The general rule is that a person who has no title to goods cannot give a title to another person - nemo dat quod non habet.
In practice, however, the general rule must be subject to important exceptions, firstly, because the seller, though he may not be the owner, may have the legal right to sell on behalf of the owner, and secondly, because the true owner may be estopped from denying the right of the seller to sell.
The exceptions above mentioned may be further sub-divided as follows:
(1) Sale by a person having legal right to sell:
(a) Sale by an agent within his authority.
(b) Sale by a person having a power of sale.
(c) Sale by a person under an order of a competent court.
(2) Sale the validity of which the owner is estopped from disputing:
(d) Sale by an ostensible owner.
(e) Sale by an ostensible agent for sale.
Exceptions (d) and (e) are further discussed below. Exception (a) is not a real exception because a sale made by an agent within his authority is the sale of the principal not that of the agent. Exception (b) is illustrated by the case of a pledgee having an implied or express power of sale. See Donald v. Suckling, 1866, L.R. 1 Q.B. 585, 21 R.C. 301.
The Sale of Goods Act (Ont. s. 23; U.K. s. 21) states the general rule and some of the exceptions as follows:
23. Subject to the provisions of this Act, where goods are sold by a person who is not the owner thereof, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell. Provided that nothing in this Act shall affect:
(a) The provisions of The Factors Act or any enactment enabling the apparent owner of goods to dispose of them as if he were the true owner thereof;
(b) the validity of any contract of sale under any special common law or statutory power of sale or under the order of a court of competent jurisdiction.
As to sale by the apparent owner, see 44, and as to the Factors Act, see 46.
In the United Kingdom the Sale of Goods Act (s. 22) also contains the following provision:
22. - (1) Where goods are sold in market overt, according to the usage of the market, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of any defect or want of title on the part of the seller.
(2) Nothing in this section shall affect the law relating to the sale of horses.
(3) The provisions of this section do not apply to Scotland.
In the Ontario statute the foregoing section is replaced by the following (s. 24) :
24. The law relating to market overt shall not apply to any sale of goods which takes place in Ontario.
As to market overt in Ontario prior to the statute, see Forristal v. McDonald, 1883, 9 Can. S.C.R. 12, at p. 16 (Strong J.: "for sale in market overt, is, of course, out of the question") ; but cf. Bowman v. Yielding,.M.T. 3 V., Ont. Dig. 1900, vol. 3, col. 6203; McNabb v. Howland, 1862, 11 U.C.C.P. 434, at p. 436; Thompson v. Nelles, 1855, 4 U.C.C.P. 399; Peoples Bank of Halifax v. Estey, 1904, 34 Can. S.C.R. 429, at p. 448.
As to sale in market overt in the United Kingdom, see 20 Halsbury, Laws of England, pp. 53 ft, 25 Halsbury, pp. 195-6; Willis, Sale of Goods, 146 ff.; Scattergood v. Sylvester, 1850, 15 Q.B. 506, 16 R.C. 1; Horwood v. Smith, 1788, 2 T.R. 750, 23 R.C. 243.
S. 26 of the original statute has been omitted from the Ontario statute, the subject matter being covered by the following provisions of the Execution Act, R.S.O. 1914, c. 80, s. 10:
10. - (1) Subject to the provisions of The Land Titles Act, a writ of execution shall bind the goods and lands against which it is issued from the time of the delivery thereof to the sheriff for execution, but subject - to the provisions of The Bills of Sale and Chattel Mortgage Act no writ of execution against goods shall prejudice the title to such goods acquired by any person in good faith and for valuable consideration unless such person had, at the time when he acquired his title, notice that such writ or any other writ by virtue of which the goods of the execution debtor might be seised or attached had been delivered to the sheriff and remains in his hands unexecuted.
(2) The sheriff shall, upon the receipt of the writ and without fee, endorse thereon the day of the year, the month, the hour and the minute when the same was received.
(3) Subsection 1 shall not apply to an execution against goods issued out of a division court, which shall bind only from the time of the seizure.