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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Inglis v. Robertson and Baxter [1898] ScotLR 35_963 (11 July 1898)
URL: http://www.bailii.org/scot/cases/ScotCS/1898/35SLR0963.html
Cite as: [1898] SLR 35_963, [1898] ScotLR 35_963
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SCOTTISH_SLR_Court_of_Session
Page: 963↓
Court of Session.
(Before the
v.
(Ante, March 18, 1897, 34 S.L.R. 577, and 24 R. 758.)
Right in Security — Pledge of Document of Title — Factors Act 1889 (52 and 53 Vict. c. 45) — Factors (Scotland) Act 1890 (53 and 54 Vict. c. 40), sec. 51.
Facts:
Held ( aff. the judgment of the Whole Court) that the right of a Scotch creditor, completed by arrestment of goods in Scotland belonging to a foreign debtor, cannot be defeated by a transaction between the debtor and another foreigner which would be, according to the law of their domicile, but is not, according to the law of Scotland, sufficient to create a real right in the goods.
The Factors Act 1889 (extended to Scotland by the factors (Scotland) Act 1890) provides by section 3 (a section falling within the group of sections headed “Dispositions by Mercantile Agents”), that “a pledge of the documents of title to goods shall be deemed to be a pledge of the goods;” “and by section 9 (a section falling under the heading “Dispositions by Buyers and Sellers of Goods”), that “where a person having bought or agreed to buy goods, obtains, with the consent of the seller, possession of the goods or the documents of title to the goods, the delivery or transfer by that person … of the goods or documents of title under any sale, pledge, or other disposition thereof to any person receiving the same in good faith and without any notice of any lien, or other right of the original seller in respect of the goods, shall have the same effect as if the person making the delivery or transfer were a mercantile agent in possession of the goods or documents of title with the consent of the owner.”
A buyer of goods, after they had been transferred into his name by the warehouse-keeper in whose custody
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they were at the time of the sale, obtained from the warehouse-keeper warrants which bore that the goods were held to the order of the buyer as owner or his assignees by endorsement. The buyer subsequently endorsed the warrant to a third party in implement of a contract assigning the goods in security. The original seller thereafter arrested the goods in the hands of the warehouse-keeper. Held, in a competition between the original seller and the endorsee of the documents of title, that the latter could not found on either of the above sections, in respect that the pledge of the documents of title had not been made either (1) by a mercantile agent, or (2) by a person obtaining possession of the documents of title “with consent of the seller.”
Observed that the statutory headings in the Factors Act are not mere marginal notes, but the sections or the groups to which they belong must be read in connection with them and interpreted by the light of them.
This case is reported ante ut supra.
The claimant Inglis appealed.
At delivering judgment—
The section in respect of which the question arises is the third section, which enacts that “a pledge of the documents of title to goods shall be deemed to be a pledge of the goods.” It can hardly be denied that if that section is applicable to this case, the pledging of the document of title would be for all purposes as valid to constitute an actual right in the goods themselves as if the goods themselves had been physically handed over to the pledgee. But the only point in this case seems to me to depend upon whether that section is applicable to the facts in this case, and that in turn depends upon whether the person pledging comes within that part of the statute which the Legislature has separated from the other parts of the statute as applicable “to dispositions by mercantile agents.”
The Act, which is a Consolidation Act, and also an amending Act, is separated into parts. Section 1 is “preliminary,” and the definition of a mercantile agent is—“A mercantile agent shall mean a mercantile agent having, in the customary course of his business as such agent, authority either to sell goods or to consign goods for the purpose of sale, or to buy goods or to raise money on the security of goods.”
From the 2nd section to the 7th inclusive the Legislature has enacted what shall be the law in respect of “Dispositions by Mercantile Agents.” From the 8th to the 10th, “Dispositions by Sellers and Buyers of Goods” are dealt with, and the 11th to the 17th are described as “Supplementary.”
I cannot doubt that each of the sections included in this separate portion of the statute must be read as only applicable to the cases of persons indicated by that separate part of the statute, and if so, it seems to me that the case is free from doubt, since under the circumstances of this case there was no disposition by a mercantile agent.
This seems to me to dispose of the case, though indeed it was suggested that under the 9th section (which comes within the part of the statute applicable to sellers and buyers of goods) it might be contended here that these goods were obtained with the consent of the seller, and under the conditions prescribed by that section. But it appears to me the facts raise no such question.
I have referred to the English Act exclusively in what I have said, simply because the Act has been extended in its operation to Scotland subject to certain provisions not relevant to any question raised in this case. If the general law of Scotland be different from that of England in respect of pledges, though I do not say it is, that Act certainly did not purport, nor did it in fact alter in any other respect than that specially enacted, the law oTScotland as it stood at the passing of the Act.
I am therefore of opinion that this appeal should be dismissed with costs, and I move your Lordships accordingly.
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Goldsmith having failed to make payment to the respondents Robertson & Baxter of the sum of £1000, 10s. 6d., being the balance of price then remaining due to them, they on the 11th February 1895 arrested the whisky in the hands of the Clyde Bonding Company, in order to found jurisdiction against their debtor, and then raised an action against him before the Court of Session, upon the dependence of which they again arrested the whisky, on the 18th February 1895.
Under an arrangement made between the respondents and Alfred Cotton Harper, chartered accountant in London, as trustee administering the estate and affairs of Walter C. Goldsmith, the whisky was sold in April 1895, upon consignation of the sum of £1000 in the British Linen Company's Bank, Edinburgh, as a surrogatum for the goods sold, subject to the arrestments and claims of all parties who had an interest in the whisky. The present action of multiplepoinding was thereafter brought by the holders of the consigned fund, and two competing claims were lodged, which have been keenly contested and have led to this appeal. The respondents claim the fund in medio, not as having a right of retention or other interest as unpaid sellers of the goods, but as personal creditors of Goldsmith, in whose name as owner the goods were at the dates of their arrestments held in Scotland by the actual custodiers, the Clyde Bonding Company; the appellant, on the other hand, claims an interest in the fund in medio preferable to that of the respondents, upon the ground that prior to the date of their arrestments he had become pled gee and end or see of the delivery-orders which constituted the documents of title to the goods within the meaning of the Factors Act 1889. He maintains that the legal effect of such a pledge, both according to the law of England and according to the law of Scotland as altered by the provisions of the Factors (Scotland) Act 1890, was to vest the property of the goods in him.
I do not find it necessary to consider, for the purposes of this appeal, whether or in what circumstances, according to the law of England, a valid pledge of documents of title to goods stored in a bonded warehouse, will enable the pledgee to defeat the right of a creditor of the person who in the warehouse books is entered as the owner of the goods. The present question does not arise between two Englishmen, nor does it arise in relation to mercantile transactions which can reasonably be characterised as English. The situs of the goods was in Scotland. The Scotch creditors who claim the proceeds did not make any English contract, and in order to attach them they made use of the execution which the law of Scotland permits, for converting their personal claim against the owner into a real charge upon the goods themselves. It would, in my opinion, be contrary to the elementary principles of international law, and, so far as I know, without authority, to hold that the right of a Scotch creditor, when so perfected, can be defeated by a transaction between his debtor and the citizen of a foreign country, which would be according to the law of that country, but is not, according to the law of Scotland, sufficient to create a real right in the goods.
I can see no reason to doubt that, by Scotch law as well as English, the endorsement and handing over of delivery-orders in security of a loan, along with a letter professing to hypothecate the goods themselves, is sufficient in law, and according to mercantile practice, to constitute a pledge of the documents of title, whatever may be the value and effect of the right so constituted. In my opinion the right so created, whether in England or in Scotland, will give the pledgee a right to retain the ipsa corpora of the documents of title until his advance is repaid. The crucial question in this case is, whether the right goes further and vests in the pledgee of the documents, not a jus ad rem merely, but a real interest in the goods to which these documents relate. That is a question which I have no hesitation in holding must, in the circumstances of this case, be solved by reference to the law of Scotland. The whisky was in Scotland, and was there held in actual possession by a custodier for Goldsmith as the true owner. That state of the title could not, so far as Scotland was concerned, be altered or overcome by a foreign transaction of pledge which had not, according to the rules of Scotch law, the effect of vesting the property of the whisky, or in other words a jus in re, in the pledgee.
I have been surprised by the suggestion, which appears to have found favour with one of the learned Judges in the Court below, that the recent decision of this House in North Western Bank v. Poynter, Son, & Macdonalds, Ap. Ca. 1895, p. 56, is an authority for holding that this appeal ought to be decided according to English law. The circumstances of that case appear to me to stand in marked contrast to the facts of this appeal. There a Liverpool firm owned and held the bills of lading of a cargo destined to the port of Glasgow. The firm obtained an advance from a Liverpool bank, to whom they, as a security, duly endorsed the bill of lading, which carried the property of the goods, according to Scotch as well as English law. The bank sent the bill of lading, without endorsing it, to the pledgors in Liverpool, in order that they might act as the agents of the bank in selling the cargo and receiving and accounting for the price. Upon that footing the pledgors sold the cargo, and a Scotch creditor, to whom they owed a personal debt, arrested the price in the hands of the purchaser in Scotland, and claimed a preferable right to it, upon the ground that by the law of Scotland the pledgees had lost their right of property in the cargo, which had reverted to the pledgor, in consequence of their having returned the bill
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It was not disputed by the appellant's counsel, and it is hardly necessary to repeat, that by the common law of Scotland the end orsation and hypothecation of delivery-orders, although it may give the pledgee a right to retain the documents, does not give him any real right in the goods which they represent. He can only attain to that right by presenting the delivery-orders to the custodier by whom they were granted, and obtaining delivery of the goods from him, or by making such intimation of his right to the custodier as will make it the legal duty of the latter to hold the goods for him. His right, which, in so far as it relates to the goods is in the nature of a jus ad rem, will be defeated if before he has either obtained delivery or given such intimation the goods are validly attached in the hands of the custodier by a creditor of the person for whom the custodier holds them.
It was argued, however, that the common law of Scotland has been materially altered by the provisions of the Factors Act 1889, their effect being that a pledge of the documents of title is by itself sufficient to carry a real right to the goods, and that the pledgee of the documents, from the moment when his right is completed by end orsation and delivery, is in the same position as if he had been pledgee of the goods and had obtained possession of them. The Statute is an English Act, which consolidates and repeals the previous Factors Acts, from 4 Geo. IV. cap. 83, to 40 and 41 Vict. cap. 39. But by the Factors (Scotland) Act 1890 the whole provisions of the English statute of 1889 are extended to Scotland, and must therefore be construed as if they had originally been made applicable to that country.
Two clauses of the Act of 1889 were founded on by the appellant. The first of these is section 3, which enacts that “a pledge of the documents of title to goods shall be deemed to be a pledge of the goods.” So far as it applies the language of that clause is unambiguous. It provides that to that extent a pledge of the documents of title shall, although in point of fact it is not so, be nevertheless regarded in law as equivalent to a pledge of the goods. If the enactment had been embodied in a statute which contemplated an alteration of the general law with regard to contracts of pledge in Scotland, I should have had little difficulty in holding that its effect would have been to make a pledge of the documents of title in all cases equivalent to a completed pledge of the goods themselves. But I am unable to come to the conclusion that the clause was meant to be or is of general application. It is one of a group of clauses which are collected under the statutory heading “Dispositions by Mercantile Agents”; and an examination of the context of these clauses shows, conclusively in my opinion, that the enactments of section 3 were merely intended to define the full effect of a pledge of the documents of title made by a mercantile agent under and by virtue of one or other of the sub-sections of the presceding clause (section 2). Accordingly, section 3 has, in my apprehension, no application to the case of a pledge of documents of title by one who was in the position of Goldsmith, or by any other person who is not a mercantile agent within the meaning of the Act of 1889.
The other clause founded upon by the appellant was section 9, one of a group of clauses which occur under the statutory heading “Dispositions by Sellers or Buyers of Goods.” The main, if not the sole, object of these clauses appears to be this—to protect the purchaser or pledgee of documents of title deriving right from one who is lawfully in possession of them against a claim of retention for unpaid price, or a right of stoppage in transitu, by the original seller, in cases where the purchaser or pledgee has had no notice of such claim or right. Goldsmith, from whom the appellant derived his right as pledgee to the documents of title representing the whisky in question, was not a pledgor within the meaning of section 9, who must be a person who has obtained the documents of title either from his seller or with consent of his seller, Goldsmith did not obtain the documents of title which he pledged to the appellant from the respondents, who were his sellers, or with their consent. He got the documents in his own right, and in his own name, as owner of the whisky directly from the warehousemen, after the goods had been tranferred to his name in the warehouse books.
I am therefore of opinion that the interlocutor appealed from ought to be affirmed, with costs.
The appellant on the 18th December 1894 advanced to Goldsmith the sum of £3000 on the security of the same whisky and of certain wines not now in question.
Page: 967↓
No notice was given to the Clyde Bonding Company by the respondent of the endorsement to him. The question is whether in these circumstances his claim is superior to that of the arresting creditors.
It was admitted on behalf of the appellant that, apart from the provisions of the Factors Act 1889, which were extended to Scotland by an Act of the year 1890, the claim of the respondents as arresting creditors must prevail. The question turns then on the construction of certain provisions of the Act of 1889. The section mainly relied on is the third, which is in these terms—“A pledge of the documents of title to goods shall be deemed to be a pledge of the goods.”
I think that in the present case there was a pledge of documents of title to goods. They were endorsed and handed to the appellant as security for an advance, and he was clearly entitled to hold them until the advance had been repaid. This appears to me to have constituted a pledge of the documents, and I fail to see how it was any the less a pledge because the agreement of the 18th of December was at the same time executed by Goldsmith. But it is not necessary in the view I take to express an opinion upon the point so much discussed in the judgments in the Court of Session, whether the effect of the enactment is to put the pledgee of the documents of title in the same position as if he had received possession of the goods to which the documents relate. I think the enactment has no application to the present case, inasmuch as the pledge was not a disposition by a mercantile agent, and in my opinion it is to such dispositions only that the section applies. It is true that it is general in its terms, but it is one of a group of sections headed, “Dispositions by Mercantile Agents.” The Act is divided into parts, The first, headed “Preliminary,” consists of a definition clause. The last part, headed “Supplemental,” contains provisions as to the mode of transfer “for the purposes of this Act,” and certain savings. The other two parts are headed respectively “Dispositions by Mercantile Agents” and “Dispositions by Buyers and Sellers of Goods.” These headings are not, in my opinion, mere marginal notes, but the sections in the group to which they belong must be read in connection with them and interpreted by the light of them. It appears to me that the Legislature has clearly indicated the intention that the provisions of section 3 should not be treated as an enactment relating to all pledges of documents of title, but only to those effected by mercantile agents.
The only other section relied on by the appellant is the 9th. I think this section also is inapplicable to the case before your Lordships. I am not satisfied, as at present advised, that the section applies in any case where no right to the goods or the documents of title remains in the seller who has parted with possession of them. But I do not decide this point. The possession of the documents of title which were pledged was obtained from the warehouse-keeper by the appellant by virtue of his ownership of the goods. They had already been transferred into his name by the warehousekeeper, and were held for him before the warrants were delivered. I think in these circumstances it cannot properly be said that he obtained possession of them “with the consent of the seller.”
For these reasons I think the judgment appealed from should be affirmed and the appeal dismissed with costs.
Appeal dismissed with costs.
Counsel for the Appellants— Pyke, Q.C.— E. Martin— Wooten. Agents— Irvine & Borrowman.
Counsel for the Respondents— Upjohn, Q.C.— R. T. Younger— T. T. Robertson. Agents— F. W. Reynolds, for Morton, Smart, & Macdonald, W.S.