Scottish Court of Session Decisions

On 22nd September 1881 Peter Westren, jeweller in Edinburgh, sent to William Fraser, a watchmaker and jeweller in Inverness, certain jewellery on a contract of sale or return.

On 3rd June 1882 Donald Macdonald, Fraser's landlord, presented a petition in the Sheriff Court at Inverness for sequestration for rent, and for a warrant to inventory and appraise Fraser's whole stock-in-trade, including the jewellery in question. On 3rd August 1882 Fraser applied for and obtained sequestration of his estates, and James H. Kerr was appointed trustee on his sequestrated estate. In the landlord's petition for sequestration minutes were lodged by Westren and Kerr, who both claimed the jewellery.

Westren pleaded that the jewellery having been delivered to Fraser on sale or return, was not subject to the landlord's right of hypothec, and that the trustee in the sequestration had no higher right than the bankrupt.

The Sheriff-Substitute ( Blair) found, inter alia, that the jewellery was, at the date of the sequestration for rent, the property of Fraser, and subject to the hypothec of the landlord, the pursuer. He therefore repelled the claim for Westren, and sustained the claim for Kerr, subject always to the landlord's hypothec.

“ Note.— … In the circumstances I am of opinion that the articles now claimed were the property of Fraser as part of his stock-in-trade, and that being so, and these being in the premises occupied by him at the date of the sequestration for rent, these were subject to the landlord's hypothec—Bell on Sale, p. 110; Benjamin on Sale, p. 483; Brown v. Marr and Barclay, 7 R. 427.

“Authorities cited for Westren— Fleming v. Howden, 6 Macph. (H. of L.) 113, Lord Westbury's opinion; Davidson v. Boyd, 7 Macph. 77; Watson v. Duncan, 6 R. 1247, Lord Deas' opinion; Thomson v. Tough's Trustee, 7 R. 1035;

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Gracie v. The Pulsometer Engineering Company, 24 S.L.R. 239.”

Westren appealed.

At the hearing it was stated that Kerr had been discharged from his office, but as the parties desired to obtain the decision of the Court on the general question of law raised in the case, counsel were heard on the assumption that the trustee was still a party to the case.

The appellant argued—The question was whether the goods which were in Fraser's shop on sale and return at his sequestration passed to his creditors, or whether they were not to be regarded, from the nature of the transaction, and in the circumstances, as still the property of Westren? Though the question had never been settled by decision, yet the nature of sale and return had been quite clearly defined by institutional writers. The property of goods sent on sale and return was in suspense till sold by the person to whom they had been sent. Until thus disposed of by him the goods were the property of the sender, and could be attached by his creditors—Bell on Sale, p. 111; Bell's Prin. sec. 1315. Here Fraser had not disposed of the jewellery in any way. It was in his shop at the date of the sequestration, and was therefore the appellant's property. The case of Brown v. Marr and Barclay, January 8, 1880, 7 R. 427, relied on by the Sheriff-Substitute, was distinguishable from this. In that case the goods had been pawned. Here they had been merely assigned by force of the sequestration, and the trustee held them tantum et tale as they stood in the bankrupt. In that case Lord Gifford (p. 447) had defined the contract in a way favourable to the appellant.

The trustee argued—A contract of sale and return gave the purchaser right to return the goods within a reasonable time. Quoad ultra it was a complete sale, with all the incidents of a sale. If Fraser had returned the goods within a reasonable time they would not have come under his sequestration—Benjamin on Sale (3rd ed.), p. 591. He had not, however, done so, and they therefore passed to his creditors on his bankruptcy. No seller of goods, as Westren was, was entitled to vindicate them in preference to the general creditors of the estate.

The landlord relied on the case of Brown v. Marr and Barclay.

At advising—