Scottish Court of Session Decisions

The Sale of Goods Act 1893 (56 and 57 Vict. cap. 71) enacts—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. (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.” Section 18—“Unless a different intention appears, the following are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer:—Rule 1—Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery, or both, be postponed. Rule 2—Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing be done and the buyer has notice thereof. Rule 3—Where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh, measure, test, or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing be done and the buyer has notice thereof. …” Section 35—“The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller. …”

Andrew Woodburn, farmer, Galston, pursuer, brought an action in the Sheriff Court at Kilmarnock against Andrew Motherwell, Limited, grain dealers, Glasgow, defenders, for payment of £94, 1s., being the value of hay purchased by the defenders from the pursuer.

The facts of the case appear from the following findings of the Sheriff-Substitute (J. A. T. Robertson)—“Finds in fact (1) that on 31st March or 1st April 1915 the pursuer sold and the defenders purchased two specific ricks of threshed hay, estimated to contain 8–10 tons, at £3 per ton, and four specific ricks of green-cut hay, estimated to contain 30–35 tons, at £3, 15s. per ton; (2)

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that by custom of the trade in the district, known to and relied upon by both parties to the contract, it was part of the contract ( a) that the defenders should send their own engine, baling machine, and balers to the pursuer's farm and there truss and bale the hay purchased by them; ( b) that the pursuer should cart the baled hay to the Garrochburn siding of the Glasgow and South-Western Railway Company; ( c) that the weight of the hay sold and purchased, as ascertained by the railway company on their weights for the purpose of fixing the carriage, should be accepted by the parties as determining the sum due by the purchasers to the seller; (3) that it was part of the contract that the hay in question should be baled and removed before the end of May 1915; (4) that the defenders made all the arrangements for the supply of railway waggons at Garrochburn and for the carriage of the hay by the railway company, and did so in order to suit their own convenience in baling the hay; (5) that on 3rd May 1915 the defenders commenced to bale the said hay, and they were baling the green-cut hay in accordance with the special requirements of the army authorities in order to use it to fulfil a contract they had made to supply hay for the army; (6) that on 5th May 1915 a considerable quantity of the baled hay was destroyed by fire in the pursuer's stackyard.”

The pursuer pleaded—“1. The defenders having purchased from the pursuer six ricks of hay at a price agreed on, and said hay having been specifically appropriated to the contract of sale, the property therein and risk thereof passed from the pursuer to the defenders at said date of sale. 2. The pursuer having sold and delivered to the defenders the said six ricks of hay, and payment of the value thereof having been withheld, he is entitled to decree therefor with expenses. 3. The said hay having been delivered to the defenders, and they having done an act in relation thereto inconsistent with the pursuer's ownership thereof, have accepted the same, and are liable to pay the value thereof to the pursuer.”

The defenders pleaded—“1. The property in the goods which were destroyed by fire not having passed to defenders, the same remained at the risk of the pursuer, and defenders should be assoilzied, with expenses.”

On 14th June 1916 the Sheriff-Substitute, upon the findings in fact above quoted, “Finds in law (1) that the property in the said hay had passed to the defenders prior to the said fire; (2) that the risk of loss by fire was with the defenders; (3) that the defenders are due to the pursuer the price of the hay destroyed: With these findings continues the cause in order that the parties may have an opportunity of adjusting the amount due: Grants leave to appeal.”

Note.—[ After narrating the facts]—“The green-cut hay was intended by the defenders to fulfil a contract which they had made with the army authorities, and it was being baled by them in a special size of bale, bound in a particular way, to meet the requirements of these authorities. They had, on 24th April 1915, informed the military authorities that they had the hay in question available to fulfil the contract which they had made with these authorities.

Upon these facts it was argued by the defenders that the property and risk had not passed to them. The sole ground of their arguments, as I understand it, was that something remained to be done by the pursuer in the way of weighing the hay in order to ascertain the price claimable by him, and that until this price was ascertained exactly there was not a sale but only an agreement to sell. They founded upon section 18, rule 3, of the Sale of Goods Act 1893.

I cannot sustain this argument. It is clear that the pursuer had not under the contract to weigh the hay. The contract, as explained by custom and understood by both parties, was that the total price should be determined as the'result of the weighing by the railway company, and the fact that the total price is not exactly ascertainable will not by itself prevent the passing of the property. See Kennedy's Trustees v. Hamilton & Manson, 25 R. 252, 35 S.L.R. 205.

If any rule of section 18 of the statute is applicable to the circumstances of this case it is rule 1, under which the property would pass on the completion of the bargain for the subject-matter of the sale was specific, and so far as the pursuer is concerned nothing required to be done to put it into a deliverable state.

The cardinal rule of law, however, is that the transfer of the property takes place when the parties intend that it should, and the intention of the parties must be gathered from a consideration of all the circumstances. Upon consideration of the facts I have come to the opinion that the parties intended that the property in the hay should belong to the defenders when the bargain was made. The defenders had power immediately thereafter to send their engine, machine, and balers to the farm, and there take possession of and bale the hay in the manner that suited their own requirements or those of their customers; they could arrange with the Railway Company to have the necessary waggons at the siding to suit themselves; all that the pursuer had to do or could do was to cart the bales of hay between his farm and the siding.

In any case, and this would be sufficient for the pursuer's case, inasmuch as only baled hay was destroyed by the fire, I think it is very clear that parties intended that after the defenders had taken possession of and baled the hay it should be their property.”

The defenders appealed, and argued—The property in the hay passed when the parties intended it to do so—Sale of Goods Act 1893 (56 and 57 Vict. cap. 71), section 17 (1)—and their intention was to be gathered from the whole circumstances of the case—section 17 (2). The property did not pass with the contract for the goods were not deliverable, and something remained to be done to ascertain the price. The Sheriff erred in thinking section 18, rule, applied, for the hay

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was not deliverable prior to baling, and further, the pursuer had to cart the hay to the railway and have it weighed, for until then his obligations were unfulfilled and defenders were not bound to take delivery—section 62 (4). The property did not pass after the baling; the baling did not make the hay deliverable in the sense of section 18 (2); it was intended merely to effect the packing of the hay, and it was not an act inconsistent with the continued ownership of the pursuer, for the hay was not converted by the baling into something different from what it was before. Under the contract it was the duty of the pursuer to have the hay weighed, i.e., to do some act with reference to the goods for the purpose of ascertaining the price. Consequently section 18 (3) applied. If, however, the weighing was not the act of the pursuer alone but of both parties the case was not covered by the statute, and at common law the rule was that the property did not pass till the act in question had been done— Gilmour v. Supple, 1858, 11 Moore's P.C. Cas. 551; Wallace v. Breeds, 1811, 13 East, 522; Simmons v. Swift, 1826, 5 B. & Cr. 857. But in any view the pursuer had still to do an act with reference to the res vendita and that suspended the passing of the property—Benjamin on Sale, p. 324; Turley v. Bates, 1863, 2 H. & C. 200. The place of delivery was also important— Walker v. Langdale s Chemical Company, 1873, 11 Macph. 906, 10 S.L.R. 663. Here the place of delivery was the railway. The present case was covered by Hanson v. Craig & Rose, 1859, 21 D. 432. Consequently the property had not passed prior to the fire, and the defenders should be assoilzied. Further, section 35 did not apply, for the hay would not have been accepted by the defenders except at the railway.

Argued for the pursuer—The Sheriff-Substitute was right. The ruling provision was section 17. The rules in section 18 were merely intended to be applied where the intention of the parties was not ascertainable otherwise, But here the intention of the'parties obviously was that the property was to pass with the contract. Immediately thereafter the defenders could have come and baled the hay; that was an act inconsistent with the continued ownership of the pursuer; it was purely for the purpose of the defenders, i.e., to meet the terms of their contract with the War Office, and it converted the hay into quite a different article of commerce. Consequently in any event the property passed when the hay was baled— Martineau v. Kitching, 1872, L.R., 7 Q.B. 436. The rules in section 18 did not apply; the carting did not make the contract of sale a conditional contract in the sense of rule 1. Rule 2 did not apply, for the hay was in a deliverable state at the time of the contract, for all the defenders could demand was the hay. Rule 3 did not apply, for the weighing was not an act to be done by the pursuer. In any event, the hay was accepted by the defenders when it was handed over for baling, and section 35 applied. In Walker's case ( cit.) it was a term of the contract that the goods should be delivered at Newcastle. In Hanson's case ( cit.) there was an express stipulation for remeasurement.