Great Eastern Railway Co. v. Lord's Trustee [1908] UKHL 1024
(Before the Lord Chancellor (Loreburn) , Lords Macnaghten , Robertson , Atkinson , and Collins .)46 SLR 1024Great Eastern Railway Company v. Lord's Trustee.(On Appeal from the Court of Appeal in England.)
Subject_ Right in Security — Lien — Possession — General Lien — Railway Company — Goods of Third Party in Portion of Railway Premises Leased to him — Right of Retention by Railway Company. Facts:possession of coal stored there, excluding the coal merchant.A railway company contracted by “ledger agreement” with a coal merchant to allow credit for the carriage of coal. Certain allotments of space within the premises of the railway company were leased by it to the coal merchant. The ledger agreement provided that the railway company should have a continual lien for the balance of freight over the coal in course of being carried and also over coal stored upon the allotments. The allotments were situated within the company's yard, which was regularly locked by the company at night. The coal merchant's account being in arrear, the company locked the gates leading to the allotments and heldPage: 1025 ↓
Held ( diss . Lords Robertson and Collins) that the railway company were in possession of the coal in the allotments and that they had a valid lien.[Had the coal in the allotments not been held to be in the railway company's possession, the ledger agreement would have been a “licence to take possession” under the Bills of Sale (England and Wales) Act 1878 (41 and 42 Vict. c. 31), sec. 4, and consequently void as not registered in terms of the Act.]The appellants were a Railway Company which, under the circumstances stated supra in rubric, had exercised an alleged lien over coal belonging to their debtor, who then became bankrupt. The trustee in bankruptcy, the respondent, raised an action of damages in which judgment was pronounced in favour of the appellants by Phillimore, J . This was reversed by the Court of Appeal ( Cozens-Hardy, M.R. , and Buckley, L.J. , diss. Moulton, L.J. )The Railway Company appealed.Their Lordships gave considered judgment as follows:—
Lord Chancellor (Loreburn) —There has been an even division of opinion among the Judges who have heard this case. In my view the judgment of Phillimore, J., ought to be restored. I think that the Railway Company were in possession of this coal. The whole object of the arrangement made between them and Lord was that they should retain a lien and a physical control, secured by retaining the coal within their yard, of which they could lock the gates if Lord was in arrear. It is perfectly consistent with this that Lord also should have the right to remove the coal when the Railway Company opened their gates for him, as they were bound to do when he was not in arrear. I have heard no answer to the observations of Moulton, L.J., when he points out how an innkeeper has an effective lien over the luggage of his guest though the guest is allowed to take out of it or put into it his articles of clothing while in the inn. True, there was a demise to Lord of an allotment in the yard whereon this coal was stacked. That entitled him to occupy the allotment. But did that occupation confer upon him the exclusive possession of everything which he placed on the allotment? I cannot see why it should. An officer may be in possession of goods whether the debtor has a lease or even the freehold of the house in which the goods are placed. I cannot perceive any necessary dependency between the occupation of a piece of land and the exclusive possession of chattels which lie on it. Nor, in my opinion, can it signify for this purpose whether the occupation of the land is under a demise or merely by licence. How can the quality of the tenure of the land determine the possession of the chattels? If this be so, the Bills of Sale Act does not apply. There is here no right in equity, nor charge, nor any licence to take possession of goods. There is already possession and at law. The agreement merely gives a right to retain it. I should have been very sorry had I felt obliged to hold that an arrangement so convenient and so harmless was frustrated by an Act designed to defeat very different transactions.Lord Macnaghten —Before his bankruptcy Frederick Lord carried on business at Norwich as a coal merchant under the style or firm of Lord Brothers. The supplies of coal required for the purposes of his business came by the Great Eastern Railway under consignment to Lord at Norwich. Everybody knows what the rights of carriers are in the absence of special agreement. On payment of what may be due for freight the carrier is bound to deliver to the consignee. The presumption is that payment and delivery are meant to be concurrent. Unless payment is forthcoming the carrier has a right to withhold delivery and to detain the goods. At the same time, in the case of railway companies and their regular customers, it would be most inconvenient if the carrying company were to stand on its strict rights and insist upon ready money on the delivery of each consignment. It would be inconvenient to the customer and even more so to the company. What was done in this case is, I believe, in accordance with common practice. At Lord's request the appellants agreed to open a monthly credit account in their ledgers for the carriage of his coal. Among the conditions on which the account was opened were these—The appellants were to have a general lien for the balance of the account, and they were to be at liberty from time to time, and in such manner as they should think fit, to sell the goods subjected to their lien. It was further provided that they might close the account on one day's notice, and, as part of the same arrangement, but by separate contracts, the appellants agreed to let to Lord certain spaces or allotments within their own yard which were to be used for the purpose only of stacking and dealing with coal and coke passing over their railway. Lord fell into arrear. Over and over again he promised to discharge his liability. He failed to perform his promises. Ultimately the appellants closed the account. They then shut the gates of their yards, and so prevented Lord from removing the coal which happened to be lying on his allotments at the time. Were the appellants within their rights in taking this step? That must depend upon the answer to another question. Was there an absolute and unconditional delivery of the coal, or was it intended that the company should keep a hold over the coal so long as their account remained open, and if so, were sufficient precautions taken to give effect to that purpose if the company chose to exercise the right of stoppage for which they bargained? There is a question of intention and a question of fact. That seems a short and simple point. Now, in the first place, it appears to me absurd to suppose that the parties had in view any equitable right such as a charge on future property to be enforced by proceedings in Chancery. The company, I suppose, wantedPage: 1026 ↓
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Judgment appealed from reversed.Counsel for Appellant— Scrutton, K.C.— Coller. Agent— E. Moore, Solicitor.Counsel for Respondent— H. Reed, K.C.— F. Mellor. Agents— Tarry, Sherlock, & King, for E. E. Blyth, Norwich.