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Nemo Dat

Nemo Dat

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Published by Adam 'Fez' Ferris
Property Notes courtesy of Nick 'Big Dog' Wood
Property Notes courtesy of Nick 'Big Dog' Wood

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Published by: Adam 'Fez' Ferris on Apr 15, 2010
Copyright:Attribution Non-commercial

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04/18/2013

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Nemo DatCompeting property rights concerns the rules used to resolve disputes between 2 or more peoplewho have independently acquired competing property rights to the same thing.The starting point is considering the basic rules for unregistered property rights. We look first at thenemo dat quod habet principle (no one can give what he or she does not have), or nemo dat forshort.According to Northern Counties of England Fire Insurance Co v Whipp...
Facts
: Manager of NCEFICo mortgages his land to the company. Manager then approaches MrsWhipp for a loan giving her all the title documents but not the mortgage, giving Mrs Whipp anequitable mortgage of the land. She was unaware of the legal mortgage to the company. Companybegins an action to foreclose the mortgage, defendant postpones this.
Held 
: Company wins action to foreclose mortgage.
Ratio
: The court will not postpone the prior legal estate to the subsequent equitable estate on theground of any mere carelessness or want of prudence on the part of the legal owner. It will only doso where the owner of the legal estate has assisted in or connived at the fraud which has led to thecreation of a subsequent equitable estate without notice of the prior legal estate
or 
where theowner of the legal estate has constituted his agent with authority to raise money, and the estatethus created has by fraud or misconduct of the agent been represented as being the first estate. Asthe company dealt with their securities carelessly but with no collusion to lend money or motive tocreate the subsequent interest there was no fraud. Further, there was no agency or authority tocreate the equitable interest (giving manager key did not give him that authority). The legal interestwas preferred.
Significance
: When an owner is careless with their property and that property is stolen and sold toan innocent buyer, the buyer should bear the loss.According to Bishopsgate Motor Finance Corp Ltd v Transport Breaks Ltd Denning mentions how theprinciple of protection of property (no one can give a better title than he himself possesses) and theprinciple of the protection of commercial transactions (the person who takes in good faith and forvalue without notice should get good title) have struggled for mastery. He acknowledges that thefirst has held sway for a long time because of nemo dat, but mentions how it has been modified bystatute and common law to meet our present needs and the prevalence of protection of property isindeed by no means black and white. There are numerous exceptions to nemo dat which enablebuyers in good faith to obtain good title even though the seller does not have good title.One of these is outlined in Miller v Race...
 
Facts
: Mr Race was a clerk at the Bank of England who refused to pay on demand when Millerpresented the Banks note. Miller was an innkeeper who had unknowingly taken the note aspayment from a lodger who had stolen the note from the mails.
Held 
: The original owner (Mr Finney, whos note it was that was stolen from the mail and given toMiller) did not have sufficient property in the note to entitle him to recover in the present action.
Ratio
: For money to work efficiently it should change hands dozensof times or more, and banknotes (and by extension other negotiable instruments) should be treated as such (money, wouldntbe efficient if evidence of title was required). As it is to change hands so many times, invokingcontract defences and putting the present possessor of the moneys title at risk would beirresponsible and unfair.
Significance
: This case established perhaps the most important exception to nemo dat, money usedas currency enables buyers in good faith to obtain good title even though the seller doesnt havegood title.Another important exception to nemo dat is clear in Farquharson Brothers & Co v King & Co...
Facts
: Timber merchants who store imported imported timber in commercial docks gave authorityto Mr Capon to sign delivery orders for the firm, authorizing him to accept all transfer or deliveryorders which should be signed on the merchants behalf by Mr Capon whose signature should besubjoined. Capon began a series of frauds, including selling to King & Co (respondents who wereacting in good faith) under a false name/address and appropriating the proceeds. First court gives infavour of plaintiffs, Court of Appeal gives in favour of defendants, plaintiffs appeal.
Held 
: Judge allows appeal, giving in favour of original plaintiffs.
Ratio
: The timber merchants were allowed to deny their agents authority to sell because if a servantsteals his masters goods the people who receive those goods innocently shouldnot be able to set upa title against the master as a thief can give no title whatever. No representation sufficient to foundan estoppel could be found
Significance
: Re: Agency... The general rule of nemo dat applies unless the non owner (agent) sellswith the authority or with the consent of the owner. Re: Estoppel... The general rule of nemo datapplies unless the owner of goods is by his conduct (Could include estoppel by representation orestoppel by negligence) precluded from denying the sellers authority to sell. For estoppels tosucceed, see significance bit of Moorgate case note.The case Moorgate Mercantile Co Ltd v Twitchings outlines when an owner should be estopped fromasserting their title.
Facts
: Moorgate let a car on hire-purchase to McL. Because of the continual risk that a person whoobtains possession of a vehicle in pursuance of a hire-purchase agreement will wrongfully sell thevehicle, the finance companies and car dealers set up a self-help organisation called HPI. Moorgatewould normally have registered the agreement with HPI but didnt. In breach of the agreement, McLsold the vehicle to Twitchings who took the precaution of checking the HPI as to whether the vehiclewas subject to a hire-purchase agreement. Moorgate claimed damages for conversion, Twitchings

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