Scottish Court of Session Decisions

The pursuer, John M'Meekin, an iron merchant in Coatbridge, accepted an offer made to him by Messrs Scott, iron ship builders, Inverkeithing, on 24th September 1875, of thirty tons of scrap-iron then in their hands, and of all that they might make for six or eight weeks thereafter, allowing the defenders to draw on him for £298, 12s. 6d. Under this agreement two deliveries were made, whose value amounted to £190, 17s. 6d. The latter of these deliveries took place on 25th December 1875. On 11th January Messrs Scott again wrote to the pursuer, offering him all the scrap-iron they had then in stock, and all they should make up to 1st April 1876, if they were allowed to draw on him to the amount of £200. This offer was accepted by the pursuer, and the former bill for £298, 12s. 6d. was renewed to the extent of £140. No portion of this scrap-iron was delivered. The estates of Messrs John Scott were sequestrated in March 1876, and John Ross, the defender, appointed trustee.

The pursuer brought this action to have it declared that “the pursuer was, and that he still is, entitled to demand and receive delivery of the whole scrap-iron which the defenders John Scott & Sons had in stock in or about their works or other premises at Inverkeithing at 11th January 1876, and also of the whole scrap-iron thereafter made or produced by them, and which was in their possession at their said works or premises or elsewhere, or under their control, at the date of the sequestration of their estates as aforesaid;” and pleaded—“The pursuer having purchased and paid for the said scrap-iron as aforesaid, and the same having been allowed to remain in the custody of John Scott & Sons as aforesaid, the pursuer is entitled to decree of declarator, as concluded for.”

The defender pleaded—“2. The alleged contract of sale being incomplete as to subject, quantities, and prices, the pursuer has no ground of action. 3. There having been no sale of specific and existing goods at a certain price, the Mercantile Law Amendment Act has no application.”

The first section of the Mercantile Law Amendment Act is as follows:—“Where goods have been sold, but the same have not been delivered to the purchaser, and have been allowed to remain in the custody of the seller, it shall not be competent for any creditor of such seller after the date of such sale to attach such goods as belonging to the seller by any diligence or process of law, including sequestration, to the effect of preventing the purchaser or others in his right from enforcing delivery of the same, and the right of the purchaser to demand delivery of such goods shall from and after the date of such sale be attachable by or transferable to the creditors of the purchaser.”

The Lord Ordinary pronounced the following interlocutor:—“The Lord Ordinary having considered the cause, assoilzies the defender Ross from the conclusions of the action, and decerns.

Note.—The pursuer seeks to recover from the defender Ross, as trustee on the sequestrated estate of John Scott & Sons, the whole scrap-iron which the bankrupts had in stock at 11th January 1876, and also the whole scrap-iron thereafter made by them and remaining in their possession at the date of their sequestration.

The contract founded on by the pursuer stands upon three letters, dated 11th, 15th, and 18th January 1876. In the first of these letters the bankrupts wrote—‘We will have another lot of scraps soon from a ship we are about to plate, besides what we have still in stock. You may have them secured to you if you promise market price during the next two months. If you have no objections, we will draw at three or four months to the extent of £200 for what we make—say to 1st of April.’ This offer was accepted by the pursuer's letter of 15th January, subject to the condition that a bill which was then

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current should be renewed to the extent of £140, and this condition was acquiesced in by the bankrupts in terms of their letter of 18th January.

In pursance of this contract the bankrupts drew on the pursuer for £200. It was accepted by the pursuer, who avers that the bill, which he has either retired or is bound to retire, ‘is greatly in excess of the market price of the scrap-iron’ to which the action relates. The pursuer alleges that the scrap-iron which is the subject of the contract ‘was separated and set apart, or was or is at all events easily distinguishable from the other articles’ in the bankrupts’ premises. But as was explained at the debate, he did not mean to aver anything more than that he had bought the whole, and that it was in this sense it was separated or was capable of separation.

The action is laid on the contract, and on the 1st section of the Mercantile Law Amendment Act.

The defender maintains—1st, That the pursuer did not buy the whole scrap-iron to be made after the date of the contract, but only a portion of the make; 2dly, That even though he did, the pursuer cannot avail himself of the provisions of the Act, because there was no completed sale of any definite quantity of goods.

The Lord Ordinary is disposed to hold that the contract does not comprise the whole scrap-iron made by the bankrupts, but only so much of it as was produced in plating the particular ship referred to in the letter of 11th January. This may not be sufficient to dispose of the case without inquiry, inasmuch as it may turn out that no scrap-iron was actually made except what fell under the contract. He is, however, of opinion that the pursuer has not brought himself within the provisions of the Mercantile Law Amendment Act.

“There was not at the date of the contract any definite subject, nor at that date or any other date was there a definite price. The contract related to a subject to be produced, and the sum due under it was to be determined by the amount of the production. Before the bankruptcy no step was taken to ascertain the amount of the scrap-iron that was made; and indeed this could not well have been the case, because the contract included the make up to 1st April 1876, and the contents of the bill were intended to cover the whole price, subject to adjustment either way according to the amount of production.

“In these circumstances, the Lord Ordinary cannot hold that the sale was complete, so as to admit of the application of the Mercantile Law Amendment Act. He refers to and adopts the opinion of the Lord President in the case of Hanson v. Craig, 21 D. 432; see also Benjamin, p. 235.”

The pursuer reclaimed, and argued—The contract of sale was completed as soon as the iron was produced. It remained with the bankrupt custotodiœ causa merely, and was instantly deliverable. The property was not passed; that could only be effected by delivery, but the contract of sale was complete, and that is all that is required by the Mercantile Law Amendment Act, sec. 1. That Act must therefore be held to apply here, for whenever the subject here comes into existence the contract is complete, and delivery is exigible. The English cases quoted do not apply here, because they deal with the question, whether property has passed or not. That is not the question here. The question here is as to the completion of the personal contract. Hanson v. Craig deals with the passing of the risk; and in all the authorities quoted there a distinction is made between the completion of the contract and the passing of the risk. That may not pass until the subject is measured or weighed, but the contract may well be completed before such operations.

Authorities quoted— Hanson v. Craig, 21 D. 432, and authorities quoted in the opinion of the Lord Justice-Clerk there; Wyper v. Harvey, 23 D. 606; Edmond v. Mowatt, 7 Macph. 59; Black v. Glasgow. Bakers, 6 Macph. 136; Bell on Sale, p. 31; Gourlay v. Hodge, 2 Rettie 738.

The respondents argued—1, This was no sale. 2, If it was, it was not completed—(1) The thing sold was not in existence, and there is no obligation to bring it into existence. The quid, quantum, quale, and pretium, are all wanting. The Mercantile Law Amendment Act contemplated a case where the claim was instantly enforceable, the sort of case reported in Morrison, 14,202, Salter v. Knox's Factor. Here there is merely an agreement to sell; (2) Neither by our law nor the law of England can this transaction be held to be a completed contract of sale. By our law the test of that is the passing of the risk, and Hanson's case shows that where things are not yet measured or weighed the risk is not passed, and consequently the contract of sale not completed. Even where the use remains with the seller, the contract is not completed. The English cases, which show that in similar circumstances there is no sale, are of importance, for the object of the Mercantile Law Amendment Act was to assimilate the laws of the two countries.

To adopt the view of the pursuer would open the door to fraud.

Authorities— Hanson v. Craig, as above; Story on Sales, p. 132; Bell on Sale, p. 16; Hanson v. Meyer, 6 East. 614; Sim v. Grant and Others, 24 D. 1033; Hutchison v. Henry and Corrie, 6 Macph. 51; Wylie and Lochead v. Mitchell, 8 Macph. 552; Benjamin on Sales, pp. 227, 235; Simmonds v. Swift, 5 Barnewall & Cresswell, 857; Heilbutt v. Hickson, 7 L. R. (Common) Taffe v. Ritchie, 23 D. 242; Pleas—C.-J. Bovill's judgment.

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