Scottish Court of Session Decisions

Thomas Sawers Mitchell was sequestrated in 1883, but before a truster was appointed a deed of arrangement, under section 38 of the Bankruptcy Act, was entered into in December 1883 between Mitchell, his creditors, and his father-in-law Mr Blackwood, whereby, inter alia, Mitchell assigned and made over his household furniture in No. 24 Merchiston Park, Edinburgh, to Blackwood for behoof of his creditors, Blackwood undertaking to pay a composition of 1s. 6d. per £ to Mitchell's creditors, and the creditors undertaking to apply to have the sequestration declared at an end. The deed of arrangement was subsequently approved by the Sheriff, and the sequestration brought to an end.

Blackwood did not take possession of the furniture under the deed of arrangement, but by assignation dated 15th January and 1st and 3rd May 1884 he assigned it to himself and others as the trustees under the antenuptial marriage-contract of Mr and Mrs Sawers Mitchell (who had been married in 1871), declaring that the said trustees were to hold it for behoof of Mrs Mitchell, “and exclusive of the jus mariti and right of administration of her husband … but that only in liferent, for the liferent use of the said Mrs Mitchell and for behoof of her children, or such of them as she may prefer thereto by any writing under her hand, in fee, with power to the second parties (the trustees) to sell the same and apply the proceeds in like

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manner.” This transaction was not accompanied by any removal of furniture, which was allowed to remain in the house No. 24 Merchiston Park. That house belonged to the marriage-contract trustees and was then occupied by Mr and Mrs Mitchell. At Whitsunday 1884 Mr and Mrs Mitchell removed to No. 17 Dalhousie Terrace, taking the furniture with them, and they continued afterwards to occupy this house, which was acquired by their marriage-contract trustees in May 1891.

By assignation dated 11th July 1890 Mitchell assigned the furniture in No. 17 Dalhousie Terrace, being the furniture previously assigned to his marriage-contract trustees, to Andrew Alexander Gladstone in consideration of the sum of £130 received by him, and of the same date he granted a letter of hire to Gladstone by which he hired the furniture at the hire of £10 a quarter. In 1892 the hire which Mitchell had agreed to pay Gladstone had fallen into arrear, and the latter then took proceedings against Mitchell in the Sheriff Court at Edinburgh in order to obtain delivery of the furniture. The marriage-contract trustees were not parties to these proceedings, but in August 1892 they presented a note of suspension and interdict against Gladstone in the Bill Chamber, in order to have him interdicted from removing or interfering with the furniture, on the ground that it belonged to them in virtue of the assignation granted by Blackwood in their favour in the year 1884.

In answer 2 the respondent averred:—“No delivery to the complainers followed upon said pretended assignation, and Mr Mitchell continued actual and ostensible and reputed owner of the furniture…. From Whitsunday 1883 to Whitsunday 1884 Mr Mitchell had possession of said furniture in a house in Merchiston Park, Edinburgh, of which he was tenant, and since Whitsunday 1884 he has had possession of said furniture in a house in Dalhousie Terrace of which he has all along been and still is tenant.”

The respondent pleaded, inter alia—“The articles mentioned in the prayer of the note having been the property of the said T. S. Mitchell, and the property therein having never effectually passed to the said William Blackwood or to the other complainers, the complainers have no right thereto, in competition with the respondent, a bona fide purchaser from Mr Mitchell.”

On 1st June 1893 the Lord Ordinary ( Kyllachy) granted the interdict craved.

“ Opinion.—The question in this case is whether certain furniture, which formerly belonged to Mr T. S. Mitchell, and still remains in the house occupied by him and his wife and family, belongs to the complainers, the marriage-contract trustees of Mr and Mrs Mitchell, or, on the other hand, to the respondent Mr Gladstone. The marriage trustees claim the furniture as having become their property under a certain transaction which took place when Mr Mitchell became bankrupt in the year 1884. Mr Gladstone claims it as having been sold, and constructively delivered, to him by Mr Mitchell in the year 1890.

The facts, which are, I think, sufficiently admitted or instructed by documents, appear to be these—Mr Mitchell was sequestrated in 1884; but before a trustee was appointed a deed of arrangement, under the 38th section of the statute, was entered into between him and his creditors and his father-in-law Mr Blackwood. By that deed of arrangement, which appears to have been duly carried through, the furniture in question was transferred to Mr Blackwood, on payment by him of a sum exceeding its value, in the shape of a composition of 1s. 6d. per £1 paid to the creditors. Mr Blackwood thereupon executed a deed, whereby he transferred the furniture to the complainers, the marriage-contract trustees of his daughter (the bankrupt's wife), to be held by them for her in liferent, and her children in fee. The transaction was not accompanied by any removal of the furniture; but the house in which it remained, and which continued to be occupied by the bankrupt and his family, was the property of the marriage-contract trustees; and that house having been sold, the furniture was subsequently removed to another house, also belonging to the trustees, and also occupied by the bankrupt and his family. And in this house it has since remained.

In 1890 Mr Mitchell, having got into difficulties, appears to have borrowed, or at least obtained, £130 from the respondent Mr Gladstone, and, by deeds passing between them, Mr Mitchell sold to the respondent the furniture in question at the price of £130, and, on the other hand, the respondent hired the furniture to Mr Mitchell at the hire of £10 per quarter. This hire having of late fallen into arrear, the respondent has taken proceedings to obtain delivery of the furniture, and the present note of suspension and interdict has been presented by the marriage-contract trustees in order to assert what they allege to be their proper right.

Upon these facts, which, as I have said, are, I think, not in controversy, I am of opinion that the complainer's title is preferable. I do not, I confess, see how either at common law or under the Mercantile Law Amendment Act the respondent can plead successfully that he has any better title than the complainers. If the complainers have only a jus ad rem, I do not at present see how the respondent is in a better position, and as between two personal titles the prior title is preferable.

But I am disposed to be of opinion that the complainers are proprietors of the furniture, and that although no actual delivery took place in 1884, there was yet such a change of possession as was tantamount to delivery. In other words, I think that in pursuance of the deed of arrangement, Mr Mitchell ceased in law to possess the furniture, and that the possession as well as the right has since been with the complainers, who have possessed directly as owners of the house, and indirectly

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through their beneficiaries, the wife and children.

Had Mr Mitchell's sequestration proceeded to the appointment of a trustee, there could, I think, have been no doubt as to his divestiture. The act and warrant of the trustee would, under the statute, have operated as delivery of the furniture, and the complainers, as taking through the trustee, must I suppose have had the benefit of that delivery. It is not, however, so clear whether mere sequestration had the same effect. Sequestration is only equivalent to a completed poinding, and the complainers right is probably therefore no higher than if they had acquired under, e.g., a sale by a poinding creditor. In such circumstances, it may perhaps be doubted whether the bankrupt was divested by the mere force of the diligence. I prefer, therefore, to take the case just as if the complainer had bought for a fair price from the bankrupt himself, he selling with consent of his creditors, and under circumstances which established beyond doubt the truth and bona fides of the transaction. Or to simplify the case still further, I prefer to consider it as if the deed of arrangement had been made directly with the bankrupt's wife and children, who, having separate funds and owning the house in which they all lived, had acquired the furniture at a fair price, duly paid to the bankrupt's creditors.

Now, I do not stop to consider what would have been the effect of such a transaction under the Mercantile Law Amendment Act. I not do at all doubt that the deed of arrangement embodied what was in effect a sale. But it may perhaps be doubted whether the Mercantile Law Amendment Act protects a purchaser, not merely against the diligence of the seller's creditors, but against the acts of the seller selling to a second purchaser, and giving delivery. In my view the common law is here sufficient for the complainers' case.

It will not, I suppose, be disputed, that if two persons jointly occupy the same house, the furniture of which belongs to one of them, such furniture may be effectually transferred by the one occupant to the other, and may be so without any overt change in the use which they respectively make of it. The contract being clear and unreserved, the legal possession in such a case necessarily follows the title, and is held to pass to the purchaser, who obtains all the possession of which the circumstances admit. So far as the seller retains any natural possession, he does so, not as proprietor, but on a new and subordinate title, which may either be hire or gratuitous use, or whatever else the parties arrange. It is perhaps superfluous to quote authorities, but Macdougall v. Whitelaw, 2 D. 500, and Fyfe v. Woodman, 4 D. 255, both recognise the above principle as applied in the one case as between a sister and a brother, and in the other, as between a father and daughters. Nor is the case of Anderson v. Buchanan, 11 D. 270 (supposing it to be still authoritative), at all to the contrary. In fact, both the decisions I have referred to were there accepted as good law.

But if the parties stand in the relation of husband and wife, or if the transaction takes place between the husband on the one hand and his wife and children, or trustees for his wife and children, on the other, does it make any difference? No doubt the truth and good faith of the transaction must, in such a case, be more jealously scrutinised, but if that be established beyond doubt, and if the wife and children have separate estate, or if the price is paid by friends or relations on their behalf, I know of no disability which attaches in such matters to either wife or children. They buy the furniture, and pay for it. They obtain all the possession of which the circumstances admit. In the present case the house is already theirs. They are now the owners both of the house and furniture, and the husband is no longer in possession of the furniture anymore than he previously was in possession of the house.

Had the complainers, the marriage contract trustees, acquired not for the wife and children exclusively, but for the husband in liferent, and the wife and children in fee, it could not, I suppose, have been said that the position of the latter was more favourable. In certain views it might be thought to be less so. But can it be doubted, on the authorities, that in that case there would have been sufficient change of possession? The husband would, in that case, have been still in possession, but it would have been possession on a new and limited title; and according to the case of Orr v. Tullis that is enough. Indeed, that this is so is necessarily conceded by the respondent, because his own title, at least so far as rested at common law, is necessarily dependent on the doctrine that delivery is not necessary when the seller continues to possess under a contract of hire, or other new title of possession.

On the whole, therefore, I am of opinion that the complainers are here entitled to interdict in terms of their prayer, and I see no reason why the complainers should not have their expenses.”

The respondent reclaimed, and argued—Delivery was necessary to complete the transfer of moveables—Ersk. ii. 1, 18; Distillery Company v. Russell's Trustees, February 9, 1889, 16 R. 479, per Lord President, p. 486. The transfer might, however, be effective by constructive delivery though the assigner remained in actual possession of the moveables, if his possession was on a new and subordinate title derived from the assignee under a known contract such as lease— Orr's Trustee v. Tullis, July 2, 1870, 8 Macph. 936; Robertson v. M'Intyre, March 17, 1882, 9 R. 772; per Lord Trayner, p. 775; Darling v. Wilson's Trustee, December 16, 1887, 15 R. 180. The furniture in question had therefore been effectually transferred to the reclaimer, unless Mitchell was divested of his right in it prior to the assignation in the reclaimer's favour. But at the date of that assignation the furniture still

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belonged to Mitchell, for the deed of arrangement and the assignation to the complainers had not been followed by delivery, and that assignation was therefore ineffectual. The complainers claimed to have had civil possession of the furniture through Mitchell's wife, for whose liferent use it had been assigned to them, but the principle of Orr v. Tullis, and the subsequent cases in the same category had never been extended to a transaction of that kind, and there was direct authority for the view that the property of moveables was not transferred from husband to wife if the moveables continued to remain in the husband's possession— Hewat's Trustees v. Smith, January 27, 1892, 19 R. 403. The same principle was affirmed by earlier authorities—M'Laren on Wills, i. 418; Campbell v. Stewart, June 13, 1848, 10 D. 1280; Brown v. Brown's Trustee, December 19, 1850, 13 D. 373; Shearer v. Christie, November 18, 1842, 5 D. 132; per opinion of Consulted Judges, p. 141; Edmond v. Mowat, November 4, 1868, 7 Macph. 59, per Lord President, p. 62. The cases of Macdougall and Fyfe relied on by the Lord Ordinary were not to a contrary effect. In Macdougall a sister purchased furniture from her brother who lived with her. She then took a house and put the furniture in it. The possession of the furniture was thus clearly transferred to the sister, although her brother continued to reside with her. In Fyfe's case, which was an application for interdict, no decision was pronounced on the merits; nothing was done except that the note was passed. The judgment in Scott's case was based upon section 1 of the Mercantile Law Amendment Act, and was therefore not in point, for that section only applied to the case of the creditor of a seller using diligence to attach goods which had been left after the sale in the seller's custody. The Lord Ordinary's interlocutor should therefore be recalled, and the note refused.

Argued for the complainers—The effect of the deed of arrangement and the subsequent assignation in the complainers' favour was to divest Mitchell of all right in or to the furniture. After the date of that assignation the possession of the furniture was transferred from him to his wife, for whose behoof the furniture had been assigned to the complainers. Mitchell's position in regard to the furniture could not be more favourable than it would have been had the complainers held it for his behoof in liferent, and in that case his possession would have been on a new and limited title, and the change would on the authorities have been sufficient to complete the assignation in the complainers favour— Orr v. Tullis; Robertson v. M'Intyre; Darling v. Wilson's Trustee, supra; Liddell's Trustee v. Warr & Company, July 18, 1893, 20 R. 989; Scott's Trustee v. Scott, February 20, 1889, 16 R. 507. The assignation had therefore been followed by a sufficient change in the possession to render it effectual. The case of husband and wife was not different from that of other relatives living together, and it had been held that where two relatives lived together the furniture of the house in which they resided might be transferred from one to the other— Macdougall v. Whitelaw, January 29, 1840, 2 D. 500; Fyfe v. Woodman, December 14, 1841, 4 D. 255. The case of Hewat's Trustee was not an authority to the contrary, but was merely an instance of the well-known rule that a husband could not by marriage-contract effectually transfer moveables to his wife, of which he retained the possession. The Lord Ordinary's judgment was therefore right.

At advising—