might be changed without a delivery of the goods.

And in

a case a few years earlier (2 Ed. 4, 25) it is argued by counsel and agreed by the Court, that "If I give to you my "goods at York, and before you take possession of them a stranger takes them, you shall have trespass against the "stranger, for by the gift the property was in you." In the 49 Hen. 6, 18, 10 Ed. 4, 19, the same point is stated as an illustration. Choke there says, "This is not like where I "purchase a horse for a price of 20 shillings, there forthwith "the 20 shillings are due to him, for by the sale the property "of the horse is in me, and I can seize him."

"Catesby. If I buy a horse of you for 20 shillings, you "may keep the horse till I pay you."

"Choke. I do not speak to that extent, but I say that the property is in me by the sale; so that if a stranger take him "I shall have an action of trespass.

"Brian to Catesby. Sir, in your case, if you gave him a "day for payment, you cannot detain the horse."

In Wortes v. Clifton (a), Lord Coke points out this very thing as an instance of the difference between the civil and the common law, "as the civil law is that a gift of goods is "not good without delivery, but it is otherwise in our law." It must be observed, that in a work of very high authority (2 Saunders, 90, n. (e)), it seems to be thought that this applies to a gratuitous parol gift; if it did, the proposition would a fortiori extend to a case of sale, but it does not seem that the word "done" in law French does import prima facie that the transaction was gratuitous. It is certainly used in many cases in which there appears to have been a consideration; and there is no case in which it was decided that the property passed, in which it appears affirmatively that the gift was gratuitous; so that there seems no ground to question Lord Tenterden's position in Irons v. Smallpiece (b), that Lord Coke's dictum must be confined to cases where there was a binding bargain for a consideration, or a deed under seal.

(a) Wortes v. Clifton, Rolle. Rep. 61. (b) Irons v. Smallpiece, 2 B. & A. 551.

U

CHAPTER IV.

EQUITABLE INTERESTS AND ASSIGNMENTS.

So far those interests chiefly which are legal interests in goods have been considered. In this chapter the subject of the creation and assignment of equitable interests is discussed. As questions relating to such equitable interests not unfrequently arise out of contracts for the sale of goods, and as the law applicable to any particular case sometimes depends upon a very critical examination of the facts of that case, the subject is treated at some length without further apology.

Equitable interests in goods or in the proceeds arising from the sale of goods, or in a specific fund, may be created in a variety of ways.

An equitable interest in a spécific fund is both created and assigned in the case which is commonly spoken of as an equitable assignment of a debt.

Rodick v. Gandell (a), in 1852, is an instance of this sort; the facts of the case are set out later on (b). Lord Truro, after reviewing all the cases on the subject, said that the principle to be extracted from them was that "An agreement "between a debtor and a creditor that the debt owing, shall "be paid out of a specific fund coming to the debtor, or an "order given by a debtor to his creditor upon a person owing

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money or holding funds belonging to the giver of the order "directing such person to pay such funds to the creditor, will "create a valid equitable charge upon such fund," or in other words, "will operate as an equitable assignment of the debts. "or fund to which the order refers" (c). The relationship

(a) Rodick v. Gandell, 1 De G. M. & G. 777.

(b) Page 319.

(c) See Ex p. Moss, 14 Q. B. D. 310; Ex p. Nichols, 22 Ch. D. 782; Brice v. Bannister, 3 Q. B. D. 569; Tooth v. Hallett, L. R. 4 Ch. Ap. 242; Percival v. Dunn, 29 Ch. D. 128; Ex p. Hall, In re Whitting, 10 Ch. D. 615; In re Irving, Ex p. Brett, 7 Ch. D. 419; Crossley v. City of Glasgow Co., 4 Ch. D. 421.

of the parties which Lord Truro is contemplating here, is where A. owes money to B. and B. owes money to C. In the first case which he puts there is an agreement between B. and C., that C. shall be paid out of the money owing by A., and in the second case, B. gives an order to C., in which he directs A. to pay the money to C.

Where a person covenants to assign goods as soon as he becomes the owner of them, but which he has not at the date of the covenant, an equitable interest in the goods is created and passed to the assignee as soon as the covenanter becomes possessed of the goods.

An equitable interest is also created where goods are deposited in the hands of one person upon certain trusts, as for example, to sell the goods and pay over the proceeds or a portion of them to some person. A trust is here created, and the cestui que trust has an equitable interest in the goods, or, if they have been sold, in the proceeds of the sale, which are a specific fund on which the trust attaches (a).

Equitable interests of this latter kind have been alleged to have been created in several reported cases where goods have been consigned, and bills of exchange have been drawn "against" that consignment. It will be found on examining the cases that such expressions are not sufficient, even if any evidence of the creation of a trust.

In the simple case where the seller consigns goods to the buyer, drawing on him for the price, and nothing further is said, that merely makes the buyer owner of the goods and debtor for the price. The relationship is that of debtor and creditor and not of trustee and cestui que trust. But if goods are consigned and received on the terms that certain bills are to be paid out of the proceeds, then the relationship of trustee and cestui que trust is created.

The consignee takes the goods in trust, to give effect to

(a) See the judgment of Jessel, M. R., in In re Hallett's Estate in 1879, 49 L. J. Ch. 415; 13 Ch. D. 707, where the following of earmarked, and funds held upon trust was fully considered, as also the meaning of a "fiduciary "relation; and the New Zealand Co. v. Watson, in 1881, 7 Q. B. D. 374; Birt v. Burt, 11 Ch. D. 773; Harris v. Truman, 9 Q. B. D. 264.

those rights which the consignor has reserved, and those rights appear to be in equity, rights not merely in personam, i.e., against the consignee, but rights in rem against those particular goods, or the proceeds of them, and consequently are good not only against the consignee but against any one who takes the goods or the proceeds subject to the equities which affect them in the hands of the consignee.

The consignee or bailee cannot do anything inconsistent with the contract. The rule of law as stated by Lord Justice Mellish in Vaughan v. Halliday (a), is, "that if a remittance "is sent for a particular purpose, whether it be by bills or a "remittance in money, the person who receives the remittance "must either apply it for the purpose for which it was sent, "or else return it."

Whether a contract to create a charge upon the goods or on the particular fund arising out of the sale of those goods can be proved depends upon the evidence. But it is not to

be presumed from the mere fact that the goods have been consigned and bills drawn on the consignee against or in respect of that consignment, whether it appears that the bills were so drawn either upon the face of the bills themselves or in the correspondence. The acceptance of a bill drawn against goods is merely a promise to pay for the goods according to the tenor of the bill, and is not a promise to pay out of a particular fund (b). A statement that they were so drawn is generally nothing more than a statement of the way in which the right to draw the bill has arisen.

It must also be borne in mind that it is not sufficient to create this trust, that the goods were consigned upon trust. It must be proved that the goods were also received upon that trust. For, in the case where goods are consigned to a person with instructions to apply the proceeds of them to a certain purpose, he is not bound to undertake that duty. He may decline to receive or to hold them for that purpose, and if he does so he has no right to take possession of them, and if they come into his possession he has no right to retain them.

(a) Vaughan v. Halliday, 9 Ch. Ap. 568.

(b) Ex parte Carruthers, In re Higginson, 3 De G. & S. 570.