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The Market Overt Method to Obtain Ownership of Lost or Stolen Goods: Comment on Manning v. Algard Estate, [2008] BCSC 1129

Published online by Cambridge University Press:  14 April 2009

Bruce MacDougall
Bruce MacDougall
Affiliation:
Faculty of Law, University of British Columbia. Email: bmacdougall@law.ubc.ca
Rights & Permissions [Opens in a new window]

Extract

Stephanie Manning's mother, Marina Ovsenek, had a penchant for garage sales. In 2000 the daughter was driving the mother to the hospital for her cancer treatment when they stopped at one of these garage sales. The mother paid $5 to buy a box containing a brooch and five gold-colored coins. She kept these in the room in her house that was used to store various items, including other trinkets bought at garage sales.

Information

Type
Case Note
Information
International Journal of Cultural Property , Volume 16 , Issue 1 , February 2009, pp. 85 - 93
Copyright
Copyright © International Cultural Property Society 2009

Stephanie Manning's mother, Marina Ovsenek, had a penchant for garage sales. In 2000 the daughter was driving the mother to the hospital for her cancer treatment when they stopped at one of these garage sales. The mother paid $5 to buy a box containing a brooch and five gold-colored coins. She kept these in the room in her house that was used to store various items, including other trinkets bought at garage sales.

The mother died 4 years later, and Manning's father invited his daughter to choose items she wanted that had belonged to her mother. Included in those things she chose were the five gold-colored coins. She did some research on the Internet about the coins, and learned they might be Swedish antiques worth thousands of dollars. A friend agreed to be her agent to investigate a possible sale of the coins. He contacted a coin museum in Sweden. Soon afterward, the local West Vancouver police arrived and confiscated the coins, indicating that they had been stolen.

Klas-Olof Algard, originally from Sweden, was a collector of Swedish coins living in West Vancouver. In 1994 he reported to police that a briefcase containing some of his coins was stolen from a tailor's shop in West Vancouver. The coins confiscated by the West Vancouver police were returned to him in 2006; but soon afterward, he died of heart failure.

At the time of Algard's death, Manning had started an action against the police to recover the coins. When she learned they had been returned to Algard, she added his estate as a defendant and discontinued the action against the police.

In addition to various evidentiary and procedural matters, in the case of Manning v. Algard Estate,Footnote 1 the British Columbia (BC) Supreme Court was asked to determine who was the rightful owner of the coins. The case is notable because the court—briefly—considered whether Manning could rely on the old doctrine of market overt to claim that her mother took good title even though the seller had no title to the goods and even though the coins had been lost or even stolen. This doctrine, which has its roots in ancient English sales law, no longer exists in England or anywhere else in Canada. If still available, the market overt doctrine conceivably provides a mechanism by which ownership of goods—lost, stolen, or otherwise—can be passed to buyers by sellers who have no legally recognized ownership interest. As such, the availability of the doctrine has potentially profound consequences for the sale and recovery of valuable objects that have been stolen or lost.

FINDINGS OF FACT OR FACT AND LAW

After its consideration of market overt and other legal doctrines discussed later in the article, the court held that the Algard estate was entitled to retain four of the five coins. The fifth coin the estate was not allowed to retain, because the court held that there was insufficient evidence that Algard had owned and then lost or misplaced it. Other significant findings of fact made by the court were that Algard had not abandoned the other four coins. Abandonment is the voluntary relinquishment of a chattel by an owner with the intention of terminating ownership, possession, and control. The court concluded that the four coins had been lost or misplaced, not abandoned. Under BC law, such a loss or misplacement does not of itself terminate an owner's interest in a chattel.

The court also concluded that there was no evidence that Ovsenek, the mother, had acted in bad faith. She treated the coins as trinkets like other items she had purchased at garage sales. The court concluded that she probably thought the coins were toys or reproductions because they were sold for so little. The fact that they were bought at a garage sale in an ordinary neighborhood ought not to have aroused any suspicion in her. So, the court concluded that Ovsenek had purchased the coins in good faith without any notice of any defect in the title of the seller. Finally, the court concluded that the gift of the coins from her father put Manning in the same position as her mother in with respect to the coins.

BACKGROUND TO SALES LAW

The province of British Columbia still has, codified in its version of the Sale of Goods Act,Footnote 2 what might be thought of as the purest common law provisions relating to the position of a buyer in a sale of goods bought from a nonowner. The transfer of ownership (property) is still the focal point of sales law. A sale is first and foremost a mechanism for transferring property from one person to another. The rest of sales law in the Sale of Goods Act is largely adjectival to this basic purpose and to the equally basic principle of nemo dat quod non habet: One cannot give another a better interest than one has oneself. The starting principle is, therefore, that a nonowner cannot convey ownership to another.Footnote 3

The rules in the BC Sale of Goods Act derive from the ur-statute, the English Sale of Goods Act of 1893. This statute was adopted across the common law world, including the United States, as legislation passed in most states based on the Uniform Sales Act of 1906. However, in most places its provisions relating to property have been modified to a greater or lesser extent. Such modifications have been made elsewhere in Canada, outside British Columbia, and in England.Footnote 4 In the United States, of course, this statutory model has been abolished altogether. Most such sales statutes (including those that used to exist in the United States) never had the market overt provision (discussed later in the article) in the first place. British Columbia retains the original and complete English rules on these matters in all their glory, however. First enacted in the late nineteenth century, these rules were not intended to change the law much at all. Because for the most part they represent a codification of the common law, as it then existed, British Columbia can be said to retain a basic common law treatment of this area of law.

In its codification of the common law relating to passing property, the BC statute sets out a handful of situations where it is possible for a buyer to take a better interest, including ownership, than the seller had to give. In other words, the BC statute contains some important exceptions to the nemo dat quod non habet principle in the sales context. These exceptions were considered by the BC Supreme Court in the Manning case. They apply to the following six scenarios:

  1. 1. An owner can be estopped by its conduct from denying that the seller had authority to sell the goods.Footnote 5 Here, by words or deeds or both, the original owner is essentially prevented from saying that the seller acted as its agent to make the sale, so transferring property to the buyer.

  2. 2. If a seller has a voidable title to the goods, but that title has not been avoided before the sale to a bona fide purchaser without notice of the defect of title, the purchaser takes a good title to the goods.Footnote 6 A seller will have a voidable title usually because of some deceit or unfairness attributable to this seller in the circumstances surrounding the transaction under which the seller acquired the goods him- or herself. So, this seller might have acquired the goods in the first place from the original owner through some actionable misrepresentation. In such a case, the original owner could rescind that transaction and recover the goods, but the original owner loses this claim to rescind once the goods are sold in the new transaction to a bona fide purchaser.

  3. 3. If a seller remains in possession of goods when the title has already passed to the buyer, or if a buyer has acquired possession when its seller has not yet transferred the property to the buyer, then if those parties in possession of the goods (without property) purport to sell (i.e., transfer property) to a third person who acts in good faith and without notice of the prior transaction, that third party acquires a good title.Footnote 7 Here, the statute effectively deems the person in possession without property to be an agent for the person who does have the property, so as to transfer that person's property to the third party.

  4. 4. The BC statute also contains provisions protecting buyers when dealing with a mercantile agent who is acting outside the scope of the agency.Footnote 8 These provisions are usually found in a different statute, called the Factors Act, in other jurisdictions that have a Sale of Goods Act.

    These exceptions or qualifications to the principle of nemo dat quod non habet are still generally retained in the Sale of Goods Acts in jurisdictions that still have this statute. British Columbia differs in that it retains yet a fifth scenario.

  5. 5. In British Columbia, if goods are sold in market overt, according to the use of the market, the buyer acquires a good title to the goods, as long as they are bought in good faith and without notice of any defect or want of title on the part of the seller.Footnote 9 Even more archaically, the BC statute goes on to provide that this provision “does not affect the law relating to the sale of horses.”Footnote 10

    Before discussing how the court in the Manning case dealt with some of these various provisions, yet another and related remnant from the original English Sale of Goods Act, still existing in the BC act, should be noted. This provision qualifies the aforementioned scenarios, in particular the market overt provision.

  6. 6. In British Columbia, even if there has been a sale in market overt, if goods have been stolen and the offender is prosecuted to conviction, the property in the goods stolen revests in the person who was the owner of the goods.Footnote 11 This qualification is itself qualified, however, by the statute's saying that if goods have been obtained by fraud or other wrongful means not amounting to theft, the property in the goods does not revest in the person who was the owner of the goods, even if there is a conviction of the offender.Footnote 12

SALES LAW FINDINGS IN THIS CASE

The court in Manning easily determined that the seller was not and could not be said to be the agent for Algard. Thus, scenarios 1, 3, and 4 had no application here. With respect to exception 2, the voidable title exception, the court held that for Manning (or, more precisely, her mother) to have benefitted from this provision, it would have to be found that the seller at the garage sale had a voidable title in the first place. The court held that this seller could only have had any title at all (voidable or otherwise) if Algard had not just lost or misplaced the coins but had abandoned them. Algard had not abandoned the coins. In such a situation, according to general principles of property law, a finder does acquire a right to retain the found chattel, but this right cannot be exercised against the true owner (or those claiming through the true owner). Algard was the true owner, then, unless the fifth scenario, the market overt exception, applied to give Ovsenek (and so her daughter) a good title.

After raising the market overt point, however, the court essentially fell silent. Both parties apparently agreed that the market overt exception is a legal anachronism. The court simply noted that the market overt section of the Sale of Goods Act has never been successfully invoked in British Columbia and noted that its applicability has been doubted. The court appeared to accept that lack of successful use of a statutory provision brings into play the doctrine of desuetude.

The questions remain: What is the law on market overt and can it apply in the BC context? Does the principle of desuetude have any application to provisions in a commercial statute? If the law of market overt does in fact apply in British Columbia, as the Sale of Goods Act clearly states, would its use have changed the outcome of this case with respect to the four gold coins?

THE MARKET OVERT DOCTRINE

England

The idea behind market overt is that goods on sale in a public market are readily available for inspection and can be identified by the true owner who is able to check the market to see whether the goods on sale are actually his goods. This somewhat quaint idea hearkens back to a much earlier time: back as far as the thirteenth century in fact, but only later imported from the law merchant into the common law.Footnote 13 The peculiarities of market overt are illustrated by the summary of case law on the doctrine made by Ivamy:

The sale must be made in a place that is overt and open, not in a back room or warehouse. The contract must be originally and wholly made in the market…. The sale must not take place at night but only between sunrise and sunset…. If goods belonging to the Crown are sold in market overt, the purchaser does not get a good title to them. The right of the original owner revives if the original seller who sold without title again acquires the goods… .Footnote 14

The concept does not reflect the reality of our urban, mobile society. But does that mean the rule necessarily has no place. If appropriate here, the same historical anomaly critique might be argued in the context of other sales rules as well, such as those of voidable title or mercantile agency.

English authority defines a market overt as “an open, public, and legally constituted market.”Footnote 15 Clearly, the great historic markets were included in the concept, but so too were those more recently established by law.Footnote 16 In Bishopsgate Motor Finance Corporation Ltd v. Transport Brakes Ltd, Denning made the following statement:

In my opinion, this beneficent rule of the common law applies not only to open markets created by grant or prescription, but also to open markets authorized by statute. When the legislature authorizes the holding of a market, it must be taken to intend to attach to it all the privileges attaching to a market by grant or prescription.Footnote 17

The city of London was subject to a broader definition of market overt, however, such that every shop in the city was a market overt for such things which by the trade of the owner were put there for sale.Footnote 18 This special rule for shops in London has been criticized.Footnote 19 But in England today the matter is entirely academic, because the concept of market overt has been abolished in the Sale of Goods Act.Footnote 20

British Columbia

British Columbia authority on the doctrine is scant indeed. It is true, as noted in Manning, that it has never been successfully applied in British Columbia and some courts have doubted its continuing validity. Yet other authority inferentially accepts that it might be used in some contexts. When the court and parties in Manning assumed that the doctrine is a “legal anachronism” (and therefore not to be considered), they appear to have relied on the 1980 case of Westcoast Leasing Ltd v. Westcoast Communications Ltd. in which, despite its inclusion in the Sale of Goods Act, the availability of the doctrine of market overt was questioned by the BC Supreme Court. The court there noted that the doctrine had been argued before in British Columbia but never successfully used.Footnote 21

In Westcoast Leasing, the BC Supreme Court was dealing with a shop in a commercial street in Vancouver. The court rightly doubted that the common law special treatment for shops in the City of London had any application in British Columbia. Even in England the applicability of market overt to shops did not apply anywhere outside the City. Thus Westcoast was not a market overt situation in any event, and its general comment about market overt is therefore obiter.

Another BC court declined to use the market overt doctrine, but its decision can also be explained as consistent with traditional law on market overt. In Director of Trade Practices v. Stewart, there was a question of whether the market overt doctrine applied to protect a buyer of a ship in an area zoned for marina and boat sales. The court agreed that the area where the sale took place was public, but held that there was no market overt because “there is no evidence of any long-standing custom indicating that the historical concept of market overt applies.” The court also held that there was “in fact no market.” Murphy said, “As there are numerous boat establishments in the area there is no one place to which a person could resort to see if his goods are being disposed of.”Footnote 22 In any event, however, the court cited English authority to the effect that there is no such thing as market overt for ships.Footnote 23

The court in Stewart sought some “long-standing custom” in relation to the finding of a market overt. How long such a custom need be was not indicated; but this was not a prerequisite for a market overt in England. English authority, as noted earlier, holds that statutory (or other regulatory) authorization for a market is a sufficient basis for the recognition of a market overt.

There is some indirect BC authority that assumes that market overt might be found in some cases. For example in R v. Balison, the court assumed that a sale in a pawn shop can be a sale in market overt, so long as the sale is by the shopkeeper and not to him.Footnote 24 This conclusion, however, is inconsistent with the Westcoast Leasing case and the English authority holding that (except in the City) a sale in a shop is outside the concept of market overt. Nonetheless, the Balison case counters the view that market overt can never be available.

More significant support for the continued operation of the market overt provision in the Sale of Goods Act comes from a decision of the BC Court of Appeal relating to scenario 6, discussed earlier. This scenario, as mentioned, is largely a qualification to the market overt operation. Although market overt itself has not been used in British Columbia, courts have not doubted the availability of section 29 (i.e., the statutory provision covering scenario 6), which substantially depends on the market overt provision to have any relevance. In St. John v. Horvat,Footnote 25 the court underlined the narrow ambit of what section 29 does. In doing so, it stressed that the section applies only in the context of a theft conviction. Conviction for another offense is insufficient. Furthermore, it seems a guilty plea to a theft charge is inadequate to allow property to be restored to the original owner. Although limiting the possible scope of the sixth scenario, by defining some scope for this provision, however, the BC Court of Appeal supported the idea that the market overt provision is also still applicable.

DESUETUDE

Might the doctrine of market overt be inapplicable simply because it has not been successfully used? There are some cases where the doctrine of desuetude has been used in British Columbia, but not specifically in the context of a statutory provision that has not been superseded and especially not in the context of a commercial statute. There is authority for the view that desuetude is not part of the common law in the statutory context. In The India (No. 2), Judge Dr. Lushington, said the following:

Though a British Act of Parliament does not become inoperative by mere non-user, however long the time may have been since it was known to have been actually put in force, yet the fact of non-user may be extremely important when the question is, whether there has been a repeal by implication.Footnote 26

The judge went on to add that there is a presumption against such repeal by implication; but it could be shown where the statutory provision in question is incompatible with a subsequent provision, where in conjunction with a later provision it would lead to an absurdity, or where its subject matter is dealt with comprehensively by a subsequent statute.Footnote 27 The market overt provision in British Columbia fits into none of these categories.

Furthermore, the BC Court of Appeal, in the context of discussing the sixth scenario in the St. John case, took an approach that bolsters the idea that desuetude does not eliminate market overt in British Columbia. Section 29, the provision that embodies the sixth scenario in the BC Act, has been criticized in England, where its predecessor once existed, for the same reasons as the market overt concept has been criticized. It comes from a different time and context and was designed to encourage private prosecutions for theft. Atiyah points out that this is “somewhat out of date at a time when it is seen to be the duty of the police rather than of the owner to undertake the prosecution.”Footnote 28 But the BC Court of Appeal in St. John said, “The legislation clearly states that the offender must have been prosecuted to conviction. If that requirement is not to be applied, it must be repealed by the legislature.”Footnote 29 The market overt rule is no odder in the modern context, so it is arguably still available until the legislature repeals it. It would be difficult to contend that there is scope for selective desuetude within the same statute.

CONCLUSION

To sum up, there is no case in British Columbia that has used the market overt section to protect a buyer. Some cases have doubted the availability of the concept, but the comments in this regard are arguably obiter. Conversely, there is no direct authority confirming its availability. If there is a such a thing as market overt, it would probably be in a public market that has a number of sellers and some historic or legislative basis for its existence. Perhaps a publicly established flea market might suit the bill; more likely one of the official public markets that exist in British Columbia. Could Manning have used the section on market overt? It is unlikely that market overt ever covered a garage sale or something equivalent to it. It is unlikely that many objects of great rarity would be habitually sold in any of the places just mentioned. But there is no reason why they could not be so sold and have the market overt provision apply. Even Ivamy, a strong critic of market overt, supported its availability in the country context and at public auctions.

It is a concern that this provision in British Columbia might allow the transfer of good title to stolen or lost items to buyers at public auctions or other market contexts. Given the uncertainty and potential disruption to expectations of those who have lost objects or from whom objects have been stolen that they will not lose title, it would be prudent of the BC legislature to abolish this part of the Sale of Goods Act. Until that is done, it would not be surprising to see some other buyer in a position similar to that of Manning try to have the section apply to protect their interests.

Footnotes

1 Manning v. Algard Estate, 2008 BCSC 1129.

2 Sale of Goods Act, Revised Statutes of BC (RSBC), 1996, c. 410.

3 Sale of Goods Act, RSBC 1996, c. 410, s. 26(1).

4 The English statute was modified in 1994, with effect as of January 3, 1995, to eliminate the market overt exception that is discussed here and is retained in the BC statute: Sale of Goods (Amendment) Act 1994, c. 32, ss. 1 and 3.

5 Sale of Goods Act, RSBC 1996, c. 410, s. 26(1).

6 Sale of Goods Act, RSBC 1996, c. 410, s. 28.

7 Sale of Goods Act, RSBC 1996, c. 410, s. 30(1), (3).

8 Sale of Goods Act, RSBC 1996, c. 410, s. 59.

9 Sale of Goods Act, RSBC 1996, c. 410, s. 27(1).

10 Sale of Goods Act, RSBC 1996, c. 410, s. 27(2).

11 Sale of Goods Act, RSBC 1996, c. 410, s. 29(1).

12 Sale of Goods Act, RSBC 1996, c. 410, s. 29(2).

13 See Clayton v. Le Roy (1911), 2 KB 1031 (KB & CA), per Scrutton in KB reasons.

14 Ivamy, “Revision of the Sale of Goods Act,” 128.

15 Lee v. Bayes (1856), 18 CB 599; 139 ER 1504 at 1505, per Jervis; Bishopsgate Motor Finance Corporation Ltd v. Transport Brakes Ltd [1949] 1 KB 322 (CA).

16 See Benjamin, Sale of Goods, para. 7-018 (the current edition, A. G. Guest, ed., 6th ed., 2002, only refers briefly to the doctrine); Bishopsgate Motor Finance Corporation Ltd v. Transport Brakes Ltd, [1949] 1 KB 322 (CA).

17 Bishopsgate Motor Finance Corporation Ltd v. Transport Brakes Ltd [1949] 1 KB 322 (CA), at p. 336.

18 See Benjamin Sale of Goods, para. 7-017.

19 See Ivamy, “Revision of the Sale of Goods Act,” 127–31.

20 See note Footnote 4.

21 Westcoast Leasing Ltd v. Westcoast Communications Ltd (1980), 22 BCLR 285 (BCSC). See also: Lexau v. Brandes [1946] 2 WWR 697 (BC Co Ct); Larsen v. MacDonald (1976), 1 BCLR 64 (BCSC); Chester Industrial Tool Supply Ltd v. Cantec Wire and Cable Ltd. [1988] BCJ No. 1857 (BCSC).

22 Director of Trade Practices v. Stewart (1987), 22 BCLR (2d) 51 (BC Co. Ct), p. 57.

23 Hooper v. Gumm (1866), 2 LR Ch App 282 at 290.

24 R v. Balison [1995] BCJ No. 939 (BC Prov Ct).

25 St. John v. Horvat (1994), 5 WWR 22 (BCCA). See also Chester Industrial Tool Supply Ltd v. Cantec Wire and Cable Ltd. [1988] BCJ No. 1857 (BCSC); R. v. Balison., [1995] BCJ No. 939 (BC Prov Ct).

26 The India (No. 2) (1864), 167 E. R. 345; 12 LT 316, 316. See also Langan, Maxwell; Hebbert v. Purchas (1871), LR 3 PC 605.

27 See also: Re McIntosh Investments Ltd. (1961), OR 474 (CA); Bent v. Vancouver (City) [1940] 2 WWR 697 (BCSC).

28 Atiyah Sale of Goods, 152 (This edition of Atiyah is the last to deal with all the old English statutory provisions, i.e. those still in existence in British Columbia.)

29 St. John v. Horvat [1994] 5 WWR 22 (BCCA), para. 17.1

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