CHAP. XXII.

Mortgage of

bill of sale.

What the term includes.

CHAPTER XXII.

PLEDGES OF PERSONALTY-BILLS OF SALE—

LIENS-STOCK MORTGAGES.

The normal way in which a man mortgages personpersonalty by alty, to give security for a debt or obtain an advance, is by bill of sale. By the 7th section of the Bills of Sale Act the expression "bill of sale" includes not only bills of sale but pretty well every document of a like nature or that is capable of being used with like effect; it includes assignments, transfers, declarations of trust without transfer, and other assurances of personal chattels, and also powers of attorney, authorities or licenses to take possession of personal chattels as security for any debt; but does not include assignments for the benefit of the creditors of the person making or giving the same, marriage settlements, transfers, or assignment of any ship or vessel or share thereof, transfers of goods in the ordinary course of business, bills of sale of goods in foreign parts, bills of lading, &c. Most of the exceptions obviously should not be treated as bills of sale. With regard to ships, a special method for their mortgage is prescribed by the Imperial Act 57 and 58 Victoria, c. 60; and with regard to bills of sale over goods in foreign parts, there do not exist the same reasons why their registration and validity should be dealt with by any Act of Parliament of this country.

When a man gives such a security over his goods, and the secured creditor allows them to remain in the

possession or "apparent possession" of the party giving CHAP. XXII. the bill, that party might, by reason of a well-to-do ap- Apparent pearance, obtain credit to which he is not entitled, and possession. this mischief the Bills of Sale Act aims at preventing; accordingly it is provided that, unless such a bill of sale be registered in the Supreme Court within thirty days, the security will be useless, in case of the debtor's bankruptcy, against his official assignee or trustees in bankruptcy, and useless, too, against the sheriff, or his officers, who may have to seize the goods in execution of a judgment against the debtor; and against every person on whose behalf such process of law has been issued. And not only should the security be thus registered, but it must be re-registered once at least in every twelve months, and Registration. a promise to give a bill of sale must, in order to make it equally good security, be registered and re-registered in the same way as a bill of sale itself.

The provisions of the Act apply to bills of sale over goods in the possession or apparent possession of the debtor, and it is worth noticing that the phrase apparent possession is wider than the order and disposition clause Cf. post, of the Bankruptcy Act. If, for instance, a proper de- p. 334. mand has been made by a secured creditor for the delivery up of goods in the possession of a debtor, and the goods have not yet been delivered, they are, then, not in the order and disposition of the debtor, and therefore are not available for the benefit of all the creditors in the case of bankruptcy, though they are in his apparent possession.

The term personal chattels in the Bills of Sale Act Meaning of personal means goods, furniture, fixtures, and other articles cap- chattels. able of complete transfer by delivery, but not chattels real nor government securities, nor shares in companies or choses in action, nor the produce of any farm or lands which by virtue of any covenant or agreement or custom of the country ought not to be removed from any farm where they shall be at the time of giving the bill of sale.

CHAP. XXII.

1894, 2 Q. B. 18.

Besides these steps, that must be taken by the bill of sale holder to protect his security from the judgments of the higher Courts, it is necessary under the Small Debts Recovery Act, No. 13, 1899, to register at the nearest Court of Petty Sessions within one week of making the bill of sale, and then security against judgments of that Court is obtained, except such judgments as follow almost immediately upon the bill of sale (i.e., where summons served on the defendant not more than fourteen days after he gave the bill of sale); this security extends to such articles as are specified in an annexure to the bill of sale. Further, if the document be given by way of mortgage, then a certain time, not more than a year, must be specifled in it for repayment of the principal money, and the mortgage will not hold good for more than a year.

Such are the safeguards one must take to obtain fully such protection as the law allows to the holders of bills of sale.

Of course, the class of transaction that has been last referred to, where there is a danger of judgment creditors from the Court of Petty Sessions claiming upon the same goods over which security has been given, comprises chiefly the numerous small loans that are the business of the little money-lender, rather than the banker.

Before passing from this subject the case of Lady Ramsay v. Margrett may be referred to. It illustrates the limits of the definition of a Bill of Sale, and also a point as to possession. Lady Ramsay's husband was in debt, and to help him she agreed to purchase for £1,700 all his furniture and plate, which were in the house where they both lived. She had separate estate which included some furniture of her own in the same house. She paid £500 down, and £1,200 more in five days' time, after arranging with her bankers. She stipulated that her husband should give

a receipt for the money, and this receipt was sub- CHAP. XXII. sequently drawn up by her solicitors and signed. Lady Ramsay sent some of the goods to her own bankers, but there had been no formal delivery to her of any of them by the husband, and the bulk of them remained, as they had previously been, in the house in which the husband and wife lived together. Afterwards, those goods were taken in execution by a judgment creditor of the husband.

98.

There arose, then, what is called an interpleader See ante, p. issue, where the wife came into court and claimed the goods were her property, and, therefore, could not be taken in execution by her husband's creditor. The execution creditor claimed that property in the goods. passed to Lady Ramsay by the receipt, that the receipt was in effect a bill of sale, and had not been registered, and was, therefore, not good against him, no sufficient possession having been taken by Lady Ramsay.

an assurance.

It was held that the receipt was not an "assurance" A receipt not of the goods to Lady Ramsay within the meaning of the Bills of Sale Act, but the transaction was a complete bargain and sale of goods, effectual without the receipt, which had been obtained simply as evidence of payment, and, consequently, the receipt did not require registration under the Bills of Sale Act.

It was held also, that the wife had a sufficient Possession of possession of the goods to take the case out of the Act, wife. for the situation of the goods being consistent with their being in the possession of either husband or wife, the law would attribute possession to the wife, who had the legal title. This result was reached by the application of a doctrine of law attaching possession to the title when, in case of dispute between the owner and another, the facts, as in this case, give no indication of a completer possession by one than the other.

There is another class of security. A form of mortgage of personalty, which is of very much greater import

CHAP. XXII. ance to the banker, and deals usually with larger interests, to which I propose to turn your attention. I refer to express general liens, liens on crops, wool, and stock mortgages.

Possession essential.

Ante, p. 18.

It will be convenient to deal first with the subject of liens.

Liens. A lien is a right which a person in possession of a thing has to retain it in his possession, in the teeth of the true owner, until a debt due to him has been satisfied.

The right of possession given by a lien enables the lienee to maintain trover if the goods are wrongfully converted to the use of someone else, or taken out of his possession; but if the lienee give up possession, the lien is lost and this privilege reverts to the owner. A lien is also lost by the holder taking a particular security, independent of the lien, for the same debt.

Liens are Particular, and General.-A particular lien arises by law in favour of any workman to whom a chattel has been delivered in order that he may improve it by his labour or other services, and extends over that particular chattel for the debt which has arisen in respect of it: e.g., a farrier in whose possession a horse is, and by whose skill it has been rendered manageable, has a lien over the horse for his charges.

General liens arise in respect of a general balance of account either by express or implied contract; from customary commercial law, a banker has a general lien over securities and documents deposited with him as banker by a customer, and may therefore retain them against his customer in respect of debts due. This general lien is implied from the relationship of banker and customer; it is not very far-reaching, as it cannot extend over documents which would not in the ordinary course of busiSee ante, pp. ness be deposited with one's banker, nor to documents of whatever nature if deposited under some other and ex

16, 17.