Chapman Bros v Verco Bros Co Ltd

[1933] HCA 23
(1933) 49 CLR 306

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(Decision by: Rich J)

Chapman Bros
vVerco Bros Co Ltd

Court:

Judges:
Rich JStarke J
Dixon J
Evatt J
McTiernan J

Judgment date: 8 May 1933

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Decision by:
Rich J

The question in this case is whether, in a South Australian "wheat storage" contract, the property in wheat passed upon delivery by the farmer to the merchant or miller. The contract is elaborately drawn upon a printed form. The effect of its material provisions is that the person supplying the wheat ceases upon delivery to be entitled to receive back the wheat he has delivered. He may require the persons to whom it is delivered up to the end of the wheat season (30th November) to purchase and pay for the wheat or any part of it. He may require them before that date to deliver to him a quantity of f.a.q. wheat corresponding to the wheat supplied, so far as it is yet unpurchased. On 30th November the persons receiving the wheat become the purchasers of the quantity remaining. The purchase price in every case is the current market price on the day or days of purchase. The form contains additional provisions concerning wheat of an inferior quality, the determination of equivalents of f.a.q. wheat, advances against price, "storage charges" if equivalent wheat is demanded, and some other subsidiary matters. The supplier of wheat is called the storer and the receiver the purchaser. The important provision in the contract is in these words: "The purchaser shall not be required to return the identical wheat." It is, therefore, evident that, at some stage, the property in the wheat must pass to the purchasers, except possibly, if by chance they did return the identical wheat pursuant to a demand for an equivalent quantity. It is argued, however, that the property in the wheat did not pass until the end, that is to say, when "a purchase" was declared or corresponding wheat returned. In support of this view the nomenclature of the contract is relied upon-"storage," "storage charges," "storer." I attach little weight to these expressions. They seem to be current in South Australia as a description of a special contract for the disposal of wheat by producers to merchants and millers on terms which enable the producer to fix a price at dates subsequent to delivery, or, if he wishes to obtain an equivalent in wheat, presumably for the purpose of carrying over stocks of wheat to another season, to require delivery to him of a proper quantity on paying storage charges appropriate to that quantity. The important thing to my mind is that the contract contemplates immediate delivery of the commodity, the loss of its identity and the payment for the commodity in money or in kind. The commodity is one in which identity is commercially unimportant, and when large quantities of wheat are concentrated, difficult and expensive to preserve. One ought not to shut one's eyes to the fact that the reason why the contract stipulates against preserving the identity of wheat is to enable the receiver of the wheat forthwith to deal with it, regardless of its identity, in such a way that it becomes indistinguishable. Why then should a transaction involving the immediate delivery of the thing, contemplating the immediate destruction of its identity and, in exchange for the wheat, reserving to the supplier only a personal obligation of the recipient to render money or kind, be considered a bailment only? The arrangement is inconsistent with the very idea of bailment according to English law, which involves the redelivery of a specific thing in its original or some altered form to the bailor or to some other person in accordance with the terms of the bailment. Our attention was called to some decisions of State Courts in the United States of America in which the identity of subject matter was held to be unessential to a bailment when the subject matter was wheat. This is a departure from the common law. Apparently the Canadian decisions do not sanction it ( Lawlor v. Nicol ^[F1] ). I am unable to understand how there can be a bailment of a thing which does not remain identifiable. Indeed it was not suggested that after identity was destroyed bailment persisted. Mr. Cleland met the difficulty by suggesting that, although the wheat might be confused with other wheat immediately upon delivery, the result was a bailment of the whole mass, each separate supplier of wheat being transformed into a joint bailor with all his fellows. This supposes that the suppliers are acting in combination, which they are not, and that under the contract "the purchasers" are bound to retain in their possession all wheat received. There is no trace of such an obligation in the contract, and little knowledge of the course of business is needed to be certain that the entire object of the contract would be frustrated if neither gristing nor exportation of wheat received under such contracts were possible. Indeed the very description of the respondent is "merchant and miller."

In my opinion there was no bailment, and the property passed immediately, and accordingly the appeal should be dismissed.