Scottish Court of Session Decisions

On 8th July Andrew Little, writer, Glasgow, proprietor of a shop and warehouse at 174 Trongate, Glasgow, brought an action against Thomas M'Connell, sole partner of the firm of A. Barr & Company, house-furnishers, 174 Trongate, Glasgow, for sequestration of the “furniture, stock-in-trade, and other effects, subject to pursuer's hypothec, which are or have been within said premises, for payment and in security of” (1) the sum of £250, being the balance of rent due as at 28th June 1909, and (2) the sum of £75 a month from 28th June 1909 to 28th May 1910—the monthly rent of said premises under a lease from Whitsunday 1908 to Whitsunday 1909 at the yearly rent of £900, which had been renewed for the following year.

On 20th July 1909 James Ryan, Newton Street, Kilsyth, lodged a minute in the sequestration proceedings stating that certain articles of furniture which he had purchased from the defender, and which had been specified in the inventory in the sequestration, were his property, and that quoad them the sequestration should be recalled. The articles, consisting of a parlour suite and sideboard, an overmantel, a telescope table, an easy chair, four Edinburgh chairs, an Edinburgh arm-chair, a carpet, a kitchen table, a kitchen fender, kitchen fireirons, a kerb, with brasses and ashpan, and a bamboo pole, were purchased by Ryan on 3rd July 1909 and paid for on that date. They were not delivered but were set aside and marked as sold to the minuter, it being part of the contract between him and the seller that he (Ryan) should remove them not later than 9th July following.

The minuter pleaded, inter alia—“(1) The articles enumerated being the property of the minuter are not subject to the landlord's hypothec, and the sequestration quoad them should be recalled. (3) The articles sequestrated being in the premises at the date of the sequestration for a temporary purpose only, are exempt, and the sequestration should be recalled.”

The pursuer pleaded—“(1) The articles referred to having been the property of the defender in the premises at 174 Trongate, Glasgow, are, until delivered, subject to the landlord's right of hypothec. (2) The said James Ryan having voluntarily allowed the said articles to remain in said premises, the same have been effectually attached by the landlord's sequestration for rent. (3) The minute is irrelevant.”

On 4th August 1909 the Sheriff-Substitute ( Smith Clark) repelled the minuter's pleas and found that the articles in question had been rightly included among the sequestrated effects.

On appeal the Sheriff ( Gardner Millar) adhered.

Note.—“The facts in this case are not in dispute. The minuter, who is a young man about to be married, purchased from a warehouse containing several flats, certain articles of furniture. He paid the price and the articles were marked as sold and set aside for him. He asked that they should be kept for a few days until it was convenient for him to take delivery. Subsequently the landlord sequestrated

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for rent past due the goods in the warehouse, including those sold to the minuter. The minuter now asks that the articles belonging to him should be withdrawn from the sequestration.

The agent for the appellant (the minuter) maintained that as the articles had been bought in market overt by a bona fide sale, and the price paid, the landlord's hypothec did not attach to those goods. The rule of law is laid down in Erskine's Institutes, ii, 6, 64, ‘and in the case of a shop the tenant must, from the nature of the lease, have an unlimited power of selling his shop goods, for he rents the shop for that very end, that he may have it as a place of sale. By the shopkeeper's alienation of his goods therefore the property of them is lawfully transferred from him to the purchaser, and so no longer remains part of the hypothec; and if the landlord entertain any suspicion that the tenant is disposing of the shop goods to his prejudice, he may, as in the case already stated (sec. 61), secure for his own payment, by sequestration or arrestment, what yet remains in the shop not sold. Hence also it follows that purchasers of shop goods from a shopkeeper are secure against any action for restitution at the suit of the landlord.’ The question that is raised therefore is, what is meant by the sale of the goods to the purchaser? Is it sufficient that there should be a contract for the sale of the goods or must it be completed by delivery? The Mercantile Law Amendment Act and the Sale of Goods Act are excluded by their terms in any question of the landlord's hypothec. We must take it, therefore, that the sale was not completed until delivery had taken place. Professor Bell, in his Principles, sec. 1277, lays down—‘It (the hypothec) will not bar the tenant from selling his goods in his shop or warehouse. But a buyer, though he has paid the price, if he have not got delivery, will not prevail against the landlord.’ He gives as his authority for this the case of Kinniel v. Menzies, where the Court altered the interlocutor of the Lord Ordinary on the ground that the agreement of sale, though bona fide made, had not been fulfilled by delivery, the goods sold still remaining in the possession of the seller. The Lords held that the articles of household furniture claimed by Menzies fell under the sequestration. That seems in accordance with the dictum of Bankton, vol. i, p. 387, that a landlord by setting a shop to a merchant consents to the buying of the shop goods from him, and therefore cannot trouble the buyers unless he had previously affected them by sequestring the same for the rent while in the merchant's possession. Now, the goods in the present case were unquestionably sequestrated while in the possession of the tenant, and accordingly I think the learned Sheriff-Substitute has come to the right decision in holding that the coutract of sale without delivery did not put an end to the landlord's hypothec over the goods. His interlocutor must therefore be affirmed.”

Ryan appealed, and argued—The case of Kinniel v. Menzies, (1790) M. 4973, relied on by the respondent, was not in point, for that was the case of a private house. The rule in the case of a shop was different, for a shopkeeper was entitled to sell goods even after sequestration had been laid on—Bankton's Instit. i, 387; More's Notes to Stair, lxxxiii; Brodie's Stair, 372; Hunter's Landlord and Tenant, ii, 380; Rankine on Leases, 348. In the case of a shop it was not necessary, in order to oust the landlord's hypothec, that there should be a jus in re—it was enough if there was a jus ad rem — and therefore purchasers could remove their goods unless the landlord had got a warrant to lock them up. If the risk had passed, the hypothec was ousted, and the risk had passed here— Hansen v. Craig, February 4, 1859, 21 D. 432. The case of the Heritable Securities Investment Association, Limited v. Wingate and Company's Trustee, July 8, 1880, 7 R. 1094, 17 S.L.R. 741, did not strengthen the doctrine laid down in Bell's Com., i, p. 180 et seq., as to delivery being essential. Esto, however, that delivery was necessary to oust the hypothec, then there had been good constructive delivery here— Gibson v. Forbes, July 9, 1833, 11 S. 916. For other instances in which the hypothec had been held not to apply, reference was made to Jaffray v. Carrick, November 18, 1836, 15 S. 43; Adam v. Sutherland, November 3, 1863, 2 Macph. 6; Bell v. Andrews, May 22, 1885, 12 R. 961, 22 S.L.R. 640; Pulsometer Engineering Company, Limited v. Gracie, January 14, 1887, 14 R. 316, 24 S.L.R. 239.

Argued for respondent—Delivery, either actual or constructive, was necessary in order to oust the hypothec, and neither had occurred here. There was no authority for the proposition that a jus ad rem was sufficient in the case of a shop—Bell's Com., i, pp. 180–191; Ross' Leading Cases (Commercial), ii, p. 567, note. Mere convenience did not amount to constructive delivery—Bell's Prin. 1277; Boak v. Megget, February 13, 1844, 6 D. 662, at pp. 669 and 675; Mathison v. Alison, December 23, 1854, 17 D. 274, at p. 285; Anderson v. M'Call, June 1, 1866, 4 Macph. 765. The question was settled by authority— Kinniel v. Menzies ( supra)—and neither the Mercantile Law (Scotland) Amendment Act 1856 (19 and 20 Vict. c. 60) nor the Sale of Goods Act 1893 (56 and 57 Vict. c. 71) had made any change in regard to the landlord's hypothec.

At advising—