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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Robertsons v. M'Intyre [1882] ScotLR 19_536 (17 March 1882)
URL: http://www.bailii.org/scot/cases/ScotCS/1882/19SLR0536.html
Cite as: [1882] SLR 19_536, [1882] ScotLR 19_536
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SCOTTISH_SLR_Court_of_Session
Page: 536↓
Court of Session Inner House Second Division.
[Sheriff of Forfarshire.
v.
Facts:
The tenant of a factory having been sequestrated, the proprietors claimed the machinery, on the ground that it had been sold to them, and was at the date of the sequestration let to the tenant, Held that as the evidence showed a bona fide contract of sale, and as possession by the tenant had been continued after the sale on a separate contract, viz., a contract of hiring, the trustee in bankruptcy
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was not entitled to retain the machinery on the ground of reputed ownership by the tenant.
The appellant and defender in this case was the trustee on the sequestrated estate of George Robertson, manufacturer in Dundee. The respondents and pursuers, the Misses Robertson, were two sisters of the bankrupt. The material facts of the case as disclosed on proof were these:—The pursuers were proprietors of a factory in Dundee which they let to their brother George Robertson in the month of February 1880. At the time when Mr Robertson became tenant of the factory, or very soon thereafter, he purchased the looms and machinery which form the subject of the present action, most of which, if not the whole, had been in the factory before Mr Robertson's occupancy began. The machinery so bought remained in the factory down to the time of Mr Robertson's sequestration in June 1881. In or about the month of August 1880 Mr Robertson, who was in need of ready-money, proposed to his sisters, the pursuers, that they should purchase from him the foresaid machinery at a price then named. The pursuers and their brother concurred in stating that the former on 2d August 1880 bought the foresaid machinery from the latter at the price of £270, 18s., which sum on that day they paid to him. A receipt for that sum and of that date was produced. No actual or corporal delivery was then given to the pursuers, but at the time when the purchase of said machinery was made it was arranged between the pursuers and their brother that they should enter into a formal lease of the factory and the machinery, the lease under which Mr Robertson held being then a merely verbal one. A formal lease was accordingly executed by the pursuers and their brother on 18th December 1880, under which the factory, and inter alia the machinery in question, were let to Mr Robertson for a period of two years from and after 2d August 1880, which was declared to be the date of the tenant's entry. Mr Robertson continued tenant of the factory and in possession of the machinery down to the date of his sequestration in June 1881. In these circumstances the defender, as trustee on Mr Robertson's sequestrated estate, claimed the machinery in question as belonging to the estate, and having advertised it for sale, the present action was brought to have him interdicted from doing so.
The Sheriff-Substitute ( Cheyne) found in fact as stated, and also:—“(5) That notwithstanding the sale and lease just mentioned, and notwithstanding also that the pursuers must have known for a considerable period preceding his sequestration that he was in embarrassed circumstances, George Robertson continued to have the full beneficial use and enjoyment of the articles sold by him to the pursuers as aforesaid down to his sequestration, and was at the date thereof the reputed, owner of them;” and in law that the machinery belonged to the sequestrated estate, and that the trustee was entitled to sell it, and assoilzied the defender accordingly.
He added this note:—“The story of the purchase is in its details a most improbable one, but improbable as it seems I cannot bring myself — having seen the pursuers — who both gave their evidence in a way which impressed me with their truthfulness — to say that I disbelieve it. There, however, my agreement with the pursuers stops; for granting that the transaction of 2d August took place in the way described, I must nevertheless hold that the subjects of it fell under the sequestration, and are now available to their brother's creditors. Had the sequestration occurred before 18th December, I do not well see how any serious doubt could have been felt on the point. Till that date, at all events, there had not been the slightest change in the possession, but the bankrupt had continued in the beneficial use and enjoyment of the articles just as before the purchase, and that being so, the case of Sim v. Grant (3d June 1862, 24 D. 1033) is, as I read it, a direct authority for saying that section 1 of the Mercantile Law Amendment Act could confer no right on the pursuers to demand delivery after the sequestration. I am aware, indeed, of the dictum of the present Lord Justice-Clerk ( 8 Macph. 947) to the effect that the case of Sim v. Grant has been misunderstood, and that the statute applies in all cases where goods sold have been allowed to remain in the custody of the seller. But with the utmost possible respect for his Lordship, I find it impossible to reconcile his dictum with the opinions delivered in Sim v. Grant, and it is pretty evident from the report of the case in which it was uttered that Lord Gifford, who was Lord Ordinary in the case, and Lord Cowan would not have agreed with it. Assuming, then, that the pursuers would have had no case had the sequestration occurred prior to 18th December, does the fact that on that date a lease of the factory and its contents, including the articles now in dispute, was executed by the pursuers in favour of their brother, make any difference in the result? I am very clearly and decidedly of opinion that it does not. Thecase is markedly different in its circumstances from the case of Orr's Trs. v. Tullis (2d July 1870, 8 Macph. 936) which was founded on so strongly by the pursuers, and in which the bona fides of the purchaser was established in a variety of ways. In the present case I doubt extremely whether the execution of the lease, looking to all its surroundings, can be called a bona fide transaction. No doubt, it may be said that the parties in executing the lease were only carrying out an understanding arrived at when the purchase was made, but it is somewhat suspicious to find the thing put into writing just at the time when the bank was pulling the bankrupt up. Another thing to be kept in view is, that at the date the lease was signed the pursuers, or at least the elder sister, must have had a pretty good idea that their brother was in deep water; and, again, the appearance of the transaction is not improved by the fact that the rent stipulated for in the lease is precisely the same as the bankrupt was paying before the sale, or by the way in which it was gone about—without the intervention of an agent, and in the presence of witnesses specially brought from a distance to act as such. Let it be, however, that the execution of the lease operated a change in the character of the bankrupt's possession, and constituted the pursuers proprietors of the articles, the assumption will not in my opinion help the pursuers. In that view I have no hesitation in saying that the case is eminently one for the application of the doctrine of reputed ownership. To bring that doctrine into play there must of course be something indicating gross carelessness or collusion on the part of the true owner. Here
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it seems to me abundantly plain that the pursuers have laid themselves open to the charge of gross carelessness and—not using the word in any very offensive sense—collusion, for, to say nothing of the privacy with which the transaction was gone about, I take it to be a fact that by the end of the year the pursuers must have had at least a general knowledge that their brother's affairs were in an embarrassed condition, and if in that knowledge they permitted him to remain in apparently, uncontrolled possession of the goods, so enabling him to obtain a false credit, I think they are most justly subjected to the penalty of seeing the goods carried off by his creditors.”
The Sheriff ( Trayner) adhered to the findings in fact, with the exception of the fifth above quoted, recalled the interlocutor, and granted interdict, adding the following note:—
“In dealing with this case it appears to me that the first question to be settled is, whether the sale of the articles in question by Robertson to the pursuers was or was not a bona fide sale? A number of circumstances are referred to by the defender as casting doubt upon the bona fide character of the transaction. I do not go into these in detail, but I have considered them all carefully, and while admitting that the circumstances referred to may reasonably enough give rise to some doubt or suspicion, I have arrived at the conclusion, reached also by the Sheriff-Substitute, that the sale on 2d August was perfectly bona fide so far as the pursuers were concerned—that they did really buy and in cash down pay for the articles in question. This, however, is not enough. There may have been a bona fide sale and price paid without excluding the applicability of the doctrine of reputed ownership, and it remains to be seen whether the circumstances of this case are such as to admit of the application of that doctrine. Mere possession is not enough to raise the presumption of ownership; it must be collusive possession, which Professor Bell defines (or perhaps I should say describes) to be a possession where the appearance of ownership is carried beyond the purpose or occasion of a legitimate contract—powers of disposal are ostensibly given or allowed to be assumed (Bell's Prin., sec. 1316). On the other hand, where the possession is such as is fairly required or had ‘under some contract requiring temporary possession, the same presumption does not arise. Thus possession under any of the contracts of commodate, deposit, pledge, hiring, &c., does not raise the presumption of ownership’ on which creditors are entitled to rely (Bell's Prin., sec. 1315). In the present case it appears to me that the possession of the articles in question had by George Robertson fell under this latter description. He had the use of them undoubtedly, but no power of disposal. His use and possession were just those and none other than he could or would have had if the articles in question had all been the property of the pursuers at the time their brother became their tenant in February 1880. The possession of the articles which George Robertson had after the 2d of August 1880 was the possession of a tenant under a contract of lease, and not the possession of a proprietor. I have therefore come to be of opinion that there is no room in the present case for the application of the doctrine of reputed ownership.
“The Sheriff-Substitute refers to the case of Sim v. Grant, 24 D. 1033, as ruling the present case. But the cases seem to me to differ very materially. In Sim's case the seller not only remained in possession, but did so with a ‘power to sell’— a power which he tried to exercise. The seller had thus a possession falling clearly within the definition of ‘collusive’ possession already quoted from Professor Bell. Another case illustrative of the same principle will be found in Edmond v. Mowat, 7 Macph. 59. The nearest case to the present with which I am acquainted is that of Orr's Trustees v. Tullis, 8 Macph. 936, the circumstances of which were very similar to the present. I regard the judgment in that case as conclusive of the present. In the present day the doctrine of reputed ownership admits of less frequent application than formerly. It is notorious that machinery, and even household furniture, are now the subjects of hire to an extent that was till recently unknown. Creditors are therefore, or should be, more upon their guard in giving credit merely in respect of the things possessed or used by their debtors. For the reasons I have given, I hold that the doctrine of reputed ownership has no application in the present case.
“But further, I am of opinion that the pursuers are entitled to prevail under the provisions of section 1 of the Mercantile Law Amendment Act of 1856. That section appears to me to apply in terms to the present case. We have here a sale of certain goods, which have, however, been allowed to remain in the custody of the seller, and these are the only conditions necessary to entitle the purchaser to the benefit which this Act confers. I am aware that a good deal has been said on Sim v. Grant and other cases as to what ‘custody’ means in the sense of the Act. But I need not go back upon these cases, as there has been a more recent judicial interpretation of the clause now under consideration in the case of M'Meekin v. Ross, 4 R. 154. In that case the Lord President says (p. 160)—‘I think that there can be no doubt that the section of the Act of Parliament refers to the case of a present sale where there is a right ad rem specificam, and where a certain price has been paid and immediate delivery may be required.’ I think all these conditions are fulfilled here. There was a present sale and a right ad rem acquired. There was a price paid and immediate delivery might have been required. That delivery was not actually taken only arose from the special circumstances that the pursuers instead of using the articles themselves or re-selling them, leased them or lent them on hire to the person from whom they were bought. This, however, was a mere accident, and did not in any way qualify the preceding contract of sale completed between the parties.
“I am not certain that there is not ground for holding that the articles in question were not only sold but delivered on 2d August 1880, and that the possession after that date was the possession of the pursuers themselves through their tenant. But it is unnecessary to determine that if I am right in the views already expressed.”
The defender appealed to the Court of Session, and argued against the bona fides of the sale and the lease, maintaining that the onus of proving it was on the pursuers, which they had not done.
Additional authorities— Anderson v. Buchanan,
Page: 539↓
At advising—
With regard to the authorities on this branch of the law, the Sheriff-Substitute seems doubtful whether some expressions of mine in the case of Tullis are sound law. That case was decided without reference to the Mercantile Law Amendment Act, and Lord Neaves entirely concurred in the opinion I then expressed. In the more recent case on this branch of the law ( M'Bain v. Wallace, in the House of Lords) I find Lord Blackburn saying—“A simple creditor who issues process and poinds the goods might at common law poind them as against that person who sold the goods, if that person retained the jus in re, though he had lost the jut ad rem; notwithstanding the statute he may poind them as a creditor where the possession of the vendor (to borrow the phrase used by Lord Justice-Clerk Inglis in the case of Sim v. Grant) has been allowed by the purchaser to be such as is quite inconsistent with his having the jus ad rem by virtue of his personal contract of sale.” That is precisely what I said in the case of Tullis. Tullis gave effect to the principle of Bell, that where possession is continued on a separate contract, and on a distinct and separate title, the doctrine of reputed ownership is not available at all. I find nothing to distinguish this case from that of Tullis except the want of any public notification of change of possession, but this is not necessary so long as the transaction is honest, and as to that I entirely concur with the Sheriff-Principal. This being so, the Mercantile Law Amendment Act ceases to be of importance. On this point I shall only read Lord Watson's definition in the case of Wallace. Referring to the difference between the laws of England and Scotland on the subject he says—“In Scotland it undoubtedly had not that effect, and in order to place a purchaser in Scotland in the same position as a purchaser in England in questions with creditors of a bankrupt or the assignee or trustee in sequestration of a bankrupt, the Legislature did not enact that in Scotland the completion of a personal contract should pass the property, or have the effect of delivery, but it did enact, by the 1st section of the statute of 1856, that as in a question with the creditors of the seller, or with the trustee in a sequestration of the seller, the purchaser under a personal contract of sale should have precisely the same right to enforce delivery of the goods sold as he would have had against the bankrupt had he remained solvent.” Therefore, if this case had disclosed a case of sale only—simply retenta possessions—the Mercantile Law Amendment Act would have applied, but it is not so.
The Court dismissed the appeal.
Counsel for Respondents (Pursuers)— Pearson— Dickson. Agent— Alexander Wardrop, L.A.
Counsel for Appellant (Defender)— Mackintosh— Hay. Agents— Rhind, Lindsay, & Wallace, W.S.