McAdams v Fiander's Trustee Bell NO

• Jurisdiction: South Africa
• Judgment Date: 16 June 1919
• Citation: 1919 AD 207

McAdams v Fiander's Trustee Bell NO
1919 AD 207

1919 AD p207

Citation	1919 AD 207
Court	Appellate Division, Bloemfontein
Judge	CG Maasdorp JA, De Villiers AJA and Wessels Acting AJA
Heard	March 12, 1919; March 13, 1919
Judgment	June 16, 1919

Flynote : Sleutelwoorde

Sale — Pledge — Delivery — Re-delivery — Insolvency.

Headnote : Kopnota

Where the Appellate Division was satisfied on the evidence that certain two transactions relating respectively to cattle and machinery entered into between plaintiff M and an insolvent F which plaintiff alleged constituted a sale to him of the cattle and machinery were in reality pledges disguised as sales.

Held (C.G. MAASDORP, J.A., dissenting as to the transaction in regard to cattle) that the machinery and cattle which had been left in the possession of F vested on insolvency in his trustee,

The decision of the High Court of Southern Rhodesia in McAdams v. Fiander's Trustee and Bell, N.O. reversed in part and in part confirmed.

Case Information

Appeal and cross-appeal from a decision of the High Court of Southern Rhodesia (HOPLEY, J.).

Plaintiff McAdams in two actions which were consolidated at them hearing and on appeal sued defendants Olver and Bell, who were, respectively the trustee in the insolvent estate of one Fiander and the Deputy-Sheriff of Hartley, Rhodesia, for the return of certain mining plant and machinery attached by defendant Bell and handed over to defendant Olver and of a further quantity of machinery held by the defendant trustee, or alternatively for the value of the machinery and for damages. Defendant Olver claimed in reconvention the return of certain cattle taken possession of by plaintiff or payment of its value, £800.

It appeared from the case as presented in the Trial Court that three transactions were in dispute between the parties, viz., (1) a transaction relating to mining plant and machinery, (2) a transaction relating to some 32 head of cattle, and (3) a transaction relating to some 46 head of cattle.

Plaintiff alleged that the plant and machinery and the 46 head of cattle which had originally belonged to the insolvent Fiander had been sold to him by the insolvent. The trustee, however, contended that these two transactions were in reality pledges of the property disguised as sales and that the property, therefore, vested in him.

As to the 32 cattle, it was common cause between the parties that these oxen had been sold by plaintiff McAdams to the insolvent,

1919 AD p208

that the purchase price was to be paid by instalments, and that a balance still remained due.

The Trial Judge, after hearing evidence, granted absolution on plaintiffs claim in convention as against both defendants. On defendant Olver's claim in reconvention he gave judgment for the delivery of the 32 oxen on payment by defendant Olver of the sum of £120. On the remainder of the claim in reconvention, viz., that portion relating to the 46 head of cattle, absolution from the instance was granted.

Plaintiff appealed from the judgment in convention, and defendant Olver appealed from the judgment of absolution from the instance on the claim in reconvention.

The facts are stated in the judgment Of DE VILLIERS, A.J.A.

S. Solomon (with him J.T. Barry), for the appellant: The case will depend on the inference to be drawn from the facts and not so much on the law. There will be little difference in the facts. My contention is that the learned Judge in the court below failed to apply certain recognised canons of law, and therefore was induced to draw wrong inferences from the facts.

As to the machinery, I submit that the property was in the plaintiff under the agreement of the 1st December, and the resale on the hire-purchase system to Fiander & Co. was not completed, owing to failure to pay the instalments due.

The case cannot be covered by authority, as each case depends on the facts. But the pactum redimendi has been recognised as admissible in our law. See Zandberg v Van Zijl (1910 AD 302, at p. 311). There was no concealment or simulation as to this transaction in the present case. The plaintiff was not a creditor of Fiander & Co., except under the hire-purchase agreement. There is a world of difference between a mortgage and a sale with the right of repurchase, but if the transaction is completed there is no difference in the result. See LORD MACNAGHTEN'S judgment in Manchester, Sheffield and Lincolnshire Railway Co. v North Central Wagon Co. (13 A.C. 554, at p. 568, and 32 Ch. Div. 478). The parties intended all along to complete the transaction. The question in English law is not one of suspension of the form of transaction, but whether it comes within the four corners of the Bills of Sale Act.

Zandberg v Van Zijl (supra) was a typical case of a marked loan, but in spite of the clearness of the facts the Court had considerable difficulty in deciding the case. In the present case the motive was

1919 AD p209

clear - namely, to keep the mine going. As to motive, see Yorkshire Railway Wagon Co. v Maclure (21 Ch. D. 309 and 19 Ch. D. 478) as an illustration. The English Courts are just as anxious to got rid of shams as our Courts.

The nature of the contract depends on the intention of the parties, even if a sale is effected for the purpose of obtaining security in the literary as opposed to the legal sense.

Gracey Bros. v Honikman (27 S.C. 150) is distinguishable, as there was a continuing debt. See Zandberg's case (at pp. 309 and 314) as to the canons laid down for the guidance of the Courts.

The difference between the value of the machinery and the purchase price is accounted for by the right of repurchase, which is a valuable right in itself. The test is whether there was a debt in existence prior to the hire-purchase agreement. The debt of £800 was extinguished by the sale of the machinery. In Zandberg's case there was a continuance of the debt.

[DE VILLIERS, A.J.A.: The pactum commissorium attached to a contract of pledge is strongly reprobated. Is not the position much the same in this case?]

The law would only assume the difficult position of the debtor, in that he is presumed to be subject to the oppression of the creditor in the case of a pledge - not in the case of a sale.

H.G. Mackeurtan, for the respondent: As to the machinery, the onus is on the plaintiff to prove the transaction was a sale and not a pledge, because it was in the possession of the insolvent. See Zandberg v Van Zijl (supra at p. 308) and Goldinger's Trustee v Whitelaw and Son (1917 AD 66). The question is whether the onus has been discharged. It is clear from the evidence that this was a pledge without delivery. 1. The object was to obtain security for an advance. 2. The price had no relation to the value. 3. Plaintiff never stepped into the shoes of Stewarts and Lloyds and Laing, the true owners of the machinery, by requiring cession from them. 4. The whole of the circumstances show that the documents were a blind to cover the true nature of the transaction.

This is not a question of bona fides. See Goldinger's case (supra).

Where the parties have an object in view and bona fide think they can effect this by sale and resale, the question is what was their paramount object, which in this case was to obtain security for an advance. If the object is not genuinely to acquire the ownership of the property there is no purchase but a pledge.

J.T. Barry, in reply: As to the question of onus, I submit that

1919 AD p210

the presumption that a document is what it purports to be shifted the onus as soon as the document in regard to the transfer of the dominium in the machinery was put in. See Zandberg v Van Zijl (supra at p. 314). This presumption can only be rebutted: 1. By proving that the agreement, though in form a sale, was in reality a pledge; or 2. by proving that a real undisclosed agreement between the parties lies behind the disclosed agreement. In the second case the onus is on the plaintiff to prove the undisclosed agreement.

The contract only provides for payment when there are milling operations. If, e.g., by an act of God, the mine had been destroyed or had been flooded no payment would have been due on the contract. This provision is adverse to the position of debtor and creditor. See Beckett v The Tower Assets Co. (1891, 1 Q.B.D. 638). This case was approved of in Zandberg v. Van Zijl (supra). See Mellor's Trustee v Maas & Co. (1902, 1 K.B. 137; 1903, 1 K.B. 226; and 1905, A.C. 102). That case was discussed in Johnson v Rees and Another (84 L.J.K.B. 1276).

Cur adv vult.

Postea (June 16th).

Judgment

De Villiers, A.J.A.:

These two actions, which have been consolidated, spring from the insolvency of one Job Maxwell Fiander, whose estate was provisionally sequestrated on the 1st and finally, on the 15th November, 1917. The plaintiff who resides at Salisbury is the owner of the Masterpiece Mine, situate about 12 miles from Gatooma in the Hartley District in Southern Rhodesia. The defendant in the first action is the trustee in the insolvent estate of Fiander, to whom for convenience I shall refer as the trustee and the insolvent respectively. The defendant in the second action is the Deputy-Sheriff of Hartley. He is sued in his capacity as messenger to the Master of the High Court as well as in his individual capacity. Upon the sequestration of the estate of the insolvent the second defendant attached certain machinery and accessories as well as some cattle on the Masterpiece Mine as belonging to the insolvent. Some of the cattle together with some of the odds were subsequently released and costs tendered by the second defendant up to date. The plaintiff claims to be the owner of all the machinery and accessories so attached as well as of the balance

1919 AD p211

De Villiers, A.J.A.

of the cattle which have not been released. Bell handed over the property attached by him to the...