SUPREME COURT OF JUDICATURE
COURT OF APPEAL
Sale of Goods – Contract – Sale or Return – Transfer of Property as between Seller and Buyer – Pledge of Goods -“Act adopting the Transaction” – Sale of Goods Act, 1893 (56 & 57 Vict. c. 71), s. 18, r. 4(a).
Where a person. who has received goods on sale or return pledges them he thereby does an act adopting the transaction within the meaning of the Sale of Goods Act, 1893, s. 18, r. 4 (a), so that the property in the goods passes to him, and the original vendor cannot recover them from the person with whom they have been pledged.
APPEALS in two actions tried. by a judge without a jury.
In the first case the plaintiff, a manufacturing jeweller brought an action against a pawnbroker to recover property pledged by a man of the name of Winter. The plaintiff had delivered to Winter a large quantity of jewellery on sale or return, some of which was pledged with the defendant. The plaintiff claimed the return of the goods or their value. The second case was a similar one, and the two appeals were argued together. The learned judge had given judgment for the plaintiff in each case.
The defendants appealed.
Bonsey (C. L. Attenborough with him), for the defendant in the first case. By the Sale of Goods Act, 1893, s. 18, r. 4(a): “When goods are delivered to the buyer on approval or on sale or return or other similar terms the property therein passes to the buyer: (a) When he signifies his approval or acceptance to the seller or does any other act adopting the transaction.” A person who receives goods on sale or return receives them with an option of becoming owner: Moss v. Sweet(1); Ex parte Wingfield. (2) And the evidence that Winter adopted the transaction is that he put it out of his power to return the goods. The property in the goods thereupon passed to him, and the only remedy of the plaintiff is by action against him for the price. This was the view taken in Brown v. Marr.(3) Apart from the question of contract, the plaintiff must fail for the reason given by Lord Halsbury in Henderson & Co. v. Williams(4), that he has allowed the person to whom he entrusted the goods to hold himself out as the owner so that he is estopped from saying that Winter had no right to deal with them.
Bucknill, Q.C. (C. L. Attenborough with him), for the defendant in the second case, contended further, that it was immaterial whether the act of Winter, which amounted to an adoption of the transaction, was in fraud of the vendor of the goods or not.
McCall, Q.C., and W. E. Hume-Williams for the plaintiff in each case. By s.17 of the Act, “(1) Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. (2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties, and the circumstances of the case.” Sect 18 is merely a guide to arriving at the intention of the parties. The contract between them did not contemplate the pawning of the goods, nor a sale on credit to Winter, but a sale by him which would put him in funds to pay the plaintiff, or a sale to him on his payment of the price. If the pawning was dishonest, no inference can be drawn from it that Winter thereby adopted the transaction so that the property passed to him. If it was honest, it was made with the intention of redeeming the goods and retaking possession, in which case the relation between the plaintiff and Winter would be the same as before. This shews that in such a case the relation would not be disturbed by the pawning. The sub-s. (a) contemplates privity between the seller and the buyer, and not an act detrimental to the former. To make the sub-section apply, the act done by the holder of the goods must be one of which the vendor has notice, or of which he must be taken to have notice because it is an act contemplated by the contract.
There was no reply.
LORD ESHER M.R. There was in this case a contract between the plaintiff and Winter by the terms of which good were delivered to the latter for sale or return. This contract is so common in business that it is well known to the Courts and has been interpreted, and all Courts will now adopt the interpretation which has been put upon it. In the absence of other terms the contract does not pass the. property in the good directly it is made. The person who has received them may return them, but the person who has entrusted them to another cannot demand their return, and his only remedy is to sue for their price or value. We have, then, to see what is the position of the person who has received the goods. To determine this it is necessary to consider the principles adopted by the Courts, and now unhappily, as I think, codified in the Act, the. language of which is unfortunately chosen. By the Act the property is to pass to the buyer when “he signifies his approval or acceptance to the seller or does any other act adopting the transaction.” The transaction mentioned cannot mean the delivery of the goods on sale or return, because that had been done already., and it must mean that part of the transaction which makes the buyer the purchaser of the goods-in other words, the transaction adopted is that the goods have been sold to and bought by the person who received them originally on sale or return. There must be some act which shews that he adopts the transaction; but any act which is consistent only with his being the purchaser is sufficient. The act done by Winter, who was a possible purchaser under this contract, was that he pawned the goods. He could not get them back from the pawnbroker without repaying the sum advanced, and such a situation is inconsistent with his free power to return them. He ought not to have done this unless he meant to treat himself as purchaser, and by doing it he made himself purchaser; and the only right of the person who has entrusted him with the goods is to sue for the price of. them. The decision of the learned judge cannot be supported and the appeal must be allowed.
LOPES L.J. The position of a person who has received goods on sale or return is that he has the option of becoming the purchaser of them, and may become so in three different ways. He may pay the price, or he may retain the goods beyond a reasonable time for their return, or he may do an act inconsistent with his being other than a purchaser. The words of the Act are difficult to construe; but it seems to me that if the recipient of the goods retains them for an unreasonable time he does something inconsistent with the exercise of his option to return them, and thereby adopts the transaction. So if he does any other act inconsistent with their return, as if he sells them or pledges them, because if he pledges them he no longer has the free control over them so as to be in a position to. return them. In all these cases he brings himself within the words of the section by adopting the transaction, and the property in the goods passes to him. If that is the state of the law, applying it to this case, it is clear that the plaintiff is not entitled to recover from the defendant either the goods or their price, and the judgment in favour of the plaintiff cannot be supported.
RIGBY L.J. I am of the same opinion.
Solicitors for plaintiffs: Collier & Collier.
Solicitors for defendants: Stanley, Attenborough & Tyler; John Attenborough.
(1) (1851) 16 Q.B.493.
(2) (1879) 10 Ch.D. 591.
(3) (1880) 17 Scottish Law Reporter, 277; Court Seas. Cas. 4th Series vol. vii. 427.
(4)  1 Q. B. 621, at p. 527.