,
Lords Macnaghten,
Robertson,
Atkinson, and
Collins.)
46 SLR 1024
(On Appeal from the Court of Appeal in England.)
Great Eastern Railway Company
v.
Lord's Trustee.
Subject_Right in Security — Lien — Possession — General Lien — Railway Company — Goods of Third Party in Portion of Railway Premises Leased to him — Right of Retention by Railway Company.
Facts:
A railway company contracted by “ledger agreement” with a coal merchant to allow credit for the carriage of coal. Certain allotments of space within the premises of the railway company were leased by it to the coal merchant. The ledger agreement provided that the railway company should have a continual lien for the balance of freight over the coal in course of being carried and also over coal stored upon the allotments. The allotments were situated within the company's yard, which was regularly locked by the company at night. The coal merchant's account being in arrear, the company locked the gates leading to the allotments and held
Page: 1025↓
possession of coal stored there, excluding the coal merchant.
Held (
diss. Lords Robertson and Collins) that the railway company were in possession of the coal in the allotments and that they had a valid lien.
[Had the coal in the allotments not been held to be in the railway company's possession, the ledger agreement would have been a “licence to take possession” under the Bills of Sale (England and Wales) Act 1878 (41 and 42 Vict. c. 31), sec. 4, and consequently void as not registered in terms of the Act.]
Headnote:
The appellants were a Railway Company which, under the circumstances stated
supra in rubric, had exercised an alleged lien over coal belonging to their debtor, who then became bankrupt. The trustee in bankruptcy, the respondent, raised an action of damages in which judgment was pronounced in favour of the appellants by
Phillimore, J. This was reversed by the Court of Appeal (
Cozens-Hardy, M.R., and
Buckley, L.J.,
diss.
Moulton, L.J.)
The Railway Company appealed.
Their Lordships gave considered judgment as follows:—
Judgment:
Lord Chancellor (Loreburn)—There has been an even division of opinion among the Judges who have heard this case. In my view the judgment of Phillimore, J., ought to be restored. I think that the Railway Company were in possession of this coal. The whole object of the arrangement made between them and Lord was that they should retain a lien and a physical control, secured by retaining the coal within their yard, of which they could lock the gates if Lord was in arrear. It is perfectly consistent with this that Lord also should have the right to remove the coal when the Railway Company opened their gates for him, as they were bound to do when he was not in arrear. I have heard no answer to the observations of Moulton, L.J., when he points out how an innkeeper has an effective lien over the luggage of his guest though the guest is allowed to take out of it or put into it his articles of clothing while in the inn. True, there was a demise to Lord of an allotment in the yard whereon this coal was stacked. That entitled him to occupy the allotment. But did that occupation confer upon him the exclusive possession of everything which he placed on the allotment? I cannot see why it should. An officer may be in possession of goods whether the debtor has a lease or even the freehold of the house in which the goods are placed. I cannot perceive any necessary dependency between the occupation of a piece of land and the exclusive possession of chattels which lie on it. Nor, in my opinion, can it signify for this purpose whether the occupation of the land is under a demise or merely by licence. How can the quality of the tenure of the land determine the possession of the chattels? If this be so, the Bills of Sale Act does not apply. There is here no right in equity, nor charge, nor any licence to take possession of goods. There is already possession and at law. The agreement merely gives a right to retain it. I should have been very sorry had I felt obliged to hold that an arrangement so convenient and so harmless was frustrated by an Act designed to defeat very different transactions.
Lord Macnaghten—Before his bankruptcy Frederick Lord carried on business at Norwich as a coal merchant under the style or firm of Lord Brothers. The supplies of coal required for the purposes of his business came by the Great Eastern Railway under consignment to Lord at Norwich. Everybody knows what the rights of carriers are in the absence of special agreement. On payment of what may be due for freight the carrier is bound to deliver to the consignee. The presumption is that payment and delivery are meant to be concurrent. Unless payment is forthcoming the carrier has a right to withhold delivery and to detain the goods. At the same time, in the case of railway companies and their regular customers, it would be most inconvenient if the carrying company were to stand on its strict rights and insist upon ready money on the delivery of each consignment. It would be inconvenient to the customer and even more so to the company. What was done in this case is, I believe, in accordance with common practice. At Lord's request the appellants agreed to open a monthly credit account in their ledgers for the carriage of his coal. Among the conditions on which the account was opened were these—The appellants were to have a general lien for the balance of the account, and they were to be at liberty from time to time, and in such manner as they should think fit, to sell the goods subjected to their lien. It was further provided that they might close the account on one day's notice, and, as part of the same arrangement, but by separate contracts, the appellants agreed to let to Lord certain spaces or allotments within their own yard which were to be used for the purpose only of stacking and dealing with coal and coke passing over their railway. Lord fell into arrear. Over and over again he promised to discharge his liability. He failed to perform his promises. Ultimately the appellants closed the account. They then shut the gates of their yards, and so prevented Lord from removing the coal which happened to be lying on his allotments at the time. Were the appellants within their rights in taking this step? That must depend upon the answer to another question. Was there an absolute and unconditional delivery of the coal, or was it intended that the company should keep a hold over the coal so long as their account remained open, and if so, were sufficient precautions taken to give effect to that purpose if the company chose to exercise the right of stoppage for which they bargained? There is a question of intention and a question of fact. That seems a short and simple point. Now, in the first place, it appears to me absurd to suppose that the parties had in view any equitable right such as a charge on future property to be enforced by proceedings in Chancery. The company, I suppose, wanted
Page: 1026↓
some rough-and-ready means of enforcing an undisputed claim, not the protracted pleasure of a Chancery suit. It is, I think, equally absurd to suppose that they would have been content with an agreement plainly illusory. They were business people. They must have known what the effect of unconditional delivery would be. But then it is said, be that as it may, Lord had possession of the coal. So he had in a sense—in the sense in which the owner of dutiable goods has possession of them while they are stored in a bonded warehouse belonging to him as owner or tenant. It is said that Lord not only had possession of the coal, but also an estate in the land on which the coal was deposited. I cannot see what the tenure of the land has to do with the question. If the delivery was absolute and unconditional, it cannot matter where the goods were deposited or what Lord did with them. If the delivery was not unconditional, the question must be, Had the goods passed out of reach, or were they still in the grasp of the company? What was the real meaning of the arrangement between the company and Lord? It seems to me that the thing speaks for itself. The proper inference from the facts and circumstances of the case is, I think, that it was the intention of both parties that the company's right of detainer should be preserved and, if need be, enforced against the coal subjected to their lien so long as it remained in their yard. It is hardly conceivable that the company would have allowed this ledger account to be opened if Lord's depot for coal had been outside their precincts. I cannot help thinking that there has been some little confusion between the right of retainer in the case of a person's own goods sold, but not paid for, and the right of detainer in the case of work and labour bestowed on the goods of another person. The two rights are not perhaps quite the same. At any rate, they arise under different circumstances, and it is not, I think, every observation which you find applied to the one that is applicable to the other. It was argued that the ledger agreement was really a bill of sale, and void because it is not in the form prescribed by the Bills of Sale Act 1882. It can hardly be contended that the agreement is within the mischief at which the Act was aimed; nor is it, I think, within the definition of a bill of sale contained in the Act of 1878 and adopted in the later Act. It did not confer, or purport to confer, a right in equity to any personal chattels or to any charge or security thereon or any equitable interest of any sort. The right which was in the contemplation of the parties was a right to detain goods so long as the power of detention remained. The appellants were, I think, in a position to exercise that right, and they certainly did exercise it effectively. The trustee can have no higher right than Lord himself would have had if he had not become bankrupt. In the face of his agreement, how could he have said to the appellants, “You shall open your gates and let me take my goods away, though I promised that
Page: 1027↓
some agreement sanctioning a retaking of possession. It seems to me that that is exactly what happened in this case. As soon as the goods were delivered to Lord on his own allotment, held by him as tenant under a demise, they ceased to be actually or constructively in the possession of the company, and mere juxtaposition, though it might give facilities, could give them no right to resume possession, though they might have, and in fact had, a contractual right to do so under what has been called the ledger agreement. If so, it is not, I think, disputed that they would come within the Bills of Sale Acts. It was, indeed, contended by Mr Scrutton that the document here in discussion was not in fact a bill of sale, and that it stood outside the mischief aimed at by the Legislature in those enactments. But this argument has been frequently adduced and as often overruled before. See the observations of Lord Halsbury, L. C., in
Charles-worth v. Mills (
ubi sup.), and of Lord Esher, M.R., in
ex parteHubbard (
ubi sup.), and of Lindley, L. J., in
ex parte Parsons (
ubi sup.), where it is pointed out that the different Bills of Sale Acts were passed from quite different standpoints, and that honest transactions are hit by them as well as dishonest. The analogy of the innkeeper's lien does not seem to me to carry the case any further. It is not suggested that it extends to goods which have ceased to be in possession of the innkeeper, or that the latter by virtue of his lien could retake them when he had caused or suffered them to be passed off his premises on to those of his late guest. His defence to an action for doing so would have to be something outside the innkeeper's lien amounting at least to leave and licence.
Judgment appealed from reversed.
Counsel:
Counsel for Appellant—
Scrutton, K.C.—
Coller. Agent—
E. Moore, Solicitor.
Counsel for Respondent—
H. Reed, K.C.—
F. Mellor. Agents—
Tarry, Sherlock, & King, for E. E. Blyth, Norwich.
