Dispositions by Mercantile Agents.

2. Powers of mercantile agent with respect to disposition of goods.- (1) Where a mercantile agent is, with the consent of the owner, in possession of goods" or of the documents of title to goods, any sale, pledge, or other disposition of the goods, made by him when acting in the ordinary course of business of a mercantile agent, shall, subject to the provisions of this Act, be as valid as if he were expressly authorised by the owner of the goods to make the same ; provided that the person taking under the disposition acts in good faith, and has not at the time a the disposition notice that the person making the disposition has not authority to make the same.

An agent is not in possession by "consent" of the owner if he has obtained possession in circumstances which render him guilty of larceny by a trick (Oppenheimer v. Frazer & W Wyatt, [1907] 2 K.B. 50, C.A.; see also Heap v. Motorists' Advisory Agency, Ltd., [1923] 1 K.B. 577; Folkes v. King, [1923] 1 K.B. 282; and Lowther v. Harris, [1927] 1 K.B. 393, and English and Empire Digest, Vol. 1, pp. 333-336). Cf. Cahn v. Pockett's Bristol Channel, etc., Co., [1899] 1 Q.B. 643, C.A.. (fraud not amounting to larceny); Lake v. Simmons, [1927] A. C. 487 (absence of owner's consent to possession). An agent employed to obtain orders but not to sell is not within the Act (Brown & Co. v. Bedford Pantechnicon Co., Ltd. (1889), 5 T. L. R. 449, C.A.). A pledge by a mercantile agent must be in the ordinary course of his business as an agent, i.e. "as if he were carrying out a transaction which he was authorised by his master to carry out" (LORD ALVERSTONE, C.J., in Oppenheimer v. Attenborough & Son, [1908] 1 K.B. 221, at p. 227)), and see English and Empire Digest, Vol. 1, pp. 336-337, Nos. 501-505. A. delivery to an auctioneer for sale by auction is not a disposition contemplated by the Act (Waddington & Sons v. Neale & Sons (1907), 96 L.T. 786). Formal notice is not required, but suspicion alone is not enough (Navulshaw v. Brownrigg (1852), 21 L. J. Ch. 908). Notice to one joint buyer is notice to all (Oppenheimer v. Frazer & Wyatt, [1907] 2 K.B. 50, C.A.). Onus to prove good faith and absence of notice is on the person taking under the disposition (Heap v. Motorists' Advisory Agency, Ltd., supra), and see English and Empire Digest, Vol. 1, p. 337, Nos. 506-509.

(2) Where a mercantile agent has, with the consent of the owner, been in possession of goods or of the documents of title to goods, any sale, pledge, or other disposition, which would have been valid if the consent had continued, shall be valid notwithstanding the determination of the consent : provided that the person taking under the disposition has not at the time thereof notice that the consent has been determined.

For validity of sale after determination of consent, see Moody v. Pall Mall Deposit Co. (1917), 33 T.L.R. 306. For authority to pledge see English and Empire Digest, Vol. 1, pp. 330-340. This sub-section was first introduced into the Act of 1877 to override the decision in Fuentes v. Montis (1868), L.R. 4 C. P. 93, Ex.Ch., where it was held that the agent was not entrusted. with goods within the meaning of the Acts if his authority had been revoked.

(3) Where a mercantile agent has obtained possession of any documents of title to goods by reason of his being or having been, with the consent of the owner, in possession of the goods represented thereby, or of any other documents of title to the goods, his possession of the first-mentioned documents shall, for the purposes of this Act, be deemed to be with the consent of the owner:

This sub-section was first introduced in the Act of 1842 to alter the law laid down in Hatfield v. Phillips (1845), 12 Cl. & Fin. 343, where it was held that a person entrusted with a bill of lading for the purpose of selling the goods mentioned in it, was not to be considered as entrusted with the dock warrant notwithstanding that his possession of the bill of lading enabled him to obtain the dock warrant.

(4) For the purposes of this Act the consent of the owner shall be presumed in the absence of evidence to the contrary. 3. Effect of pledges of documents of title.-A pledge of the documents of title to goods shall be deemed to be a pledge of the goods.

This section is controlled by the heading "Dispositions by Mercantile Agents," which covers ss. 2-7 inclusive (Inglis v. Robertson & Baxter, [1898] A.C. 616) (pledge of documents of title by person other than mercantile agent). See Preliminary Note, p. 36, ante.

4. Pledge for antecedent debt.-Where a mercantile agent pledges goods as security for a debt or liability due from the pledgor to the pledgee before the time of the pledge, the pledgee shall acquire no further right to the goods than could have been enforced by the pledgor at the time of the pledge.

This section draws a marked distinction between past consideration and present or future consideration. A pledge in exchange for other goods previously pledged and for an additional advance is protected by the Act (Sheppard v. Union Bank of London (1862), 7 H. & N. 661). Where goods are pledged to obtain a new loan the proceeds of which are to be applied merely to repay an old loan, the Act will not protect (Learoyd v. Robinson (1844), 12 M. & W. 745; Phillips v. Huth (1840), 10 L.J. Ex. 65).

5. Rights acquired by exchange of goods or documents.-The consideration necessary for the validity of a sale, pledge, or other disposition, of goods, in pursuance of this Act, may be either a payment in cash, or the delivery or transfer of other goods, or of a document of title to goods, or of a negotiable security, or any other valuable consideration; but where goods are pledged by a mercantile agent in consideration of the delivery or transfer of other goods, or of a document of title to goods, or of a negotiable security, the pledgee shall acquire no right or interest in the goods so pledged in excess of the value of the goods, documents, or security when so delivered or transferred in exchange.

This section considerably extends the scope of the Act of 1842 by substituting for "advance" "valuable consideration." It protects exchanges of goods and securities made in good faith. The Act of 1842 altered the law as declared in Taylor v. Kymer (1832), 3 B. & Ad. 320, and in Phillips v. Huth (1840), 6 M. & W. 572.

6. Agreements through clerks, etc.-For the purposes of this Act an agreement grade with a mercantile agent through a clerk or other person authorised in the ordinary course of business to make contracts of sale or pledge on his behalf shall be deemed to be an agreement with the agent. 7. Provisions as to consignors and consignees.-(1) Where the owner of goods has given possession of the goods to another person for the purpose of consignment or sale, or has shipped the goods in the name of another person, and the consignee of the goods has not had notice that such person is not the owner of the goods, the consignee shall, in respect of advances made to or for the use of such person, have the same lien on the goods as if such person were the owner of the goods, and may transfer any such lien to another person: (2) Nothing in this section shall limit or affect the validity of any sale, pledge, or disposition, by a mercantile agent.

This section applies only to goods and not to documents of title, and to cases where the consignee has not had notice that the consignor is not the owner. The second sub-section shows that the section is to be construed as amplifying the powers of mercantile agents under s. 2, p. 38, ante.