1 subject to various modifications, viz. (1) a common-law Sect. 17. sanction to well-recognised contracts subordinate to owner- Modifications ship, such as lease; (2) a common-law recognition of the of rule. intention of parties as embodied in a condition postponing the passing of the property as in hire-purchase; 2 and (3) a statutory right created in 1856, by which the buyer was preferred to the seller's creditors, although the goods had not been delivered, and a seller was bound under certain conditions to give delivery to a sub-purchaser notwithstanding a general balance due to him by the first purchaser.4 modification. These relaxations of the rule as to possession were not Reasons for recognised without difficulty, and were occasionally strongly condemned. They were, however, rendered necessary by the greatly increased complexity of commercial interests in the present century. Bell, while speaking in almost affectionate terms of possession as "the true and proper badge of transferred property," admits that "an adherence to this plain and simple rule is utterly impossible amidst the complicated transactions of modern trade." 6 Elsewhere he points out that "creditors in giving credit must henceforth lay their account with a suspending condition, and not conceive themselves entitled absolutely to rely on the property as irrevocably vested in their debtor."8 Finally, in his posthumous work on Sale, Bell speaks of the rights of the creditors of the seller as they existed in his day, and before 1 As in Eadie v. Young (1815), Hume 705, and Orr's Trustee v. Tullis (1870), 8 Macp. 936. 2 See, for example, Murdoch and Co. Ltd. v. Greig (1889), 16 Ret. 396, correcting Cropper and Co. v. Donaldson (1880), 7 Ret. 1108. See also Arbitration Case, Barclay and Brand v. Guild (1876), reported Guth. Sel. Ca. 2nd ser. 519. Formal sanction is given by this Act to conditions suspensive of the passing of the property. See Sect. 19 post, p. 99. 3 19 & 20 Vict. c. 60, Sect. 1, repealed by this Act, Sect. 60 and Schedule. 4 Ibid., Sects. 2 and 3 repealed as above. 5 Lord Justice-Clerk Hope would not recognise any injustice in the seller's creditors carrying off the subject of sale from a buyer who had paid the price. "The principle of the Scotch law," he held, is both recommended by practical justice and by expediency "-Boak v. Megget (1844), 6 D. 662 at p. 668. And again, "Our law is, in the most fundamental points of doctrine and practice respecting the law of ownership and the effect of possession of moveables, essentially different from the law of England, and we are apt to forget our own very clear and far superior rules"-Anderson v. Buchanan (1848), 11 D. 270 at p. 274. 6 Bell's Com. i. 178. 7 Bell writes in 1826, and evidently refers to Cowan v. Spence (1824), 3 8 Bell's Com. i. 273; see also Com. i. 258. Sh. 42. G Sect. 17. Views of the Bench. Effect upon rights of creditors. an the Mercantile Law Amendment Act of 1856, as unhappy and unjust consequence of the general principle of the Scottish law." 1 Similar views as to the necessity or propriety of a relaxation of the rigid rule have frequently been expressed from the Bench, e.g. by Lord Ivory in an oft-quoted passage where he says "creditors are bound to know that many honest occasions of possession may arise in the daily complications of human affairs without any radical title of property on which they would be safe to rely as a ground of credit." Lord Justice-Clerk Moncreiff in 1882 summed up the effect of modern case law by the statement that the doctrine of reputed ownership "is no longer of much importance," result which requires careful consideration in view of the extensive change in the Scottish law of possession introduced by the present Act. Thus it may be doubted if, in consequence of the new doctrine of the passing of the property by the contract without change of possession, the just rights of creditors are sufficiently protected by the ordinary common-law rules or by the provisions of Sect. 25. The last-mentioned provisions form a partial return to the doctrine, but they only relate to the case of a particular purchaser or pledgee. The general creditors of the seller or buyer are not protected, and the question therefore arises whether it may not be expedient 1 Bell on Sale (1844), p. 13. The view here expressed was strongly condemned by Lord Justice-Clerk Hope immediately after the publication of Bell's work-Boak v. Megget (1844), 6 D. 662 at p. 668. 2 In Shearer v. Christie (1842), 5 D. 132 at p. 136. The same statement was repeated by Lord Ivory as Lord Ordinary in Anderson v. Buchanan (1848), 11 D. 270 at p. 274, and is quoted with approval by Lord JusticeClerk Moncreiff in Orr's Trustee v. Tullis (1870), 8 Macp. 936 at p. 946. It is to be observed, however, that in both of the cases in which Lord Ivory, as Lord Ordinary, expressed his views, he was overruled by the Court. 3 In Robertsons v. M'Intyre (1882), 9 Ret. 772 at p. 778. Reputed ownership was fully discussed by Lord Cowan and Lord Neaves in Orr's Trustee v. Tullis (1870), 8 Macp. 936. See also Mitchell v. Heys and Sons (1894), 21 Ret. 600. Lord Blackburn, however, assumes that reputed ownership still exists in a practical form in the law of Scotland. "If," he says, "you can show that the man who has acquired the jus ad rem has allowed the vendor to keep possession of the goods in such a way as is quite inconsistent with his jus ad rem it seems very reasonable indeed to say that that shall be considered as analogous to a case of reputed ownership, and that being so the Mercantile Law (Scotland) Amendment Act does not take the goods out of it."-In M'Bain v. Wallace and Co. (1881), 8 Ret. H.L. at p. 113. to extend to Scotland the statutory reputed ownership Sect. 17. which for centuries has formed part of the English bank- Suggested ruptcy code.1 statutory reputed etc. It is not altogether in consequence of the new rule ownership. introduced into Scotland that the interests of creditors seem Hire-purchase to require further protection. A condition suspensive of the passing of the property has long been recognised in Scotland 2 as well as in England,3 and has been given effect to in such contracts as hire-purchase, where the aim of the seller is to prevent the property passing to the buyer, and being carried off by assignees or creditors before payment of all the instalments of the price. The seller's rights do not conflict with those of third parties until he gives delivery, but, after the buyer obtains possession, he may fraudulently sell or pledge to third parties, or he may incur debt on the faith of the ownership of the goods. A remedy for the hardship involved in such cases as Murdoch and Co. Ltd. v. Greig (1889), was intended under the provisions of the Factors Act 1889,5 repeated in Sect. 25 (2) of this Act, 1 It was introduced by the Statute 21 James I. c. 19 (1623), and in its present form will be found in Sect. 44 of the English Bankruptcy Act of 1883 (46 & 47 Vict. c. 52). As to reputed ownership in a question with the creditors of the reputed owner, see remarks of M. P. Brown (Sale, p. 27, note). 2 Stair, i. 14. 4 and 5; Ersk. iii. 3. 11; Bell's Com. i. 258; M. P. Brown, 43. The passage from M. P. Brown is quoted with approval by Lord President Inglis in Murdoch and Co. Ltd. v. Greig (1889), 16 Ret. 396 at p. 401. See also cases in Appendix II. post, p. 327. 3 See M'Entire v. Crossley, H.L., 13th May 1895, Law Times, vol. xcix. p.61. 4 16 Ret. 396. 5 52 & 53 Vict. c. 45, Sect. 9. 6 In Lee v. Butler [1893], 2 Q.B. 318, a contract of hire-purchase was held to be an agreement to sell, there being an absolute obligation on the part of the hire-purchaser to complete the instalments of so-called hire and thus become owner. This decision was approved of by the House of Lords in Helby v. Matthews, 30th May 1895, 11 Times Law Reports, 446. In Murdoch and Co. Ltd. v. Greig, the Court of Session expressly held the agreement to be a sale, and yet a bona fide purchaser at a public auction was held bound to restore the article to the seller, in respect of a latent condition by which the passing of the property was suspended. This decision is no longer law, being covered by Sect. 9 of the Factors Act 1889 and Sect. 25 (2) of this Act as interpreted by Lee v. Butler, supra. In Helby v. Matthews above referred to there was a clause in the agreement that the hirer might at any time terminate the hiring by delivering up the article hired (a piano) to the owner without being liable for more than the arrears of hire. This was held by the House of Lords (reversing the decision of the Court of Appeal) to distinguish the case from Lee v. Butler. It was said to form a real case of hire, and therefore to be beyond the scope of the present Act, but the judgment is open to the observation that the hirer's option to treat the contract as either hire or sale extends to an option to treat the payments already made as either hire or Sect. 17. Sale on approval, etc. Mortgage, etc. but a recent House of Lords judgment shows that the remedy is very imperfect, and in any event the general creditors of the hire-purchaser are still unprotected. "2 1 The condition in the case of hire-purchase affects the passing of the property, but does not make the sale itself conditional. It therefore differs in this respect from " sale on approval" or "sale or return," in neither of which is there any sale if the event forming the condition does not happen. A transfer of property without transfer of possession does not apply to "any transaction in the form of a contract of sale which is intended to operate by way of mortgage, pledge, charge, or other security.' The law of Scotland, as affecting a security in the form of a sale, has, however, been much disturbed of recent years, and is not yet well settled.3 There is nothing in the law of Scotland analogous to the English Bill of Sale, by which a statutory method is provided of securing advances over moveables by means of registration. Campbell, in his work on the Sale of Goods,5 is of opinion that such a statutory provision is " unnecessary in Scotland: 1st, because in Scotland the doctrine of reputed ownership exists independently of statute . . .; and 2ndly, by reason of the principle that possession is necessary to transfer the ownership in moveables." But this author's argument does not seem to be supported by the Mercantile Law Amendment Act, Scotland, 1856, or by the cases of Wyper v. Harveys' (1861), M'Bain v. Wallace (1881), and Edmond v. Mowat9 (1868), on which he founds.10 8 instalments of a price. The previous Factors Acts did not affect hire-purchase, 2 Sect. 61 (4). 7 23 D. 606. 8 8 Ret. H. L. 106. 6 19 & 20 Vict. c. 60. 97 Macp. 59. 10 See Campbell, pp. 154 to 159. In Coote v. Jecks (1872), L. R. 13 Eq. 597, It was held in a recent case,1 that where a dealer in Sect. 17. musical instruments had let out pianos on the hire-purchase system, and had afterwards by an indenture assigned both pianos and hire-purchase agreements in security of an advance, the assignation, so far as regards the hire-purchase agreements, was not invalid because not registered as a bill of sale. It was admittedly invalid as regards the pianos themselves, and it was argued that the deed must stand or fall as a whole, but this contention was negatived. "Upon the face of the instrument there was an assignment of proprietory rights and also of certain contractual rights. . Could two things which were different be said to be inseparable? Each gave different rights and different remedies. . . . If different instruments had been used to assign each, the Bills of Sale Acts would not be applicable. to the instrument assigning the contractual rights." 2 illustrations. So far as the law of England is concerned the section is General declaratory. Illustrations will be found in connection with the immediately succeeding section.3 Rules for Ascertaining Intention. ASCERTAINING 18. Unless a different intention appears, the Sect. 18. following are rules for ascertaining the intention of RULES FOR the parties() as to the time at which the property in the goods is to pass to the buyer. a minute of lease of heritage in Scotland was deposited by an English debtor with an English creditor, along with an agreement pledging all furniture and effects in the leased premises in security of an English debt. The pledge was clearly ineffectual according to the law of Scotland, and it was maintained that to be effectual in England it was necessary that the agreement should be registered in terms of the Bills of Sale Act of 1854. It was held by Bacon, V. C., that as the Act did not extend to Scotland registration was unnecessary, and the curious result followed that a security became available to the creditor which was invalid on different grounds in both countries. 1 In re Isaacson, ex parte The Trustee, Ct. of App. (7th December 1894), 11 Times Law Rep. 101. 2 Per Lord Esher, M.R., 11 Times Law Rep. at p. 102. Lord Esher's views are supported by In re Burdett, ex parte Byrne (1888), 20 Q. B.D. 310, and Cochrane v. Entwistle (1890), 25 Q. B.D. 116. 3 Sect. 18 post, p. 89. INTENTION. |