111 N.E.2d 871 (N.Y. 1953)
On November 28, 1947, plaintiff Jane Zendman bought a diamond ring for $12,500 at an auction held at the gallery of Brand, Inc., on the Boardwalk in Atlantic City, New Jersey.1 Harry Winston, Inc., a diamond merchant located in New York City, claims ownership of the ring.2 Brand and Winston had done business together for years, with Harold Brand visiting Winston’s premises in New York several times a month to select articles later sold at the gallery.3
In October of 1947, Brand chose the ring later purchased by Miss Zendman, advising that he wished to show it to a customer.4 At his request, the ring was mailed to the gallery in New Jersey accompanied by a memorandum reciting that the goods were only for Brand’s examination and that no title was to pass until selection, notification of agreement to pay the $11,000 price, and acceptance by bill of sale.5 Upon receipt, Brand placed the ring in one of its public show windows with the knowledge and acquiescence of Winston, where it remained on display for more than a month.6
On November 28, 1947, the ring was put up at auction, knocked down, and sold to Zendman for $12,500.7 She received a bill of sale from Brand and knew nothing about the written memorandum or the circumstances under which Brand had obtained possession.8 Sometime in January 1948, Winston discovered that Brand had sold the ring, and on February 2 demanded its return.9 On the following day, an involuntary petition in bankruptcy was filed against Brand.10
The record established that delivery of merchandise on memorandum similar to that involved here had been the regular course of dealing between Winston and Brand for some years, with hundreds of such memoranda found in Brand’s files.11 Every week or so, one of Winston’s salesmen and officers would visit Brand’s gallery, check items sent to Brand, and settle the account by collecting cash or checks from Brand or his customers.12 The case reached the Court of Appeals of New York after the Special Term rendered judgment in favor of plaintiff on the counterclaim and the Appellate Division reversed, directing judgment for defendant.
Whether Winston was precluded by its conduct from denying Brand’s authority to sell the ring under the New Jersey statute?13
Subject to the provision of this chapter, where goods are sold by the person not the owner thereof and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell.14 This rule embodies the principle of estoppel or something akin to estoppel.15 Under it, an owner who has clothed the vendor with possession and other indicia of title is precluded from asserting title against a bona fide purchaser for value.16
Yes. Winston acquiesced in Brand’s public display of the ring in a show window for more than a month.17 Winston made no effort to inform the public that the item was exhibited only to solicit offers.18 Winston’s regular course of dealing over several years involved hundreds of similar memoranda.19 Its salesman regularly collected cash or customer checks from Brand without insisting on compliance with the memoranda limitations.20 This created the appearance of unrestricted authority in Brand to sell.21 Zendman was an innocent purchaser who bought at auction in the regular course of Brand’s business.22 She paid full value, received a written bill of sale, and had no notice of any limitation on Brand’s authority.23
These facts satisfy the New Jersey statute’s estoppel standard.24 Winston’s conduct went beyond mere entrusting of possession.25 It included both public display with acquiescence and a pattern of prior dealings that clothed Brand with apparent general authority to sell.26 This distinguishes the case from situations where possession alone is insufficient to create preclusion.27
Winston was precluded by its conduct from denying Brand’s authority to sell the ring under the New Jersey statute, so the judgment of the Appellate Division must be reversed and that of Special Term affirmed.28