judgment, held the following.
The rule of law has been thoroughly established
the cases are numerous, and I need not citethem
that where a contract is voidable on the ground of fraud, you may avoid it, so long as thegoods remain in the man's hands who is guilty of the fraud, or in the hands of anybody who takesthem from him with notice; but where a person has bonâ fide acquired an interest in the goods, youcannot, as against that person, avoid the contract. Where the goods have come into the hands of abonâ fide purchaser you cannot take them back. The case is very closely analogous to the oldcommon-law rule, in the case of felony or trespass. If goods are stolen or taken away by trespass,no title whatever is conferred, in general, upon a purchaser from the person who took them,however bonâ fide the purchase may have been; but if the sale be in market overt to a person whohas no knowledge of the felony or trespass, then the purchaser acquires the property,notwithstanding the goods had been taken from the owner by felony or trespass.
Mellor J and Lush J agreed.
Court of Appeal
The Court of Appeal, with Mellish LJ, Brett J and Amphlett JA overturned the Divisional Court, holding thatLindsay could recover the handkerchiefs, since the mistake about the identity of the rogue voided the contractfrom the start. Cundy appealed.
House of Lords
The House of Lords held that Lindsay & Co had meant to deal only with Blenkiron & Co. There could therefore
have been no agreement or contract between them and the rogue. Accordingly, title did not pass to the rogue,
and could not have passed to Cundy. They were forced to therefore return the goods.Lord Cairns explained the mistake to identity, and the consequences:
Now, my Lords, stating the matter shortly in that way, I ask the question, how is it possible toimagine that in that state of things any contract could have arisen between the Respondents andBlenkarn, the dishonest man? Of him they knew nothing, and of him they never thought. With himthey never intended to deal. Their minds never, even for an instant of time rested upon him, and asbetween him and them there was no consensus of mind which could lead to any agreement or anycontract whatever. As between him and them there was merely the one side to a contract, where, inorder to produce a contract, two sides would be required. With the firm of Blenkiron & Co. of coursethere was no contract, for as to them the matter was entirely unknown, and therefore the pretence of