Scottish Court of Session Decisions

“ Opinion.—There can be no question as to the true intent and meaning of the contract between the claimants and the bankrupt. The two witnesses who alone can speak to it differ in some respects in their accounts of what passed between them when it was made. But they are quite agreed as to the understanding between them. The difference in matters of detail is not greater than might reasonably be expected in the recollection of two persons speaking, after the lapse of ten years, to a verbal bargain the import and intention of which they remember better than the words in which it was expressed. There is no imputation against their honesty, and I therefore hold it to be proved that the bargain was in fact what they say it was, viz., that the claimants should place wines in the bankrupt's cellar to be used by him for consumption in his hotel; that they should take stock once a month, and charge for what was found short in the bin; that he should pay cash for the wine consumed, not necessarily at the prices current when it was deposited in the cellar, but either at these prices or at such altered price as might in the meantime have been intimated to him by the claimants, and that he should not be liable to pay for, or in other words should not be considered as having purchased, wine which at the taking of stock was found to be still in the cellar. Both parties understood that the wine deposited in the hotel cellars still belonged, to the wine merchants, and that it continued to be their property until it should be removed from the bins for consumption in the hotel. And accordingly the risk was not transferred to the hotel-keeper, but remained with the merchants, who insured the wine as their own property.

This is a perfectly intelligible and, in my opinion, a perfectly legal contract, and I see no reason for refusing to give effect to it. It is said that delivery transfers property, but that is true only when delivery is made in execution of a contract to transfer property, or else in circumstances which bar the true owner from denying that the property has been transferred. There is nothing unintelligible or contrary to legal principle in a contract of purchase and sale which shall be qualified by a condition supensive of the sale, that it shall not take effect except on a certain contingency, although in the meantime, while the contract is still incomplete, the goods may be deposited with the proposed buyer to await the contingency on which the contract is to be complete. It is said that the agreement is either an ordinary sale or a contract of sale and return; and the respondent's counsel relied upon the doctrine as to the latter contract expounded by the Lord Justice-Clerk in Brown v. Marr, Jan. 8, 1880, 7 R. 427, and by Lord Justice Mellis in the case of White in re Neville, L.R., 6 Chanc. Ap. 397. But there is no analogy between the contract in question and the contract of sale and return. In the case of Brown v. Marr the Lord Justice-Clerk has shown that in the contract of sale and return the condition empowering the buyer in a certain event to return the goods is in its nature resolutive and not suspensive of the contract. But the principle, as his Lordship has explained it, is that the goods have been delivered upon a contract to transfer the property for a price which has either been paid, or which the buyer has undertaken to pay, unless he can relieve himself of that obligation by rescinding the contract and returning the goods in virtue of a condition in his favour. The Lord Justice-Clerk states the principle in words which he quotes from Pothier, and which he says express a sound and simple rule of general application, to be this, that ‘by the clause of return, which is entirely in favour of the buyer, the seller undertakes to the buyer to take back the article if it does not suit the buyer, and to pay him back the price if it has been paid, or otherwise to discharge it.’ But in the present case the condition is mutual, and there can be no question whether it is resolutive or suspensive of the sale if it is to receive effect at all. For the agreement was not that the buyer should return the goods or be discharged of his liability to pay the price in a certain event, but that he on the one hand should incur no liability whatever to pay the price, and that the merchants on the other should retain the property of the wine until it should be removed from the cellar for consumption in the hotel. There was therefore, in my opinion, no completed contract of sale until the hotel-keeper removed wine from the cellar for sale to his customers in the hotel, although there was an agreement that when that happened a contract of sale which till then remained in suspense should take effect.

There are many recent examples in the decisions of the Court that property does not pass by mere delivery if the contract is that it shall not pass— Duncunson v. Jeffries, March 4, 1881, 8 It. 563; and the principle stated by Lord Rutherfurd Clark in one of these cases appears to me directly applicable, viz., that ‘property cannot pass by mere possession contrary to the wish of both giver and receiver’— Hogarth v. Smart's Trustee, June 16, 1882, 9 R. 965.

There can be no question that if the wine merchants had brought an action for payment of the price of the wines still in the cellar, averring a contract in the terms deponed to by Mr Lindsay and Mr White, they must have failed. The answer would have been conclusive that the sale was conditional, and that the condition was not purified; and it is equally clear that if the dividend payable on a claim for the price had exceeded the value of the wine, which is a possible contingency if the question is to be treated as a general one, the trustee would have rejected the claim on the ground that the wines had not been bought by the bankrupt. There is no room for the doctrine of reputed ownership, because there is no pretence that the wines were left in the possession and apparent ownership either by collusion or gross negligence of the true owner.”