[HOUSE OF LORDS.]

AND

Bill of Sale - Pledge of Goods with Possession - Licence to take Possession - Authority to sell Goods - Document containing Authority to Sell - Possession of Auctioneer - Bills of Sale Acts, 1878 (41 & 42 Vict. c. 31) and 1882 (45 & 46 Vict. c. 43).

The owner of household goods which had been seized under a fi. fa. agreed verbally with an auctioneer that in consideration of his paying out the sheriff the auctioneer should hold possession of the goods, sell them by auction and pay over the balance (if any) to the owner. This agreement was reduced into writing s.nd the sheriff was paid out, the man in possession remaining in possession for the auctioneer:-

Held, reversing the decision of the Court of Appeal (25 Q. B. D. 421), that since the written agreement did not constitute the auctioneer's title, and was not intended to and did not come into operation until possession had been actually transferred from the sheriff to the auctioneer, it was not an "assurance" or a "licence to take possession," or in any other respect a bill of sale within the Bills of Sale Acts 1878 and 1882.

Ex parte Hubbard (17 Q. B. D. 690) approved.

APPEAL from an order of the Court of Appeal(1) affirming a judgment of Day J.

In December 1887 the household furniture of Wilson was seized by the sheriff's officer under an execution at the suit of Townsend, and a man placed in possession. On the 9th of December Wilson asked the appellant Charlesworth, an auctioneer, to pay the sheriff out. Charlesworth after seeing the goods agreed to do this and the following arrangement was verbally made. The man in possession was to remain in possession for Charlesworth, who was to sell the goods by auction, repay himself the advance and hand over any balance to Wilson. This arrangement was carried out. Charlesworth paid out the sheriff, the sheriff's officer giving the following receipt:-

(1) 25 Q. B. D. 421.

"9th December, 1887.

Townsend v. Wilson.

Memo. - That I have received from Mr. Charlesworth, auctioneer, cheque for £62 15s. 1d., being the amount of levy and costs herein."

Wilson gave Charlesworth a letter as follows:-

Hull, 9th December, 1887.

Mr. Charlesworth, Auctioneer,

Hull.

Sir, - In consideration of your paying to Mr. C. F. Wells, the sheriff's officer, the amount of Townsend's writ and expenses, viz., £62 15s. 1d., I hereby authorize and request you to hold possession of all my furniture and effects now on the premises No. 2, Pendrill Street, Hull, and to sell the whole by auction as soon as convenient, and after deducting the above amount and your charges, pay over the balance (if any) to me.

Yours truly,

A. P. Wilson."

The man in possession remained in possession for Charlesworth. On the next day, the 10th, Wilson gave a bill of sale of the same goods to the respondent Mills, who registered it. Wilson absconded and Charlesworth removed the goods to his auction rooms and sold them for about £55. Mills having brought an action against Charlesworth claiming damages for the detention and conversion of his goods, Day J. who tried the action without a jury held that the above letter was a bill of sale and not being in the form required by the Act was void, and gave judgment for the plaintiff' for £112, the amount of his loss, and costs. The Court of Appeal (Lindley and Lopes L.JJ., Lord Esher M.R. dissenting) affirmed this judgment(1). From these decisions the defendant brought the present appeal.

1892. April 1, 4. Witt Q.C. and Montague Lush for the appellant:-

The letter which the Court of Appeal held was a bill of sale was nothing more than a mandate, an authority, from the owner

(1) 25 Q. B. D. 421.

of the goods, Wilson, to Charlesworth the auctioneer, to hold possession of the goods and to sell them and repay himself the advance out of them, and hand the balance to the owner. It was an ordinary auctioneer's transaction, with some of the elements of a pledge. No doubt until repayment Charlesworth was entitled to keep possession of the goods as a security. But that does not make the letter a bill of sale. The Court of Appeal seem to have been misled by the old fallacy that because the claimant "relies on" a document or "must look at it" to prove his claim the document is within the Bills of Sale Act. This document does not fall under any of the definitions of a bill of sale given in the Act of 1878: the only colourable one is a "licence to take possession," and that it was not, for possession was taken simultaneously with the advance and the creation of the document. The whole thing was one transaction, and no act remained to be done before possession was perfected. The sheriffs man at the moment he ceased to be in possession on behalf of the sheriff was in possession on behalf of Charlesworth. Wilson could not have maintained an action of detinue or conversion against Charlesworth for selling the goods the instant after the money was paid; therefore neither can Mills. It would perhaps have been better if no letter or document had been given, for then no one could have mistaken the transaction for a bill of sale. The Court of Appeal has itself pointed out the distinction in Ex parte Hubbard (1), where as here the possession was changed before or simultaneously with the calling into existence of the document. Ex parte Parsons (2) was a case of licence to take possession and has no bearing here.

Arnold Statham and Dyer for the respondent:-

The appellant looked to the letter as the basis on which he lent his money - as his security. There was no change of possession till after the sheriff had been paid out. The appellant would not advance the money till the document was signed, and then he paid not Wilson but the sheriff. Possession was therefore taken under and by virtue of the document. After the sheriff was paid out possession for a moment at least vested in Wilson,

(1) 17 Q. B. D. 690.

(2) 16 Q. B. D. 532.

and the document is therefore a bill of sale. "Hold possession" in the document means become the holder. More than what had been done was required to perfect possession, and it was clearly under the authority of the document that the goods were removed to the auction rooms. If a document constitutes the authority to take possession of goods as a security for a loan it is within the Act though possession be given at the same time. If the document contemplates the possibility of an interval between the intended immediate taking of possession and the taking it is a bill of sale. "Possession is an equivocal term: it may mean either actual manual possession or the mere right of possession": Martin v. Reid (1), per Erle C.J. When the terms of an agreement are reduced to writing you must look at the document only, as Lord Esher M.R. said in Ex parte Parsons (2), and where you must look at the document to prove your title it is a bill of sale. It was clearly a bill of sale within the Act of 1878 because the goods were in the apparent possession of the debtor. The letter was either a "licence to take possession of personal chattels as security for a debt" - see per Bowen L.J. in Ex parte Hubbard (3) - or "an assurance of personal chattels" within the Act of 1878. If this decision be reversed auctioneers will be in a very favourable position for lending money and defeating the Bills of Sale Act of 1882.

[They also referred to Wordall v. Smith (4); Seal v. Claridge (5); and Newlove v. Shrewsbury (6).]

The appellant's counsel were not heard in reply.

LORD HALSBURY L.C.:-

My Lords, I confess that but for the doubts which have been in the minds of the learned judges in the Court below, I should have thought that this was a very plain case. I am not quite certain that I appreciate at this moment what the learned judge who tried the cause meant by the phrases which he used. I can quite understand that what he called "the mischief" intended

(1) 13 C. B. (N.S.) at p. 735.

(2) 16 Q. B. D. 532.

(3) 17 Q. B. D. 690.

(4) 1 Camp. 333.

(5) 7 Q. B. D. 516.

(6) 21 Q. B. D. 41.

to be remedied by the Bills of Sale Act may have been very prominent before the learned judge's mind, but what it had to do with the facts of this case I am not able at present to fathom.

That the Bills of Sale Acts of 1854 and 1878 were intended to prevent false credit being given to people who had been allowed to remain in possession of goods which apparently were theirs, the ownership however of which they had parted with, is manifest enough by the language of those statutes. The Acts intended, in a case with creditors, that if people were allowed to remain in possession of goods, of which nevertheless the ownership was no longer theirs, those goods and chattels should be subject to the execution of bon‰ fide creditors who ought not to have been induced to give credit by the apparent ownership of the goods being in those persons, and who were therefore entitled to have their debts satisfied when by the default of the assignees of those goods they had been allowed to continue in the possession of persons to whom the property in them no longer belonged. That was the intended policy; and for such purposes it is manifest that the Legislature would desire to give the widest possible interpretation to every one of the documents by which the ownership was really intended to be practically changed, while the goods still remained in the apparent possession and dominion of the persons from whom the ownership had nevertheless really passed away.

My Lords, the Act of 1882 was directed to a totally different subject-matter. It was thought by the Legislature, rightly or wrongly, that a great number of impecunious debtors might be induced to sign documents the legal effect of which those persons did not understand. It was therefore intended by the Legislature, in order to protect them, to give a particular form of words which should plainly express the nature of the contract as to the loan and the security for the loan. The Legislature accordingly, in order to effect the object, gave a form of bill of sale, and made every bill of sale void unless it was in accordance with the form given by the statute. It seems to me that the Legislature neither intended to interfere, nor is it the effect of the legislation to which I have referred to interfere, with other

transactions than those which the Legislature has expressly pointed out.

Now let us see what the transaction here is. First of all, is it within the mischief of either the Act of 1854 or the Act of 1878, the object and purpose of which I have described? The transaction here is a very plain one. The debtor has an execution in his house, the sheriff takes possession (upon what the effect and quality of that possession is, I will say a word presently), the debtor is under the impression that he can raise sufficient money upon the security of the goods of which the sheriff has taken possession to satisfy him, and also perhaps to leave a surplus for himself. For that purpose it is necessary that the execution should be paid out; the sheriff will not relinquish possession, and for his own security cannot relinquish possession until he has been paid the money. Accordingly the debtor goes to the appellant, Mr. Charlesworth, and invites him to lend him the money upon the security of the goods which at that moment are in the possession of the sheriff. Mr. Charlesworth agrees to do so, but he bargains and makes it a necessary part of the transaction without which he will not advance his money, that he shall get possession of the goods. That is agreed to. The effect and value of what is done I will discuss presently, as I have said, when I am dealing with what was in the possession of the sheriff. That was a bargain that the possession should be changed from the person to whom the money was being advanced to the person lending it. That, therefore, undoubtedly was not within the mischief intended to be cured by the Acts of 1854 and 1878. The transaction is completed, the money is advanced, and the sheriff is paid out.

Well, but it is said that this is a bill of sale within the Act of 1882 - that the form of the instrument by which the property in these goods is changed and the assignment is made is within the Act of 1882, and that inasmuch as the Act of 1882, in furtherance of the objects which I have described, makes a bill of sale in such a form void even as against the grantor himself, no property passed by this instrument. The simple answer to that is that the whole foundation of that argument fails. There was no assignment, there was no bill of sale, there was nothing that

in the meaning of the Act of 1882 can be relied upon by reason of its operating a change of property, no such thing took place. The instrument itself does not purport to do any such thing. The reasoning of the Court of Appeal, so far as I can follow it at present, appears to be this, that although they affirm and rely upon their own decision in Ex parte Hubbard (1), they raise what to my mind would be a most serious and important question, having very wide consequences indeed - they raise a distinction between what is suggested as physical possession and formal possession.

Now, I must say that I received a very candid answer from the Bar when I put the question, what was the difference in the nature of the possession between the possession by the sheriff and the possession by the man who held the property on the part of Mr. Charlesworth? It was admitted with great candour that there was no difference at all in the character or quality of the possession. Then it comes to this, that the possession of the sheriff in this case - nay, I may say the possession of the sheriff in every case - must be regarded as open to that question, as to whether or not it is a physical possession or a formal possession. I am not quite certain that I am able to comprehend the exact distinction which has been pointed out. I understand what possession is (at least, I think so), and I never understood that the possession of the sheriff was other than physical and actual possession. I do not mean by that, that the sheriff's man has at every moment in his possession every article which exists in the house. It is obvious that such a possession, if it is to be limited to that, would be absolutely impossible; it would make the question of whether or not there was possession sufficient to vest the property in the sheriff a question depending upon the particular article or class of articles of which he was in possession; because some of them would be incapable of being grasped by the hand, if that is what is meant by taking physical possession. But what do I find occurred here? I find that there was a man in the house for the purpose of preventing any other person interfering with or removing or taking away any of the property in question; and it is not denied that if the assignor or any

(1) 17 Q. B. D. 690.

one on his behalf had attempted to remove any of the articles which were in the house at the time when this man was in possession on behalf of Mr. Charlesworth, he would have been immediately stopped. Therefore, I should have thought that this possession was just as much a physical and actual possession as it is possible for any one man to have in articles which are distributed all over a house.

My Lords, under these circumstances, what is the problem which your Lordships are called upon to solve? We have the fact that the debtor has given a perfectly good mandate. I am not quite satisfied that the word "pledge" is properly applicable to it, although I do not deny that in some respects the rights of a pledgor may come in question; but the transaction is this: the man says, "I hand over these goods to you," in the only sense in which goods that are distributed over a house are capable of being handed over, "in consideration of your paying money to the sheriff and getting them out of the hands of the sheriff"; and then he draws up a document in which he says, "Now keep this possession for me, and sell the goods for what they will fetch by auction"; and of course after he has done that the person to whom they are handed holds them with this kind of trust attached to them, and when they are realized, if there is anything remaining beyond the amount of £62 which he has advanced upon them, he holds that money to the order of the person who has given him the mandate.

My Lords, that is the transaction; what that has to do either with the mischief contemplated by the Bills of Sale Acts, or what it has to do with a bill of sale at all, I confess myself totally unable to understand. It is a transaction in which, simultaneously with the handing over the goods and advancing the money (and I affirm that the words "handing over the goods" are perfectly applicable to such a transaction as this, because they are handed over in the only way in which goods distributed all over a house can be handed over), a document is signed by the borrower which says, "Pay yourself the money which you have advanced, and hand me the surplus if there is any."

It seems to me that the whole argument based upon the assumption that this is a bill of sale transaction at all entirely

fails. It therefore appears to me to be obvious that the judgment of the Court of Appeal must be reversed.

My Lords, there is one further observation which I wish to make, because it appears to me that there has been a confusion both in the argument, and (I say it with all respect) I think in one of the judgments, between what it is necessary to establish in a Court of Law when you are proving a transaction and the operative part of the transaction itself. I can well understand that where upon a trial, after the statement of the loan had taken place and after what the transaction was had been deposed to, one of the witnesses might have said: "There was a writing drawn up and it had relation to the transaction," then the judge would of course insist upon the production of the instrument in order to see whether or not the rights of the parties had been reduced to writing, and would not allow a mere parole description of the transaction to go on without the writing being produced. But after all that only comes to producing the writing such as it is; and if the writing when it is produced does not affect the rights of the parties, or make them different from what they would have been before, or from what they would have been if no writing had been referred to, no particular magic is applicable to such a thing as that.

One very cogent observation which appears to me to have been made by the Master of the Rolls on this subject, commenting on his own judgment and that of the rest of the Court of Appeal in Ex parte Hubbard (1), was this, that in Ex parte Hubbard (1) the whole transaction was disclosed upon the writing, including the making of the advance and the terms upon which that advance was made; and but for one circumstance, it might very fairly and reasonably have been argued to have been a bill of sale within the Act; but the distinction was this, that, although that document did profess to disclose the whole terms of the transaction, it was held, and I think rightly held (and I should have thought that the Court of Appeal were in this case bound by their own decision in Ex parte Hubbard (1)), that the Bills of Sale Act did not apply at all, that the transaction was one in which the possession had been already taken, and the relation

(1) 17 Q. B. D. 690.

of the parties such that there was no room for the application of any of the definitions in the Bills of Sale Act.

My Lords, under these circumstances, I have to move your Lordships that the judgment of the Court of Appeal be reversed.

LORD WATSON:-

My Lords, I can have no hesitation in concurring in the judgment which has been proposed, because I am quite unable to distinguish the present case in principle from that of Ex parte Hubbard (1). The document of the 9th of December 1887, which has been treated as a bill of sale by the majority of the Appeal Court, does not give any licence to take possession of the goods, and it did not constitute the title upon which possession was given to the appellant. It contains a mandate to hold and sell the goods; but it was not intended to operate, and did not, in point of fact, come into operation, until possession had been actually transferred from the sheriff to the appellant. In any question with the present respondent the case seems to me to be the same as if the goods had been sent for sale to the appellant's premises and an advance made against them by the appellant before the document in question was either written or delivered.

LORD HERSCHELL:-

My Lords, I am of the same opinion. The question in this case must be decided in precisely the same way as if the debtor, whose transactions have given rise to the controversy, had been himself bringing this action; and it certainly would be startling, to my mind shocking, if there were anything in the state of the law which compelled us to say that under the circumstances which occurred in this case he could successfully maintain such an action.

Now, I think that in a case of this description it is most important to bear in mind the distinction between the Acts of 1854 and 1878 relating to bills of sale and the Act of 1882. The only Act which can have any operation in this case to make the transaction void is the Act of 1882; and the earlier Act of 1878

(1) 17 Q. B. D. 690.

is only important as containing the definition of a bill of sale which is imported into the Act of 1882. But any reference to the Act of 1878 beyond that which is necessary for the purpose of transferring, so to speak, the definition contained in that Act to the Act of 1882 can only lead to misunderstanding and mischief.

Now, my Lords, the Act of 1882 no doubt makes a bill of sale void which is not in accordance with the prescribed form; but in order to make the Act operate at all it is essential in the first place to prove that the transaction was one which was effected by a bill of sale, of course using those words in the sense which is attributed to them by the Act of 1878. Well, was it so effected? It is true that a document was drawn up simultaneously with the acts which were done for the purpose of completing the right of Charlesworth in relation to these goods; but it is absolutely clear that it is not every document which may be drawn up at the time when a transaction is being carried out for the purpose of transferring goods from one party to another that is a bill of sale. In each case one must look at the circumstances in order to see what the transaction was, and what the document was.

Now, this document, beyond all question, was not a document which was intended to transfer, or did transfer, the property in these goods; because if there is anything clear in the transaction, it is this, that at the time at which this document, whatever its effect, began to operate, Charlesworth was in possession of the goods under an arrangement by which he was to have, for certain purposes at least, a title to them. He did not get his title under that document - he got his title by virtue of the transaction, and the document never began to operate at a time at which he had not possession. Under those circumstances, what words in the Act of 1878 are supposed to cover it? For the reasons which I have given it cannot be an "assurance." It certainly is not "a bill of sale" in the ordinary sense of those words. Is it a "licence to take possession"? The statement which I have just made seems to me to be conclusive that it is not a licence to take possession, because those words can only apply, as was pointed out by all the judges in Ex parte Hubbard (1)

(1) 17 Q. B. D. 690.

when the possession is to be taken subsequently to the signature of the document.

The case of Ex parte Hubbard (1) seems to me to be absolutely undistinguishable from the present case. In that case there was a document drawn up, containing the terms upon which the advance was to be made, the sale of the goods was to be effected, and the repayment was to be required. That was much more like a bill of sale than anything which is to be found in the present case, and yet it was held that because the transaction was one of pledge where the possession was given and taken independently of that document, although you might be obliged to have recourse to that document if there was a controversy about the terms of the advance, nevertheless you did not need to have recourse to the document for the purpose of establishing title. Now, what is the distinction between that case and the present? None that I have heard, unless it be that in this case Charlesworth was not put in possession of the goods simultaneously with the signature of this document. If Charlesworth was not put in possession of these goods simultaneously with the signature of the document, it seems to me that the sheriff was never in possession. I am quite unable to accede to the argument that a possession which is sufficient possession to make good the title of the sheriff under his authority to seize, is not a possession as between the person giving it and the person taking it, which is the only point we have to decide in the present case. The question whether it is a possession which excludes the apparent possession of the other party might arise under the Act of 1878; but it is not of the slightest importance in the present case. Is it a possession as between the person giving it and the person taking it? When once it is admitted, as it was inevitably admitted by the learned counsel for the respondent, that it was a possession sufficient as between those two persons to constitute a good pledge, it seems to me that the case is at an end. I say "inevitably admitted," because how can it be disputed that as between the two persons to the transaction it would have been impossible for the person who had received an advance on giving this possession to say that he had not given the other person a possession of the goods which would entitle

(1) 17 Q. B. D. 690.

him to hold them as a security for the advance? And that is all that a pledge is.

Then, if that be so, it seems to me to shew conclusively that the case is within Ex parte Hubbard (1), because what was there decided was that if the transaction be only one of pledge arising from a delivery by one party to the other of the possession of his goods as a security for the money advanced, it is immaterial that the terms upon which those goods are pledged are reduced to writing. It does not make it a bill of sale. The decision in Ex parte Hubbard (1) seems to me to be absolutely conclusive of this case.

But even if this were not a pledge, there is another possible view of it - namely, that the goods were delivered to Charlesworth in his capacity of auctioneer, to be held by him as auctioneer, with authority to sell them, and to retain out of the money which arose from that sale the advance which he had made. If that is really the true nature of the transaction - possibly even that might be a pledge with an authority to sell - but supposing it is not, strictly speaking, a pledge, and that what I have stated is a more accurate description of the transaction, the same result would follow - it would be an authority to sell which would be irrevocable, except upon the terms of paying back the money; and it seems to me impossible to say, that because the document which was given in this case was given simultaneously with the entering into that transaction, it was a bill of sale in any sense in which those words are used within the definition clause of the Act of 1878.

For these reasons, it seems to me that the case of Ex parte Hubbard (1) really governs this case. I desire to say that, so far as I am concerned, instead of seeing any reason to doubt the correctness of the decision in Ex parte Hubbard (1), I am very glad that that decision was arrived at; it has my hearty concurrence; and between that case and the present I can see no distinction.

LORD MORRIS:-

My Lords, I concur.

(1) 17 Q. B. D. 690.

LORD FIELD:-

My Lords, I am of the same opinion.

Solicitors for appellant: Pritchard & Sons, for Locking & Holdich, Hull.

Solicitors for respondent: John Cotton & Son, for John H. Green, Hull.