Dude, Where's My Car?

What happens when two legal principles are both conflicting and correct

Sometimes, both sides of an argument are right. Not just partly right, or right on odd numbered days, or right only under certain circumstances. They’re both right for all time, and—ceteris paribus—under all circumstances. Some of the thorniest problems in public policy are of this type, and when they come into conflict with each other, I guarantee you that trying to split the difference—which is what legislators, lawyers, policy wonks and the rest of us must do—is really, really difficult. 

One of the most pervasive characteristics of modern legislative and political micromanagement in developed countries is its perfectionism. Everyone must be perfectly well informed is a version of this. Laws are passed and then patched and re-patched to ensure this happens, often producing all sorts of negative unintended consequences. Sometimes the outcome is worse than the situation that pertained before the laws were enacted.

It’s my view that trying to ‘fix’ the injustices that arise in situations where two sets of principles are both conflicting and correct is impossible. Sometimes it is simply better to make a rule: indeed, HLA Hart once argued that the first principle of the rule of law is not ‘treat like cases alike’ but ‘that there be rules’, for the simple reason that the alternative is too messy to contemplate.

Imagine the following scenario: you’re in the market for a good quality used car and you go scouting around looking for a decent Jaguar, Mercedes or Porsche. You finally see what you want on the forecourt of a car dealership that you trust, and you close out the deal. 

Two days later, a man turns up on your front lawn claiming the car is his. He’s furious. You’re worried that he’s going to start throwing punches—at you, your kids, your dog, whatever. Eventually, you get him to calm down enough to explain what happened. It turns out that last week, he put an advert in the paper offering his Jaguar in British Racing Green for sale.

Photo by Alex Rhee on Unsplash

A man responded to the advertisement and came around to view the car. The man was an absolute dead ringer for David Tennant and—on questioning—revealed that he was indeed David Tennant. The angry man on your front lawn admits to being a huge Who fan and tells you he cheerfully accepted a cheque from the famous actor for the car.

In the meantime, ‘David Tennant’ sells the Jaguar to your favourite car dealership and disappears. The cheque he made out to the angry chap on your lawn bounces. You buy the car, paying good money for it. You had no idea of the car’s provenance.

Who gets the car?

Two people have very good claims to the car. The angry man on your lawn has a good claim. He owned the car and had good title to it. He was tricked into selling it by a bounder who did not have good title; when that bounder on-sold the car to the dealership, he had nothing to sell: he did not have good title. This principle is known in the common law as the ‘nemo dat’ rule, which is short for nemo dat quod non habet. That is, you cannot give what you do not have.

The principle is an old one, and a more sophisticated (and market-friendly) version is outlined by the Roman jurist Ulpian: nemo plus iuris ad alium transferre potest, quam ipse habet (D.50.17.54). What you don’t have a legal right to alienate, you cannot purport to transfer. So far, so dandy. Both the common law and Roman law says you should return the car to its rightful owner. He was cheated, after all, by the bounder pretending to be David Tennant.

In Roman law, this process was known as vindicatio, when the rightful owner could reclaim the chattel (maybe we need to start thinking in terms of used chariots here…). At common law, the rather more idiomatic term used was ‘self-help’.

But what of your rights? You purchased the car in good faith. You paid good money for it. Maybe the question turns on the integrity of the car dealer. Did he suspect the car’s provenance? Is he known around the place for doing a bit of ‘receiving’ on the side? Or did he, like you, purchase the car in good faith from a chap who seemed to have good title?

Once again, both Roman law and the common law will come to your aid. You are what is known in the trade as a ‘bona fide purchaser for value without notice’. Both Roman and common lawyers (in the 1st Century AD and the 18th Century respectively) noticed that vindicatio and self-help could go badly wrong. You know, punch-ups in the local over disputed property and all that. Both societies had a vested interest in keeping the peace, but also in trying to weed out receivers and fences. Both had to split the difference between two equally meritorious claims.

The solution arrived at in both societies—and completely independently of each other—was to have a presumption that operated in favour of the nemo dat rule, but to carve out large exceptions in favour of the bona fide purchaser for value without notice. Unfortunately, the Roman justification for the change in their law is lost to history, but we do have Adam Smith’s discussion of the change at common law. 

Smith pointed out that if goods are to move freely in trade, protection must be given to the innocent purchaser, especially with the growth of credit. People need to be able to walk into a business or market of whatever sort and trust that the person selling to them is, in fact, good to sell: he must have title in his goods. If this need for trust is not assuaged, then the market will not work properly, and people will be reluctant to trade.

Of course, all this applies to what the Romans called ‘moveable property’ and what we common lawyers call ‘chattels’. Land law always operated differently, strongly favouring (as it still does) the person with the strongest title. The Romans operated a titles office system, while the common law demanded proof of a chain of title.

Ultimately the Roman system proved more efficient, and when a clever South Australian called Robert Torrens came up with a modified version, it was rapidly adopted in many other countries. It is—in my view—Australia’s most significant legal innovation. Unfortunately, applying the same principles to chattels—while tempting and possible in some situations—is much trickier.

So, we are back to you and the angry chap eyeballing each other on the front lawn. Assuming the car dealer also acquired the car honestly, who gets the car? If the car dealer was engaging in a bit of receiving, how does that change the outcome? What if the angry chap had turned up on the car dealer’s forecourt before you arrived? What if the angry chap had called the police to report a theft before ‘David Tennant’ had succeeded in passing the Jaguar to the dealership? What if a factor or agent purchased the car on behalf of the dealership without informing his boss (the principal)?

As lawyers reading this will know, I am stealing facts from a dozen different ‘car’ cases. The factual tweaks above matter, too: they bear on whether the court goes with nemo dat or bona fide. And yes, I’m aware that some of the solution to this tussle—once the courts had sorted out the law—involved the development of motor vehicle registries in many countries. My point, however, is larger than just an amusing little excursus on property law. It’s to point out that sometimes, someone with a good claim must lose. Either you, or the fellow who was cheated of his green Jaguar motorcar.

The law cannot be perfect. Sometimes, it cannot even be just.