S. 19 (2).

S. 19 (3).

direct to the buyer an unindorsed bill of lading, when he keeps the indorsed bill under his own control (o), as an unindorsed bill is equivalent to no bill at all (p). So also where he keeps the only bill stamped in his own possession (q).

Transmits the bill of exchange and bill of lading to the buyer. -By this sub-section the transmission of the bill of lading together with the bill of exchange to the buyer to secure the price, imposes, as a condition to the transfer of the property in the goods shipped, the honour of the bill of exchange. It is apparently based upon Mr. Benjamin's sixth rule (r), which was intended to embody the effect of the decision in Shepherd v. Harrison (s). But it is important to advert to the particular circumstances of that case, which undoubtedly governed the decision. The seller there took a bill of lading making the goods deliverable to his own order, and forwarded it with the bill of exchange, not to the buyer, but to the seller's own agents, and these latter forwarded the bill of lading and the bill of exchange together to the buyer, accompanied by a letter in which they said: "We enclose bill of lading, &c., shipped by [the seller] on your account. We hand also the draft on your good selves for cost of the cotton, to which we beg your protection." The buyer retained the bill of lading, and sent back the bill of exchange unaccepted, and it was held by the House of Lords that, under these special circumstances, the seller had reserved his right of disposal of the goods. The learned Lords point out (t) that the question was one entirely of fact depending on the circumstances stated in the special case. But the decision affords no authority for the general proposition, that previous to the Act the transmission to the buyer direct of the bill of lading (in whatever form it may be taken), together with the bill of exchange, prevented the property in the goods from passing to the buyer unless he accepted the bill of exchange. This is evident from the judgment of Cotton, L.J., in Mirabita v. Imperial Ottoman Bank (u). He says:"So, if the vendor deals with, or claims to retain the bill of

(0) Brandt v. Bowlby (1831), 2 B. & Ad. 932; Wait v. Baker (1848), 2 Ex. 1.

(p) Per Cockburn, C.J., in Shepherd v. Harrison (1869), L. R. 4 Q. B. at p. 204.

(a) Moakes v. Nicholson (1865), 19 C. B. N. S. 290.

(r) p. 371.

:

(s) (1871), L. R. 5 H. L. 116. (t) Per Lord Chelmsford, at p. 123; and per Lord Cairns, at p. 133.

(u) (1878), 3 Ex. D. at p. 172; and see the judgment of Mellish, L.J., in Ex parte Banner (1876), 2 Ch. D. 278, where Shepherd v. Harrison was distinguished.

lading in order to secure the contract price, as when he sends forward a bill of lading with a bill of exchange attached, with directions that the bill of lading is not to be delivered to the purchaser till acceptance or payment of the bill of exchange, the appropriation is not absolute, but until acceptance of the draft, or payment, or tender of the price, is conditional only, and until such acceptance, or payment, or tender, the property in the goods does not pass to the purchaser; and so it was decided in Turner v. Trustees of Liverpool Docks (x); Shepherd v. Harrison (y); Ogg v. Shuter (z). But if the bill of lading has been dealt with only to secure the contract price, there is neither principle nor authority for holding that in such a case the goods shipped for the purpose of completing the contract do not, on payment or tender by the purchaser of the contract price, vest in him. When this occurs there is a performance of the condition subject to which the appropriation was made, and everything which, according to the intention of the parties, is necessary to transfer the property is done."

S. 19 (3).

sub-section

on the

Now the language of this sub-section is perfectly general. It Effect of this refers to "the bill of lading" without any qualification; so that, apparently, the form of the bill of lading is immaterial, and it previous law. may be a bill of lading drawn either to the seller's order, or to that of the buyer. Again, the sub-section says "transmits to the buyer," and not to the seller's agent. If the direct transmission to the buyer of a bill of lading, in whatever form it may be taken, is authorized by this sub-section, then the law is changed. In that case, the bill of lading in the buyer's hands will be subject to the condition imposed by the seller (the words "to secure" being read only as meaning "with the intention of securing "), and the seller's security will then be his intention, either expressed, or implied from the fact of the bill of lading and the bill of exchange being transmitted together, that the one document should be dependent upon the other, although he has committed both to the control of the buyer. It may, however, be contended that the words "transmits to the buyer" are governed by the following words, "to secure acceptance, &c.," and that the latter words mean in such a manner as to secure, i.e., according to the previous law, through the hands of the seller's agent, the bill being originally taken to the seller's order as in sub-s. 2, supra; or (as Cotton, L.J., puts it in the above judgment) "sent forward with directions that it is not to be

(x) (1851), 6 Ex. 543.

(y) (1869), L. R. 4 Q. B. 196.

(*) (1875), 1 C. P. D. 47.

S. 19 (3).

S. 19.

delivered to the buyer till acceptance, &c." That this was the effect of the previous law also appears from the judgment of the Court of Appeal in Ex parte Banner (a), where it is laid down that, in order to secure payment of the bill of exchange, the seller must have "taken the precaution of making the goods by the bill of lading deliverable to his own order, and transmitted the bill of lading to an agent of his own, with directions not to hand it over . . . unless the bill of exchange is accepted."

ILLUSTRATIONS.

1. A. agrees to sell to B. five tons of oil at 53s. a cwt., and orders C., the warehouseman, to transfer into B.'s name a particular lot of oil. C. does so, and hands A. an acknowledgment addressed to B. that the oil had been so transferred. A. sends B. the acknowledgment and an invoice of the oil to be exchanged for a cheque, but B. refuses the cheque and retains the acknowledgment, and gets delivery of the oil from C. A. may maintain trover against B., as the property in the oil had not passed to the latter, A. having reserved the right of disposal subject to B.'s payment. Godts v. Rose (1855), 17 C. B. 229.

2. A. agrees to sell to B. a specific article on the terms that payment is to be made before delivery within a given time. A. has reserved the right of disposal of the article subject to the condition of payment. If B. tenders within the time the thing becomes his. Cohen v. Foster, (1892) 61 L. J. Q. B. 643.

3. A. sells goods to B., drawing bills on him for the price, and takes the bill of lading to his own order, which he transfers to C., the purchaser of the bills. A. sends B. an invoice stating that the goods are shipped on B.'s account and at his risk. B. becomes owner when he pays the bills. Jenkyns v. Brown (1849), 14 Q. B. 496.

4. A. agrees to sell goods to B. free on board, to be paid for by bill at three months on delivery of the bill of lading. A. takes the bill of lading to his own order, but indorses it to B., and sends the bill with an invoice and bill of exchange to his own agent, C. The property vests in B. on shipment, as, though A. prima facie reserved the right of disposal, the facts show that he intended B. to have the goods, as he immediately indorsed it to B. Browne v. Hare (1858), 4 H. & N. 822.

5. B. orders of A. a quantity of guano. A. writes of the engagement of a ship to carry the guano, and says the price is 107. a ton. B. replies grumbling at the price, but not expressly repudiating the contract. A. being uncertain whether B. would accept, takes the bill of lading to his own order. B. had no intention of repudiating the contract. The property in the cargo vests in B. on shipment, as A., by taking the bill of lading to his own order, did so, not to reserve the right of disposal, but to protect himself if B. refused to admit the price. Joyce v. Swan (1864), 17 C. B. N. S. 84.

6. A. sells goods to B., and ships them, taking the bill of lading to his own order, which he sends, with a bill of exchange on B., to C., A.'s agent. A. sends B. an invoice stating that the goods were at B.'s risk, and that A. had drawn upon him in favour of C. C. forwards the bill of lading and bill of exchange to B. B. refuses to accept the bill, but retains the bill of lading, and demands the goods from D., the master

(a) (1876), 2 Ch. D. at p. 287; a case of principal and agent, but so far as relates to the transfer of the

property, the same principles of law are applicable.

of the vessel, who delivers to C. D. is not liable to B. in trover. Shepherd v. Harrison (1871), L. R. 5 H. L. 116.

7. A., B.'s agent, consigns goods to B., sending the bill of lading making the goods deliverable to B. directly to B., and advising B. of bills of exchange which he had drawn upon B. and sold to third parties. The property in the goods passes to B. on shipment, as A. had not taken the bill of lading to his own order and sent to his own agent. Ex parte Banner (1876), 2 Ch. D. 278.

8. A. sells a cargo of timber to B. on the terms that the bill of lading should be delivered on payment of a bill of exchange. A. takes the bill of lading to his own order, and transfers to C., to whom he also transfers the bill of exchange. B. tenders the price to C., but C. sells the cargo. C. is liable to B. in trover, as B. has fulfilled the condition, and the property then vested in him. Mirabita v. Imperial Ottoman Bank (1878), 3 Ex. D. 164.

S. 19.

facie passes

20. Unless otherwise agreed, the goods remain Risk primâ at the seller's risk until the property therein is trans- with proferred to the buyer, but when the property therein perty. is transferred to the buyer, the goods are at the buyer's risk whether delivery has been made or not. Provided that where delivery has been delayed through the fault of either buyer or seller the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault.

Provided also that nothing in this section shall affect the duties or liabilities of either seller or buyer as a bailee or custodier of the goods of the other party.

Under this section the risk of loss is regulated by(1.) Mutual agreement:

(2.) The fact of ownership:

S. 20.

(3.) Delay in delivery wrongfully caused:

(4.) Express or implied bailment.

Firstly, with respect to mutual agreement.

Mutual

Though the fact that one party is to bear the risk affords a agreement. strong argument that he is also to be the owner, yet "the two are not inseparable. It may very well be that the property shall be in one, and the risk in the other" (b). "There is no rule of law to prevent the parties. from making whatever bargain they please [under s. 55]. . . . The parties... may intend that the

(6) Per Blackburn, J., in Martineau v. Kitching (1874), L. R. 7 Q. B. at p. 454.

S. 20.

Effect of shipment "free on board."

vendor shall deliver the goods to the carrier, and that, when he has done so, he shall have fulfilled his undertaking, so that he shall not be liable in damages for breach of contract, if the goods do not reach their destination, and yet they may intend that the whole or part of the price shall not be payable until the goods do arrive. They may bargain that the property shall vest in the purchaser as owner as soon as the goods are shipped [under s. 18, Rule 5 (2)], that then they shall be both sold and delivered, and yet that the price (in whole or in part) shall be payable only on the contingency of the goods arriving . . . but without any contract on the vendor's part. . . to procure the goods to arrive" (c).

In the same way, "I see no reason," says Lindley, L.J. (d), "why a person should not agree to buy and pay for a portion of a cargo, say of sugar in bags or corn in bulk, although the actual sugar or corn to be delivered may not be ascertained before the ship is unloaded."

An agreement that one party is to bear the risk (irrespective of the passing of the property) may, of course, be either expressly made, or may be inferred from the circumstances of the case: see s. 49 (2), and notes. Thus, the fact that one party is to insure the goods and the other not, is, coupled with the fact of such insurance, relevant to prove such an agreement (e).

In some cases, the goods contracted to be sold are to be shipped to the buyer "free on board." In the case of specific goods, these words mean that the goods are put on board “ on account of the person for whom they are shipped; and in that case the goods . . . would be at the risk of the buyer, whether they were lost or not on the voyage even though 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" (f).

In the case of unascertained goods, the same principle will apply, unless there is anything in the contract inconsistent therewith (f).

(c) Per Blackburn, J., in Calcutta, &c. Co. v. De Mattos (1863), 32 L. J. Q. B. at p. 328; Beer v. Walker (1877), 25 W. R. 880, illustrates this rule.

(d) In Stock v. Inglis (1884), 12 Q. B. D. at t p. 577.

(e) Anderson v. Morice (1876), 1 Ap.

Ca. at pp. 730, 743, 747.

(f) Per Brett, M.R., in Stock v. Inglis (1884), 12 Q. B. D. at p. 573. This case was affirmed on other grounds, 10 Ap. Ca. 263. In the C.A. the Court referred largely to the course of dealing between the parties.