Sect. 18. Shipbuilding contracts. Simpson v. appropriated without being delivered. If, for example, an order is given for the manufacture of an article, and the manufacturer makes two of the same kind, the executory contract may be changed into a bargain and sale by selection on the part of the buyer without actual delivery to him.1 "The very appropriation of the chattel is equivalent to delivery by the vendor, and the assent of the vendee to take the specific chattel and to pay the price is equivalent to his accepting possession." 2 3 The apparent exception to Rule 2 in the case of a shipbuilding contract is explained in England on the theory of appropriation. The same result was reached in Scotland in 1786 in Simpson v. Duncanson's Creditors, which for nearly a century was looked upon as an authoritative and leading case." Several English writers go the length of suggesting that this case lay at the foundation of the English rule, and it must at least be admitted that its date was long anterior to the settlement of the question in England. The English writers referred to, assume that Simpson's Case was founded on "appropriation," as in the corresponding English decisions. This certainly derives some colour from the expressed opinions of the judges so far as 1 "A tradesman often finishes goods which he is making in pursuance of an order given by one person and sells them to another. If the first customer has other goods made for him within the stipulated time he has no right to complain."-Per Heath, J., in Mucklow v. Mangles (1803), 1 Taunt. 318 at p. 320. But it would be otherwise if the goods were appropriated. 2 Per Park, J. (Lord Wensleydale), in Dixon v. Yates (1833), 5 B. & Ad. 313 at p. 340. 3 The foundation of the decision in Woods v. Russell (1822), 5 B. & Ald. 942 "was that as, by the contract, given portions of the price were to be paid according to the progress of the work, by the payment of those portions of the price the ship was irrevocably appropriated to the person paying the money.' -Per Bayley, J., in Atkinson v. Bell (1828), 8 B. & C. 277 at p. 282. This view was approved in Clarke v. Spence (1836), 4 A. & E. 448, and was held by the House of Lords as settled in Seath and Co. v. Moore (1886), 13 Ret. H.L. 57. 4 Mor. 14204. The report in Morrison is meagre, but is supplemented to some extent by Bell (Com. i. 189) and by Lord Hailes (Decisions, p. 1000). 5 It is so spoken of by Lord Justice-Clerk Moncreiff in M'Bain v. Wallace and Co. (1887), 8 Ret. 360 at p. 368. 6 Wilkinson's Law of Shipping (1843), p. 30, note; Abbott on Shipping, 7th ed. p. 3; Foard on Merchant Shipping (1880), p. 158. Lord JusticeClerk Moncreiff (8 Ret. at p. 368) erroneously attributes the statement in Abbott to the author himself (Lord Tenterden). The real author is Serjeant Shee, the editor of the seventh edition, which appeared in 1844. reported, although such a principle seems inconsistent Sect. 18. with the primary maxims of the law of Scotland before this Act. It was argued by the party standing in the position of purchaser that the shipbuilder was from the first a mere mandatory employed to perform certain work and to furnish materials, and that he consequently never had any right of property in the thing called a ship. The materials in this view became the purchaser's, specificatione, from the moment of their being applied to the vessel.1 So far as can be gathered from the imperfect reports, only one out of seven judges who expressed an opinion, held this view. Three judges seem to have treated the passing of the property as matter of contract (intention ?), thus anticipating by a century the assimilation with English law which has now taken place. Two of these, according to the report of Bell, came even nearer to the principles of English law by holding that in terms of the contract there was an "appropriation" of the vessel to the employer when the first instalment of the price was due.3 The case of M'Bain v. Wallace and Co. (1881) was decided by the Court of Session on the authority of Simpson's Case, but, in the House of Lords, the authority of the old case was doubted, and the decision was rested entirely on the special provisions of the Mercantile Law Amendment Act of 1856. 1 Session papers as quoted by Brodie (Com. on Stair, p. 900). 2 Bell's Com. i. 189, note. "Mr. Bell has a report of his own, but whence derived he has not been pleased to inform us (Brodie's Com. on Stair, p. 904, note). In one respect, at least, Bell is inaccurate. In referring to Lord Braxfield, he calls him Lord Justice-Clerk M'Queen, whereas M'Queen did not succeed to the office till 1788. Brodie thus apologises for the great length of his criticism of this case: "Legal principles have, in my opinion, been so much violated in it, and it has led Mr. Bell to lay down on the subject what appears to me such erroneous law, that I cannot dismiss it without satisfying myself that I have cleared up every difficulty (Com. on Stair, p. 903, note). Brodie's view of Simpson's Case seems to have been adopted by the House of Lords in M'Bain v. Wallace and Co. (1881), 8 Ret. H.L. 106. See opinion of Lord Chancellor Selborne at p. 109, and of Lord Watson at p. 116. 3 Seven judges appear to have taken part in the discussion. Lord President Dundas and Lords Braxfield and Eskgrove founded on contract, and Lord Monboddo on specification." Lord Elliock discarded legal principle and rested his opinion on "justice and common sense." Lord Henderland doubted if the property were transferred at all, and Lord Stonefield entered an unqualified dissent from the judgment. 48 Ret. 360; Affd. 8 Ret. H.L. 106. H Sect. 18. Sect. 19. RESERVATION OF RIGHT OF The English law as now embodied in Rule 5, is illustrated by the cases in the footnote.1 19. (1.) Where there is a contract for the sale of specific goods (a) or where goods are subsequently appropriated to the contract," the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions (a) are fulfilled. In such case, notwithstanding the delivery of the goods to the buyer, or to a carrier or other bailee or custodier for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled. (2.) Where goods are shipped, and by the bill of lading the goods are deliverable to the order of the seller or his agent, the seller is primâ facie deemed to reserve the right of disposal.") (g) (3.) Where the seller of goods draws on the buyer for the price, and transmits the bill of exchange and bill of lading to the buyer together to secure acceptance or payment of the bill of exchange, the buyer is bound to return the bill of lading if he does not 1 Mucklow v. Mangles (1803), 1 Taunt. 318; Dutton v. Solomonson (1803), 3 B. & P. 582; Bishop v. Crawshay (1824), 3 B. & C. 415; Fragano v. Long (1825), 4 B. & C. 219; Rohde v. Thwaites (1827), 6 B. & C. 388; Atkinson v. Bell (1828), 8 B. & C. 277; Elliott v. Pybus (1834), 10 Bing. 512; Alexander v. Gardner (1835), 1 Bing. N.C. 671; Sparkes v. Marshall (1836), 2 Bing. N.C. 761; Bryans v. Nix (1839), 4 M. & W. 775; Cunliffe v. Harrison (1851), 6 Ex. 903; Godts v. Rose (1855), 17 C. B. 229; Aldridge v. Johnson (1857), 7 E. & B. 885; Langton v. Higgins (1859), 4 H. & N. 402; Browne v. Hare (1859), 4 H. & N. 822 ; Levy v. Green (1859), 1 E. & E. 969; Campbell v. The Mersey Docks (1863), 14 C.B. N.S. 412; Tregelles v. Sewell (1863), 7 H. & N. 571; Calcutta Co. v. De Mattos (1863), 32 L.J. Q.B. 322; Gath v. Lees (1865), 3 H. & C. 558; Ex parte Pearson (1868), 3 Ch. 443; Jenner v. Smith (1869), L. R. 4 C.P. 270; Borrowman v. Free (1878), 4 Q.B.D. 500; Stock v. Inglis (1885), 12 Q.B.D. 564, 10 App. Ca. 263. honour the bill of exchange, and if he wrongfully Sect. 19. retains the bill of lading the property in the goods does not pass to him.") NOTES. (a) "Specific goods." Defined Sect. 62 (1). (b) "Appropriated to the contract." See Sect. 18, Rule 5. (c) "Terms of the contract." This is a concrete instance of the general rule that the property passes in accordance with the intention of parties. See Sect. 17.1 (d) As to the nature and effect of conditions, see COM., Sect. 10 ante, p. 46. (e) "Delivery." Defined Sect. 62 (1). "2 (f) "Bailee" in Scotland includes "custodier" [Sect. 62 (1)]. (g) "Prima facie." It is entirely matter of intention. Thus the seller may take the bill of lading to his own order, but "as agent or on behalf of the purchaser or he may indorse the bill of lading and transmit it to the buyer direct, or even transmit it so indorsed to his own agent. In all these cases it has been held that the seller did not intend to reserve a right of disposal. 3 (h) Sub-sects. (2) and (3) refer to the particular case of goods shipped to the buyer, whereas sub-sect. (1) is general in its application. Sub-sect. (3) is in accordance with the previous law of Scotland, but is supposed to introduce a change in the law of England. See Coм. infra, p. 103. COMMENTARY. The general effect of this section is to give statutory sanction to conditions suspensive of the passing of the property. In Scotland, before this Act, such conditions were necessarily attached to delivery, as it was only by delivery at 1 See also Benjamin, p. 345. 2 Per Cotton, L. J., in Mirabita v. Imperial Ottoman Bank (1878), 3 Ex. D. 172. Wilmshurst v. Bowker (1844), 7 M. & G. 882; Key v. Cotesworth (1852), 7 Ex. 595. 4 Browne v. Hare (1859), 4 H. & N. 822. 5 For exposition and illustration of sub-sect. (2) see Benjamin, p. 345 et seq. As to the general effect of a bill of lading, see Coм. infra, p. 101. 6 See Coм., Sect. 17 ante, p. 83. Effect of de livery upon suspensive conditions in Scotland. Sect. 19. Sub-sect. (1). Delivery as affecting reservation of jus disponendi. Previous law of Scotland. that the property in goods sold could be transferred. The importance attached to the overt act of delivery in passing the property is evidenced by many judicial utterances in Scotland. In some cases the extreme view was held that where there was a condition suspensive of the passing of the property there was, strictly speaking, no sale at all.1 But in Scots law it was the contract which constituted the sale and not the passing of the property, and thus devotion to one supposed principle of Scottish law led to another of at least equal authority and value, being entirely ignored. The obligations of parties in the cases supposed admittedly continued in force so far as unperformed, and there was therefore a binding contract which could be called by no other name than a contract of sale. The first sub-section provides that, in the case of goods originally specific or subsequently appropriated, a jus disponendi may be reserved by the seller so as to prevent the property passing, as it would otherwise do, at the date of the contract or the appropriation. In Scotland, as we have seen, no property passed by the mere contract or by appropriation without delivery, and even in England the change of possession by delivery is so important that it has been thought necessary in this sub-section to supplement the general provision by an express statement that even delivery to the buyer or to some one on his behalf will not pass the property so long as the conditions are unfulfilled. It has already been noticed that in modern Scots law conditions suspensive of the passing of the property by 1 "The condition was that delivery should not pass the property until the price was paid. If that condition was legal it follows that there was no sale till the price was paid. Smart never became proprietor and Hogarth never ceased to be proprietor, and as Smart became insolvent the contract never grew into a contract of sale."-Per Lord Justice-Clerk Moncreiff in Hogarth v. Smart's Trustee (1882), 9 Ret. 964 at p. 968. "I decline to apply the term 'contract of sale' to such a contract."-Per Lord Young in the same case, 9 Ret. at p. 968. "I am unable to understand the idea of a condition in a contract of sale in Scotland suspensive of the property passing notwithstanding delivery-that is to say, I cannot conceive a contract of sale in Scotland followed by bond-fide delivery, yet leaving the property unpassed."--Per Lord Young in Clarke and Co. v. Miller and Son's Trustee (1885), 12 Ret. 1035 at p. 1042. 2 In the law of Scotland sale is only a contract for transferring, not in itself a transference."-Bell's Com. i. 458. |