Back
1935 Supreme(SC) 38
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD ATKIN, SIR JOHN WALLIS, AND SIR SHADI LAL.
HOE KIM SEING - Appellant
Versus
MAUNG BA CHIT - Respondents
On Appeal from the High Court at Rangoon.
Decided On : July 11. 1935.
Solicitor for appellant : J. E. Lambert.
Solicitors for respondent: Cutler, Allingham & Ford.
Property in specific goods passes when parties intend, overriding prima facie statutory rules. If the price is determined by a fixed rate and known quantity, payment of the balance transfers ownership, even if measurement for verification is subsequently performed by the buyer.
Headnote:(A) Sale of Goods Act, 1930 - Sections 19 and 22 - Transfer of property in specific goods - Intention of parties - Ascertainment of price - In a contract for the sale of specific or ascertained goods, property is transferred when the parties intend it to be transferred. Where the contract is for specific goods in a deliverable state, but the seller is bound to weigh or measure for the purpose of ascertaining the price, property does not pass until such act is done and the buyer has notice. However, these rules are merely for ascertaining intention and must yield to any contrary intention gathered from the circumstances of the case. If the price is fixed by a rate and the quantity is known, requiring only a simple calculation, measurement for verification by the buyer does not prevent the transfer of property.
(B) Intention of parties - Where the balance of the price is calculated and paid to the sellers to acquire the property, and the sellers part with the goods without retaining a lien, the intention is that ownership passes upon such payment.
Facts of the case:
A merchant advanced funds to a cultivator for the purchase of paddy. The cultivator entered into contracts with sellers using notes at a fixed rate per hundred baskets. Before the cultivator's insolvency, the merchant's agent paid the balance of the purchase price to the sellers to secure the goods. A dispute arose as to whether the property in the goods passed to the merchant upon payment of the balance or whether it required prior measurement as per the statutory rules.
Findings of Court:
The property in the goods passed to the purchaser upon payment of the balance of the price. The requirement for measurement under the statutory rule did not apply because the price was not to be ascertained by measurement but by simple calculation based on a fixed rate and declared quantity.
Issues: Whether the property in the specific goods passed to the appellant upon payment of the balance of the price or whether it remained with the sellers until the goods were measured.
Ratio Decidendi: The decisive factor in determining when property passes is the intention of the parties. Statutory rules regarding measurement for price ascertainment are prima facie guides to intention and are overridden by evidence of a contrary intention. Where the price is determined by a fixed rate and known quantity, and the balance is paid to acquire ownership, the property passes upon payment regardless of subsequent measurement for verification.
Result: Appeal allowed.
Legal Category Hierarchy
-
commercial law
-
sale of goods
-
transfer of property
- intention of parties
- specific goods
-
transfer of property
-
sale of goods
-
insolvency law
- vesting of assets
Judgement
Appeal (No. 76 of 1934) from a decree of the High Court (June 21, 1933) reversing a decree of the District Court of Pegu (September 29, 1930).
Contracts were made for the purchase of paddy by Bought and Sold Notes, counterparts of each other. The material terms of the notes were as follows, the sale of a second lot of 7000 baskets of paddy being on similar terms to the sale of the first lot of 21,000 baskets —
" Deed of Sale of Paddy.
Sale of paddy (lying) in the granary is made at Peinzalok Town and the terms are as follows
On the 24th April, 1930, the whole contents about 21,000 baskets in total of kauknge paddy from 3 rooms in U Maung Gyis granary belonging to U Po Thin are sold at the rate of Rs. 160 per hundred baskets of paddy. (Baskets and methods of measurement described.) As regards the date for taking delivery of paddy, if the paddy is taken within one month from the date of the execution of the deed, it shall be taken on payment of money. The buyer shall pay the money fully in respect of the remaining paddy which has been left in the granary. (The seller undertakes the paddy shall be uniform &c.) The buyer Mg. Ba Them (in plural) makes the purchase on payment of Rs. 2100 as earnest money. If the buyer makes any default as mentioned in the above deed, he loses the earnest money.....The sale is made with the consent of both the parties and the deed is signed herein-below."
Part payments were made and endorsed on the Sold Notes. On July 5, 1930, the balance due to complete the purchase price was made and endorsed on the Sold Notes.
The circumstances attending the transaction are stated in the judgment of the Judicial Committee.
The District Judge held that the property passed on payment of the balance on July 5. The High Court dissented from that view and held, applying s. 22 of the Sale of Goods Act, that the property would not puss till the paddy was measured.
May 13, 14. De Gruyther K.C. and Pennell for the appellant. The case falls to be decided under the Sale of Goods Act which came into force on July 1, 1930. Under that Act, the time when the property in the goods passes depends on the intention of the parties. When the intention is not expressed, it must be ascertained from the conduct of the parries and the circumstances of the case. The rule does not differ from the English rule as laid down by Cockburn C.J. in Martineau v. Kitching . (( 1872) L. R. 7
Q. B. 436, 449.) The rules in ss. 20 to 24 of the Act are merely rules for ascertaining the intention.
They are not exhaustive, and when an intention contrary to any of these rules is clearly ascertained, it will prevail over the rule. Here it was clearly the intention of the parties that the property was to pass on payment of the agreed price. The balance due on July 5 was ascertained, not from measurement of the paddy, but from the price fixed in the contracts.
Leach for the respondent. The bought and sold notes speak of taking delivery of the paddy. This suggests that something remained to be done. Po Ni was heavily involved, and any transfer by him to the appellant would be a fraudulent preference under s. 54 of the Provincial Insolvency Act (V. of 1920). That question was raised in the High Court, but the High Court would not allow it to be taken.
[LORD ATKIN. The payments to the vendors had been made with funds furnished by the appellant and, in completing the sale, he was merely protecting his own interests. There was nothing fraudulent about it.]
Leach. When Po Thin made over the bought note, he got from the appellants agent a receipt stating that delivery must be taken within twenty-five days and that if the paddy were burnt after that he would not be responsible. That shows he was to be regarded as the owner till delivery.
[LORD ATKIN. He was custodian of the paddy for the purchaser and was merely limiting his liability. The ownership had passed.]
July 11. The judgment of their Lordships was delivered by
SIR SHADI LAL. This appeal from a judg
