Illegality.

and of no effect, but if two parties enter into an agreement whereby it is stipulated that one of them shall be enabled to commit an act contrary to the provisions of a statute, though not expressly prohibited thereby except by the imposition of a penalty, the agreement is illegal and void (p). (512) This principle is sometimes applicable in an action for the price of goods. Statutes affecting the right to recover the price of goods by a vendor who has failed to comply with their requirements are of two kinds; the one class of statutes having for its object the raising and protection of the revenue, the other class being directed either to the protection of buyers and consumers, or to some object of public policy. In connection with the first-mentioned of these two classes the difficulty most likely to occur to the practitioner will be in determining whether the infliction of a penalty was meant by the legislature to imply a prohibition of the contract. In connection with the latter class, the inquiry will most likely be whether by reason of the vendor's non-compliance with certain statutory provisions, the law will decline to imply a promise by the purchaser to pay for the goods sold (q).

Fraud.

Again, from the current of reported cases we collect, that where any one has by fraud or wilful misrepresentation induced another to contract or to part with goods under the belief that such representation was true, a fraud has been committed which will not be tolerated by our law. And the fact that such fraud was practised may be alleged with a view to annulling the contract, and to compelling restitution of property transferred [*170] or money paid in pursuance of it (r). Fraud destroys a contract ab initio, so that a fraudulent seller is precluded from setting up and insisting on the contract,-a fraudulent purchaser gets no title under it. Such, doubtless, is the general principle to be applied; a question of more nicety is this-What misstatement will-what will not-vitiate a contract? (s)

*

(p) Ritchie v. Smith, 6 C. B. 462, 477. (q) Cundell v. Dawson, 4 C. B. 376. (r) Fraud avoids a contract only where it is the ground of the contract, and where, unless it had been employed, the contract would never have been inade; per Lord Wensleydale, Smith v. Kay, 7 H. L. Cas. 750; Murray v. Mann, 2 Exch. 538.

(8) As to the mode of resolving the question supra, see Attwood v. Small, 6 C1. & F. 232, 418, 444, from which case, although decided with reference to realty, principles are deducible quite apposite to a sale of goods. As to contracts for the sale of land, or any interest therein, ante, vol. ii.

(512) It is well settled by American authorities that a contract founded directly on a consideration, rendered illegal by statute, whether the illegal act is in terms prohibited or is only punished with a penalty, is void. See Coburn v. Odell, 30 N. H. 540; Stanley v. Nelson, 28 Ala. 514; Elkins v. Parkhurst, 17 Vt. 105; Downing v. Ringer, 7 Mo. 585; Siter v. Sheets, 7 Ind. 132; Ellsworth v. Mitchell, 31 Me. 247; Swords v. Owen, 43 How. 176; Smith v. City of Albany, 7 Lans. 14. The validity of a contract is to be determined by the statute in force at the time it is made. If valid when made, a subsequent change or repeal of the law cannot impair its validity; and if it is void when made, no subsequent law can impart validity to it. Mays v. Williams, 27 Ala. 267; Bennett v. Woolfolk, 15 Ga. 213; Banchor v. Mansel, 47 Me, 58; Milne v. Huber, 3 McLean's C. C. 212. See Etna Ins. Co. v. Harvey, 11 Wis. 394.

No action lies on any contract the consideration of which is either wicked in itself or prohibited by law. But if the illegal act is not the consideration of the contract, and is entirely disconnected from it, the contract is valid, though the occasion for making the contract arose out of the existence of the illegal act. Toler v. Armstrong, 4 Wash. C. C. 297; S. C., 11 Wheat. (U. S.) 258. See Doty v. Wilson, 14 Johns. 381; Flanegan v. Garrison, 28 Ga. 136.

It is clear that if the vendor of a chattel, during the negotiations preliminary to its sale, place fairly before or within reach of the intended purchaser facts and documents whence may be drawn right inferences as to its value, and if the purchaser do not choose to avail himself of the means of knowledge thus afforded, or if he fail in deducing true inferences from them, he will have but himself to blame should the purchase prove disadvantageous, for a vendor is not bound in law to explain fully and completely everything which he may be cognizant of affecting the value of the property which is the subject-matter of the contract. Statements, moreover, false, but collateral to the contract, cannot be made available to nullify it. Still less can the expression of an opinion by the vendor, the grounds and reasonableness of which may be examined by the vendee, be relied upon to vitiate the contract. The representation, to avail for such purpose, must be shown to have given rise to the contracting of the other party-there must have been dolus dans locum contractui-fraud inducing to the contract-in order that the vendee may obtain relief from the contract into which he has thus fraudulently been induced to enter. (513)

*The fundamental rule, however, that fraud will vitiate every- [171] thing, is sometimes modified by circumstances, ex. gr., where a person

has by fraud been induced to contract, he may elect whether he will adopt the contract or repudiate it; and if, with notice of the fraud, he adopts the contract, he cannot afterwards repudiate it (t). (514) Further, where a contract

(t) Rogers v. Hadley, 2 H. & C. 247.

(513) In order to avoid a contract on the ground of misrepresentation, there must not only have been a misrepresentation of a material fact constituting the basis of the sale, but the purchaser must have made the contract upon the faith and credit of such representations. At least he must so far have relied upon them as that he would not have made the purchase if such representations had not been made. Taylor v. Fleet, 1 Barb. 471. And see Morris Canal Co. v. Everett, 9 Paige, 168; Phipps v. Buckman, 30 Penn St. 402; Stebbins v. Eddy, 4 Mason's C. C. 414. If the truth or falsehood of the representations might have been tested by ordinary vigilance and attention, it is the party's own folly if he neglect to do so, and he is remediless. Foley v. Cowgill, 5 Blackf. (Ind.) 13; Farrar v. Alston, 1 Dev. (N. C.) 69; Saunders v. Hatterman, 2 Ired. (N. C.) 32; Moore v. Turbeville, 2 Bibb (Ky.), 602.

For a full discussion of the subject of fraud, misrepresentation, and mistake in contracts, see the following cases: Hammutt v. Emerson, 27 Me. 308; Ayer v. Tilton, 42 N. H. 407; Overton v. Morris, 3 Port. (Ala.) 249; Gassett v. Wilson, 3 Fla. 235; Hubbard v. Briggs, 31 N. Y. (4 Tiff.) 518; Terhune v. Dever, 36 Ga. 648; Smith v. Babcock, 2 Woodb. & M. 246; Warner v. Daniels, 1 id. 107; Grimes v. Williams, 16 Ill. 47; Elder v. Allison, 45 Ga. 13; Frenzel v. Miller, 37 Ind. 1; Fisher v. Mellen, 103 Mass. 503; Oberlander v. Speiss, 45 N. Y. (6 Hand) 175.

(514) Where a party determines to avoid a contract on account of fraud, he must give notice of such determination to the other party within a reasonable time after his discovery of the fraud. Herrin v. Libbey, 36 Me. 350; Masson v. Bovet, 1 Denio, 69; Lindsley v. Ferguson, 49 N. Y. (4 Sick.) 623; and, if possible, must put the other party in statu quo. Cobb v. Hatfield, 46 N. Y. (1 Sick.) 533; Poor v. Woodburn, 25 Vt. 234; Cook v. Gilman, 34 N. H. 556. But if the subject-matter is of no value at all to either party, it need not be restored. Perley v. Balch, 23 Pick. (Mass.) 283. Where both parties have been guilty of a fraudulent intention, the law refuses to interfere, and leaves them as it finds them. Goudy v. Gebhart, 1 Ohio St. 262; Taylor v. Weld, 5 Mass. 116; Warburton v. Aken, 1 McLean, 460; 1 Story's Eq. Jur., § 61. As it is an established rule, both in law and equity, that fraud will never be presumed, the burden of proof is, of course, upon the party alleging the fraud. Stewart v. Thomas, 15 Gray (Mass.), 171; Howe v. Howe, 99 Mass. 88; Baldwin v. Parker, id. 79;

of sale has intervened, preference will sometimes be given to the title of an honest purchaser over that of a vendor who has been cheated and defrauded of his goods. If A., through B.'s fraud, be induced to contract with him for the sale of goods, and the goods be delivered to B. in pursuance of the contract, and B. transfer them bona fide and for value to C., C. will have a good title as against A., who afterwards seeks to disaffirm the contract into which he has been inveigled (u). The spirit of this proposition favours the quieting of titles to chattel property, and so tends to the expansion of trade, which most flourishes when confidence is best assured.

Sale in market overt.

Nay, in favour of the contract of sale, and to give security to titles resting upon it, our customary law long since deviated from its well-established doctrine, that the absolute owner of a chattel cannot be prejudiced, so far as concerns his right therein, by the act of a third person in reference to it done in his absence without his acquiescence or knowledge, for the general rule is, that the sale of anything vendible, in market overt, (that is, open), shall not only be good between the parties thereto, but also be binding on all those who have any right of property therein (x). And for this purpose, the Mirror (y) informs us, were tolls established in markets, viz. to testify the making of contracts; for every private contract was discountenanced by law: insomuch, that our * Saxon ancestors prohibited the sale of [*172] anything above the value of twenty pence, unless in open market, and directed every bargain and sale to be contracted in the presence of credible witnesses (z). Market overt in the country is only held on the special days, provided for particular towns by charter or prescription; but in London every day, except Sunday, is market day (a). The market place, or spot of ground set apart by custom for the sale of particular goods, is also in the country the only market overt (b); but in London every shop in which goods are exposed publicly to sale, is market overt, for such things only as the owner professes to

(u) White v. Garden, 10 C. B. 919.

(2) Leg. Ethel. I., 3; Leg. Edg. Anc. Laws

(x) 2 Inst. 713. Case of Market Overt, 5 and Inst. Eng. p. 116. Rep. 84.

(3) C. 1, § 3.

(a) Cro. Jac. 68.
(b) Godb. 131.

Beatty v. Fishel, 100 id. 448. See Boynton v. Hubbard, 7 id. 112; Gould v. Gould, 3 Story, 540; Jackson v. Burgott, 10 Johns. 457; Boreing v. Singery, 2 Har. & Johns. (Md.) 455.

The question as to whether possession by the vendor after the sale of goods constitutes a presumption of fraud, or proof thereof, has undergone much discussion in England and the United States, with varying conclusions. In the Federal courts, and in many of the State courts, it is held that an absolute bill of sale or conveyance, without surrender of possession, is of itself conclusive evidence of fraud. See Hamilton v. Russell, 1 Cranch, 310; Conrad v. Atlantic Ins. Co., 1 Pet. 449; Meeker v. Wilson, 1 Gall. C. C. 419; Clayton v. Anthony, 6 Rand. (Va.) 285; Brady v. Haines, 18 Penn. St. 113; Hutchins v. Gilchrist, 23 Vt. 82; Farnsworth v. Shepard, 6 id. 521; Thornton v. Davenport, 1 Scam. (I11.) 296; Gibson v. Love, 4 Fla. 217; Hall v. Gaylor, 37 Conn. 550. In other of the States the later doctrine of the English courts is adopted, namely, that possession of goods by the vendor after a sale of them is only prima facie evidence of fraud, which may be explained by proof. See Briggs v. Parkman, 2 Metc. (Mass.) 258; Adams v. Wheeler, 10 Pick. (Mass.) 199; Bradeen v. Brooks, 22 Me. 463; Cutter v. Copeland, 18 id. 127; Johnson v. Willey, 46 N. H. 75; Sterling v. Van Cleve, 7 Halst. (N. J.) 285; Mitchell v. Beal, 8 Yerg. (Tenn.) 141; Allen v. Johnson, 4 J. J. Marsh. (Ky.) 235; Trotter v. Howard, 1 Hawks. (N. C.) 320; Bryant v. Kelton, 1 Tex. 415; Barr v. Hatch, 3 Ohio, 529; Smith v. Henry, 2 Bailey (S. C.), 118. In New York the question is set at rest by statute. See 2 R. S. 136.

trade in (c). But a sale by sample is not entitled to the privileges of a sale in market overt (d).

If, then, my goods are stolen from me, and sold, out of market overt, my property in them is not altered, and I may take them wherever I find them. And it is expressly provided by statute 1 Jac. 1, c. 21, that the sale of any goods, wrongfully taken, to any pawnbroker in London, or within two miles thereof, shall not alter the property: for this, being usually a clandestine trade, is therefore made an exception to the general rule. And, even in market overt, if the goods be the property of the crown, such sale (though regular in all other respects) will in no case bind it; though it binds infants, idiots, or lunatics, and men beyond sea or in prison.

So likewise, if the buyer know the property not to be in the seller; or there be any other fraud in the transaction; if he know the seller to be an infant, or feme covert not usually trading for herself; if the sale be not originally and wholly made in the fair or market, or not at the usual hours; the owner's

property is not bound * thereby (e). If a man buys his own goods in a [*173]

fair or market, the contract of sale shall not bind him, so that he shall render the price; unless the property had been previously altered by a former sale (ƒ). And, notwithstanding any number of intervening sales, if the original vendor, who sold without having the property, comes again into possession of the goods, the original owner may take them, when found in his hands who was guilty of the first breach of justice (g). By which wise regulations the common law has secured the right of the proprietor in personal chattels from being devested, so far as was consistent with that other necessary policy, that purchasers, bona fide, in an open and regular manner, should not be afterwards put to difficulties by reason of the previous knavery of the seller, though the title of one who honestly purchases a stolen chattel in market overt may be defeated, should its owner prosecute the thief to conviction (h).

Sale of horses.

But there is one species of personal chattels, in which the property is not easily altered by sale, without the express consent of the owner (i). For the owner's property in a horse that has been stolen is not devested, unless it be sold in a fair or market overt, according to the directions of the statutes 2 Ph. & M. c. 7, and 31 Eliz. c. 12; by which it is enacted, that the horse shall be openly exposed, in the time of such fair or market, for one whole hour together, between ten in the morning and sunset, in the public place used for such sales, and not in any private yard or stable; and afterwards brought by both the vendor and vendee to the book-keeper of such fair or market: that toll be paid, if any be due; aud if not, one [*174] penny to the book-keeper, who shall enter down the price, colour, and marks of the horse, with the names, additions, and abode of the vendee and vendor; the latter being properly attested. Nor shall such sale take away the property of the owner, if within six months after the horse is stolen he

(h) 24 & 25 Vict. c. 96, s. 100; Scattergood v. Sylvester, 15 Q. B. 506.

A metropolitan police magistrate may order the restitution of stolen property under the stat. 2 & 3 Vict. c. 71, ss. 27, 40. See also stats. 10 & 11 Vict. c. 82, s. 12; 18 & 19 Vict. c. 126, ss. 1, 8; 21 & 22 Vict. c. 73, ss. 1, 2. (i) 2 Inst. 719.

puts in his claim before some magistrate, where the horse shall be found; and, within forty days more, proves such his property by the oath of two witnesses, and tenders to the person in possession such price as he bona fide paid for him in market overt. But in case the requirements before mentioned be not complied with, such sale is utterly void; and, under the former of the two acts, the owner shall not lose his property, but at any distance of time may seize or bring an action for his horse, wherever he happens to find him (k).

Warranty

By the civil law (7) an implied warranty was annexed to every sale, in respect to the title (515) of the vendor; but by our law no warranty of title is implied upon the sale of goods, although upon this abstract rule numerous exceptions are engrafted,-as where goods are sold by a shopkeeper in the ordinary course of his business, or under an executory contract, or under circumstances from which a jury may infer a warranty (m).

Of title.

The law concerning implied warranty of the quality of goods sold (n) does not admit of being very concisely stated; to avoid prolixity it is below set forth

Of quality.

language (o).

in a series of propositions based respectively upon the authorities cited in the margin, and clothed for the most part in judicial

[*175] * 1st. Where goods are in esse, and may be inspected by the buyer, and there is no fraud on the part of the seller, the maxim caveat emptor applies; the purchaser takes them at his risk, even though the defect which exists in them is latent, and not discoverable on examination,—at least where the seller is neither the grower nor the manufacturer. The buyer in such a case has the opportunity of exercising his judgment upon the matter,

(k) See North v. Jackson, 2 Fost. & F. 198. (4) Dig. 21, 2, 1.

(m) Bagueley v. Hawley, L. R. 2 C. P. 625, 628, and cases there cited.

(n) An express warranty must be made at the time of sale, or be incorporated with the

contract; it will otherwise be inoperative, as having no consideration to support it. Roscorla v. Thomas, 3 Q. B. 234.

(0) See judgm. Jones v. Just, L. R. 3 Q. B. 202. 3.

(515) Very generally in the United States it is held that upon all sales of personal property by one in possession, the law implies a warranty of title. See Swett v. Colgate, 20 Johns. 196; McCoy v. Artcher, 3 Barb. 323; Edick v. Crim, 10 id. 445; Reed v. Gannon, 3 Daly, 414; Scranton v. Clark, 39 N. Y. (12 Tiff.) 220; Gross v. Kierski, 41 Cal. 111; Hoe v. Sanborn, 21 N. Y. (7 Smith) 552; Thurston v. Spratt, 52 Me. 202; Sherman v. Champlain 1. Co., 31 Vt. 162; Williamson v. Sammons, 34 Ala. 691; Shattuck v. Green, 104 Mass. 42. And possession by a bailee or agent of the vendor is the possession of the vendor himself, and the implied warranty of title arises. Id.; and see Cushing v. Breed, 14 Allen (Mass.), 376; Hallard v. Bliss, 12 id. 590. In a sale by executors, administrators, and other trustees, there is no implied warranty of title. Bingham v. Maxcy, 15 Ill. 295; Forsythe v. Ellis, 4 4 J. J. Marsh. (Ky.) 298; Mockbee v. Gardner, 2 Har. & Gill. (Md.) 176; Prescott v. Holmes, 7 Rich. (S. C.) 9. And so, in case of sales by officers of the law. Hensley v. Baker, 10 Mo. 157; Stone v. Pointer, 5 Munf. (Va.) 287; Worthy v. Johnson, 8 Ga. 236; Bashore v. Whisler, 3 Watts (Penn.), 490.

On the sale of a promissory note, the law implies a warranty that it is not paid (Ellis v. Grooms, 1 Stew. [Ala.] 47); that the signatures and indorsements upon it are made by persons who have capacity to make a valid contract (Thrall v. Newell, 19 Vt. 202); that the signatures are genuine (Terry v. Bissell, 26 Conn. 23); and that the note is of the kind and description it purports on the face of it to be. Id. On the sale by one person of a judgment recovered by another, a warranty of title is implied, embracing also a warranty that the judgment is due and unpaid, where nothing is said upon the subject. Furniss v. Ferguson, 34 N. Y. (7 Tiff.) 485.