Nicholls took it to his family laundry business in Cardiff, before handing it to his rugby-mad van boy Thomas Mahoney.
The jersey was kept in Mahoney's family for generations before coming up for auction.
Gallaher was born in Ireland in 1878 and emigrated to New Zealand with his family in the 1890s.
After becoming a prominent figure in New Zealand rugby, he captained his side's first tour outside Australasia in 1905, where they played in Britain, France, and Canada.
They lost only one match, going down controversially 3-0 against Wales at Cardiff Arms Park.
Gallaher played 33 times for his country and won six test caps.
Ten years after his retirement from rugby he volunteered to serve his country during World War I, aged 42.
Gallaher was killed during the battle of Gravenstafel Spur on October 4, 1917, when a piece of shrapnel penetrated his helmet.
He was honoured in 2011 when a bronze statue of him was unveiled outside Eden Park.
His jersey from 1905 has the embroidered New Zealand silver fern on its chest and stitched canvas overlay to shoulders, upper chest and back area. It is complete with leather v-shape neckline.