Sect. 39. "Right to retain.' Misapplication of word "retention." The words "or right to retain were introduced at an early stage of the adaptation of the Bill to Scotland, but they seem unnecessary, and may possibly lead to misapprehension. In Scots law, "retention" has long been applied to the right of an owner of moveable property to retain it, notwithstanding a personal obligation to transfer to another. Retention is, in substance, the right of the undivested owner to refuse implement of his contract until the counterpart is fulfilled,' and, therefore, in sale, it is applied exclusively to the right of the seller to detain res sua, against one who has only a jus ad rem. "Lien," on the other hand, is used to signify a right depending on possession of res aliena, and in this sense it is common to the law of England and 1 Retention is sometimes applied in a much wider sense, and the right has been said to belong to "every legal possessor of a subject till all the debts due to him by the proprietor are paid.' See exhaustive argument on the subject in report by Robert Bell of the case of Harper's Creditors v. Faulds (1791), Bell's Cases, 8vo, pp. 440 et seq. It was claimed in this case by a bleacher in respect of a general balance, but by a narrow majority, the claim was negatived. The view referred to was thus expressed by Lord Monboddo: "Compensation and retention are the same in principle; the ground of equity is this, that a person is not obliged to pay a debt while the creditor is at the same time due something to him. If the claims be of the same nature it is called compensation; if different it gets the name of retention "-Bell's Cases, 8vo at p. 467. See also Brown v. Somerville (1844), 6 D. 1267. The whole subject of retention, including its relation to arrestment and compensation, is discussed by Professor More, whose work is characterised by Lord President Inglis as "a scientific and justly admired dissertation on the subject." [National Bank v. Union Bank (1885), 13 Ret. 380 at p. 410.] The following passage explains the general argument: "Retention seems the necessary counterpart of the diligence of arrestment in security, and appears to be necessary to give consistency to a system of jurisprudence where such diligence is recognised. It would be a strange anomaly if a third party could by arrestment compel the holder of any fund or article which belonged to the common debtor, to retain it for his behoof in security of his debt, while the holder himself could not retain it for his own behoof in security of a similar debt which was due to himself before the arrestment was used. The diligence of arrestment in security being unknown to the common law of England, no right of retention at common law is there allowed. This, too, seems necessary to give consistency to the English system of jurisprudence; for where a creditor could not, by the legal use of diligence, acquire any preference over a fund or article belonging to his debtor, which happened to be in the hands of a third party, it would be anomalous to allow this third party by his accidental possession of such fund or article to acquire any preference over it for the payment of his own debt to the prejudice of the other creditors of the owner. It thus appears that our own system of jurisprudence in adopting the doctrine of retention, and the English system in rejecting it, have each proceeded upon those peculiarities in their respective systems which are requisite to give consistency to each "-More's Lectures, vol. i. p. 402. Scotland.1 It is true that in the law of England "lien is Sect. 39. used in a different and more extended sense in sale than in any other contract, and that it gives rights to a seller in security of the price which are inconsistent with a complete right of property in the buyer. It does not, however, permit of goods being retained for any debt other than the price of the goods themselves, and it is to be observed that it is only where the property has passed to the buyer in the sense of Sect. 17 of this Act, that lien comes into existence. Prior to the transfer of the property, the seller's right is that of an undivested owner, just as, in Scotland, the seller had formerly a right of retention down to the passing of the property by delivery. In both cases the seller could detain the goods until every debt due to him by the buyer was satisfied. When the property has passed, the seller's right is limited to a security for the price of the particular goods sold. That this is the intention of the Act as regards Scotland as well as England, is shown by the special definition of "retention" given in this section, viz. "a right to the unpaid seller to retain the goods for the price while he is in possession of them." The objection is that, in Scotland, this is not the common-law meaning of "retention," and that the limited right, as expressed, is neither more nor less than the vendor's lien in England. The right in both countries could with perfect propriety have been signified by the word "lien." The added words were apparently introduced 1 The distinction is enforced by Lord President Inglis in Black v. Incorporation of Bakers (1867), 6 Macp. 136 at p. 140. See also opinions by Lord President Inglis in National Bank of Scotland v. Forbes (1858), 21 D. 79 at p. 85; Wyper v. Harveys (1861), 23 D. 606 at p. 611; National Bank v. Union Bank (1885), 13 Ret. 380 at p. 410. The last of these cases was reversed on appeal (1886), 14 Ret. H. L. 2. As to the application of lien in England see Lickbarrow v. Mason (1793), 6 East 21, where Buller, J., said: "Neither lien nor stoppage in transitu are founded on property; they necessarily suppose the property to be in some other person, and not in him who sets up either of these rights. They are qualified rights which in given cases may be exercised over the property of another, and it is a contradiction in terms to say a man has a lien upon his own goods, or a right to stop his own goods in transitu. If the goods be his, he has a right to the possession of them whether they be in transitu or not; he has a right to sell or dispose of them as he pleases, without the option of any other person; but he who has a lien only on goods has no right to do so, he can only retain them till the original price be paid "-6 East at p. 25. Sect. 39. Suggestion is a rule of bankruptcy. Objections. on the analogy of The Factors (Scotland) Act 1890,1 but the Factors Act did not change the law of Scotland as to passing the property, and therefore, it was not only appropriate but indispensable, that the seller's right of retention in its comprehensive sense should be preserved. In the foregoing remarks it has been assumed as beyond that retention dispute, that the intention as regards Scotland is to restrict to a lien for the price, as in England. It has, however, been suggested, by one whose opinion deservedly carries the weight of authority both in England and Scotland, that "the right of retention for a general balance is one of the rules of bankruptcy referred to in Sect. 61 (1), and is not disturbed by the provisions of the Act." If this were the case, the consequences to the law of Scotland would be serious. The sale sections of The Mercantile Law Amendment Act of 18562 were passed on the recommendation of the Commissioners of 1855, who thought the seller's retention as against a bona-fide sub-buyer for a general balance due by the first buyer, was "injurious to commerce." The Commissioners' Report expressly bore that in this matter the law of Scotland should be assimilated to that of England and Ireland, with certain modifications rendered necessary by the different principle of passing the property which then existed in Scotland. The sections referred to are, however, repealed by the present Act; and therefore, if the right of retention for a general balance is not disturbed, it follows that the repeal leaves the law of Scotland as it was prior to 1856,5 except that the principle upon which the right was formerly exercised is now entirely subverted. It is submitted that this result was never contemplated, and that it is unfortunate if, by the use of the word " retention" in this and subsequent sections, any countenance has been given to a view which tends not to assimilation of the law, but to greatly increased diversity. 153 & 54 Vict. c. 40, Sect. 1 (1). 2 19 & 20 Vict. c. 60, Sects. 1 to 4. 3 2nd Report, p. 9. See also Appendix to Report, p. 44. 4 Sect. 60 and relative Schedule. 5 On this assumption Sect. 47 would have entirely different meanings in Scotland and England. 6 Benjamin speaks of retention in Scotland as equivalent to stoppage BY SELLER IN 40. In Scotland a seller (a) of goods may attach Sect. 40. the same while in his own hands or possession by ATTACHMENT arrestment or poinding; and such arrestment or SCOTLAND. poinding shall have the same operation and effect in a competition or otherwise as an arrestment or poinding by third party.() NOTES. (a) "Seller." Defined Sect. 62 (1). Unpaid seller." Defined Sect. 38. (b) "Possession" is not defined in this Act; but see Factors Act 1889, Sect. 1 (2).1 (c) "Arrestment or poinding." Poinding, and not arrestment, is the proper diligence. "A creditor cannot arrest in his own hands, because arrestment is a diligence in personam, and operates as a restraint upon third parties, who are prohibited from performing the obligations in favour of the debtor until the right of the arresting creditor shall be satisfied. But poinding is in rem, and if the poinded goods are the property of the debtor, the fact of their being in the creditor's possession does not appear to create any obstacle to their being poinded."2 Under the repealed ante transitum in England-Benjamin, Sale, p. 768 and note. If by stoppage ante transitum is meant stoppage before the transit has commenced, then if the property has passed to the buyer, retention in its Scottish sense is certainly not its equivalent, for such stoppage is simply the seller's lien for the price. If, however, in a stoppage ante transitum the property has not passed to the buyer, retention has practically the same effect. As to the meaning of stoppage ante transitum see remarks of Crompton, J., in Griffiths v. Perry (1859), 1 E. & E. 680 at p. 688. The meaning suggested by Benjamin (Sale, p. 768) seems somewhat special. 1 Text in Appendix I. post, p. 297. 2 Per Lord Kinnear (Ordinary) in Lochhead v. Graham (1883), 11 Ret. 201 at p. 204. "A man may cause poind goods of his debtors that are in his own custody and that for debt owing to him by the debitor "-Tillicoutry v. Laird of Rollo (1678), Fountainhall, i. 10. But the position of a creditor holding his debtor's goods was one of acknowledged difficulty. "It is said that a person in possession is in a worse situation than any other creditor; but this is by no means the case. He may do diligence in the name of a trustee, or deposit the goods in the hands of a third party, and carry on the diligence in his own name."-Per Lord Dreghorn in Harper's Creditors v. Faulds (1791), Bell's Cases, 8vo, 440 at p. 465. This assumes that the creditor's right to arrest in his own hands was not competent apart from the devices mentioned. Ross, however, suggests that the creditor could have poinded-Leading Cases, Com. Law, ii. 740. Professor More argues with much force and clearness that the right of retention is the counterpart of Sect. 40. Sect. 41. section of the Mercantile Law Amendment Act, which this section has supplanted, it was of little consequence which term was applied, since both were equally inappropriate. Under that Act the remedy was not a diligence, but a piece of legal machinery invented as a "limited or modified substitute for the seller's former broad right of retention." 2 But now that the property in specific goods may be in the buyer while the seller retains the custody, the seller's remedy is really a diligence against his debtor's goods, and poinding is the proper form of that diligence. (d) This section is taken from Sect. 3 of The Mercantile Law Amendment Act, Scotland, 1856,3 with the omission of certain particulars referring to the special procedure created by that Act. In consequence of the passing of the property to the buyer under the present Act, what in the Mercantile Law Amendment Act was a confusing anomaly, has now become an appropriate diligence. The section is declaratory of the common law so far, at least, as the diligence of poinding is concerned, and it might have been omitted as mere matter of procedure but for a possible negative inference from the repeal of identical words in the old statute. Where the seller's right of lien or so-called retention is defeated, as by the transfer of a document of title under Sect. 47, the right to arrest or poind is necessarily gone. The goods no longer belong to the seller's debtor. Unpaid Seller's Lien. (c) 41.-(1.) Subject to the provisions of this Act,(a) the unpaid seller of goods who is in possession (d) of them is entitled to retain possession of them until payment or tender of the price in the following cases, namely: (a.) Where the goods have been sold without any stipulation as to credit;) arrestment, and that wherever a third party could arrest the goods, a creditor in possession ought to have the power to retain in preference to such arrestment.-More's Lectures, i. 402 et seq. See passage quoted ante, p. 186, note. 119 & 20 Vict. c. 60, Sect. 3, repealed by Sect. 60 of this Act and relative schedule. 2 Per Lord President M'Neill in Wyper v. Harveys (1861), 23 D. 606 at p. 618. See also Browne and Co. v. Ainslie and Co. (1893), 21 Ret. 173. 3 19 & 20 Vict. c. 60. |