Chapman Bros
vVerco Bros Co Ltd

Judges: Rich J
Starke J
Dixon J
Evatt J

McTiernan J

Judgment date: 8 May 1933

Judgment by:
McTiernan J

This appeal turns upon the facts admitted by the parties and the effect of the contract described as a storage warrant. The admitted facts, as set out in the judgment of Richards J., are as follows:-"The company, at all material times, carried on business as a wheat merchant and miller at Adelaide and elsewhere in the State. On several days during December 1931 and January 1932, the defendants, who were farmers, delivered to the company the wheat in question, 2,559 bags in all, some at Hoyleton and some at Kybunga. Upon such delivery of each parcel of wheat the company gave to the defendants a storage warrant in respect of the parcel and the company caused the bags of wheat in the parcel to be stacked upon land belonging to the company, together with other wheat delivered to the company by other farmers on sale or in exchange for like storage warrants, and all such wheat was stacked, all the wheat delivered at Hoyleton being stacked in one stack there, and all delivered at Kybunga being stacked in one stack there. All the facts so far stated are admitted in the defence. It had also been admitted by both parties, for the purpose of the action, that the bags of wheat delivered to the company had no mark, symbol or other indication thereon capable of any use for indentification purposes, and that the bags were of the same type as those used by all other farmers in the State." It is not necessary to repeat the terms of the storage warrant.

The existence of the custom or trade usage to which the company, which will be referred to as the respondent, alleged that the contract was subject, is not an admitted fact. The appellants in their defence denied that they consented or agreed that their wheat should be stored with or lent to the respondent for the purposes of its business or otherwise or agreed that it should become part of the respondent's consumable stock or be dealt with by the respondent as its own wheat. But, if the contract, on its true construction, involves an agreement on the part of the appellants to that effect, this denial cannot prevail against the effect of the contract. Although the existence of the custom or trade usage alleged was denied, it was agreed before Richards J. in the proceeding in which the declaration and order, against which the appeal is brought, was made, that neither party was to be precluded from contending therein that the contract has or may have an implied condition and that the same can be inferred from the admitted facts and documents or that evidence can subsequently be tendered to prove such implied condition or that any clause, phrase or word in the contract has or may have a special meaning, and that it ought to be applied or that evidence can subsequently be tendered to establish that meaning.

It is clear, upon the terms of the storage warrant, that it was not intended to regulate the rights and duties of the parties in a transaction which involved merely the deposit of the wheat in the respondent's storehouse upon the terms that, if the wheat was not purchased, the whole of the identical wheat, or if a portion of it was purchased, the identical residue, should, upon the request of the appellants, if made before 30th November, be redelivered to them. The respondent was expressly discharged from the obligation to return the identical wheat or any part of it and the appellants were entitled to be returned a quantity of f.a.q. wheat equal to that remaining unpurchased "on storage with the respondent." It is consistent with clause 3 of the contract, in which the respondent's obligation was thus settled, that in carrying out the transaction the respondent was not disentitled to use the wheat in its business of a wheat merchant and miller. Mr. Cleland contended for the appellants that it would be outrageous for any merchant or miller thus to employ wheat delivered "for storage." But the question is whether it is unlawful for that to be done under the contract which the parties have made in the present case. If the respondent as a merchant and miller thereby acquired that right, the Court cannot deny it. Whether contracts under which such a right exists should be sustained is a matter of policy with which the Court is not concerned. It is a matter within the discretion of the Legislature to say with the force of law, if it thinks fit to deal with the matter at all, whether these contracts should be added to the list of agreements in which the interests of one of the parties is protected by statute. In furtherance of his submission, Mr. Cleland contended that, as the identity of the appellant's wheat was lost in the common stock, the object of clause 3 was to require the respondent to redeliver in specie to them as their property either a parcel of wheat equivalent to that delivered, if the whole of it was not purchased, or a parcel equivalent to the residue, if a portion had been purchased. This construction requires the implication of a condition in the contract and the assumption of certain facts. The implication is that the respondent agreed to give the appellants an identifiable part of the common stock in which their wheat was merged and that the respondents agreed to hold that specified part as bailee. The assumption is that the gift and bailment were respectively completed by the constructive delivery of that part of the stack of wheat to the appellants as owner, and the constructive redelivery of it to the respondent as bailee. But the impossibility of separating or distinguishing the appellant's wheat is not sufficient to explain clause 3 of the contract. The respondent was not expressly prohibited from using the wheat in its business until the wheat was purchased, and, the wheat having been deposited upon terms that did not bind the respondent to return the identical wheat or any part of it, prima facie it was not inconsistent with the appellant's duty under the contract to use the wheat which it held "on storage" in its business before it was purchased under the contract. If the term "storage" in the contract has a special meaning, which it may have in South Australia and is judicially noticed there, and "storer" and "store" a corresponding meaning, these terms stand with the provisions of clause 3, whereby the respondent is absolved from returning to the appellants their identical wheat. Without attempting an exhaustive or precise definition, the term "storage" when used according to its special meaning in the wheat trade in South Australia, denotes the delivery of wheat by a farmer to a wheat merchant or miller subject to the condition that it may be used in the latter's business and that the farmer may demand to be paid the price ruling on a day to be named by him or, in the alternative, to have delivered to him a quantity of wheat equivalent in quantity to that which he delivered to the miller or merchant. It is therefore not necessary to make the implication and assumption, which appear vital to the appellant's submission, that although clause 3 absolved the respondent from the obligation to restore the identical wheat because of the impossibility of distinguishing or separating it, yet the wheat intended to be returned under it in discharge of the respondent's obligation is property of the appellants in the hands of the respondent. Moreover it is plain upon the face of the contract that when the appellants delivered their wheat, apart from the question of purchase, the only rights which they received in return were to demand the return to them of an equal quantity of f.a.q. wheat. Indeed, if wheat below that standard were delivered, the contract provides that, subject to an adjustment, a quantity of f.a.q. wheat should be returned. The obligation of the respondent under the contract could be duly discharged by the delivery of wheat that was not taken from any stack into which the appellant's wheat was put. The provisions in clause 1 relating to free insurance and in clause 3 providing for the payment of storage charges although the wheat may not have been in fact stored, appear anomalous. But the contract does not positively impose a charge for insurance in the case where wheat has not been "purchased" but "returned"; and, if the word "storage" be used in its special meaning, the expression "storage charges" should be read to include a charge in respect of the accommodation which the appellant may be assumed to have derived from the contract.

I agree with the judgment of Richards J. The appeal should, in my opinion, be dismissed.

Solicitors for the appellants, Cleland & Teesdale Smith.

Solicitors for the respondents, Finlayson, Mayo, Astley & Hayward, and Shierlaw, Frisby Smith & Romilly Harry.