#6855 - Car And Universal Finance Co. V. Caldwell - Restitution of Unjust Enrichment BCL

Car and Universal Finance Co. Ltd v. Caldwell

Facts

The defendant, John David Balfour Caldwell, was the owner of a Jaguar motor car. On Sunday, January 10, he was visited by two men calling themselves Norris and Foster. They wished, they said, to buy the Jaguar car for 975, and paid 10 in cash as a deposit. He was induced by Norris to let them take is away, leaving with Caldwell a Hillman car of much less value as security, and also a cheque for 965 drawn on the Midland Bank.

The next morning, January 13, when the bank at Brighton opened at 10 a.m. Caldwell was there to present the cheque. The cheque was not met and the manager told him that it could not be met from that account.

Caldwell took a taxi at once and went to the police. The police produced a photograph of a wanted man who was the same man, Norris, who had induced Caldwell to part with his car. The police immediately put out a wireless call to all their police patrols, to try to find the car. They told Caldwell that there was a warrant out for the arrest of Norris in the name of Rowley, and that they had been watching his house for several days and had not found him.

Sometime on January 13, Norris sold and delivered the Jaguar car to Motobella Co. Ltd. who, it was further agreed, had notice of the defect in title. The previous week Motobella had had a similar transaction with Norris, and if they did not know the details of the actual fraud they had notice from which they could infer that he had not come by it honestly. On January 15, Motobella sold the car for 950 to G. & C. Finance Corporation Ltd. (hereinafter called "G. & C. Finance") who purported to hire it to one "Alfred Harry Knowles," who appeared to have been a fictitious hirer.

Meanwhile, on January 20, 1960, the car had been found at Bosham, being driven by one Brian Charles Allen, a director of Motobella, who claimed that his company had bought it and that it was their property. On January 29, 1960, Caldwell's solicitors demanded of Motobella's solicitors the return of the car, but they claimed to have goodwill.

Holding

Lord Denning (QBD)

Argument: An election, he indicated, was not complete until he had communicated it to the other side in such a way as to lead the opposite party to believe that he had made that choice. Then he had completed his election and could go no further.

Rejected: In principle, it seems to me that a seller can avoid a contract by an unequivocal act of election which demonstrates clearly that he elects to rescind it and to be no longer bound by it. It is sufficient if he asserts his intention to rescind "in the plainest and most open manner competent to him." How is a man in the position of Caldwell ever to be able to rescind the contract when a fraudulent person absconds as Norris did here? If his right to rescind is to be a real right, when the rogue absconds, it must be sufficient if he does all that he can in the circumstances unequivocally to make it known. It is not sufficient for him, of course, to keep it in his own mind or write down a note in his own private sitting room. However, conduct such as we have here, namely, telling the bank, the police and the A.A., "Find this car if you possibly can. Get it back. It is mine," seems to me an unequivocal act of rescission.

Effect of Rescission: I hold, therefore, that where a seller of goods has a right to avoid a contract for fraud, he sufficiently exercises his election if he at once, on discovering the fraud, takes all possible steps to regain the goods even though he cannot find the rogue or communicate with him. That is what Caldwell did here by going to the police and asking them to get back the car. I, therefore, hold that on January 13 the contract of sale to these rogues was avoided and Caldwell then became the owner of the car again. It was only after he avoided it (so that it was once again his property), that these rogues purported to sell it to Motobella and Motobella purported to sell it to G. & C. Finance. Those sales were ineffective to pass the property because it had already been re-vested in Caldwell.

Sellers LJ (Court of Appeal)

He has to...