Carlos Federspiel & Co SA v Charles Twigg & Co Ltd

(QBD (Comm Ct)) Commercial Court

2 April 1957

[1957] 1 Lloyd's Rep. 240

Summary

Subject: Sale of Goods

Keywords: Cargo; FOB contracts; Intention; Title to goods

Catchphrases: Passing of property

Summary: The plaintiffs ordered goods from an English company and paid for them in advance.
The goods were to be sent to Costa Rica and the contract was an FOB one with some CIF
features. The English company packed the goods into cases, marked them with the buyers' name,
registered them for consignment and ordered shipping space in a named ship. Before the goods
were sent to the port a receiver was appointed by the debenture holders of the English company
and he refused to deliver the goods. On an action brought by the plaintiffs, who contended that
the property in the goods had passed to them, Pearson J. held that the intention of the parties was
that the property in the goods should pass on shipment and that there was no such prior
appropriation of the goods and assent thereto as would pass the property by virtue of the Sale of
Goods Act 1893 s. 18, r. 5.

Judge: Pearson, J
Legislation Cited

Sale of Goods Act 1893 r. 5

Sale of Goods Act 1893 s. 18
Sale of Goods Act 1893 Sect.1
Sale of Goods Act 1893 Sect.5
Sale of Goods Act 1893 Sect.16
Sale of Goods Act 1893 Sect.18
Sale of Goods Act 1893 Sect.20
Sale of Goods Act 1893 Sect.32
Sale of Goods Act 1893 Sect.62
FOR EDUCATIONAL USE ONLY
*240 Carlos Federspiel & Co., S.A. v. Charles Twigg & Co., Ltd., and
Another.
Queen's Bench Division. (Commercial Court.)
QBD (Comm Ct)
Mar. 25, 26, 27, 1957; Apr. 2, 1957.
Before Mr. Justice Pearson.

Sale of goods (f.o.b.)--Passing of property-- Unascertained goods by description-- Payment by buyers--Goods not
shipped-- Winding-up of defendant company (sellers) --Right of receiver to retain goods against buyers--Whether
goods were appropriated to contract and property had passed to buyers -- Damages.

Contract entered into between plaintiff buyers and defendant company (sellers) for sale of cycles and tricycles f.o.b.
British port, insurance and freight to be charged as extras - Price paid by buyers - Preparations for shipment made by
sellers - Second defendant appointed by debenture holders as receiver and manager of defendant company before
shipment - Refusal by receiver to ship goods to buyers except upon further payment of price - Compulsory winding-
up of defendant company - Claim by buyers, in conversion or detinue, alleging that goods had been appropriated to
the contract and that the property in them had passed to buyers - Contention by receiver that, until shipment, goods
were not appropriated to the contract and that no property in goods had passed - Evidence as to intention of parties -
Damages.
Held,
(1) that it was to be inferred from the contract that the intention was that the property in the goods should not pass
until shipment, and that accordingly, although sellers had made some preparations for shipment of certain goods
which they intended to appropriate to the contract, such goods had not in fact been appropriated to the contract and
the property had not passed to the buyers at the time of the winding-up - Judgment for defendants.
Held,
(2) (obiter), that the goods having been offered to buyers by the receiver on further payment of the price, buyers
should have accepted such offer in mitigation and could not claim as damages the higher price which they might
have recovered on resale.

The following cases were referred to:

Aldridge v. Johnson, (1857) 7 E. & B. 885;
Arnhold Karberg & Co. v. Blythe, Green, Jourdain & Co., [1916] 1 K.B. 495;
Arpad, [1934] P. 189; (1934) 49 Ll.L.Rep. 313;
Atkinson and Others (Assignees of Sleddon) v. Bell and Others, (1828) 8 B. & C. 277;
Biddell Brothers v. E. Clemens Horst Company, [1911] 1 K.B. 934; [1912] A.C. 18;
Browne and Another v. Hare and Another, (1858) 3 H. & N. 484; (1859) 4 H. & N. 822;
Colley v. Overseas Exporters, [1921] 3 K.B. 302;
Elliott v. Pybus, (1834) 10 Bing. 512;
France v. Gaudet and Others, (1871) L.R. 6 Q.B. 199;
Ireland and Others v. Livingston, (1872) L.R. 5 H.L. 395;
Langton v. Higgins, (1859) 4 H. & N. 402;
Law & Bonar, Ltd. v. British American Tobacco Company, Ltd., [1916] 2 K.B. 605;
Mirabita v. Imperial Ottoman Bank, (1878) 3 Ex.D. 164;
Mucklow and Others (Assignees of Royland) v. Mangles, (1808) 1 Taunt. 318;
Payzu, Ltd. v. Saunders, [1919] 2 K.B. 581;
Pignataro v. Gilroy, [1919] 1 K.B. 459;
Rohde and Others v. Thwaites, (1827) 6 B. & C. 388;
Sachs v. Miklos and Others, [1948] 2 K.B. 23;
Stock v. Inglis, (1884) 12 Q.B.D. 564; (1885) 10 App. Cas. 263;
Wait and Another v. Baker, (1848) 2 Ex. 1;
Wilkins v. Bromhead and Hutton, (1844) 6 M. & G. 963;
Wimble, Sons & Co. v. Rosenberg & Sons, [1913] 3 K.B. 743.

In this case, Carlos Federspiel & Co., S.A., of San Jose, Costa Rica, claimed for the delivery of goods valued at
<<PoundsSterling>>646 5s., for which they had paid, and damages for detinue or conversion by Charles Twigg &
Co., Ltd., of Lye, Worcs, and Mr. H. J. Patience.
Plaintiffs' case was that by a letter of June 16, 1953, they ordered a number of cycles and tricycles from the
defendant company, which order was accepted. On July 28, 1953, Mr. Patience was appointed receiver and manager
of the company on behalf of the debenture holders, after which the company carried on business: but on Nov. 17,
1953, a compulsory winding-up order was made and the company went into liquidation. The goods ordered by
plaintiffs were paid for by cheque on July 1, 1953, but were never delivered. Plaintiffs claimed that the goods were
appropriated to the contract and that the property had passed to them.
Plaintiffs also claimed that they had been deprived of the opportunity of selling the goods at a profit and that they
had thereby lost such profit as they would have made on resale.
Mr. Patience denied that the goods were appropriated to the contract or that there was a breach of the agreement.
They were charged to the debenture holders in terms of their debentures and the defendants had no authority to make
them available to plaintiffs.
The defendant company did not take part in the proceedings.

Representation

Mr. Stephen Chapman, Q.C., and Mr. John Stephenson (instructed by Messrs. Henry Pumfrey & Son) appeared for
plaintiffs; Mr. Maurice Lyell, Q.C., and Mr. John Shaw (instructed by Mr. Sidney Pearlman) represented Mr.
Patience.
Mr. CHAPMAN said that the question was whether the receiver, Mr. Patience, had committed conversion of the
goods which had been ordered and paid for prior to his appointment. It turned basically on whether the goods were
appropriated to the contract so that the property passed to the plaintiffs.
COUNSEL said that the order on June 16, 1953, was for the goods to be shipped direct to Port Limon as soon as
possible. On June 25, the defendants wrote accepting the order and stating they would have the goods ready for
shipment at the earliest possible moment. The prices were quoted "f.o.b. British port," but insurance and freight
were to be charged as extras. It was not a standard form of f.o.b. contract. A cheque for $1820 (then
<<PoundsSterling>>646 5s.) was received from the plaintiffs, who stated that they were looking forward to the
invoices and shipping documents. On July 29, the day after Mr. Patience's appointment, defendants wrote stating
they were not yet able to dispatch the goods. On Aug. 27 they wrote that the goods were available but that no vessel
would be sailing to Port Limon until the end of September, and that the goods had been registered for export. That
was completion of the appropriation of the goods to the contract. The only hold-up was finding the ship. The
plaintiffs wrote stating that if there was no ship sailing for Port Limon, the goods could be sent by way of New
York. On Sept. 14 the defendants*242 wrote that they were arranging to ship by way of New York. Houlder
Brothers & Co., Ltd., shipping agents, instructed the defendants to send the goods to Liverpool for the steamship
Britannic. The document from the defendant company giving forwarding instructions to the Britannic was never
sent, but COUNSEL contended that, even so, there was evidence of appropriation.
His LORDSHIP: The defendants may be saying that there was no appropriation until the goods were dumped in the
hold of the ship.
COUNSEL said that the defendants were taking the line that this was an f.o.b. contract and that there could be no
passing of the property until the goods were over the rail of the ship; but in Counsel's view that was not so.
Mr. LYELL, for the defendants, said that the contract was "f.o.b. U.K. port. " There was never an intention by the
sellers or the buyers to fix prices on c.i.f. terms. He submitted that the words "free on board" in a contract clearly
indicated that the property was intended to pass by virtue of sub-Rule (2) and not sub-Rule (1) of Rule 5 of Sect. 18
of the Sale of Goods Act, 1893. Sub-Rule (1) proceeded on the basis that the parties agreed that the specific article
should be the agreed article of the contract. That was what "assent appropriation" meant. No such assent was
necessary under sub-Rule (2). Sub- Rule (2) was designed to meet just those circumstances which arose in
international commerce where parties were far apart and there was no real possibility of one accepting what the
other selected or offered. The first thing in an f.o.b. contract was to put the goods on board ship. No doubt there
were things for the sellers to do beforehand, but that was preparatory. In the present case there was an agreement
indicating that the property passed from the sellers to the buyers under "f.o.b." when it was put on board. From start
to finish the intention was to pass the goods when they were on board and not before. They were never put on board,
so the property never passed. The receiver was entitled to hold them as the property of the company for the benefit
of the creditors; and the plaintiffs were creditors for the amount of money paid in advance.
Mr. CHAPMAN replied.
Judgment was reserved.
Tuesday, Apr. 2, 1957.

JUDGMENT.

Mr. Justice PEARSON:

In this case the basic facts are agreed and all the evidence is contained in agreed documents. The only remaining
issues are (1) whether the ownership of certain goods passed from the defendant company, as sellers, to the
plaintiffs, as buyers, in which case both defendants would be liable to the plaintiffs for conversion of their goods; (2)
if there is liability, whether the sum described as loss of profit can, under any guise, be included in the damages. The
defendant company has taken no part in the trial, and the contest has been between the plaintiffs and the second
defendant, who is receiver for a debenture-holding company. The figures of damage, in the event of liability being
established, are agreed at, I think, <<PoundsSterling>>646 5s. without the sum for loss of profit, and that sum, if it
is to be added, is agreed at a figure which I think is <<PoundsSterling>>89 7s. 8d..
As stated in par. 1 of the statement of claim, the plaintiffs are a company incorporated in San Jose, Costa Rica, who
were at all material times carrying on business as merchants in Costa Rica. The defendant company at all material
times in the early part of 1953 carried on business as manufacturers of children's bicycles and tricycles at Lye in the
County of Worcester. Then, as stated in par. 4 of the statement of claim, and admitted in the defence, in about June,
1953, the plaintiffs agreed to buy and the defendant company agreed to sell and deliver at a price of 1820 U.S. dols.,
certain goods which are set out in that paragraph of the statement of claim, namely, cycles, tricycles and certain
accessories. As stated in par. 5 of the statement of claim and admitted in the defence, the agreement was contained
in or evidenced by an order in writing from the plaintiffs to the defendant company dated June 16, 1953, and an
acceptance in writing of the said order from the defendant company to the plaintiffs, dated June 25, 1953. Then it is
also common ground that, as stated in par. 6 of the statement of claim, pursuant to the said agreement, the plaintiffs
on or about July 1, 1953, paid the said price to the defendant company by cheque of that date, and the receipt of it
was acknowledged by the defendant company on July 7, 1953. Then it appears from par. 2 of the defence,*243
which is similar to, but as to the date more accurate than, par. 3 of the statement of claim, that on July 28, 1953, the
second defendant, Mr. H. J. Patience, was appointed receiver and manager of the defendant company by the
debenture-holders. Thereafter all goods belonging to the defendant company, which were charged to the debenture
holders by virtue of their debentures, passed into his management and control. On Oct. 2, 1953, the second
defendant, Mr. Patience, the receiver, refused to deliver to the plaintiff company any goods in fulfilment of the
contract of sale which had been made in June, 1953. Then on Nov. 17, 1953, the company being insolvent, a
compulsory winding-up order was made.
The plaintiffs' claim, in its essence, appears from par. 7 of the statement of claim which alleges:
Pursuant to the said agreement the said goods were duly manufactured by the defendant company and thereafter
were made available to the plaintiffs and appropriated to the said agreement, which availability and appropriation
were duly notified to the plaintiffs by letters to the plaintiffs dated the 27th August and the 14th September 1953
from the defendant company and/or the defendant Patience as receiver and manager thereof.
Some further and better particulars were given of the acts and matters relied upon under that paragraph, and those
further and better particulars are dated June 6, 1955, but I do not have to refer to them here, because the matters
referred to will be mentioned in due course.
Then par. 8 of the statement of claim alleges:
The property in the said goods in the premises passed to the plaintiffs by virtue of Sect. 18 (5) of the Sale of Goods
Act 1893 but the defendant company and the defendant Patience none the less failed and neglected to deliver the
same to the plaintiffs and wrongfully and in breach of the said agreement detained and still detain the same.
Then it is alleged--and this is, I think, admitted--that the plaintiffs demanded the goods from the receiver, and the
receiver and the defendant company refused to deliver them up. It is admitted that if the goods were the property of
the buyers, that is to say, the plaintiff company, there was conversion by the defendants.
The issue in the case appears from par. 5 of the defence. I should perhaps read also part, at any rate, of par. 4:
This defendant [Patience] . . . denies that any bicycles or tricycles were made available to the plaintiffs or
appropriated to the said agreement.
In par. 5 it is said:
This defendant denies that the property in any bicycles or tricycles manufactured by the defendant company passed
to the plaintiffs either as alleged or at all. This defendant admits that no bicycles or tricycles have been delivered to
the plaintiffs pursuant to the said agreement but he denies that he or the defendant company detain wrongfully or in
breach of the said agreement any goods belonging to the plaintiffs.
That, therefore, is the main issue: whether or not the goods were appropriated to the contract by the sellers with the
consent of the buyers so as to pass the ownership to the buyers; and the buyers are the plaintiff company. I should
have said that the defence to which I have referred is the defence of the defendant Patience only. As I have said, the
defendant company have taken no part in the trial, and they did not even deliver a defence at the earlier stage.
In considering that main issue, it is convenient to refer first to the relevant, or possibly relevant, provisions of the
Sale of Goods Act, 1893. Sect. 1 provides:
(3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer the contract is
called a sale; but where the transfer of the property in the goods is to take place at a future time or subject to some
condition thereafter to be fulfilled the contract is called "an agreement to sell."
(4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the
property in the goods is to be transferred.
Then Sect. 5 provides:
(1) The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the
seller, or goods to be manufactured or*244 acquired by the seller after the making of the contract of sale, in this Act
called "future goods."
I need not read sub-ss. (2) and (3). Then there is Sect. 16, which provides:
Where there is a contract for the sale of unascertained goods no property in the goods is transferred to the buyer
unless and until the goods are ascertained.
Then the opening words of Sect. 18 are important:
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.
Then I can pass over Rules 1 to 4. Rule 5 is in two parts. Sub-Rule (1) says:
Where there is a contract for the sale of unascertained or future goods by description and goods of that description
and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the
buyer, or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such
assent may be express or implied, and may be given either before or after the appropriation is made:
(2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee or
custodier (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the
right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.
Sect. 20 may have some bearing. It says:
Unless otherwise agreed, the goods remain at the seller's risk until the property therein is transferred to the buyer,
but when the property therein is transferred to the buyer, the goods are at the buyer's risk whether delivery has been
made or not.
I need not read the two provisos to that section. Sect. 32 I have in mind, but I think it need not be read.
Sect. 62 contains definitions, which include:
"Delivery means voluntary transfer of possession from one person to another.
"Sale" includes a bargain and sale as well as a sale and delivery.
Sect. 62 (4) provides that
Goods are in a "deliverable state" within the meaning of this Act when they are in such a state that the buyer would
under the contract be bound to take delivery of them.
This is a case in which the contract is for the sale of unascertained goods by description, for the sale of future goods
probably still to be manufactured. Afterwards certain goods were manufactured, and the sellers at one time
apparently expected to use them in fulfilment of the contract. The question is whether there was an appropriation of
those goods to the contract by the sellers with the assent of the buyers within the meaning of Rule 5 of Sect. 18.
I think it is convenient just, in effect, to lay a foundation for the understanding of the exact meaning and effect of
Sect. 18 by reading a short passage from an old case, Mirabita v. Imperial Ottoman Bank, (1878) 3 Ex.D. 164. The
relevant passage is from the judgment of Lord Justice Cotton, at p. 172, where he says:
Under a contract for sale of chattels not specific the property does not pass to the purchaser unless there is
afterwards an appropriation of the specific chattels to pass under the contract, that is, unless both parties agree as to
the specific chattels in which the property is to pass, and nothing remains to be done in order to pass it. In the case of
such a contract the delivery by the vendor to a common carrier, or (unless the effect of the shipment is restricted by
the terms of the bill of lading) shipment on board a ship of, or chartered for, the purchaser, is an appropriation
sufficient to pass the property.
There was an old case called Wait and Another v. Baker, (1848) 2 Ex. 1, in which there was a discussion by Baron
Parke which is of considerable interest. I think it is convenient to read only a short passage from it. He said, at p. 7:
It is perfectly clear that the original contract between the parties was not for a specific chattel. That contract would
be satisfied by the delivery of any 500 quarters of corn, provided the corn answered the character of that which was
agreed to be delivered. By the original contract, therefore, no property passed; and that matter admits of no*245
doubt whatever. In order, therefore, to deprive the original owner of the property, it must be shown in this form of
action--the action being for the recovery of the property--that, at some subsequent time, the property passed. It may
be admitted, that if goods are ordered by a person, although they are to be selected by the vendor, and to be
delivered to a common carrier to be sent to the person by whom they have been ordered, the moment the goods,
which have been selected in pursuance of the contract, are delivered to the carrier, the carrier becomes the agent of
the vendee, and such a delivery amounts to a delivery to the vendee; and if there is a binding contract between the
vendor and vendee, either by note in writing, or by part payment, or subsequently by part acceptance, then there is
no doubt that the property passes by such delivery to the carrier. It is necessary, of course, that the goods should
agree with the contract.
Later, on p. 9, having referred to Roman law, he says on this subject:
The law of England is different: here, property does not pass until there is a bargain with respect to a specific article,
and everything is done which, according to the intention of the parties to the bargain, was necessary to transfer the
property in it.
Then he discusses the different senses in which the word "appropriation" is used.
Now I will come to the set of documents in this case which constitute the contract. First, there is the sellers' price
list, which quotes the prices f.o.b. English port inclusive. That only states the price, so I think it is not of great
significance. Then there is a letter of May 20, 1953, from the buyers to the sellers, saying:
To-day we are able to inform you that we received your first shipment, according your invoice No. . . and found that
the cycles and tricycles are made of a good quality and are satisfactory.
For the above mentioned, we would like to place a new order and would appreciate very much if you would send us
by airmail, your last catalogue and complete price list. We do not have it complete and would like to place the new
order for rush shipment.
The only significance of that is, I think, that at this early stage, as one will find throughout the correspondence, the
emphasis is on shipment as indicating the intention of the parties that shipment should be a decisive act of
performance by the seller.
Then there is the letter of June 6 from the sellers to the buyers, and they say, among other things:
. . . as we should very much like to extend our business relationship with your goodselves, we have pleasure in
offering you a commission of 5 per cent. (on the f.o.b. value exclusive of packing) on all orders which you place
with us. This commission would be in addition to the 2 1/2 per cent. cash discount which we allow for payment in
advance or by confirmed irrevocable letter of credit.
On June 16 there is the offer. It is addressed by the buyers to the sellers, and it says:
Gentlemen,
Regarding to your letter dated June 6th, we are agree at the present with your indications in regard to the
representation, but hope that in a very near future you are going to accede to our request naming us your exclusive
agents for this territory.
For the following order we beg you to send us two pro-forma invoices to be able to make advance payment reducing
the 5 per cent. and 2 1/2 per cent. discounts. Please prepare shipment to be able to ship with direct ship to our Port
Limon, as soon as you receive our advance payment remittance.
Then they set out the goods for which the order is given, being cycles, and so on. Then there is the provision:
All boxes have to be marked: C. F. & Co., San Jose--Costa Rica, Port Limon.
The answer, which is the acceptance, is on June 25. There is a letter and an enclosed confirmation of export order
and an enclosed pro forma invoice. The material parts of the letter from the sellers to the buyers are at the beginning:

Dear Sirs,
We thank you for your letter of the 16th June and are very pleased to have your second order for cycles and
tricycles.
This has been entered by us under reference P/1052 and we are enclosing herewith our official acknowledgment
form. Attached also is our pro- forma*246 invoice, in duplicate, on which we have given the approximate c.i.f.
charges and deducted the 5 per cent. commission and 2 1/2 per cent. cash discount. This will enable you to remit to
us, as suggested, and we look forward to receiving your cheque in due course.
Meanwhile, we have placed the order on our works and can assure you that we will have the goods ready for
shipment at the earliest possible moment.
Confirmation of export order was enclosed, and it contains these provisions:
Shipping Marks: C. F. & Co., San Jose, Costa Rica, Port Limon.
Delivery: F.o.b. U.K. Port.
Packing: Extra.--No. 4.--As per our pro-forma invoice dated 25.6.53.
Freight: Extra.
Insurance: Extra.
Payment: In advance.--As per your letter dated 16.6.53.
The goods are set out, and there is the provision:
All shipments will be invoiced at prices ruling at the date of despatch, irrespective of anything shown to the contrary
on your order sheet.
Then there is the enclosed pro forma invoice, which sets out the goods, sets out the shipping mark and numbers as
before: "C. F. & Co., San Jose, Costa Rica, Port Limon. 1/up." Then certain packing charges are set out, and then
there are these words: "Approximate c.i.f. charges-- <<PoundsSterling>>60. " Then there is a deduction made for
the two commissions, 5 per cent. on the f.o.b. value, exclusive of packing, and 2 1/2 per cent. cash discount on the
same sum for payment in advance.
Then on July 1 there is a letter from the buyers to the sellers, saying:
To-day we received your letter dated June 25th from which we separate your two pro forma invoices. To cover this
pro forma invoices we are sending you herewith our cheque 2376 against our account at the National City Bank of
New York in the amount of U.S.A. $1820.
We beg you to acknowledge receipt of this remittance any difference will be paid as soon as we receive your
definitive invoices and two original shipping documents.
Please follow the shipping instructions given on our order of June 16th regarding marks, etc., etc.
To avoid difficulties with the custom house it is indispensable that you send us with the five invoices, 5 packing lists
indicating what contains on each box, with the indication of the No. of each cycle (serial No.) that would help us
very much.
Thanking you in advance for the soon shipment of that order, we remain,
Yours truly,
Carlos Federspiel & Co., S.A.
Then there is the receipt for the cheque, dated July 7, 1953.
Then on July 9 the sellers write to the buyers, saying:
We thank you for your letter of the 1st July together with cheque for the amount of $1820 and have pleasure in
enclosing our official receipt.
Your instructions regarding marks, etc., will be complied with and immediately we have some definite information
as to the date of shipment we will write to you again.
When we forward the documents we will let [you] have a statement showing the actual position of the account, and
you can then remit to us any balance which may be due.
You may be assured that the order is having our best attention, and we anticipate that the goods will be ready for
despatch in the very near future.
That is the end of the contractual documents, and the question arises: what is the nature of this contract? I agree with
Mr. Lyell that fundamentally it is to be regarded as an f.o.b. contract, but one has to add that it has some c.i.f.
features attached to it. The delivery expressly is to be f.o.b., but freight and insurance are to be extras, and they are
stated at an approximate figure of <<PoundsSterling>>60. It would seem that the intention is that the sellers are, in
the first instance, to arrange the insurance and the contract of affreightment, and they are to pay the freight and
insurance and charge them as extras to the buyers; and the intention seems to be that they should charge the cost
price to the buyers, so that any rise or fall in rates of freight or insurance would be for the account of the buyers and
of no interest to the sellers. That seems to be the nature of the contract.
*247 It is, in my view, an f.o.b. contract, but one can also consider what the position would be if that is a wrong
view and if it is in truth to be regarded as predominantly a c.i.f. contract. The first question is: when would the
property pass under that contract of sale in the absence of any further development subsequently? I will have to
consider later whether the subsequent developments make any difference. There is authority which shows quite
clearly that normally, at any rate, under an f.o.b. contract the property passes on shipment. There is the case of
Browne and Another v. Hare and Another (1858) 3 H. & N. 484, a decision of the Court of Exchequer. The relevant
passage is in the majority judgment of Chief Baron Pollock, Baron Martin and Baron Channell, beginning on p. 498:

If, at the time the oil was shipped at Rotterdam, the plaintiffs had intended to continue their ownership, and had
taken the bill of lading in the terms in which it was made for the purpose of continuing the ownership and exercising
dominion over the oil, they would in our opinion have broken their contract to ship the oil "free on board," and the
property would not have passed to the defendants; but if when they shipped the oil they intended to perform their
contract and deliver it "free on board" for the defendants, we think they did perform it, and the property in the oil
passed from them to the defendants.
I ought to have explained that this was a contract for oil to be shipped free on board at Rotterdam, and the possible
doubt as to the date of passing of the property arose from the fact that the seller took the bill of lading to his own
order but indorsed it specially to the other party. That is what was said in the Court of Exchequer.
Then it went to appeal, apparently to the Court of Exchequer Chamber, which is therefore of high authority. Mr.
Justice Erle delivered the judgment of the Court, and he says, (1859) 4 H. & N. 822, at p. 829:
In this case we are of opinion that the judgment of the Court below should be affirmed.
The contract was for the purchase of unascertained goods, and the question has been, when the property passed. For
the answer the contract must be resorted to; and under that we think the property passed when the goods were placed
"free on board," in performance of the contract."
He went on to discuss the special problem which arose from the fact that the seller, who was the shipper, took the
bill of lading to shipper's order but indorsed it to the buyers. That is the first authority.
Then there is the case of Stock v. Inglis, (1884) 12 Q.B.D. 564, a decision of the Court of Appeal. That is a case
where the difficulty arose in this way: there were two contracts each providing for 200 tons of sugar to be loaded
f.o.b. Hamburg with the port of destination Bristol; but the goods as put on board were not separated as between the
two contracts, and the question was at whose risk the sugar was, because this was an action by the plaintiff, a Bristol
merchant, against a Lloyd's underwriter under a policy of insurance, and the question was whether the plaintiff, who
was the buyer, had an insurable interest.
There is a passage on p. 573 from the judgment of Sir Baliol Brett, M.R., where he says:
Now if the goods dealt with by the contract were specific goods, it is not denied but that the words "free on board,"
according to the general understanding of merchants, would mean more than merely that the shipper was to put them
on board at his expense; they would mean that he was to put them on board at his expense on account of the person
for whom they were shipped; and in that case the goods so put on board under such a contract would be at the risk of
the buyer whether they were lost or not on the voyage.
Now that is the meaning of those words "free on board" in a contract with regard to specific goods, and in that case
the goods are at the purchaser's risk, even though the payment is not to be made on the delivery of the goods on
board, but at some other time, and although the bill of lading is sent forward by the seller with documents attached
in order that the goods shall not be finally delivered to the purchaser until he has either accepted bills or paid cash.
Then the question arises, can there be a contract with the terms "free on board" which can be fulfilled without the
delivery of specific goods at the time*248 of shipment? Is there any mercantile or legal reason why a person should
not agree to sell so much out of a bulk cargo on board or ex such a ship upon the terms that if the cargo be lost the
loss shall fall upon the purchaser, and not upon the seller? I can see no reason why he should not; and if such a
contract can be made, and in a contract to buy and sell a certain quantity ex ship or ex bulk there is put in the terms
"free on board," one must, with regard to that contract, give some meaning to those words "free on board." What
meaning can be given to them with regard to the unseparated part of the goods which is the subject-matter of the
contract, but the same meaning as is given to those words with regard to goods attributed to the contract? What is
there unreasonable or contrary to business or law in those words "free on board," meaning in such a contract "I sell
you twenty tons out of fifty upon the terms that you shall pay such a price for those twenty, I paying the costs of the
shipment, that is, 'free on board,' and you bearing the risk of whether they are lost or not?"
Then there is a passage on p. 575 in Lord Justice Baggallay's judgment, where he says:
It has not been denied that, where the contract deals with specified goods, the introduction of the provision that they
are to be "free on board" places the goods at the risk of the buyer. But it has been suggested that such is not the case
when the goods are not specific, but are, as they were in the present case, a certain proportion of goods to be
delivered out of a larger quantity. I think the argument which was addressed to us by Mr. Reid in reply was a very
forcible one. What authority is there for a suggested difference between the case of specific goods, and goods of the
class which I have just now mentioned? Why should there be any difference between the two?
Then Lord Justice Lindley said, at p. 576:
Let us look at that contract by itself, and without reference to any particular course of trade. No particular sugar is
specified, but 200 tons of sugar, and I apprehend that that contract might be performed in one of two ways. 200 tons
of sugar might be shipped "free on board" a vessel at Hamburg, and be shipped so as to be appropriated at the time
of shipment. That is one mode of performing it. and I should say that would be the ordinary mode of performing it,
and in that case, the sugar, provided it answered the description contracted for, would be appropriated at the time of
shipment, and the property would then pass to the buyer, and of course would be at his risk.
That is the passage that is quite clear in that case.
The case went to appeal, and is reported under the name of Inglis v. Stock, (1885) 10 App. Cas. 263. There the
House of Lords were more specifically dealing with the question of the passing of the risk than the passing of the
property. In the House of Lords they could not find anything inconsistent with the view expressed by Lord Justice
Lindley in the Court of Appeal, and I think it is not necessary to read the passages.
I will merely refer to two other cases. There is the case of Wimble, Sons & Co. v. Rosenberg & Sons, [1913] 3 K.B.
743; the material passage is at p. 759, where the passage from the Master of the Rolls' judgment in Stock v. Inglis,
sup., is reported. Then this is important. There is an express and clear decision on the subject by Mr. Justice
McCardie in Colley v. Overseas Exporters, [1921] 3 K.B. 302. The material passage is at p. 307, where he said:
It seems clear that in the absence of special agreement the property and risk in goods does not in the case of an f.o.b.
contract pass from the seller to the buyer till the goods are actually put on board: see Browne v. Hare (1859) 4 H. &
N. 822; Inglis v. Stock, (1885) 10 App. Cas. 263; Wimble v. Rosenberg, [1913] 3 K.B. 743, at p. 747; Benjamin on
Sale, 6th ed., p. 785, where several useful cases are collected.
It follows, therefore, that if and so far as this contract was in its true nature an f.o.b. contract, the natural time at
which the property would pass would be on shipment. Undoubtedly this contract also contained some c.i.f features,
and there is an express reference to what is called "approximate c.i.f. charges" in the pro forma invoice. If and in so
far as it was a c.i.f. contract, the effect of the authorities is that the property would pass not earlier than shipment,
perhaps later than shipment. But for the purpose of the present case there is no need to*249 consider whether it
would be on shipment or at some later time. The insurance referred to in a c.i.f. contract is, of course, marine
insurance for the sea voyage. Although authority is hardly required for that, it can be found in George Ireland and
Others v. Livingston (1872) L.R. 5 H.L. 395, at p. 406. There is also Lord Justice Kennedy's dissenting judgment in
Biddell Brothers v. E. Clemens Horst Company, [1911] 1 K.B. 934, the material passage being at p. 956; and Lord
Justice Kennedy's dissenting judgment was approved in the House of Lords ([1912] A.C. 18). Then there is Arnhold
Karberg & Co. v. Blythe, Green, Jourdain & Co., [1916] 1 K.B. 495, at pp. 512 and 515. There is also Law & Bonar,
Ltd. v. British American Tobacco Company, Ltd., [1916] 2 K.B. 605, at p. 608.
Therefore, under the contract, it was to be expected that the ownership of the goods would pass to the buyers on
shipment of the goods, or possibly at some later time, when the bill of lading and insurance policy and final
definitive invoice would be handed over to the buyers. The goods were not in fact shipped, and indeed they were not
even dispatched from the sellers' works to the port of shipment. They were, however, packed, and the packages were
marked "C. F. & Co., San Jose, Costa Rica, Port Limon." There were some answers to interrogatories which
admitted certain facts, showing that the preparatory steps towards shipment had been taken by the sellers. Goods to
the quantity and proper description required had been manufactured. They were packed, and they were marked with
these shipping marks. The steps can be regarded, not as intended appropriation, but as being preparation for the
shipment. It was contended that in August or September, 1953, there was an appropriation of the goods to the
contract by the sellers with the assent of the buyers.
I will first go through the relevant further documents which bear on this question. Then I will consider certain
decided cases that were cited and then I will endeavour to apply the principles which emerge from those cases to the
present case now under consideration.
I have already read the letter of July 9, which may be regarded either as the final contractual letter, or the first letter
after the conclusion of the contract. It refers to shipment and says:
Your instructions regarding marks, etc., will be complied with and immediately we have some definite information
as to the date of shipment we will write to you again. When we forward the documents we will let [you] have a
statement showing the actual position of the account, and you can then remit to us any balance which may be due.
You may be assured that the order is having our best attention, and we anticipate that the goods will be ready for
dispatch in the very near future.
On July 22, 1953, the buyers write to the sellers:
Regarding your letter of July 9th we would appreciate very much if you would execute our pending order as soon as
possible with direct ship to our Port Limon, or Puntarenas.
Thanking you in advance for your co-operation, we remain,
and so on. It is of interest to note that the form of execution of the pending order to which reference is made is, "with
direct ship to our Port Limon." That is consistent with the assumption that the intention still was that the
performance of the order should be by shipment.
On July 29, the sellers write to the buyers, saying:
We thank you for your letter of the 22nd July and regret that we have, as yet, been unable to despatch the goods
against your recent order.
Most of the items are available but others are still in course of production and, unfortunately, we are unable to
proceed at the present time as our works are closed for the annual holiday of two weeks. However, we can assure
you that we will endeavour to complete your order at the earliest possible moment after the re-opening of our factory
on August 10th, and we will write you further immediately we have some definite information regarding the date of
shipment.
On Aug. 24 the buyers write to the sellers:
Herewith we beg you to indicate us when you expect to execute our pending order of toys, of June 16th 1953.
As we are in a big urgency of these toys, we will appreciate very much if you ship it, as soon as possible.
*250 Thanking you for your prompt answer, we remain.
There again there is the contemplation that the order will be executed by shipment.
Then on Aug. 27 shipping instructions were given by the sellers to Messrs. Houlder Brothers & Co., Ltd., at
Birmingham, and the shipping instructions state that the goods are to be consigned by bill of lading to Carlos
Federspiel & Co., the plaintiffs. The document says, referring to the sellers:
Freight payable by us. F.o.b. charges payable by us. Please insure for <<PoundsSterling>>AAAAAA arranged by
us.
Then the shipping marks are given.
On the same date, Aug. 27, the sellers write to the buyers:
Further to our letter of the 29th July, we have pleasure in advising you that the goods against your order are now
available but, unfortunately, there is no boat sailing direct to Port Limon until the end of September.
However, we have registered the consignment for shipment and we will write you further immediately we have
some definite news regarding the name of the vessel and the date of sailing.
Then from the form of registration of the consignment for shipment one can see that it did refer to a proposed
shipment of cycles and tricycles, and the amount received was to be received as stated, and the fact that cash had
been received was mentioned and the parties' names.
On Aug. 28, the agents, Messrs. Houlder Brothers & Co., Ltd., wrote to the sellers:
We thank you for shipping details covering the undermentioned consignment, which matter is receiving our
attention and required instructions will be sent to you as early as possible.
Insurance is not being effected, in accordance with your instructions.
Then the identification of the undermentioned consignment is: "C. F. & Co., San Jose, Costa Rica, Port Limon.
1/19."
On Aug. 31 there is a letter from the buyers to the sellers, which says:
Referring to your letter of August 27th 1953 we beg you when you have the shipment ready, if there is not boat
sailing direct to Port Limon, please send it, via New York, as soon as possible.
There again the emphasis is on shipment as constituting the performance, or the deciding act of performance of the
contract.
On Sept. 3, Messrs. Houlder Brothers write to the sellers telling them that there were no direct sailings from
Liverpool to Port Limon. They go on:
Shipment may however be arranged with transhipment at Cristobal or New York.
On Sept. 14, there is the letter especially relied upon, together with that of Aug. 27, by the plaintiffs in their
pleading. It is written by the sellers to the buyers, and it says:
Dear Sirs,
We thank you for your letter of the 24th August which crossed ours of the 27th and we also acknowledge your letter
of August 31st.
In accordance with your instructions we are now arranging to ship the consignment via New York and we hope to
let you have some definite information regarding the date of shipment, etc., within the course of the next few days.
Assuring you of our co-operation at all times.
Then there are forwarding instructions, saying that the goods were then to be sent to the particular ship, the
steamship Britannic, at Huskisson Dock, Liverpool to the order of Houlder Brothers & Co., Ltd.
Then on Oct. 2, 1953, the receiver, the second defendant, wrote to the buyers in these terms:
Dear Sirs,
I have to inform you that I was appointed receiver and manager of this company on the 28th July, 1953, under the
terms of a debenture dated the 2nd September, 1952.
I am informed that you are awaiting shipment of tricycles and adult bicycles.
From a lack of understanding of the legal position, our sales office have had these goods manufactured. I much
regret to have to inform you that I cannot release these goods as they are claimed for the debenture holders under the
terms of the debentures. In the circumstances, I am unable to dispatch them. You will rank, with the other creditors
of the company, in respect of the remittance you made of $1820, the sterling equivalent of which is
<<PoundsSterling>>644 19s. 2d..
*251 An alternative, which I do not suppose you will wish to exercise, is for these goods to be shipped against a
fresh payment, which would make this an entirely new transaction with me as receiver and manager of the company.
Then I was informed that some Chamber of Commerce, the British and Latin American Chamber of Commerce, at
Canning House, 2, Belgrave Square, London, S.W. 1, wrote a letter to the receiver or to the defendant company or to
both, containing strong protests at the treatment which the foreign buyers were receiving from the two English
companies, the sellers and the debenture holders, in this transaction. It appears from the letter I am about to read that
the Board of Trade had been informed of the matter. Mr. Patience, the receiver and manager of the debenture
holders, writes on Nov. 27, 1953, to the British and Latin American Chamber of Commerce:
Dear Sirs,
Carlos Federspiel & Co., S.A.
I have now informed the Board of Trade that I have been advised that I am unable to dispatch goods to the above
against the payment of 1820 dollars made by him.
As you are already aware this payment was received by the company before my appointment as receiver and
manager, and the goods were made up and completed for shipment after that time.
Whilst I fully appreciate the points set forth in your letter of the 26th October, I much regret my own legal position
compels me to adopt this attitude. I would add that on the 9th November, a winding up order was made for the
compulsory liquidation of the company, and that Federspiel's claim as a creditor has been passed to the Official
Receiver who was appointed liquidator.
There are some further letters which show that the shipping instructions for the Britannic had been cancelled, and I
think the rest of the correspondence need not be read. I should, however, mention that the foreign buyers, not
unnaturally, did not accept the offer contained in the last paragraph of the receiver's letter of Oct. 2, 1953.
On that correspondence, the question is whether there was an appropriation of the goods to the contract by the
sellers with the consent of the buyers after the conclusion of the contract and before the letter of Oct. 2, 1953. A
number of cases were cited to which I will refer as briefly as possible. Some of them were quite old cases. The first
is Mucklow and Others (Assignees of Royland) v. Mangles, (1808) 1 Taunt. 318. That was a case where it appears
that Mr. Royland had undertaken to build a barge for Mr. Pocock. The head-note reads:
Before the work was begun, Pocock advanced to Royland some money on account, and as it proceeded, he paid him
more, to the amount of << PoundsSterling>>190 in all, being the whole value of the barge. When it was nearly
finished, Pocock's name was painted on the stern. Two days after the completion of the work, and before a
commission of bankrupt had issued, the defendant, who was an officer of the sheriff of Middlesex, under an
execution against Royland, took this barge, which had not then been delivered to Pocock, but gave it up to him
under an indemnity. The jury found a verdict for the plaintiff.
The material passage, I think, is in Mr. Justice Heath's judgment, where he says this (ibid., at p. 319):
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;
he could not bring trover against the purchaser for the goods so sold. The painting of the name on the stern in this
case makes no difference. If the thing be in existence at the time of the order, the property of it passes by the
contract, but not so, where the subject is to be made.
The next case is Rohde and Others v. Thwaites, (1827) 6 B. & C. 388. The headnote is:
A. having in his warehouse a quantity of sugar, in bulk, more than sufficient to fill twenty hogsheads, agreed to sell
twenty hogsheads to B., but there was no note in writing of the contract sufficient to satisfy the Statute of Frauds.
Four hogsheads were delivered to and accepted by B. A. filled up and appropriated to B. sixteen other hogsheads,
and informed him that they were ready, and desired him to take them away. B. said he would take them as soon as
he could: Held, that the appropriation having been made by A., and assented to by B., the*252 property in the
sixteen hogsheads thereby passed to the latter, and that their value might be recovered by A. under a count for goods
bargained and sold.
Mr. Justice Bayley said, at p. 392:
Where a man sells part of a large parcel of goods, and it is at his option to select part for the vendee, he cannot
maintain any action for goods bargained and sold, until he has made that selection; but as soon as he appropriates
part for the benefit of the vendee, the property in the article sold passes to the vendee, although the vendor is not
bound to part with the possession until he is paid the price. Here there was a bargain, by which the defendant
undertook to take twenty hogsheads of sugar, to be prepared or filled up by the plaintiffs. Four were delivered; as to
them there is no question, but as to the sixteen it is said, that as there was no note or memorandum of a contract in
writing sufficient to satisfy the Statute of Frauds, there was no valid sale of them; and that the plaintiffs in their
declaration having stated their claim to arise by virtue of a bargain and sale, cannot recover for more than the four
hogsheads which were actually delivered to and accepted by the defendant; that in order to recover for the others
they ought to have declared specially, that, in consideration that the plaintiffs would sell, the defendants promised to
accept them. In answer to this, it is said, that there was an entire contract for twenty hogsheads, and that the
defendant, by receiving four, had accepted part of the goods sold within the meaning of the seventeenth section of
the Statute of Frauds. In fact, the plaintiffs did appropriate, for the benefit of the defendant, sixteen hogsheads of
sugar, and they communicated to the defendant that they had so appropriated them, and desired him to take them
away; and the latter adopted that act of the plaintiffs, and said he would send for them as soon as he could. I am of
opinion, that by reason of that appropriation made by the plaintiffs, and assented to by the defendant, the property in
the sixteen hogsheads of sugar passed to the vendee. That being so, the plaintiffs are entitled to recover the full value
of the twenty hogsheads of sugar, under the count for goods bargained and sold.
Mr. Justice Holroyd said (at p. 393):
The sugars agreed to be sold being part of a larger parcel the vendors were to select twenty hogsheads for the
vendee. That selection was made by the plaintiffs, and they notified it to the defendant, and the latter then promised
to take them away. That is equivalent to an actual acceptance of the sixteen hogsheads by the defendant. That
acceptance made the goods his own, subject to the vendor's lien as to the price. If the sugars had afterwards been
destroyed by fire, the loss must have fallen on the defendant. I am of opinion that the selection of the sixteen
hogsheads by the plaintiffs, and the adoption of that act by the defendant, converted that which before was a mere
agreement to sell into an actual sale, and that the property in the sugars thereby passed to the defendant; and,
consequently, that he was entitled to recover to the value of the whole under the count for goods bargained and sold.
That is a perfectly clear anticipation of Sect. 18 of the Sale of Goods Act.
The next case is Atkinson and Others (Assignees of Sleddon) v. Bell and Others, (1828) 8 B. & C. 277. That was a
matter of two spinning frames and a roving frame ordered from Sleddon by a man named Kay for the defendants.
They were made and altered and packed by Kay's directions, but then the defendants refused to take delivery. There
was an action for the price. It is a case of considerable interest. I think the most material passage is at p. 283, where
Mr. Justice Bayley says:
They were Sleddon's goods, although they were intended for the defendants, and he had written to tell them so. If
they had expressed their assent, then this case would have been within Rohde and Others v. Thwaites, (1827) 6 B. &
C. 388, and there would have been a complete appropriation vesting the property in the defendants. But there was
not any such assent to the appropriation made by the bankrupt, and therefore no action for goods bargained and sold
was maintainable.
Then (and I am taking this shortly) the next case is Elliott v. Pybus, (1834) 10 Bing. 512, where there was a machine
to be manufactured and there was no doubt that there was an appropriation. The real contest was as to whether the
price had been agreed, but it was held that there*253 was a sufficient acceptance. The passage which is, I think, of
some interest is in Chief Justice Tindal's judgment at p. 517, where he says:
I agree that this comes, at last, to the question, whether or not the property has passed to the defendant; and that the
plaintiff cannot sustain his action for goods bargained and sold, unless when the defendant is in a condition to
recover the goods in trover, and must sustain the loss in case of their being stolen or destroyed by fire.
That is in anticipation of Sect. 20 of the Sale of Goods Act, whereby normally the ownership and the risk are
associated.
Then there is Wilkins v. Bromhead and Hutton (1844) 6 M. & G. 963. The headnote there is:
A. employed B. to build him a greenhouse for <<PoundsSterling>>50. When it was completed B. gave A. notice,
and requested him to remit the price. A. remitted the amount and desired B. to keep the greenhouse till sent for.
Afterwards B. (unknown to A.) deposited the greenhouse with C., telling him it was the property of A., and
requesting him to keep it for A., which he agreed to do. B. having become bankrupt, his assignees took possession of
the greenhouse. Held, first, that the property in the greenhouse passed to A., there having been an appropriation of it
to him by B., and an assent on his part to such appropriation; secondly, that the greenhouse was not in the
possession, order, and disposition of B. as reputed owner.
Chief Justice Tindal gave the first judgment, and he said, at p. 974:
Looking at the facts of this case, it seems to me that there is complete evidence of assent on the part of the plaintiff,
to the appropriation made by the vendors. The plaintiff was informed by letter that the greenhouse was finished, and
was requested to remit the price. He did so, at the same time requesting the vendors to keep the greenhouse for him
until he sent for it. It has been argued, that the letter of the plaintiff, desiring Smith and Bryant to keep the
greenhouse for him, was written before the article was seen, and that it would be hard if it were held to be such an
acceptance as would preclude him from rejecting the article if it afterwards turned out defective in its construction.
If a purchaser's assent to the appropriation was shown to have been obtained by misrepresentation, it seems to me it
would probably be held to be no assent at all. But that is not the case here; and although the plaintiff thought proper
to assent to the appropriation without seeing the greenhouse, the assent was not the less complete. Upon this point,
therefore, I think that the property vested in the plaintiff, so as to enable him to maintain this action.
Then there was Mr. Justice Maule's judgment. At the foot of p. 978 he says:
In these cases it is not necessary that the vendee should actually see the article when completed, provided there is
sufficient to show that the identical thing offered or appropriated by the one party, is accepted and assented to by the
other, as made in the performance of the contract. Of this there was evidence on which any jury would have found
for the plaintiff.
Mr. Justice Cresswell said (at p. 979):
I am of the same opinion. The first point comes very much to this,-- whether the contract was not in effect an
agreement for the sale of a specific chattel; for although, in the first instance, the bankrupts contracted to build the
greenhouse for the plaintiff, after the article was finished there was an appropriation of it to the plaintiff, and a clear
assent on his part to such appropriation. I therefore think the properly passed to the plaintiff.
Then there is the case of Aldridge v. Johnson, (1857) 7 E. & B. 885. This was a case of considerable interest. There
was a contract for the sale of barley. There were some rather complicated facts in the case, because to some extent
there was an exchange of barley for agricultural animals, which I think were bullocks. In effect, there was an
agreement for a sale of the barley. The buyer inspected the barley in bulk and approved of it, and sent his sacks to
the seller for the seller to fill barley into the sacks. The seller did so, and the buyer repeatedly sent to the seller
demanding the barley, but the seller detained it and eventually emptied it from the sacks back into the bulk. It was
held, however, that the barley which had been put into the sacks did become the property of the plaintiff buyer,
because that was a clear appropriation of it to the contract for which authority had been given by the buyer, and
therefore assent*254 had been given by the buyer. It was so held, notwithstanding the fact that under the contract the
seller, after putting the barley into the sacks, still had the further task of sending them to the neighbouring railway
station and arranging for their transmission. That was the decision, and Lord Campbell, C.J., gave judgment at p.
899, where he said:
It is equally clear that, as to what was put into those sacks there must be judgment for the plaintiff. Looking to all
that was done, when the bankrupt put the barley into the sacks eo instanti the property in each sack-full vested in the
plaintiff. I consider that here was a priori an assent by the plaintiff. He had inspected and approved of the barley in
bulk. He sent his sacks to be filled out of that bulk. There can be no doubt of his assent to the appropriation of such
bulk as should have been put into the sacks. There was also evidence of his subsequent appropriation, by his order
that it should be sent on. There remained nothing to be done by the vendor, who had appropriated a part by the
direction of the vendee. It is the same as if boxes had been filled and sent on by the bankrupt, in which case it cannot
be disputed that the property would pass: and it can make no difference that the plaintiff ordered the sacks to be
forwarded by the vendor.
Then there is Mr. Justice Erle, who said this, at p. 900:
I also am clearly of opinion that the property in what was put into the sacks passed to the plaintiff. It is clear that,
where there is an agreement for the sale and purchase of a particular chattel, the chattel passes at once. If the thing
sold is not ascertained, and something is to be done before it is ascertained, it does not pass till it is ascertained.
Sometimes the right of ascertainment rests with the vendee, sometimes solely with the vendor. Here it is vested in
the vendor only, the bankrupt. When he had done the outward act which showed which part was to be the vendee's
property, his election was made and the property passed. That might be shown by sending the goods by the railway:
and in such case the property would not pass till the goods were dispatched. But it might also be shown by other
acts. Here was an ascertained bulk, of which the plaintiff agreed to buy about half. It was left to the bankrupt to
decide what portion should be delivered under that contract. As soon as he does that, his election has been indicated;
the decisive act was putting the portion into the sacks.
The next case is Langton v. Higgins (1859) 4 H. & N. 402. That was a similar case to the last one, because in
January the farmer had agreed to sell to the plaintiff all the crop of oil of peppermint grown on his farm at a certain
price per pound. In September the farmer wrote to the plaintiff for bottles to put the oil in. The plaintiff sent the
bottles, and the farmer, having weighed the oil, put it in the plaintiff's bottles, labelled them with the weight and
made out the invoices. Before he completed the filling he sold and delivered some of the bottles to the defendant,
and there the question arose whether the property had passed to the plaintiff.
Baron Martin gave judgment at p. 408, where he said:
The defendant's Counsel chiefly founded their argument upon the obligation of the vendor to deliver the goods to the
carrier to convey them to the railway station. If they had established that, it might have altered the case, but they
have failed to do so. In my opinion, when two parties enter into a contract and put into writing, that writing
determines the terms of their bargain.
There was no term that the goods should be sent to the railway station.
There was also a judgment delivered by Baron Bramwell, who took a wider view, and his judgment is especially
interesting on the importance of the intention of the parties in deciding whether the property passes. He said, at p.
409:
I do not dissent from what was said by my brother Martin with respect to the delivery to a carrier. It may be that the
vendor would be bound to show some act of delivery before he could sue for the price; but however that may be, I
am of opinion that the property vested in the plaintiff when the oil was put into her bottles. Looking at the principle,
there ought to be no doubt. A person agrees to buy a certain article, and sends his bottles to the seller to put the
article into. The seller puts the article into the buyer's bottles, then is there any rule to say that the property does not
pass? The buyer in effect says, "I will trust you to deliver into my bottles, and*255 by that means to appropriate to
me, the article which I have bought of you." On the other hand the seller must be taken to say, "You have sent your
bottles and I will put the article in them for you." In all reason, when a vendee sends his ship, or cart, or cask, or
bottle to the vendor, and he puts the article sold into it, that is a delivery to the vendee.
Then finally there is the case of Pignataro v. Gilroy, [1919] 1 K.B. 459, and which was a Divisional Court decision
by Mr. Justice Lawrence and Mr. Justice Rowlatt on appeal from the Middlesex County Court. That was a case in
which there was a sale of 140 bags of rice to be "taken delivery in 14 days free from date." The sale was by sample
and the bags were ascertained when the defendant seller told the plaintiff that the 125 bags would be delivered at
Chambers' Wharf and the remaining 15 bags at the defendant's place of business. The plaintiff sent a cheque for the
price and asked for a delivery order as arranged. On the following day the defendant wrote to the plaintiff enclosing
a delivery order for 125 bags from Chambers' Wharf and stating that the 15 bags were ready for delivery at 50 Long
Acre. The plaintiff neglected to send for the 15 bags until considerably later, and it was found that they had been
stolen. The question was to whom the bags belonged, and it was held that the property had passed, because in effect
there was nothing remaining for the seller to do. He had had the goods ready to be taken by the buyer, and it was for
the buyer to come and take them, and therefore it was held that that constituted an appropriation for the purpose of
the contract.
On those authorities, what are the principles emerging? I think one can distinguish these principles. First, Rule 5 of
Sect. 18 of the Act is one of the 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 unless a different intention appears. Therefore the element of common intention
has always to be borne in mind. A mere setting apart or selection of the seller of the goods which he expects to use
in performance of the contract is not enough. If that is all, he can change his mind and use those goods in
performance of some other contract and use some other goods in performance of this contract. To constitute an
appropriation of the goods to the contract, the parties must have had, or be reasonably supposed to have had, an
intention to attach the contract irrevocably to those goods, so that those goods and no others are the subject of the
sale and become the property of the buyer.
Secondly, it is by agreement of the parties that the appropriation, involving a change of ownership, is made,
although in some cases the buyer's assent to an appropriation by the seller is conferred in advance by the contract
itself or otherwise.
Thirdly, an appropriation by the seller, with the assent of the buyer, may be said always to involve an actual or
constructive delivery. If the seller retains possession, he does so as bailee for the buyer. There is a passage in
Chalmers' Sale of Goods Act, 12th ed., at p. 75, where it is said:
In the second place, if the decisions be carefully examined, it will be found that in every case where the property has
been held to pass, there has been an actual or constructive delivery of the goods to the buyer.
I think that is right, subject only to this possible qualification, that there may be after such constructive delivery an
actual delivery still to be made by the seller under the contract. Of course, that is quite possible, because delivery is
the transfer of possession, whereas appropriation transfers ownership. So there may be first an appropriation,
constructive delivery, whereby the seller becomes bailee for the buyer, and then a subsequent actual delivery
involving actual possession, and when I say that I have in mind in particular the two cases cited, namely, Aldridge v.
Johnson, sup., and Langton v. Higgins, sup.
Fourthly, one has to remember Sect. 20 of the Sale of Goods Act, whereby the ownership and the risk are normally
associated. Therefore as it appears that there is reason for thinking, on the construction of the relevant documents,
that the goods were, at all material times, still at the seller's risk, that is prima facie an indication that the property
had not passed to the buyer.
Fifthly, usually but not necessarily, the appropriating act is the last act to be performed by the seller. For instance, if
delivery is to be taken by the buyer at the seller's premises and the seller has completed his part of the contract and
has appropriated the goods when he has made*256 the goods ready and has identified them and placed them in
position to be taken by the buyer and has so informed the buyer, and if the buyer agrees to come and take them, that
is the assent to the appropriation. But if there is a further act, an important and decisive act to be done by the seller,
then there is prima facie evidence that probably the property does not pass until the final act is done.
Applying those principles to the present case I would say this. Firstly, the intention was that the ownership should
pass on shipment (or possibly at some later date) because the emphasis is throughout on shipment as the decisive act
to be done by the seller in performance of the contract. Secondly, it is impossible to find in this correspondence an
agreement to a change of ownership before the time of shipment. The letters, especially those of Aug. 27 and Sept.
14, which are particularly relied on by the plaintiff, do not contain any provision or implication of any earlier change
of ownership. Thirdly, there is no actual or constructive delivery; no suggestion of the seller becoming a bailee for
the buyer. Fourthly, there is no suggestion of the goods being at the buyer's risk at any time before shipment; no
suggestion that the buyer should insist on the seller arranging insurance for them. Fifthly, the last two acts to be
performed by the seller, namely, sending the goods to Liverpool and having the goods shipped on board, were not
performed.
Therefore, my decision that the prima facie inference which one would have drawn from the contract is that the
property was not to pass at any time before shipment, is in my view not displaced by the subsequent correspondence
between the parties. It follows, therefore, that there was no appropriation of these goods and therefore the action
fails.
I should also deal briefly with another question that was raised as to what the measure of damages would have been
if the action had succeeded. There was only one question there. It is agreed that the value of the goods in the sense
of their cost to the buyers, at least, can be recovered. That figure is, as I have stated, agreed. A further question is
whether the sum called a sum for loss of profit would in some way be recoverable. Reference was made to, I think,
four cases: France v. Gaudet and Others, (1871) L.R. 6 Q.B. 199; Payzu, Ltd. v. Saunders, [1919] 2 K.B. 581; The
Arpad, [1934] P. 189; (1934) 49 Ll.L.Rep. 313; and Sachs v. Miklos and Others, [1948] 2 K.B. 23.
I will deal with this shortly because on the view I have taken as to liability it does not have to be decided. I am
expressing a view on this point only to indicate briefly how the argument went, and what my opinion is as to the
decision.
I think the proper view is that if this additional sum is recoverable at all it can only be recoverable on the ground that
the proper value to be taken as the measure is the value to the buyer, and the value of these goods to the buyer would
have been not merely what he had to pay for the goods but the higher sum at which he could have sold them. It is
agreed that he would have been able to sell them for some ten per cent. more, and I have stated the figure which is
agreed. On the other hand, it is pointed out that when the receiver wrote to the buyer on Oct. 2, he offered to sell the
goods to the buyer at cost price. The buyer, if he was wrong, had a duty to mitigate the resulting damage, and the
question is whether in legal faith the buyer should have accepted that offer, or at any rate whether, not having
accepted that offer, he is entitled to claim on the footing that the goods have any higher value than the price at which
he could have bought them at that moment. The material case there is Payzu, Ltd. v. Saunders, sup., and there is a
passage in the judgment of Lord Justice Bankes which bears on this problem. There the question was whether it was
unreasonable for one party to refuse to take advantage of an offer made by the other party. Lord Justice Bankes said,
at p. 588:
It is plain that the question what is reasonable for a person to do in mitigation of his damages cannot be a question of
law but must be one of fact in the circumstances of each particular case. There may be cases where as matter of fact
it would unreasonable to expect a plaintiff to consider any offer made in view of the treatment he has received from
the defendant. If he had been rendering personal services and had been dismissed after being accused in presence of
others of being a thief, and if after that his employer had offered to take him back into his service, most persons
would think he was justified in refusing the offer, and that it would be unreasonable to ask him in this way to
mitigate the*257 damages in an action of wrongful dismissal. But that is not to state a principle of law, but a
conclusion of fact to be arrived at on a consideration of all the circumstances of the case. Mr. Matthews complained
that the respondent had treated his clients so badly that it would be unreasonable to expect them to listen to any
proposition she might make. I do not agree. In my view each party was ready to accuse the other of conduct
unworthy of a high commercial reputation, and there was nothing to justify the appellants in refusing to consider the
respondent's offer. I think the learned Judge came to a proper conclusion on the facts, and that the appeal must be
dismissed.
One can see the possibility of an argument here, because the final result of this transaction in all its aspects was that
the two English companies, the sellers, and the debenture holders taken together, received the money and kept the
goods, and the unfortunate foreign buyer, who had been too confiding in his dealings with the persons concerned,
found that he had paid the money and received no goods. One can imagine the feeling of indignation in the breast of
the foreign buyer in that situation. The question is whether, from a legal point of view, his refusal to accept the
receiver's offer in mitigation is unreasonable, or, as it is put better, whether having refused that offer, the buyer can
afterwards charge any higher price as against the defendants when he makes his claim against them.
On the whole, I think in a commercial sense the proper view is that, in spite of the indignation the buyers may well
have felt, having refused that offer they cannot reasonably claim an additional sum against the defendants here. I am
dealing, of course, solely with the legal aspect, and it is not necessary for me to consider any non-legal aspect of the
transaction. One would suppose that such treatment of a foreign buyer was not conducive to the improvement of the
British export trade, but that is a non-legal consideration, and I think Mr. Lyell was perfectly right from a legal point
of view when he said that legally no discrimination can be made between a foreign and a home buyer in a matter of
this sort. The English debenture-holding company has taken good and timely steps to protect its interests and the
foreign buyers, being too confiding, have not taken such steps, and the loss legally falls on the foreign buyer.
Therefore if the question had to be decided, I would have held that the proper measure of damages here is the mere
cost price, and that the additional sum could not be included. However, in view of my decision on liability, there
must be judgment here for the defendants, with costs.
(c) Lloyds of London Press Limited
[1957] 1 Lloyd's Rep. 240

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Copr. (c) West 2000 No Claim to Orig. Govt. Works