Chattels Transfer. PAkT 11.

Progress, Volume III, Issue I, 1 November 1907, Page 20

Chattels Transfer. PAkT 11.

(By C. P. Skerrett, X C , Earrister-at-I-a\v )

Ihe statute contains - important provisions relating to future acquired property — i c , property of which the grantor has not the ownership at the time of the execution of the instrument , and which may not even be m existence at that time The strict rule of the common law prevented an assignment or transfer of property not then in existence or not then owned by the grantor The more modern system of equity allowed the assignment for value of future property, of possibilities and expectancies. It thus became possible for a man, apait from statutory restriction, to execute a mortgage over all his stock-in-trade in existence at the time of the execution of the mortgage, or which might be acquired by him afterwards during the subsistence of the mortgage in connection with a specified business It also became competent for a man to assign by way of mortgage all book debts then owing or which might thereafter become owing to him in connection with a specified business. Until the new stock-in-trade or book debts was acquired the mortgage was regarded as a mere contract to grant the mortgage, but directly the event happened the mortgage effectually bound the new stock-in-trade or book debt so coming into existence for a time the courts struggled against the full application of the above principle , and various distinctions and reasons were urged by judges refusing to apply these principles to particular cases This tendency to compromise with a principle was pat an end to by the House of Lords in Ta<lby v Official RctciV'V (13 Ap. C. 5-13) '1 here a man assigned by way of mortgage all book debts which should become owing to him but not restricting the assignment to book debts to become owing to him in connection with a specified business Ihe assignment was treated as an assignment of all future book debts to become owing to the assignor The county couit judge held that the assignment was bad, and his judgment was promptl) reversed in appeal m the QB Division by Justices Hawkins and Matthew" Ibis decision was reversed by the court of appeal and the judgment of the county court judge restored upon the ground that the book debts, not being restucted to those accruing in a particular business the description in the assignment was too vague. The matter then went to the House of Lords, who unanimously reversed the decision of the Couit of Appeal, and restored the judgment of the judges of the Queen's Bench

Division, tnus affirming to the fullest extent the principle which we have been considering. While the House of Lords may m the case just referred to, have arnv ed at the true logical conclusion, their decision called attention to the necessity for legislation to restrict this wide power of assigning future acquired property. In our law this has been efiected by treating book debts as " chattels " and by two separate provisions of the statute which practically have one and the same object in view. Section 29 of the Act, 1889, provides that every instrument should contain a schedule containing an inventory of the chattels comprised m the instrument, and that the instrument should be void as to any chattels not comprised in the schedule as against the assignee m bankruptcy, the trustee under an assignment for the benefit of creditois and an execution creditor The effect of this provision is to require the goods te be described as in an ordinary trade inventory , and to ensure that the description m the schedule will sufficiently identify the articles which are the subject of the security. The other provision to which I have referrred is section 30, which provides that an instrument should be void m respect of any chattels cf which the grantor was not the true o-wner at the time of executing the instrument The general effect of these two provisions is to make it practically impossible to give a chattel security over a trader's stock-in-trade, because the stock-in-trade must be that which is described in the mventoiy, and the result is that the varying articles of stock-in -trade o^ ned by a trader cannot be described in the schedule at the time of the execution of the instrument of security. This provision also makes it impossible to give an effective security over the future book debts of a trader. If such a security were possible, it would affect a great deal of the purpose of a security over future acquired chattels, because the stock of a trader is resolved into book debts, and if he could give a security over future book debts it would serve to some extent the purpose of a security over future acquired chattels In this connection it should be noticed that these pi ovisions do not apply to a mortgage of an incomplete article, for when the article is completed the security attaches to the completed article. The legislature, howevei, ft It it necessary to make certain exceptions to these rules, and accordingly three classes of exceptions were provided for, namely, (1) wool and crops ; (2) fixtures, plant and trade machinery, where such fixtures, plant or trade machinery are used in, attached to, or brought upon any place m substitution for any of the like machinery plant or trade machinery described m the schedule to the instrument ; (3) stock branded with the brand described in the schedule and the increase of the stock described in the schedule. To ensure identification of the stock, stock is only covered by the security if it is branded, or ought by a covenant in the instrument to be branded, with the brand specified in the instrument. The statute requires all defeasances, conditions or declarations of trust, which form part of the transaction, whether the same are verbal or m writing, to be written on the same paper on which the instrument is written, otherwise the instrument will be absolutely void, except as to live stock, wool, crops, or substituted trade machinery. A defeasance is an instrument which defeats or qualifies some obligation created by deed ; and that which in the same deed is called a condition in a separate deed may be defined as a defeasance. The case of The Chnstchurch Finance Co v. Durant and Sons (7 L R , 619) is a striking illustration of what would amount to a defeasance. There a bill of sale was made payable on demand, and in default of payment a power was given to the mortgagee to seize and sell, but the mortgagee verbally agreed with the mortgagor that so long as he paid the interest due under the bill of sale no seizin c would be made It was held that such agreement was a condition of defeasance,and that the bill of sale was accordingly void even between the immediate parties to it With a view to shortening instruments under the statute certain covenants and powers are implied m the instrument which may be modified or varied by agreement of the parties and m addition certain abbreviated expressions are provided for which, when used imply the compend'ous provisions which are fully expressed in the statute In securities over stock it should be noted that it is desirable to state where the lands are on which the stock are depasturing and it is also necessary to describe stock bv the brand or by the sex, age, name colour or otherwise so as to be reasonably capable of identification and to include substituted livestock and the increase of stock in instrument, it is necessary that a covenant should be contained providing that such substituted stock and increase cf stock should be branded -with a particular brand. {To be continued.)

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