Scottish Court of Session Decisions

Lord Johnston.—These proceedings commenced by a decree in absence of date 9th October 1912, at the instance of James Hepburn, accountant Alloa, against the Rev. J. S. Weir, the minister of Rayne, Aberdeenshire. On this decree poinding followed on 1st November, but when it was proposed to sell the poinded effects, another creditor, William Law, Kirkton of Rayne, intervened and craved that certain of the most valuable of the poinded subjects should be withdrawn from the sale, in respect that they were his property. Upon this a litigation ensued, and after a proof the Sheriff-substitute found that it was not proved that the articles claimed by the minuter William Law were his property, and therefore dismissed the claim with expenses. On appeal the Sheriff reversed his substitute's judgment; and the case has been brought by appeal to this Court. After carefully considering the evidence, I have come to the conclusion that the Sheriff-substitute's judgment should be restored, and very much for the reasons clearly stated by him.

The facts are that Mr Weir, in connection with settling himself in the parish, had come under certain obligations to Mr Law, and in June 1912, was due him £130, for which Mr Law held, if I am not mistaken, no document of debt and certainly no security. Now Mr Law was himself overdrawn with the North of Scotland Bank at Insch; and a new agent, Mr Reith, having come to that branch, Mr Law was himself pressed to reduce his overdraft, and in turn pressed Mr Weir for repayment of his advance. Mr Weir offered security over his furniture, along with a policy on his life by way of assignation, but Mr Reith was fully aware that no effectual security could be given over the furniture, and besides had been advised by Mr Shewan, solicitor, Aberdeen, that “the whole difficulty in this matter is that nothing in the form of a sale by way of security would be valid. It must be understood to be an out-and-out sale, and that the property passes to Mr Law. The best will be to take a receipt in the ordinary terms for so much money in respect of certain specified articles. Mr Weir must understand that the articles are no longer his, and that it would be as well to have the insurance policy for the furniture endorsed for Mr Law's interest.”

I think I may say that Mr Reith took command of the situation, and, armed with the above letter, he and his accountant, Mr Morrison, and Mr Law went to the manse, and had an interview with Mr Weir. It was carefully explained to Mr Weir that a security over his furniture was a thing which could not be legally effected, and that nothing but an out-and-out sale would do, and after some discussion an inventory was made of certain articles of furniture estimated by Mr Reith to be of the value of £130; and Mr Weir executed this document dated 14th June1912:—“Received from Mr William W. Law, Kirktown of Rayne, Rayne, the sum of one hundred and thirty pounds sterling, in payment of the following specified articles of furniture belonging to me in the Manse of Rayne, and sold to him at date hereof,” and there was appended the inventory of the furniture also signed by Mr Weir.

The further facts are that no discharge of this indebtedness was granted by Mr Law to Mr Weir; that the document of debt, if any existed, was not returned to Mr Weir; that no money passed, and that possession was not taken of the furniture, which was left with Mr Weir. Mr Law explained in his evidence, “I did not want to raise a ‘claick’ throughout the parish; and I allowed the furniture to remain in the manse.” And it remained in the manse in Mr Weir's possession until the poinding. Nor was the policy of insurance transferred.

I have no doubt that Mr Reith intended that an out-and-out sale should be made, and thought that he had effected his object. But it is not his intention that rules, but that of the principal parties to the sale. The Sale of Goods Act, 1893, to comply with the provisions of which the men of business concerned were working, provides (section 17 (1)) “where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred,” and (2) “for the purpose of ascertaining the intention of the parties, regard shall be had to the terms of the contract, the conduct of the parties, and the circumstances of the case.” Having regard to these three considerations, I think it is impossible to hold that the principal parties to the contract intended the property to be transferred on the signature of the document above quoted, or that as between them there was anything but the form of a contract of sale without the reality, for it was admittedly fully understood between them that Mr Weir was to be entitled to redeem his furniture if he paid the £130; though Mr Law might if he chose take possession, and remove and realise the furniture in the meantime. The reality of the transaction was I think nothing but a security, and a bad security, over the furniture. The transaction is exactly struck at by section 61 (4) of the statute which says:—“The provisions of this Act relating to contracts of sale do not apply to any transaction in the form of a contract of sale which is intended to operate by way of mortgage, pledge, charge or other security.”

I refer to the case of Robertson v. Hall's Trustees, and particularly to the opinion of the late Lord Moncreiff. As in that case, there was perfect bona fides on the part of those concerned in this transaction. All concerned intended to take effectual steps to exclude the diligence of Mr Weir's creditors, and thought they had done so. They came nearer to it than did the parties in Robertson v. Hall's Trustees . But for all that the transaction in substance was not a sale. For these reasons, concurring with the Sheriff-substitute, I think that Mr Law's claim to have the articles in the inventory withdrawn from the poinding must be refused.

The Lord President, Lord Kinnear, and Lord Mackenzie concurred.