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LA313 - Commercial Law - Cases

[IN THE COURT OF APPEAL.]

 

KURSELL

-v-

TIMBER OPERATORS AND CONTRACTORS, LIMITED.

[1927] 1 K. B.928

 

Sale of Goods-Contract for Sale of uncut Timber in Latvian Forest-Timber to be cut when Ripe-Cutting to be completed and Timber removed within fifteen Years-Possession taken by Purchasers-Subsequent Expropriation of Forest by Latvian Government-"Specific goods"-Frustration of Contract-Sale of Goods Act, 1893 (56 & 57 Vict. c. 71) ss. 17, 18, r. I

BY the Sale of Goods Act, 1893, s. 17, sub-s. 1: "Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred." By sub-s. 2: "For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties, and the circumstances of the case." By s. 18, r. 1: "Where there is an unconditional contract for the sale of specific goods, in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery, or both, be postponed."

By a contract dated September 10, 1920, the vendors agreed to sell and the purchasers to purchase all the merchantable timber growing on August 20, 1920, in the forest of Luhde in the Republic of Latvia. Merchantable timber was therein defined to be "all trunks and branches of trees but not seedlings and young trees of less than six inches in diameter at a height of four feet from the ground. The. timber was to be cut not more than twelve inches from the around. The purchasers were to have fifteen years in which to cut the timber and were to have the use of the vendors' sawmills, plant and huts. and the right to occupy every part of the forest. The price was 225,000l., and the payments were to be made 15,000l. on each of the three quarter days in the year, and for the fourth quarter a sum equal to 4l. a standard of exportable timber cut in the forest during the year, less 45,000l. (the three previous instalments). The amount was to be certified by the authorized agents of the vendors and purchasers, the measurements having been agreed by them. The purchasers, unless prevented by some act or enactment of the Government of the country, or by force majeure, were to cut the timber at the rate of 15,000 standards per annum, and if they were so prevented, the fifteen years' period was to receive a corresponding extension of time. During the period of prevention the 15,000l. instalments of price were to be reduced to 4l. a standard of timber cut, carried away and sold or exported during the quarter.

On September 16 the Latvian Assembly passed an agrarian law, by which from October 1, 1920, the forest became the property of the Latvian State and the contract was annulled and all property and rights of vendors and purchasers in the forest were confiscated. For the last five and a half years, therefore, it had been illegal to perform the contract in the place where alone it could be performed and the obstacle to its performance was continuing. The purchasers had paid 30,000l. to the vendors covering the first six months, and no question therefore arose that a default of payment of sums due had made the whole price payable:-

Held, that the contract was not a contract for the sale of specific goods in a deliverable state within the meaning of s.18, r. 1, of the Sale of Goods Act, 1893 ; that the goods in question were neither identified nor agreed upon; that it was not every tree in the forest which passed, but only those complying with certain measurements not then made; that the timber was not in a deliverable state until the purchasers had severed it and that they could not under the definition in the rule be bound to take delivery of an undetermined part of a tree not yet identified, and accordingly that the property in the timber had not passed under s. 18, r. 1, and therefore that the timber was not at the risk of the purchasers.

Morison v. Lockhart 1912 S.C. 1017 followed.

Held, also, by Scrutton L.J., that even if the property in the timber had passed so much remained to be done under the contract that the doctrine of frustration would apply.

Metropolitan Water Board. v. Dick, Kerr & Co. [1918] A.C. 119 applied.

Decision of Rowlatt J. affirmed.

APPEAL from a decision of Rowlatt J. upon an award in an arbitration stated in the form of a special case under s. 7 (b) of the Arbitration Act, 1889.

By an agreement dated September 10, 1920, and made between the plaintiffs (thereinafter called "the vendors") of the one part and the defendants (thereinafter called "the purchaser") of the other part, the plaintiffs agreed to sell and sold and the defendants agreed to buy and bought at the price of 205,000l. all the merchantable timber growing on August 20, 1920, in the forest called Lillide, situate between the towns of Wolmar and Walk in the Republic of Latvia. The agreement provided that the purchaser was to have fifteen years within which to cut and remove it, and at the end of that time any timber uncut or not removed was to be forfeited to the vendors: "Provided however that if the purchaser shall be prevented by any act or enactment of the Government of the country de facto, or otherwise by force majeure, or by war from cutting the timber or from disposing of the timber so cut, then the said term of fifteen years shall be extended by a time equal to the duration of such prevention." By clause 10 the timber sold was to be felled, piled, sawn and removed-subject to the following stipulations: (1) All trees should be felled so that the stumps thereof did not exceed twelve inches in height from the ground. (2.) The timber so collected as aforesaid should be measured before removal according to British customary methods, and the measurements agreed by the representatives of the vendors and the purchaser respectively. (3.) As soon as any section of the forest should have been cleared of merchantable timber the vendors should be at liberty to enter thereon for the purpose of replanting the same, provided that such replanting should not interfere with the efficient exploitation by the purchaser of the sections not so cleared. By clause 12 the timber was to be cut at the minimum rate of 15,000 standards per annum. By clause 13 30,000l. was to be paid down in cash or it's equivalent on the signing of the agreement, the balance of 193,000l. was to be paid by quarterly instalments of 15,000l. with an adjustment in the case of each fourth instalment, or last annual payment, upon a certificate signed by the authorized agents of the vendors and purchaser; and by a proviso to the clause in case any part of the timber hereby agreed to be sold shall be destroyed by fire during the said period of fifteen years ....the same shall be deemed to have been merchantable timber and to have been cut by the purchaser at the time when the same was destroyed and the amount so deemed to have been cut shall be such fraction of the total estimated number of standards of merchantable timber in the whole forest on 20th August, 1920, last as shall equal the fraction of the total area of the forest, the timber whereon shall have been so destroyed." By clause 19 the agreement was to be construed as an agreement made in England, and the rights of the respective parties were to be determined in accordance with the laws of England. By clause 1(i) merchantable timber was to mean and include all trunks and branches of trees, but not seedlings and young trees of less than six inches in diameter at a height of four feet from the ground.

The facts as found by the special case were as follows:-

(a) The forest of Luhde in the agreement of September 10, 1920, mentioned had an area of 9000 dessiatines or thereabouts. A dessiatine was a Russian measurement equal to 2.7 acres. A small part of the forest consisted of leaf bearing trees ; by far the greater part consisted of conifers.

(b) The forest was estimated by the plaintiffs to contain 24,000,000 and by the defendants to contain about 33,000,000 or 34,000,000 cubic feet of timber ripe for cutting.

(c) The sum of 30,000l. part of the purchase money payable tinder the agreement was duly paid by the defendants to the plaintiffs in manner provided by clause 13 (i) of the agreement. No further part of the purchase money had been paid.

(d) On September 15, 1920, the defendants were duly admitted by the plaintiffs into the forest and took possession of the timber, the subject-matter of the agreement.

(e) On or about October 2, 1920, the defendants began to cut the timber in pursuance of the agreement and continued so to cut the same until October 14, 1920. There was no evidence before the arbitrator as to the amount of timber so cut by the defendants.

(f) On October 14, 1920, the Government of Latvia by its agents in pursuance of the Lettish agrarian law passed on September 16, 1920, Part I. of which (being the relevant Part) came into operation on October 1, 1920 took possession of the forest and the timber therein.

(g) By virtue of the said law as from October 1, 1920, the forest and the timber therein became the property of the, Latvian State and the agreement of September 10, 1920, became annulled, and all property and rights of the plaintiffs and the defendants in the forest and the timber therein became entirely confiscated to the Latvian State.

(h) Continuously until the present time (a) the said law had remained in force and (b) the Government of Latvia had remained in possession of the forest and (subject to the arrangement and agreement with the defendants hereinafter referred to) of the timber therein.

(i) The defendants used all reasonable means to obtain from the Latvian Government recognition of the agreement of September 10, 1920, with a view to the agreement being carried into effect, but were unsuccessful in obtaining such recognition.

(j) The defendants recommenced felling timber in the forest about the end of October, 1920, and continued such felling until December 23, 1920. Such felling was done under a temporary arrangement with the Latvian Government made while negotiations were being carried on between the defendants and the Government for a formal contract between the defendants and the Government.

(k) On December 23, 1920, the defendants ceased felling timber in the forest in consequence of an order of the Latvian Government prohibiting any further felling therein. The defendants did not fell any timber in the forest after that date until January 21, 1921.

(l) On January 21, 1921, the defendants recommenced felling timber in the forest and continued to fell timber therein until March 9, 1921. From and after March 9, 1921, no timber was felled in the forest by the defendants or by their servants or agents.

(m) All the timber in the forest which was felled by the defendants on and after January 21, 1921, was so felled under and in pursuance of the agreement of that date specified in the schedule to the special case.

(n) As from October 14, 1920, no timber was felled in the forest under or in pursuance of the agreement of September 10, 1920.

(o) The total amount of timber in the forest felled by the defendants between the end of 1920 and March 9, 1921, was about 2,000,000 cubic feet.

(p) The defendants did not in regard to any matter relevant to the subject of the reference induce the plaintiffs to alter their position for the worse or to refrain from altering their position for the better.

(q) The risk of confiscatory legislation on the part of the Latvian Government to the detriment of British subjects was mentioned in the course of the negotiations between the plaintiffs and the defendants leading up to the agreement of September 10, 1920, but such risk was treated in the course of such negotiations by both the plaintiffs and the defendants as being too remote to require consideration, and both parties entered into the agreement on the footing that there would be no such confiscatory legislation.

(r) Apart from the said Lettish agrarian law passed on September 16, 1920, there was nothing in any relevant law rendering the agreement of September 10, 1920, or the performance thereof in accordance with the terms thereof illegal or unenforceable by the plaintiffs. The arbitrator declined to admit, as being irrelevant to any issue arising in the reference, evidence tendered by the plaintiffs for the purpose of showing that the defendants made considerable profits by the sale of timber cut under their arrangement and agreement with the Latvian Government.

The arbitrator awarded and determined (subject to the opinion of the Court on the questions of law thereinafter submitted)-

1. That the agreement of September 10, 1920, was dissolved by frustration of its commercial object.

2. That no further part of the purchase money payable under the agreement beyond the sum of 30,000l. already paid thereunder was payable by the defendants to the plaintiffs.

3. That the claims of the plaintiffs in the arbitration failed.

The questions submitted by the arbitrator for the opinion of the Court were:-

1. Whether on the true construction of the agreement of September 10, 1920, and in the events which had happened the commercial object of the agreement was frustrated and the agreement became dissolved.

2. Whether on the true construction of the agreement and in the events which had happened the term of fifteen years mentioned in clause 3 of the agreement had become extended until the present time.

If the Court should be of opinion as to either question in the affirmative then the award was to stand.

If the Court should be of opinion as to both questions in the negative then the arbitrator awarded and determined that the defendants should pay to the plaintiffs the sum of, together with interest thereon at the rate of 7 percent per annum from June 10, 1921, until the date of payment, and made a special order as to the costs of the award.

Rowlatt J., without deciding whether the property in the timber had passed, held that the responsibilities of the vendors under the agreement had not been fulfilled or completed on September 16, 1920, and that the agreement was dissolved by frustration of its commercial object.

The plaintiffs appealed. The appeal was heard on February 25, 26, 1926.

Maugham K.C., Barrington-Ward K.C. and E. F. Spence K.C. for the appellants.
Clauson K.C. and D. N. Pritt for the respondents.

The arguments sufficiently appear from the judgments.

[The following cases were referred to : James Jones & Sons v. Earl of Tankerville1; Taylor v. Caldwell2; Ralli Brothers v. Campania Naviera Sota y Aznar3 ; Morison v.Lockhart4 ; Tarling v. Baxter5 ; Rugg v. Minett6 ; Royce v. Birley7; Metropolitan Water Board v. Dick, Kerr & Co.8 ; Blackburn Bobbin Co. v. T. W. Allen & Sons.9

Cur. adv. vult.

March 10. The following written judgements were delivered:-

LORD HANWORTH M.R. This is an appeal from a judgment of Rowlatt J. given on December 2, 1925, upon an award in an arbitration between the above parties stated in the form of a special case under s. 7 (b) of the Arbitration Act, 1889.

Two questions were propounded in the case for the opinion the Court. The meaning and purport of 'the second of question is not easy to follow. Probably at the time it was suggested and framed, it had special relevance to some points at the arbitration, and seemed to raise correctly the raised point on which a decision was invited, though it is somewhat obscure now. However, it is not necessary to discuss it or deal with it, for counsel for the appellants agree that unless the first question is answered in their favour their appeal fails.

By an agreement made between the parties and dated September 10, 1920, the Timber Operators and Contractors, Ltd.-the respondents to the appeal, who were, and herein will be called "the purchasers"-made a contract with the appellants, who were the owners and will be called herein "the vendors," as to some timber then standing uncut in the forest of Luhde in the Republic of Latvia.

From the facts found and stated in the case by the learned arbitrator, it appears that on September 16, 1920, the purchasers were duly admitted by the vendors into the forest, and took possession of the timber, the subject-matter of the agreement, and that they began to cut the timber on October 2, and continued to cut it until October 14, 1920; but the amount so cut cannot be determined, and since the latter date no timber has been felled under, or in pursuance of, the agreement of September 10.

On September 16, 1920, an agrarian law was duly passed in Latvia, and the relevant part became effective on October 1, 1920. By virtue of this law, as from October 1, 1920, the forest of Luhde, and the timber therein, became the property of the Latvian State and the agreement of September 10, 1920, became annulled, and all property and rights of the vendors and purchasers in the forest, and the timber, became entirely confiscated to the Latvian State. On October 14 the Government of Latvia by its agents took possession of forest and the timber therein.

Continuously to the present time, the said law has remained in force and the Government of Latvia has remained in possession of the forest and the timber, and the purchasers have failed to secure recognition of the agreement of September 10, 1920, by the Latvian Government.

The risk of confiscatory legislation by the Latvian Government, to the detriment of British subjects, was mentioned in the course of negotiations between the parties leading up to the agreement of September 10, 1920 ; but was treated as too remote to require consideration. The total sum payable by the purchasers to the vendors under the agreement was 225,000l. ; of this sum 30,000l. was duly paid by the purchasers as provided by clause 13, sub-clause 1, of the agreement. The balance of 195,000l. was payable by instalments. By clause 3 of the agreement the purchaser was to "have fifteen years within which to cut and remove from the forest the whole of the timber agreed to be sold".

The purchaser's claim that in the events which happened the commercial object of the agreement has been frustrated, and that it became dissolved in accordance with the principle adopted in Metropolitan Water Board v. Dick, Kerr & Co.10 The vendors do not contend otherwise, unless under the agreement the property in the timber sold passed, so as to render the contract between them executed in the sense that there is nothing left to be done under it by the vendors, except to receive the balance of the purchase money.

They claim that the relation of the parties was no longer that of contractors bound, inter se, by the terms of the contract ; but was only that of creditor and debtor in accordance with the principle stated by Montague Smith J. in Royse v. Birley.11 Putting it in another way, the vendors claim that an immediate sale of the timber was effected on September 10, 1920, and that their right to payment accrued at once, although such payment was to be made by instalments and deferred over a period of time-that the illegality supervened subsequently, and that the purchasers are not discharged from their obligation as in accordance with the doctrine of Taylor v. Caldwell12 : see per Blackburn J.13 and see also Blackburn Bobbin Co. v. P. W. Allen & Sons.14

It is thus necessary to examine the agreement of September 10, 1920, to ascertain whether the property passed.

It may be stated, that subject to the case stated, the learned arbitrator held that the agreement of September 10, 1920, was dissolved by the frustration Of its commercial object. The learned judge, without deciding whether the property in the timber had passed, held that the responsibilities of the vendors under the contract were by no means fulfilled or completed on September 16, and he found it to be a case of frustration-that the whole substratum of the contract had gone.

The terms of the agreement may be summarized shortly as follows. [His Lordship shortly stated the material provisons of the agreement as above set out, and referring to the definition of merchantable timber in clause 1, sub-clause 12 thereof continued:] Taking this interpretation and bearing in mind that under clause 10, sub-clause 3, the vendors have a right to replant any section of the forest then cleared of merchantable timber. I do not accept the construction of clause 2 suggested by the vendors-namely, that what is or is not merchantable timber was to be determined and fixed as on August 20, Such a construction offers many practical difficulties. Ten years hence it may be difficult to decide whether a tree had been of not less than six inches in diameter on August 20, 1920, nor will it be easy to determine at what point on the bark the measurement is to be taken, for undergrowth or detrition may have altered the Point from which the four feet is to be measured.

In my judgment the determination of what trees fulfil the definition of merchantable, timber is to be determined from time to time, as and when it is proposed to fell them and the words "growing on the 20th August 1920" are inserted in order to lay down the condition that such trees must have Part of the forest growing at the date, and not part of those replanted later under clause 10, sub-clause 3, some of 1926 which might reach the required measurements in the course of the lapse of twelve or fourteen years from their planting by the vendors. This conclusion negatives the contention that the agreement of September 10, 1920, made a sale of specific or ascertained goods. The definition of specific goods in s. 62 of the Sale of Goods Act, 1893, is "'specific goods' means goods identified and agreed upon at the time a contract of sale is made." It is clear that this definition will not fit trees of which it cannot be determined that they are merchantable and within the contract until the time for felling them has approached and when the time for their measurement has arrived-that may be any number of years up to nearly fifteen after the contract was made.

It is not necessary, however, to base my judgment upon this point of interpretation of its terms alone. From a careful study of the agreement, and in particular the clauses which I have set out above, I have come to the conclusion that the agreement. was not executed on the part of the vendors at its date. They still had to agree the timber to be cut, its measurement when cut, and its value, and the instalments due in respect of it.

The question whether the property in the timber then passed depends first upon whether it is "specific or ascertained goods" within s. 17 of the Sale of Goods Act, 1893, and next if it be such, whether the parties intended the property in it to be transferred.

Further, by sub-s. 2: "For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties, and the circumstances of the case."

The law as stated in the code is similar to the proposition as to the passing of the property in specific and ascertained goods laid down in his judgment in Heilbutt v. Hickson15 by Bovill C.J., where he adds "unless from other circumstances it can be collected that the intention was that the property should not at once vest in the purchaser. Such an intention is generally shown by the fact of some further act being first required to be done; such as, for instance, in most cases, delivery-in some cases, actual payment of the price-and in other cases, weighing or measuring in order to ascertain the price, or marking, packing, coopering, filling up casks, or the like."

In my judgement the terms of the agreement point to such other circumstances, and negative the intention that the property should at once, on the execution of the agreement, vest in the purchaser. The case is very different from Tarling v. Baxter16, which was much pressed upon us, where a haystack standing in a field was sold and paid for by a bill of exchange and afterwards lost by fire. In that case however the same principle stated in Heilbutt v. Hickson17 and in the code is referred to: "In the case of a sale of goods, if nothing remains to be done on the part of the seller, as between him and the buyer, before the thing purchased is to be delivered, the property in the goods immediately passes to the buyer .... but if any act remains to be done on the part of the seller, then the property does not pass until that act has been done " : see per Holroyd J.18

Coming to the actual subject-matter of the sale in the present case, authority is not lacking that although for some purposes fictione juris the tree may be treated as divided from the freehold, yet in fact and in truth the vendor cannot take them before severance: "for it was said, that timber trees cannot be felled with a goose-quill": see 11 Co. Rep. 46b, 50a, quoted in Benjamin on Sale, 6th ed., p. 218n.

This appears to be authority for Parker J.'s dictum in James Jones & Sons v. Earl of Tankerville19: "A contract for the sale of specific timber growing on the vendor's property, on the terms that such timber is cut and carried away by the purchaser, certainly confers on the purchaser a licence to enter and cut the timber sold, and, at any rate as soon as the purchaser has severed the timber, the legal property in the severed trees vests in him": see also Morison v. Lockhart.20

The contention of the vendors appears to strain the agreement in their favour, and to leave out of sight many important terms which remained to be operative on their part during its continuance.

It is in my judgment impossible to hold that the intention of the parties was that the property passed immediately at the date of the agreement. For these reasons, therefore, I am unable to answer the first question favourably to the vendors, with the result that their appeal fails and must be dismissed with costs.

 

SCRUTTON L.J. This appeal from the decision of Rowlatt J. on a case stated by a legal arbitrator involves the effect on the purchase of a forest in Latvia of a Latvian law appropriating the forest and annulling all private rights in relation to it. The vendors sue for the price of the forest on the ground that the property in it has passed to the purchasers, and any subsequent loss of the subject-matter is for the purchasers' account. The purchasers reply that the property has not passed ; and that if it has, the contract is void by frustration. The arbitrator and Rowlatt J. have decided in favour of the purchasers' contention. The contract in question was made on September 10, 1920, and provided for the sale of all merchant able timber growing in a specified forest on August 20, 1920. Merchantable timber was defined as "all trunks and branches of trees but not seedlings and young trees of less than six inches in diameter at a height of four feet from the ground." The timber was to be cut not more than twelve inches from the ground. The measurement of the trunk was, therefore, uncertain till cutting. The purchasers had fifteen years in which to cut the timber, and were to have the use of the vendors' saw-mills, plant and huts, and the right to occupy every part of the forest. The price was 225,000l., and the payments were to be made 15,000l. on each of the first three quarter days in the year, and for the fourth quarter a sum equal to 4l. a standard of exportable timber cut, in the forest during the year, less 45000l .(The three previous instalment ). The amount was to be certified by the authorized agents of the vendors and purchasers, measurements having been agreed by them. The purchasers agreed unless prevented by some act or enactment of the Government of the country, or by force majeure, were to cut timber. at the rate of 15,000 standards per annum, and if they were so prevented, the fifteen years' period was to receive a corresponding extension. During the period of prevention the 15,000l. instalments of price were to be reduced to 4l. A standard of timber cut, carried away and sold or exported during the quarter. So long, therefore, as there was complete prevention, no price would be payable.

The contract having been made on September 10, on September 16 the Latvian Assembly passed an agrarian law, by which from October 1, 1920, the forest became the property of the Latvian State and the contract was annulled and all property and rights of vendors and purchasers in the forest were confiscated. In other words, for the last five and a half years it has been illegal to perform the contract in the place where alone it can be performed; and the obstacle to performance is continuing. A small quantity of timber was cut between October 2 and 14, 1920, amount unknown; but as the purchasers have paid 30,000l. to the vendors covering the first six months, it is not possible to argue that a default of payment of sums due has made the whole price payable.

What is the legal result of these facts? In the first place has the property passed ? It was said that this was a contract for the sale of specific goods in a deliverable state under s. 18, r. 1 of the Sale of Goods Act. Specific goods are defined as goods identified and agreed upon at the time a contract of sale is made. It appears to me these goods were neither identified nor agreed upon. Not every tree in the forest but only those complying with a certain measurement not then made. How much of each tree passed depended on where it was cut, how far from the around. Nor does the timber seem to be in a deliverable state until the buyer has severed it. He cannot under the definition be bound to take delivery of an undetermined part of a tree not yet identified. I refer to and adopt Lord Johnston's discussion of a similar question in the Scotch case of Morison v. Lockhart.21

For these reasons in my opinion the property had not passed under s. 18, r. 1, and, therefore, the timber was not at the risk of the purchasers.

Even if it had passed, I agree with the view of Rowlatt J., that so much remained to be done under the contract that the doctrine of frustration would apply. That doctrine depends on whether in the particular contract there is an implied term that its validity shall depend on the continued existence of some thing, or state of facts or law. Here I think it is clear that the continued existence, apart from temporary interruptions, of a state of law in which the contract could be performed was contemplated by the parties. The arbitrator finds that both parties entered into the agreement on the footing that there would be no confiscatory legislation. It is true that there are provisions for extension of the contract period in case of temporary prevention ; but so there were in Metropolitan Water Board v. Dick, Kerr & Co22, where the House of Lords held the prevention sufficiently substantial and permanent to frustrate the performance of the contract. I asked counsel for the vendors what would happen if the Latvian legislation remained valid for forty years, with no cutting and no payment of price instalments. He was, I think, inclined to agree that there would be an end to the contract. If so, it is a question of degree and fact whether the prevention is sufficiently permanent to defeat the adventure and make it a different adventure from that which the parties contemplated. The arbitrator has found frustration ; and as absolute prevention has now lasted for five and a half years, and there is no sign of it ceasing, we cannot possibly interfere with his finding.

I would add that I think the same result would follow under the decision of this Court in Ralli Brothers v. CampaniaNaviera Sotay Aznar23 from the fact that performance of the contract is at present permanently illegal in the place where the greater part of the contract is to be performed. The appeal must be dismissed with costs.

 

SARGANT L.J. The argument for the appellants here has been based on establishing that, under the contract in question, there was an immediate transfer to the purchasing company of the property in the timber forming the subject matter of the contract. For, though there was no admission, by the appellants that such an immediate passing of the property was an essential (though not a sufficient) condition of their- success, they deliberately abstained from arguing that they could succeed on any other view of the matter. It is, therefore, necessary in the first place to consider whether the contract effected an immediate transfer of the property in the timber to the respondents; and this, in my judgment, depends upon whether, under r. 1 in s. 18 of the Sale of Goods Act, 1893, the contract was one for the sale of specific goods in a deliverable state. This question again divides itself into two heads-namely, first, was the timber agreed to be sold specific goods; and, secondly, was it in a deliverable state?

As to the first head, there is a curious ambiguity in the wording of the contract. The merchantable timber sold is obviously limited to trees planted at the date of the contract, and does not include any trees subsequently planted. But is it limited to such of these existing trees as were merchantable (that is of the required size) at the date of the contract ; or does it include trees which being unmerchantable at the date of the contract become merchantable at that period of the subsequent fifteen years when the purchasers come to exercise their right of fell in? The former construction is one that is more in accordance with a very strict view of the language of the contract, but it would necessarily involve 'such extreme and obvious difficulty in the working out of the contract, that I am for myself inclined to adopt the second of these two constructions.

If then this view is correct it seems hopeless to contend that the timber sold was specific, for the items of timber sold depend upon the rate of growth of the trees, and the time at which the purchasers come to fell the various sections of the forest. Accordingly the appellants contended strenuously that the date for ascertaining the size of the trees was the date of the contract. And I will consider the question whether the goods sold were specific on this view of the construction, which is the more favourable to the appellants.

Even on this view, however, I cannot think that the timber sold was at the date of the contract identified, or more than merely identifiable; and in order that goods may be specific they must in my view be identified and not merely identifiable. The appellants relied on the maxim "Id certum est quod certum reddi potest"; but I do not think that this maxim applies in the present connection. The future book debts which were assigned in Tailby v. Qfficial Receiver24 were identifiable, and so were held to be subject-matter for a good equitable assignment which prevailed against the Official Receiver; but they certainly were not identified or specific at the date of the assignment. For the purpose of the passing of the actual property in goods as distinguished from a right to ultimately claim a title to the goods as against the vendor or volunteers under him, a present identification of the goods as specific goods appears to be required by the statute. There must be a transfer of the right in re not merely of the right ad rem.

Further I am of opinion that under the contract in question the timber sold did not form goods in a deliverable state. I am content on this point to adopt the views of Lord Johnston in the Scotch case of Morison v. Lockhart.25

In the view I have taken, it is unnecessary to consider whether the doctrine of frustration would have applied even if the property in the timber had passed to the purchasers, though I do not desire to express any doubt as to the decision on this point also of the learned judge.

 Appeal dismissed.

Solicitors for appellants: Bull & Bull.
Solicitors for respondents: Lawrence Jones & Co.

W.I.C.

ENDNOTES:

(1) [1909] 2 Ch. 440.

(2) (1863) 3 B. & S. 826, 833.

(3) [1920] 2 K. B. 28,11.

(4) 1912 S.C. 1017; 49 S.L.R. 865.

(5) (1827) 6 B. & C. 360.

(6) (1809) 11 East, 210.

(7) (1869) L.R. 4 C.P. 296.

(8) [1918] A.C. 119.

(9) [1918] 2 K. B. 467.

(10) [1918] A. C. 119.

(11) L.R. 4 C.P. 296, 310.

(12) 3 B.& S. 826

(13) 3 B. & S. 833

(14) [1918] 2 K.B. 467.

(15) (1872) L.R. 7 C.P. 438, 449.

(16) 6 B. & C. 360.

(17) L.R. 7 C.P. 438.

(18) 6 B. & C. 360, 365.

(19) [1909] 2 Ch. 440, 442.

(20) 1912 S.C. 1017; 49 S.L.R. 865.

(21) 1912 S.C. 1017; 49 S.L.R. 865.

(22) [1918] A.C. 119.

(23) [1920] 2 K.B. 287.

(24) (1888) 13 App. Cas. 523.

(25) 1912 S.C. 1017; 49 S.L.R. 865.

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