffman V. Noble, 6 Metc. (Mass.) 68, 39 Am. Dec. 711; Neff v. Landis, 110 Pa. 204, 1 Atl. 177; Le Grand v. Bank, 81 Ala. 123, 1 South. 460, 60 Am. Rep. 140; Moore v. Moore, 112 Ind. 149, 13 N. E. 673, 2 Am. St. Rep. 170; Jones v. Christian, 86 Va. 1017, 11 S. E. 984; Armstrong v. Lewis, 38 I11. App. 164; First Nat Bank v. Carriage Co., 70 Miss. 587, 12 South. 59S; Scheuer v. Goetter, 102 Ala. 313, 14 South. 774; Hall v. Hinks, 21 Md. 406; Singer Mfg. Co. v. Sam-mons, 49 Wis. 316, 5 N. W. 788; Cochran v. Stewart, 21 Minn. 435. See "Vendor and Purchaser;' Dec. Dig. (Key-No.) § 239; Cent. Dig. §§ 583-600.

94 Buffington v. Gerrish, 15 Mass. 158, 8 Am. Dec. 97; Thompson v. Rose, 16 Conn. 71, 41 Am. Dec. 121; Jordan v. Parker, 56 Me. 557; Oswego Starch Factory v. Lendrum, 57 Iowa, 573, 10 N. W. 900, 42 Am. Rep. 53; Henderson v. Gibbs, 39 Kan. 679, 684, 18 Pac. 926. See "Sales," Dec. Dig. (Key-No.) § 222; Cent. Dig. §§ 609-611; "Vendor and Purchaser," Dec. Dig. (Key-No.) § 216; Cent. Dig. § 441; "Execution," Cent. Dig. §§ 53, 106-109, 113, 115.

95 Donaldson v. Farwell, 93 U. S. 631, 23 L. Ed. 993; Bussing v. Rice, 2 Cush. (Mass.) 48; Singer v. Schilling, 74 Wis. 369, 43 N. W. 101; Benesch v. Weil, 69 Md. 274, 14 Atl. 666. See "Sales," Dec. Dig. (Key-No.) § 230; Cent. Dig. § 650.

96 Barnard v. Campbell, 58 N. Y. 73, 17 Am. Rep. 208; Stevens v. Brennan, 79 N. Y. 258; Sleeper v. Davis, 64 N. H. 59, 6 Atl. 201, 10 Am. St. Rep. 377; Poor v. Wodburn, 25 Vt, 235; McGraw v. Solomon, S3 Mich. 442, 47 N. W. 345. Contra, Shufeldt v. Pease, 16 Wis. 659; Butters v. Haughwout, 42 I11. 18, 89 Am. Dec. 401. See "Sales," Dec. Dig. (Key-No.) § 230; Cent. Dig. § 650.

97 CUNDY v. LINDSAY, 3 App. Cas. 459, 47 L. J. Q. B. 481, 38 L. T. Rep. N. S. 573, 26 Wkly. Rep. 406, Throckmorton Cas. Contracts, 169; Loeffel v. Pohlman, 47 Mo. App. 574. Cf. Edmunds v. Transportation Co., 135 Mass. 283. See "Sales," Dec. Dig. (Key-No.) § 234,; Cent. Dig. §§ 645-680.

98 Cases cited, ante, p. 250, note 21.

As a rule, if a negotiable instrument is procured by fraud, the party intending to sign it as such, so that there is no mistake as to the character of the instrument, it cannot be avoided on the ground of the fraud after it has passed into the hands of a bona fide purchaser for value; 99 but, as we have seen, it is otherwise where, by fraud or circumvention, a person is induced to sign a negotiable instrument, when he does not intend to sign it, but thinks he is signing something else, provided, of course, he is not guilty of such negligence as will estop him from setting up his mistake.1