The Sale of Goods Act (Ont. s. 25; U.K. s. 23) provides: 25. When the seller of goods has a voidable title thereto but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller's defective title.
This section does not form a real exception to the rule that person cannot give a better title than he has himself.
The buyer gets a good title because the seller has a good title at the time of sale, nothing having then been done to avoid the title. The case of a pledge by a person with a voidable title is possibly not within the wording of the section, but the result at common law is the same. For instance, if the owner of goods is induced to deliver them on sale or return by the false representation of the buyer that he has a customer who desires to purchase them, the title passes to the buyer, and a pledgee in good faith and without notice gets a good title, notwithstanding that the original seller may have the right to avoid the transaction as against the buyer.
Whitehorn Brothers v. Davison,  1 Kb. 463; cf. Laidlaw v. Vaughan-Rhys, 1911, 44 Can. S.C.R. 458, at pp. 467, 468; Willis, Sale of Goods, pp. 148 ff.; for a discussion of the earlier cases, and the principle upon which the third party's title is good, see Ewart, Estoppel, pp. 181-3, 302-4.
A voidable title is to be distinguished from a void title. If goods are obtained by means amounting to theft, the thief has no title and can give none. So, if a contract of sale is procured by fraud of such a nature that it nullifies the consent to the contract, as, for instance, if A delivers goods at B's address under the belief that he is dealing with C, such belief being brought about by the fraud of B, whom A does not know and has not seen, there is no contract between A and B. B, having no title, can give none to a third party. Cundy v. Lindsay, 1878, 3 App. Cas. 459, 6 R.C. 211.
If, however, B, fraudently assuming the name of C, buys, in person, and obtains delivery of, goods from A, the property in the goods passes to B, and he can therefore give a good title to a third party who buys in good faith and without notice before B's title is avoided.
Phillips v. Brooks,  2 K.B. 243. In the United Kingdom the Sale of Goods Act (s. 24) provides:
24. - (1) Where goods have been stolen and the offender is prosecuted to conviction, the property in the goods so stolen revests in the person who was the owner of the goods, or his personal representative, notwithstanding any intermediate dealing with them, whether by sale in market overt, or otherwise.
(2) Notwithstanding any enactment to the contrary, where goods have been obtained by fraud or other wrongful means not amounting to larceny, the property in such goods shall not vest in the person who was the owner of the goods, or his personal representative, by reason only of the conviction of the offender.
(3) The provisions of this section do not apply to Scotland.
As to the history and meaning of this provision, see Benjamin, Sale, 5th ed. 1906, pp. 19 ff.
A thief cannot by a sale of goods confer a good title upon a third party as against the owner, except in the case of sale in market overt or in the case of a sale in a foreign country by the law of which a sale by a thief is valid. The foregoing provision has been omitted from the Ontario statute as being unnecessary in view of the fact that the doctrine of market overt does not apply to any sale of goods which takes place in Ontario (Ont. s. 24, quoted in 41). Its retention would only have served to throw doubt upon the general rule that a thief cannot confer a good title. Sub-s. 2 repeats in part the principle stated in another section (Ont. s. 25; U.K. s. 23), that a buyer in good faith and without notice from a person with a merely voidable title may obtain a good title.