Felthouse v. Bindley

A nephew was selling his farming stock by auction. His uncle had written that he would consider a horse his at a stated price if he heard nothing more. The nephew never replied, and the auctioneer sold the horse. The Court of Common Pleas held that the uncle had no property in the horse at the time of the sale.

Quick Revision

Read the full judgment: BAILII

Parties

Paul Felthouse — plaintiff (the party who brought the action); a builder residing in London and the uncle of John Felthouse.

Bindley (William Bindley) — defendant; an auctioneer residing at Tamworth, who sold the horse at the nephew's auction.

John Felthouse — not a party to the action; the plaintiff's nephew and the owner of the horse before the sale.

Procedural History

1. The action was for the conversion of a horse. The defendant pleaded not guilty and not possessed.
2. The cause was tried before Keating, J., at the last Summer Assizes at Stafford.
3. The defendant argued that John Felthouse's letter of 27 February 1861 was not admissible in evidence. The learned judge overruled the objection.
4. The defendant then argued that the property in the horse was not vested in the plaintiff at the time of the sale by the defendant.
5. The jury gave a verdict for the plaintiff, with damages of 33l. Leave was reserved to the defendant to move to enter a nonsuit if the Court thought the objection well founded.
6. Dowdeswell, in Michaelmas Term last, obtained a rule nisi (a provisional order to show why a step should not be taken). The grounds were as follows:
   • sufficient title or possession of the horse to maintain the action was not vested in the plaintiff at the time of the wrong;
   • the letter of John Felthouse of 27 February 1861 was not admissible in evidence against the defendant;
   • if admissible, that letter was written after the sale by the defendant and did not confer title on the plaintiff;
   • at the time of the wrong there was no sufficient memorandum in writing, possession of the horse or payment to satisfy the statute of frauds.
7. Carter v. Toussaint and Bloxam v. Sanders were referred to at that stage.
8. Powell showed cause against the rule. Montague Smith, Q.C., and Dowdeswell supported it.
9. 8 July 1862: the Court of Common Pleas made the rule absolute.

Facts

1. The plaintiff was a builder residing in London. The defendant was an auctioneer residing at Tamworth.
2. Towards the close of the year 1869, as the judgment states, John Felthouse, the plaintiff's nephew, was about to sell his farming stock by auction.
3. A conversation took place between uncle and nephew about the uncle buying a horse from the nephew.
4. In December 1860, according to Willes, J., the uncle thought he had bought the horse for 30l. The nephew thought he had sold it for 30 guineas.
5. On 1 January 1861, John Felthouse wrote to his uncle. He said his father had told him the uncle thought he had bought the horse for 30l.
6. The nephew wrote that this was a mistake, because 30 guineas was the price he put on the horse. He said he would not take less.
7. On 2 January 1862, as the letter is dated in the report, the uncle replied. He admitted the nephew's price was 30 guineas. He said he had offered 30l. and never more, and that the nephew had said the horse was his.
8. He proposed to split the difference at 30l. 15s., paying all expenses from Tamworth. The horse could be sent at the nephew's convenience between then and 25 March.
9. His letter ended with the words: if he heard no more about the horse, he considered it his at 30l. 15s.
10. The nephew sent no reply to that letter.
11. On 25 February, the sale took place. The horse was sold with the rest of the stock and fetched 33l., which was handed over to John Felthouse.
12. The defendant, the auctioneer, had been told to reserve the horse. Willes, J., records that he was told on that day that it was already sold.
13. On the following day, the defendant learned of the mistake. He wrote to the plaintiff on 26 February 1861 acknowledging that he had forgotten the instruction to reserve the horse.
14. The defendant said the lapse of time and a multiplicity of business caused him to forget his previous promise. He said he would try to get the horse back.
15. On 27 February 1861, John Felthouse wrote to the plaintiff. He said the horse he sold to his uncle had been sold at the sale.
16. He wrote that when Mr. Bindley came to take an inventory, he told him that horse was sold. Mr. Bindley said it would be better to put it in the sale, and he would buy it in without charge.
17. His father stood by while Mr. Bindley was running the horse up, and had no idea he was not acting for the good of the sale. He objected only when he heard Mr. Bindley call out the name of a buyer, Mr. Glover. He then told Mr. Bindley that the horse was not to be sold.
18. Mr. Bindley said he had quite forgotten. He would try to recover the horse and offered 5l. to the buyer if the buyer gave it up. The nephew feared this was doubtful.
19. The nephew offered his uncle another horse, kept for his own use, on loan for five or six months free of charge except travelling expenses. The uncle could return it or keep it and say what he thought it was worth.
20. The nephew wrote that he was very sorry and would have given 5l. rather than that horse should have been given up.

Issues Raised

1. Was sufficient title or possession of the horse vested in the plaintiff, to maintain an action for conversion, at the time of the defendant's sale on 25 February?
2. Was the letter of John Felthouse of 27 February 1861 admissible in evidence against the defendant?
3. If it was admissible, did that letter, written after the sale, confer title on the plaintiff?
4. Was there at the time of the wrong a sufficient memorandum in writing, possession of the horse or payment to satisfy the statute of frauds?

Arguments Contended

For the plaintiff (Powell, showing cause against the rule):

• There was an ample note of the contract (an agreement enforceable by law) in writing to satisfy the statute of frauds.
• When the parties met in December 1860, they agreed that the plaintiff should be the purchaser. There was only a slight misunderstanding about the price: 30l. on the plaintiff's side and 30 guineas on the nephew's.
• After the nephew said he was mistaken, the plaintiff proposed to split the difference. He ended by saying that if he heard no more he considered the horse his at 30l. 15s.
• The question is whether the seller accepted that offer, even though nothing more passed between uncle and nephew until after 25 February, the day of the auction.
• After his letter of 2 January, the plaintiff could not have refused to take the horse.
• The letter was unanswered. But it was proved that the nephew afterwards spoke of the horse as sold to the plaintiff, and told the defendant to keep it out of the sale.
• The letter of 27 February was evidence although written after the conversion. With the plaintiff's letter of 2 January, it made a valid note in writing, even as between uncle and nephew.
• The nephew's letter admits that he had assented to the bargain before that day. He did not need to assent in writing. It is enough to show that he assented.
• Dobell v. Hutchinson held that where a contract in writing binds one party, a later signed note by the other binds him too. The note must contain the contract's terms or refer to a contract that does.
• Smith v. Neale held something similar. A written proposal signed by the defendant, and assented to by the plaintiff by word of mouth, is a sufficient agreement. The 4th section of the statute of frauds was in question.
• Bill v. Bament held that it is enough if the memorandum is made at any time before action brought.

For the defendant (Montague Smith, Q.C., and Dowdeswell, supporting the rule):

• The letter of 27 February was clearly inadmissible.
• The 17th section of 29 Car. 2, c. 3 provides that no contract for the sale of goods is good unless a note or memorandum in writing is made. The parties to be charged must sign it.
• When the sale complained of took place, there was clearly no binding contract for the sale of the horse by the nephew to the plaintiff.
• The plaintiff had no insurable interest.
• Carter v. Toussaint is a far stronger case. A horse was sold by verbal contract with no time fixed for payment, and it stayed with the sellers for twenty days free of charge. It was then sent to grass on the buyer's direction and entered as the horse of one of the sellers. It was held there was no acceptance within section 17.
• Smith's Mercantile Law was also cited.
• The plaintiff had no property in the horse on 25 February, the day of the sale.
• An admission after the fact by a stranger cannot affect the parties' positions to this action on that day.

Court's Reasoning

Opinion of Willes, J.

1. Held: The rule to enter a nonsuit should be made absolute.
2. Noted: The horse had belonged to the plaintiff's nephew, John Felthouse.
3. Noted: In December 1860 the uncle seems to have thought he had bought the horse for 30l. The nephew thought he had sold it for 30 guineas.
4. Held: there was "clearly no complete bargain at that time".
5. Noted: The judge sets out the nephew's letter of 1 January 1861 and the uncle's reply of the next day. The reply ends by saying that if he heard no more he considered the horse his at 30l. 15s.
6. Held: There was no complete bargain on 2 January.
7. Held: The uncle "had no right to impose upon the nephew a sale of his horse for 30l. 15s." unless the nephew chose to comply with the condition of writing to repudiate the offer.
8. Noted: The nephew could have bound his uncle to the bargain by writing to him. The uncle could also have retracted his offer at any time before acceptance.
9. Noted: It "stood an open offer", and things stayed that way until 25 February, when the nephew was about to sell his stock.
10. Noted: The horse was catalogued with the rest of the stock, and the auctioneer was told it was already sold.
11. Held: The nephew in his own mind intended his uncle to have the horse at the price the uncle named. But he had not communicated that intention to his uncle or done anything to bind himself.
12. Held: Nothing had been done to vest the property in the horse in the plaintiff down to 25 February, when the defendant sold it.
13. Held: Independently of the later letters, there had been no bargain to pass the property in the horse to the plaintiff. He therefore had no right to complain of the sale.
14. Noted: The judge then turns to the effect of the later correspondence.
15. Held: The auctioneer's letter amounts to nothing.
16. Noted: The more important letter is the nephew's of 27 February. It is relied on to show that he intended to accept, and did accept, the terms of his uncle's letter of 2 January.
17. Noted: That letter may be treated as an acceptance made then for the first time. Or it may be treated as a memorandum of a bargain complete before 25 February, sufficient under the statute of frauds.
18. Held: The former is the more likely construction. If so, it is clear that the plaintiff cannot recover.
19. Held: Suppose there was a complete verbal bargain before 25 February, and the letter of 27 February only stated the terms of that earlier bargain. It would still be contrary to the decision of the Court of Exchequer in Stockdale v. Dunlop to hold that the acceptance related back to the earlier offer so as to bind third persons who dealt with the property in the meantime.
20. Noted: In Stockdale v. Dunlop, Messrs. H. & Co. owned two ships, the Antelope and the Maria, trading to the coast of Africa. Both were expected at Liverpool with cargoes of palm-oil.
21. Noted: They agreed verbally to sell the plaintiffs two hundred tons of oil, one hundred tons by each ship. The Antelope arrived with one hundred tons, which were delivered to the plaintiffs.
22. Noted: The Maria, with fifty tons of oil on board, was lost by perils of the sea. The plaintiffs had insured that oil and their expected profits.
23. Noted: It was held they had no insurable interest, because the contract with H. & Co. was verbal only and incapable of being enforced.
24. Noted: Willes, J., added a separate observation. Coats v. Chaplin is an authority to show that John Felthouse might have had a remedy against the auctioneer.
25. Noted: In Coats v. Chaplin, a traveller for Morrisons, London tradesmen, verbally ordered goods from the plaintiffs, manufacturers at Paisley. No order was given about sending the goods.
26. Noted: The plaintiffs gave the goods to the defendants, carriers, directed to Morrisons. They also posted an invoice to Morrisons, who received it. The carriers lost the goods by negligence, and they were not delivered.
27. Noted: It was held that the carriers were liable to the plaintiffs.

Opinion of Byles, J.

1. Held: He agrees with the opinion of his brother Willes and has nothing to add.

Opinion of Keating, J.

1. Held: He agrees with the result.
2. Noted: Had the question arisen between uncle and nephew, "there would probably have been some difficulty".
3. Noted: As between the uncle and the auctioneer, the only question is whether the horse was the plaintiff's property at the time of the sale on 25 February.
4. Held: Nothing had been done at that time to pass the property out of the nephew and vest it in the plaintiff.
5. Why: "A proposal had been made, but there had before that day been no acceptance binding the nephew."

Provisions discussed

• The 17th section of 29 Car. 2, c. 3 (the statute of frauds): no contract for the sale of goods is good without a note or memorandum in writing. The note must be made and signed by the parties to be charged. Counsel cited it, and the fourth ground of the rule refers to the statute.
• The 4th section of the statute of frauds: cited by plaintiff's counsel through Smith v. Neale. A signed written proposal, assented to by word of mouth, is a sufficient agreement.

Authorities

• Carter v. Toussaint, 5 B. & Ald. 855, 1 D. & R. 515: referred to when the rule was obtained. Defendant's counsel argued it was a stronger case, with no acceptance of the horse by the buyer within section 17 (arguments).
• Bloxam v. Sanders, 4 B. & C. 941, 7 D. & R. 396: referred to when the rule was obtained. Nothing more is said about it.
• Dobell v. Hutchinson, 3 Ad. & E. 355, 5 N. & M. 251: relied on by the plaintiff's counsel. A later signed note by the other party binds him if it states the terms or refers to a contract that does.
• Smith v. Neale, ante, vol. ii., p. 67: relied on by the plaintiff's counsel for a signed written proposal assented to by word of mouth.
• Bill v. Bament, 9 M. & W. 36: relied on by the plaintiff's counsel. A memorandum made at any time before action brought is enough.
• Stockdale v. Dunlop, 6 M. & W. 224: relied on by Willes, J. A later acceptance does not relate back to an earlier offer to bind third persons who dealt with the property in the interim. The plaintiffs there had no insurable interest under a verbal contract.
• Coats v. Chaplin, 3 Q. B. 483, 2 Gale & D. 552: cited by Willes, J. as authority that John Felthouse might have had a remedy against the auctioneer. Carriers who lost goods by negligence were liable to the manufacturers.
• Smith's Mercantile Law, 4th edition, p. 468 et seq.: cited by defendant's counsel; a textbook, not a case.

Judgement

1. Rule absolute (the rule to enter a nonsuit, obtained in Michaelmas Term, is made absolute).
2. Byles, J., and Keating, J., agreed with Willes, J.
3. The judgment does not state any order as to costs.

Legal Principle / Ratio

An offeror cannot make the offeree's silence an acceptance. Until the offeree accepts in a way that binds him, no property passes, and the offeror cannot sue a third party who deals with the goods. On the alternative assumption of an earlier verbal bargain, a later acceptance would not bind third persons who dealt with the horse in the meantime.

Key holding: the uncle could not impose a sale of the horse on the nephew unless the nephew chose to write and repudiate the offer.

Critical Analysis

Analysis based on the judgment text.

• The judgment records dates that do not agree with each other: the close of the year 1869, the 1st of January, 1860, January 1st, 1861 and January 2nd, 1862. The 26 and 27 February letters are dated 1861.
• The judgment says the nephew's own intention was for the uncle to have the horse. It still holds that the uncle acquired no property, because that intention was not communicated to the uncle.
• Keating, J., says the position between uncle and nephew would probably have involved some difficulty. The judgment does not decide that question.
• The rule was argued mainly on the statute of frauds. The judges rested their decision on the absence of an acceptance binding the nephew before the sale.
• The judgment does not say whether the plaintiff ever replied to the nephew's offer of another horse on loan.

Significance

• The case is cited for the rule that silence is not acceptance. The offeror cannot bind the offeree by saying no reply will be treated as assent.
• It shows that an offer stays open and can be withdrawn until it is accepted in a way that binds the offeree.
• It shows that a private, uncommunicated intention to accept does not pass property or bind the offeree.
• It shows that a later acceptance does not relate back so as to bind third persons who dealt with the property in the meantime.

Exam-Important Points

• Rule: an offeror cannot impose a sale on the offeree unless the offeree writes to repudiate the offer. Trap: the uncle's words if I hear no more made no difference.
• Rule: until acceptance, the offer stood open and the uncle could have retracted it.
• Rule: the nephew's uncommunicated intention that the uncle should have the horse did not bind him.
• Rule: a later acceptance does not relate back to bind third persons, following Stockdale v. Dunlop.
• Trap: this was an action for conversion against an auctioneer. The Court asked whether the plaintiff owned the horse on 25 February.
• Trap: the case was argued on the statute of frauds. The Court did not rest its decision on the writing requirement.
• Result: rule absolute; nonsuit to be entered. Damages of 33l. awarded by the verdict fall away.

Prepared from the full text of the judgment. The judgment text has no numbered paragraphs, so no paragraph numbers are cited; the report is 142 ER 1037.