One of the exceptions, mentioned in 41, to the general rule that a person who has no title to goods cannot confer a title upon a third party, is the case in which the owner is estopped from denying the validity of the sale. Estoppel may arise where the owner has so acted as to clothe another person with apparent or ostensible ownership, or it may arise where the owner has so acted as to clothe another person with apparent or ostensible agency for sale. If the ostensible owner or ostensible agent for sale, as the case may be, purports to sell to a buyer who takes for value in good faith and without notice, the original owner ought on principle to be estopped from disputing the validity of the sale.
At common law, a person in possession of goods could not confer on another, either by sale or by pledge, any better title to the goods than he himself had. To this general rule there was an exception of sales in market overt, and an apparent exception where the person in possession had a title defeasible on account of fraud. But the general rule was that, to make either a sale or a pledge valid against the owner of the goods sold or pledged, it must be shown that the seller or pledger had authority from the owner to sell or pledge,as the ease might be. If the owner of the goods had so acted as to clothe the seller or pledger with apparent authority to sell or pledge, he was at common law precluded, as against those who were induced bona fide to act on the faith of that apparent authority, from denying that he had given such authority, and the result as to them was the same as if he had really given it. But there was no such preclusion as against those who had notice that the real authority was limited. And the possession of bills of lading or other documents of title did not at common law confer on the holder of them any greater power than the possession of the goods themselves.
Cole v. North Western Bank, 1875, L.R. 10 C.P. 354, at pp. 362-3, Blackburn J.
A, the owner of goods, tells B that he has sold them to C. If B then buys the goods from C in good faith and without notice of the fact that C has not a good title, A is estopped from denying the validity of the sale. " The maxim nemo plus juris transferre potest quam se ipse habet has no application where the owner of goods has so lent himself to accredit the title to another person."
Peoples Bank of Halifax v. Estey, 1904, 34 Can. S.C. R. 429, at pp. 434, 438; but see also the dissenting judgment at pp. 447 ff.
Mere possession, apart from special circumstances, does not accredit title, or, in other words, is no evidence of title -usually a man cannot be said to be the ostensible owner of goods merely because he has them in his possession. The character of the goods, the character of the place in which the owner leaves them or to which he sends them, or the customary occupation of the person to whom he entrusts them, may, however, be such as to estop the owner from denying, to a transferee for value, in good faith and without notice, that the person in possession is the owner; or there may be other circumstances which give to the possessor of goods such ostensible ownership as may estop the owner from disputing the validity of a sale made by the person in possession. So if the owner of goods delivers to another a document of title to the goods, he may in certain circumstances be estopped from denying the ownership or1 right to sell of the holder of the document in the case of a sale by the latter to a purchaser for value in good faith and without notice. The decided cases are, however, frequently far from clear in the application of the principle of estoppel, and the general applicability of the principle has been obscured by the passing from time to time of partial enactments dealing with particular cases of estoppel rather than with the general principle. The provisions of the successive Factors Acts and those of the Sale of Goods Act have apparently been taken by the courts as being more or less exhaustive declarations of the principle of estoppel, to the exclusion of cases not falling within the letter of the statutes. Thus the courts have directed their efforts rather to the construction of statutes than to the application of the general principle.
See Ewart, Estoppel, pp. 296 ff. (chapters on ostensible ownership and agency: goods - possession - documents of title - legislation).