BROWN ET AL. V. JOHNSTON ET AL.

Equitable assignment-Contract of sale-Charging anticipated purchase money.

While the defendants C. & E. were negotiating with the defendant J. for the purchase of his stock of goods, the plaintiffs presented to C. & E. an order upon them for part of the anticipated purchase money, which order they had obtained from J. in payment of a debt due by him to the plaintiffs. This order C. & E. refused to pay or accept. The sale was subsequently completed, and the price paid in full to J. Held, that no charge on the purchase money had thus been created, and payment therefore could not be enforced against C. & E.

Mitchell v. Goodall, 5 A. R. 164, and McMaster v. Garland, 8 A. R., 1, observed upon and explained.

THIS was an appeal by the defendants Cross & Edwards from a judgment given by one of the Judges of the County Court of the county of Middlesex, on the 13th day of January, 1883, whereby the defendants Cross & Edwards were ordered to pay the plaintiffs $345.29 and costs.

The defendant Johnston was indebted to the plaintiffs in the sum of $345.29 for goods sold and delivered by them to him.

On the 22nd of September, 1883, the defendant Johnston, who was negotiating for a sale of his business and stock in trade to the defendants Cross & Edwards, gave to the plaintiffs an order on them in the following words :

"STRATHROY, September 22nd, 1883. "MESSRS. CROSS & EDWARDS, -Please pay Messrs. Brown, Balfour, & Co. the sum of $345.29 out of the moneys payable to me on the purchase of my stock by you.

"W. J. JOHNSTON."

After notice to the defendants Cross & Edwards of the giving of this order, which they refused to honor, the sale of the stock was completed, and the whole of the purchase money paid over to Johnston and this action. was therefore brought for the amount named in the order. The appeal was heard on the 23rd of April, 1885.*

John Cameron for the appellants.

Gibbons for the respondents.

*Present.-HAGARTY, C.J.O., BURTON, PATTERSON, and OSLER, JJ. A.

June 23, 1885. HAGARTY, C. J. O.—It is clear on the evidence and admissions that when this order was signed by Johnston, on September 22nd, and given to the plaintiffs, there was only a negotiation proceeding between him and the defendants for the purchase of his stock of goods. Either party to this negotiation could have withdrawn from it at pleasure. It was not until September 24th, late in the evening, that any final arrangement was arrived at. On the morning of the 24th September, an agent of the plaintiffs told the defendant Cross that they had an order from Johnston to pay them the amount of the order. Cross said he would not accept any order as they had not bought his stock. He did not see the order. About an hour after the agent came again and asked Cross how about this order. Cross said he would not accept any order, as he did not owe Johnston anything: that he had not bought the stock, and did not know that he would. Cross never saw the order.

On that night they completed or concluded to purchase, Johnston forbidding them to pay the order. He told them this shortly after the second time the plaintiffs' agent had called. Johnston said he had accepted a draft from the plaintiffs and it was not yet due. That was the reason they did not pay the plaintiffs, Johnston insisting on being paid the whole price, which was accordingly paid by the defendants.

Edwards's evidence is somewhat similar. The draft in question did not reach Strathroy till the 24th September, and Johnston then accepted it, and before defendants paid for the stock.

There is no suggestion or suspicion of any bad faith or collusion with Johnston on defendants' part. The right to recover here must apparently rest on this, that although there was no fund or debt in existence at the time the order was given, or when defendants were informed of it, yet, as defendants afterwards chose to purchase from Johnston, they must be bound to pay the amount of the order out of the purchase money.

I feel it a difficult matter to accept this view as cor

rect.

I cannot understand how there can be an equitable or any other assignment or charge given on something that has no existence whatever.

It is not the case of an accruing debt or liability. It is not the case of a fund that must come legally into the hands of the person sought to be charged, or an assignment of a charge on freight, &c., to be earned. It is an attempt to create a charge on a negotiation for a bargain. between two parties, so that where completion on either side is wholly optional, the negotiating parties can never complete the bargain, except on the terms of being bound by the attempted charge or assignment.

The effect, of course, must be, that the defendants mustabandon all attempt to purchase, if the vendor refuse to sell except for the full price, disallowing the amount he at one time was willing that his creditors, the plaintiffs, should have.

The defendants refused to accept or in any wise recognize Johnston's order on this plain ground, that they owed him nothing, and could not tell whether they ever would owe him anything.

I think the vast majority of business men would have assumed, as defendants did, that they had nothing to do with any such attempted charge or assignment, situated as they were.

I have seen no case in which the law has been pushed to the extent here claimed by the plaintiffs, nor do I think that a rule of law should be unduly extended, which would never commend itself to the understanding or govern the transactions of business men of ordinary commercial intelligence or experience.

Lord Justice Brett said in Field v. Megaw, L. R. 4 C. P. 660, 664: The law upon this subject is brought to such an exquisite degree of refinement that it is by no means easy to understand it."

I fear that any law of an "exquisite degree of refinement" is but ill-suited to the exigencies of business dealings.

Besides the class of cases collected in the notes to Ryall v. Rowles, 2 Wh. & Tud. 537, so often referred to, and the case in our own Court of Mitchell v. Goodall, 5 A. R. 164, we may refer to cases of charges on the sale of officers' commissions before the abolition of purchase in the army.

The contest was generally as to priority of charge and the notifying of the agent, who in due course would receive the purchase money on sale of the commission.

As I understand the cases, it is held that a notice of charge or assignment is of no effect until the agent is in possession of the funds.

In Webster v. Webster, 31 Beav. 393, 397, the Master of the Rolls, says: "The case of Buller v. Plunkett, 1 J. & H. 441, clearly shews, that, as between two equitable assignees, the time when notice is given is of no importance, if both notices are given previous to the period when the relation of trustee and cestui que trust is created, where that relation is not constituted until the money is actually received by or is due from the trustee."

In Somerset v. Cox, 33 Beav. 634, 638, the Master of the Rolls says that the notice given to the regimental agent, before the money is received, is an invalid notice. He points out (p. 641) that] if Cox & Co., on receiving notice before payment had said: "We undertake to hold the fund. in trust for you," they could not afterwards have said they had not notice. Sir Hugh Cairns there says in argument, "The principle is this-that you cannot go to a stranger and say, 'if you at any time hereafter should receive any money for A. B., take notice that I have a charge on it.""

In Addison v. Cox, L. R. 8 Ch. 76, 79, Lord Selborne, C., discusses the question. He says: "The cases cited as to the sale of commissions, when they come to be examined, turn upon the fact that the notice was given to a mere possible agent before he was an actual agent-before the time at which he was in any sense liable to make payment, neither being himself a debtor, nor at that time. charged with the duty of paying the money in question.' 25-VOL. XII A.R.

He says he agrees with these decisions. The legal position of the army agent is fully explained in this case by the Lord Chancellor. See also Yates v. Cox, 17 W. R. 20.

A case of Walker v. Bradford, 12 Q. B. D. 511, 515, may also be referred to. The peculiar position of the assignor's banker as to moneys received on assignor's account, after the creation of a charge of money then or thereafter to be standing to assignor's credit is discussed.

It may be quite true, though not necessary for the decision of this case, that Johnston did, or could as against himself, create a valid charge on the purchase moneys or chattels expected to be paid to or received by him, if a negotiation then pending with third parties ripened into an executed contract. The assignee might quite possibly be able to enforce his equity to a charge against such money or chattels when received in payment.

The distinction in the present case is, that the attempt is to make the defendants liable when there was neither fund nor property to charge, when they were not debtors or trustees, or liable in any way. If the plaintiffs' contention be sound, the defendants would have been forever disabled from completing any bargain with Johnston for the purchase of these goods, and possibly the argument would be pushed to the extent of equally affecting all persons having notice of the alleged equitable assignment.

It must always be borne in mind that the defendants. in no way assented to or agreed to be bound by Johnston's premature order, or in any way misled the plaintiffs.

I may refer as to the general principle to Ex p. Hall, 10 Ch. D. 615, 620; Adams v. Morgan, 12 L. R. Ir. 1; Clements v. Matthews, 11,Q. B. D. 808, 812.

BURTON, J. A.-I think this is an attempt to carry the doctrine of equitable assignment beyond any of the decided cases, and, speaking for myself, I am not disposed to extend a doctrine, which, if carried to the length contended for, would necessarily have the effect of hampering the ordinary business transactions of life, and rendering it all but