Banque d'Hochelaga v. Waterhouse Engine Works Co.

A

TERVENANT) .................................

*May 1.

AND

THE WATEROUS ENGINE WORKS

ESPONDENT. COMPANY (OPPOSANT).................

ON APPEAL FROM THE COURT OF QUEEN'S BENCH FOR LOWER CANADA (APPEAL SIDE).

A suspensive condition in an agreement for the sale of moveables, whereby, until the whole of the price shall have been paid, the property in the thing sold is reserved to the vendor' is a valid condition.

In order to give moveable property the character of immoveables by destination, it is necessary that the person incorporating the moveables with the immoveable should be, at the time, owner both of the moveables and of the real property with which they are so incorporated.

Laine v. Be'land (26 Can. S. C. R. 419), and Filiatrault v. Goldie (Q. R. 2 Q. B. 368), distinguished.

Decision of the Court of Queen's Bench affirmed, Gironard J. dissenting.

APPEAL from the judgment of the Court of Queen's Bench for Lower Canada (appeal side) (1), reversing the judgment of the Superior Court, District of Joliette, and maintaining the respondent's opposition d fin de distraire which the judgment of the court below had dismissed.

A statement of the case appears in the judgment of His Lordship the Chief Justice.

*PRESENT :-Sir Henry Strong C.J. and Gwynne, Sedgewick, King and Girouard JJ.

(1) Q. R. 5 Q. B. 125.

The agreement constituted a sale upon credit with a resolutory condition.

Leonard v. Boisvert (2) ; Brown v. Lemieux (3) ; Paquin v. Laverdidre (4) ;

Bellamy v. Burcher (5).

The unpaid vendor can only claim his goods whilst they remain in the possession of the vendee and clear of subsequent charges. Faure v. Alathine (6); Courroux v. Bouquet-Dupin (7); Arts..

1478, 1536, 1543 & 1550 0. C.

The purchasers were entitled to immobilize the machinery and they did so by building it into the mill upon a stone foundation, embedded in mortar andcement and attached by bolts and rivets both to the foundations and the roof of the mill. It then became part of the realty and liable for all charges thereon.

It was destined to become moveable when it was sold.

See Pdrier v. Veyrassat ; M1tariaunaux v. Perrier ;

Fi6vet et al. v. Bonduelle . et al. ; Arts. 379,

416, C. C.

The recent decision in Hobson v. Gorringe (11)

is directly in point; "possession vaut titre." We refer also to 3 Laurent, nos. 460-462;

5 Laurent, nos. 435-437, 461, 462; 24 Laurent, no. 367 ;

3 Aubry & Rau, no. 204; 4 Aubry & Rau, no. 356,

400; Baudry-Lacantinerie, Dr. Civ. no. 1220; 9 Dem.

208, 209; Rolland de Villard, vo. "Resolution," p. 23.

Longueuil v. Crevier ; Bopd v. Wilson ; Budden v. Knight ; Chevalier v. Beauchemin (4); V. '83, 1382;

Aubry & Rau, 2o; 1 Beaudry-Lacantinerie, .

no. 1229.

The creditor cannot secure more by his lien than the debtor had the right to affect; Filiatrault v. Goldie ; Renaud Proulx (6); Union Baink v. Nutbrown

No person can give to a moveable which he does not own the character of an immoveable; Staronv. des Moteurs a g'az et al. ; Hue, no. 20; Laurent, no. 482; Dal. vo. " Biens," nos. 128-132 ; Fusier-Herman, " Biens," no. 215. There is quite a distinction between this case and Laind v. Bhand The immoveable character of machinery so affixed disappears when the land and the machinery belong to different owners.

There are also distinctions between this case and Leonard v. Boisvert for here the usual consequences of a sale are suspended; no title vested in the purchaser till the full price had been paid. The Code (art. does not forbid such conditions; Richard v. Le Cure et Marguilliers etc. de Qudbec

There never was any intention here to immobolize, but the contrary is apparent, Wyatt v. Lewis & Kennebec Railway Co. maxim vaut titre has been narrowed down by our jurisprudence to a presumption merely which can be rebutted as has been done in this case. There has been no promise of sale and the provisional delivery of possession pending payment of the full price has no effect in changing the ownership; Grangev. McLennan O3); Lucas v. Bernard (14); Gray v. Hpital du Sacrd Ccur (1); v. Parker The machinery is separable from the mill and can at any time be removed without deteriorating what actually belongs to the

Tealty, leaving it an empty mill, just as it was before the machinery was placed in it. We refer as additional authorities to Spencer v. Lavigne ; Goldie v.

Rascony (4); Canadian Subscription Co. v. Donnelly ; Perkins v. Printing

Press Manufacturing

(6);

Laurent

"Vente,"

nos.

4, 54; Marcad6 C. N., art. 1583, no. 2; 15 Laurent, no. 92; 4 Aubry & Rau, 71; Guillouard, no.

THE CHIEF JUETICE.-The sheriff of the district of

Joliette having, under a writ of Fieri Facias de bonis et de terris issued in an action brought by Edouard

Migu6 against Francis Kelly, seized certain immoveables as being the property of the defendant in the action, present respondents filed and served upon the sheriff an opposition by which they opposed the publication, sale and adjudication of the following property, to wit:

The appellants having intervened and contested the opposition, the parties went to proof.

From the pleadings and depositions the following facts appeared.

The immoveable in question was originally the property of Dame Honorine Grenier, widow of Andrew Kelly.

On the 20th of November, 1884, Mrs. Kelly, by a notarial deed of that date, sold and ceded this property to Francis Kelly and William Copping. This deed was duly enregistered the 27th of June, 1885.

The price in consideration of which this sale was made was the sum of $7,000.

As security for the payment of this price the vendor, by the deed of sale, expressly reserved a privilege or hypothec bailleur de fond on the property sold, and the purchasers by the same deed expressly hypothecated the property for the same purpose in favour of the vendor. On the 31st December, 1895, there being then due to Mrs. Kelly on account of the purchase money and interest accrued thereon $8,456.80, the appellants paid off the same and obtained a subrogation to the hypothee and privilege which she held under the deed of sale as security for the purchase money.

The appellants subsequently sued the firm of Kelly Brothers (in whom the title to the land had become vested) for the amount of their hypothec. and on the 18th March, 1896, recovered judgment for the sum of $9,203.7 The respondents found their opposition on the following facts which were duly proved.

The respondents are manufacturers of saw-mills and mill machinery and carry on their business and have their works at Brantford, in the province of Ontario.

On the 10th of March, 1888, the firm of Kelly & Brother agreed to purchase the machinery in question from the respondents for the price of $7,000, and the contract, embodied in a written agreement of that date, was entered into. This agreement was as follows:

thereafter as finished and a car can be obtained, one of your sawmills as per specification attached and signed by us.

For the above we agree to pay you the sum of seven thousand D'HOCHEdollars as follows: $500 cash on signing order, $500 when goods are ready to ship, and for the balance we will sign and deliver before shipment, promissory notes as follows, $3,000 on 4th September, and $3,000 on 4th December, 1888, with interest at

7 per cent per annum from date of shipment.

CORKS Delivery as above is to constitute fulfilment of this contract by

W. E. W. Co.

The Chief This order is taken subject to approval of W. E. W. Co., at head office, Brantford, and may be cancelled by them at any time, even if accepted and goods shipped.

Any arrangements made or implied to erect machinery mentioned in this order is to be on conditions enumerated on last page of price list. It is agreed the W. E. W. Co. are not to be held responsible for delay caused by fire, disturbance among employees, or other causes that could not be foreseen or prevented by reasonable diligence.

The title to the above mentioned machinery is to remain in the

Waterous Engine Works Co. (Limited) till purchase money, all repairs thereon, and any other indebtedness to the said company incurred during the currency of notes given for purchase money, are paid, and in default of payment in full, vendors, or their officers or agents, may resume possession and remove the same after default, or at any time they are of the opinion that the security is or was or has become unsatisfactory, or if in their opinion it is necessary to do so to secure the said debt or protect themselves from loss, either of the original sum or interest or any repairs thereon, or attorneys or agents' costs incurred in collecting said notes or accounts by non-payment when due, or making seizure and vending said machinery in case of default.

You may insure the above mentioned machinery in any good company for two-thirds of the time payments and charge premium to me.

This contract with its terms and conditions has been read over to me, and are thoroughly understood by me.

I understand no money is to be paid agents except on your written order, and I will not hold you responsible for statements of agents or others not enumerated on this order.

It is specially agreed that in case of default all amounts unpaid immediately become due.

KELLY & BRO.,

Joliette, P. Q.

Kelly & Brother affixed the machinery in their sawmill and used it for some years.

Subsequently the execution already mentioned was issued against the goods and lands of Francis Kelly, and under it the sheriff seized the saw-mill property and also the machinery, against the sale and adjudication of which the respondents have formed the present opposition. At the date of the seizure and opposition a part of the price had been paid but there remained still due to the respondents a balance of the purchase money and interest amounting to $4,881.

This judgment was, however, unanimously reversed by the Court of Appeals, the judges present being the Chief Justice, and Boss4, Blanchet, Hall and Wuirtele, Justices. The reasons upon which the latter court based their judgment are set forth in the considdrants of the judgment itself, and are also fully developed in the notes of Mr. Justice Witrtele which accompanied the judgment. The opinion of Mr. Justice W-irtele is preceded by a very full statement of the facts which I may refer to as containing a history of the title to the immove- -able upon which the machinery was set up, which is not, however, material to the questions now arising for decision.

Two questions have arisen and been argued in this appeal which may be defined in the words of Mr. .Justice Wtirtele as follows

1st. Is the stipulation contained in the contract of the 10th March, 1888, by which the ownership of the machinery was retained by the respondents until the payment of the whole price, lawful and valid, and did -the ownership remain vested in the respondents after the machinery was delivered to Kelly Brothers ? B.

2nd. Was the machinery immobilized by being placed by Kelly Brothers in the building which they had constructed to be used as a saw-mill to the detriment of the right of property which by the agreement of the 10th of March,

1888, the respondents had stipulated should be retained and remain vested in them until the price was fully paid ?

As to the first question, it is to be observed that Cef what the respondents contend is that no property passed under the contract of the 10th of March, 1888, and that according to the clauses of that agreement none was to pass until the price was fully paid which it never has been. What the respondents are, therefore, insisting upon, is not any right to a resolution the sale under a resolutory condition, either express or implied by law, nor to a privilege in respect of the purchase money for which they agreed to sell, but upon a suspensive condition by which the property in the machinery was retained to the vendors until payment.

Had this condition not been expressly stipulated the property would no doubt have passed to Kelly Brothers upon the conclusion of the contract.

It having, however, been expressly agreed that this ordinary legal consequence of a sale should not take effect in present instance, the only point for decision on the first question propounded is: Was such a condition legal ?

The contract of sale may by English law be modified in any way the parties may agree, and in particular it is open to them to suspend the operation of the general effect of the contract in respect of the vesting of the property in the vendee, and to provide that it shall not pass until the price is fully paid. It has, however, been assumed, and I accept it as a settled point in the case, that the law of the province of Quebec is to furnish the rule of decision in the present case.

Noproof of the law of Ontario was made and the court had a right, therefore, to assume that it was identical with the law of Quebec upon the point involved, as indeed it is. Then it cannot for a moment be pret--nded that there was anything illegal in this stipulatioL that the vendor should retain the property.

Mr. Justice Wtrtele fully explains the principles of the French law on this head, and the authorities he refers to and the extracts he has given from Laurent and Aubry & Rau, beyond all question state the law correctly.

To these authorities, that of many other authors might be added. As regards the jurisprudence we have first the case of Filiatrault v. Goldie

There in the case of a sale moveables the contract contained a provision identical with that in the present case, that the property should not pass to the purchaser until the price was entirely paid. It was held by the Court of Queen's Bench in a very clear and able judgment pronounced by Sir Alexander Lacoste, Chief Justice, that the provision in question was a good suspensive condition and one which would have entitled the vendor, had he tendered and offered to repay the portion of the price he had received, to judgment in an action of revendication. I aIso refer on this head to a case reported in Sirey (2), Staron v. Comp. des Moleurs d gaz, decided by the Court of Appeal at Lyons on the 10th August, 1888, (which I shall have occasion to refer to hereafter as it is exactly in point upon both the questions involved in the present case) w'iere it was expressly decided that a sale under a condition suspensive such as that in the case before us, whereby the property is reserved to the seller until the whole of the price is paid is valid. To the report of this case in Sirey is appended a very full and clear note by M. Appleton, in which the whole doctrine and jurisprudence is examined and the correctness of the arri1 of the court of Lyons most satisfactorily demonstrated and Sirey may be also cited as authorities to the same effect. I, therefore, conclude that the judgment of the Court of Appeal upon the first point propounded was entirely correct. Coming to the second question: Was the machinery in question immobilized by the act of Kelly Brothers, the purchasers, in affixing it in their saw-mill in such Chief a way that it became their property, and as such liable to be seized and sold for the satisfaction of judgments against them?

I find the reasoning of the Court

Appeal even more decisively supported by the authorities than that on the first point.

On this head the law of France is identical with that of the Quebec

Code, so that there can be no question as to the applicability of the authority of the French authors and the decisions of the French courts.

In the first place the Court of Appeal were clearly authorized by the express words of article 379 in holding that this machinery, supposing it to have been the property of Kelly Brothers, would have been immoveable by destination under article 379, and not immovable by nature under articles 376 and 377.

second paragraph of article 379, " Les ustensiles nicessaires A 1'exploitation des forges, papeteries et autres usines," would in that case have undoubtedly included this engine and machinery affixed in the saw-mill.

This was the conclusion of both the courts below, and it has not been seriously argued that the property in question was immoveable by nature. Had these fixtures been detached from the building, as they easily could have been, they would have had an independent existence as moveables which is the proper test to be applied in distinguishing immoveables by destination from immoveables by nature.

Then what are the essentials, compliance with which the law requires in order that moveable property may be constituted immoveable by destination? I cannot answer this question better than by citing a passage from Huc where that author says:

A If this is a correct statement of the law there can be no doubt as to the absolute correctness of the conclusion arrived at by the Court of Queen's Bench. Kelly Brothers, upon the hypothesis that the judgment of the court upon the first point was a sound conclusion, as I have endeavoured to demonstrate that it was, were never the owners of the engine and machinery, and thererefore, could not make them immoveables by destination.

Baudry-Lacantinerie & Chauveau are to the same effect, in enumerating the essential requisites to the constitution of a moveable an immoveable by destination. They say:

The arrt already quoted from Sirey is here again precisely in point; two questions were there decided, both identical with the two points which have been adjudicated by the Court of Queen's Bench in the present case.

An engine worked by gas, ioteur a gaz, had been furnished by the defendants to certain manufacturers, who having affixed it in their factory, subsequently hypothecated the factory in favour of the plaintiff in the action. The hypothecary deed expressly included the engine in question.

The engine had been delivered to the intending purchaser just as in the present case, under a stipulation that the property was to remain vested in the vendors until the price had been fully paid. The action was instituted by the mortgagee against the company, who had agreed to sell the engine under the suspensive condition mentioned, to have it declared that the machine had been The Chief included in his hypothec as being an immoveable by destination.

The tribunal of first instance having decided in favour of the company that judgment was confirmed by the arrt of the Court of Appeal.

The court say:

Attendu qu'il est certain d'aprbs les documents produits que le moteur A gaz dont it s'agit de d6terminer le caractbre au point de vue de la distinction des biens, a 6t6 fourni aux Sieurs Guinard en mars

1881; qu'il a plac6 dans laur usine, et qu'il s'y trouvait le 23 fivrier

1884, comme faisant partie, en apparence tout au moins, des ustensiles ndcessaires h 1'exploitation de cette usine, qu'il devait done 6tre considdr6 comme une de ces choses mobilibres de leur nature qui se confondent parfois avec les fonds elles sont apporties et qui deviennent immeubles par destination, si les conditions exigies pour que cette destination puisse leur 6tre donn6e se trouvent accomplies.

Attendu que lapremibre de ces conditions est d'4tre A la fois propri6taire du fonds et de Pobjet h immobiliser lui-mame, que le locataire ne rend pas plus immeuble une chose mobilibre blui appartenant et qu'il apporte dans un bAtiment qui n'est pas le sien, que le propridtaire d'une usine ne rend immeuble une chose mobilibre de sa nature, non employbe A la construction et dont il n'est possesseur qu'A titre pr~caire.

This concise statement of the reasons in the judgment itself, is upon this second branch of the case, as well as upon the first, developed by the note of Professor

Appleton already referred to, appended to the report.

The case of Lain6 v. Bdland (1), has been much relied on by the appellants.

That case is, however, in no way inconsistent with the judgment of the

(1) 26 Can.S. C. R. 419.

Court of Queen's Bench.

There could be no doubt that the boiler there in question was an immoveable by destination; it had been affixed to the soil, whilst both it and the immoveable to which it was annexed were in the common ownership of Nelson & Company, and there never had been any actual physical severance. The question there was an entirely differ- The ent one.

It was considered that what was insisted on by the appellants there as a constructive severance, namely, a sale of the boiler as a separate moveable to persons under whom the plaintiff in the action for revendication claimed, did not affect a remobilization against an bypothecary creditor whose hypothec had been duly registered.

In truth that was rather a question on the registry law of the province of Quebec than such a question as is here presented. I only mention this as sufficiently distinguishing the case without saying whether I considered Mr. Justice Blanchet right or not. For myself, I decided the appeal on the same grounds as those relied on by the learned Chief Justice of the Queen's Bench, namely, that the plaintiffs in the action had failed to prove their title.

I may add that I entirely agree with Mr. Justice Wtirtele in that part of his judgment in which he points out why the principle on which the defendant in the case of Filiatrault v. Goldie (1) succeeded, is wholly inapplicable here. It was there held that the plaintiff, the vendor, ought to have tendered to the purchaser the portion of the price paid on account. respondents are not here seeking to recover the possession of the property sold, they are merely opposing a sale by the sheriff which would defeat their rights altogether. Filiatrault v. Goldie (1) is, therefore, of no application on this point.

There is a strong reason for adopting a fortiori, the rule of law sanctioned by the French authorities cited, in the consideration that in France the rule possession vaut titre prevails, whilst in the law as formulated in of uebecTHE the Civil Code of the province of Quebec that maxim has no place.

The appeal must be dismissed with costs.

J.-The sole question, as it appears to me, which is involved in this appeal is the construction of art. 379 of the Civil Code of the province of Quebec.

The question is: How can moveable things or chattels become immoveable, or real property, by destination? And the answer which the article gives is:

By being incorporated by the owner with his own real property. The language of the article is: " Moveable things which a proprietor " (or in other words an owner)"has placed on his real property for a permanency, or which he has incorporated therewith, are immoveable by their destination so long as they remain there."

The plain construction of that article, both according to its letter and its spirit, is that the person capable of converting chattel property into realty by destination must be owner both of the chattel to be converted into realty, and of the realty into which, by incorporation therewith, the chattel is converted.

words, " moveable things which a proprietor" taken alone without any of the words subsequently used in the article, according to their natural grammatical construction, plainly indicate the person capable of doing what the subsequent part of the article authorizesthat is to say, of converting chattel property into realty, and the subsequent language in the article only designates the mode by which such proprietor can effect his purpose, and the person so indicated can be no other than the owner of the chattel to be converted.

Now how is the conversion to be effected? Plainly by the proprietor or owner already mentioned dealing with the chattel in some manner, and so the article adds, " has placed on his real property or which he" (that is to say the proprietor or owner already mentioned in the first five words of the article in concomPY. nection with the words " moveable things ") "has in- J. corporated therewith," that is to say, with his real property; the ownership of the real property is designated by the pronoun "his," and the ownership of the goods by the words " moveable things," which, a " proprietor," or an owner, or the owner, or any owner, for there is substantially no difference between these expressions in this connection, so that the person acting to effect the conversion of a chattel into realty must be the owner of the chattel and of the real property with which the chattel is to become incorporated by destination. And this is in precise accord with the spirit of the article, for it is contrary to natural justice and to reason that an owner of real property by incorporating with such real property a chattel which is the property of a stranger, can give such chattel the character realty so long as he shall keep the chattel so incorporated with his realty. The article uses no language to which such an unreasonable construction involving such manifest injustice can be given.

As, then, it appears that the owners of the real property to which the machinery has been by them annexed were not proprietors of the machinery so annexed, but that the property therein is still vested in the respondents. the conversion of the machinery into the real property has never been effected so as to come within the article, and consequently the machinery did not pass under the mortgage of the realty in virtue of which alone the appellants claim, and the appeal must, in my opinion,, be dismissed.

SEDGEWICK and KING JJ. concurred in the opinion that the appeal should be dismissed with costs.

-I am bound to admit that, as to one fact, this case is not analogous to Laind v. WTHEOUS B6land (1), for in the latter case the incorporation had been originally made by the proprietor of both the CompAwy. immoveable and the moveable property, whereas in Girouard J. this case the incorporation was done by the proprietor of the immoveable property, with the express consent of the proprietor of the moveable effects.

In the two cases, however, the contract is the same, and as to the principle of law involved the cases are similar.

Speaking for myself and also for my brothers Taschereau, Sedgewick and King, who agreed " for the reasons stated in the judgment pronounced," I said in

Laind v. Biland (1), in support of the judgment of the

Court of Appeals:

La majorit4 des juges de la cour d'appel n'a pas song6 & rechercher la nature du contrat du 7 avril 1893; 4 leurs yeux, sans doute, et je crois qu'ils avaient raison, il importait peu que les appelants fussent vendeurs on simples locateurs ; ils avaient consenti 4 l'incorporation des machines 4 l'immeuble; ils les avaient vendues pendant qu'elles 6taient ainsi incorpordes ; elles 4taient done devenues immeubles et frappdes des hypotbques de l'intim6.

L'honorable juge en chef et M. le juge Boss4 expriment 'opinion, dans leurs notes, que ces objets mobiliers peuvent Atre considdrbs immeubles par nature; mais le texte du jugement d6clare simplement qu'ils 6taient incorpor6s & 1immeuble et en faisaient partie intigrante sans s'expliquer sur la nature de leur immobilisation,

Je crois qu'ils sont devenus immeubles par le seal fait de Pincorporation qu'en firent les propri6taires du fonds, et qu'ils sont immeubles par destination " tant qu'ils y restent," aux termes de 1'article 379 du Code

Civil. Cet article d6clare que:

" Les objets mobiliers que le propridtaire a placs sur son fonds h perp6tuelle demeure, en qu'il V a incorpor6s, sont immeubles par destination, tantqu'ils y restent. Ainsi sont immeubles sous ces restrictions les objets suivants, et autres semblables: 1. Les pressoirs, chaudibres,

alambics, caves et tonnes ; 2. Les ustensiles nicessaires a l'exploitation des forges, papeteries et autres usines."

. D'HOCHE- I est incontestable, et le fait me parait admis par l'appelant et tous les juges, qu'il y a eu de fait incorporation des machines A l'immeuble, TE et que cette incorporation faite par dufonds. Voild THEP tout que l'article 379 de notre Code prescrit, it n'excige mdme pas que l'incorporation ait ed faite d perpdtuelle deneure.

Il ne fait aucune mention du vendeur non payd, on avec la condition resolutoire, pas mdme de locateur on tout autre proprittaire des objets mobiliers qui aurait consenti Girouard J. d leur incorporation.

And again on page 429:

Voild d'ailleurs la doctrine que cette cour a consacrde h l'dgard du vendeur non pay6 dans un jugement diabor6 et rempli d'autoritis, rendu en 1890 dans les causes de Wallbridge v. Farwell, et Ontario Car Foundry Co. v. Farwell qui jusqu'ici a cependant bchappd h 1'attention des parties.

Cette cour ddcida que le crbancier hypothicaire doit 6tre prdfir6 au vendeur non payd, et je crois que cette d6cision s'applique au vendeur avec condition r~solutoire, et mgme an locateur, car le droit de revendiquer du vendeur non payd implique la resolution du contrat comme dans le cas du vendeur avec condition r6solutoire ou du locateur, avec cette seule diffirence, que dans le premier cas, la rdsolution r~sulte de la loi, tandis que dans 'autre ellc rdsulte contrat.

In the present case the Court of Appeal took no notice of its former decision in Lain6 v. B6land (2). The Court of Review, per Pagnuelo J., in Leonard v. Boisvert (3), has recently expressed the opinion that the two decisions are contradictory, and gave its preference to Laind v. Bdland (2).

The decision of this court, dismissing this appeal, would widen the chaos of the jurisprudence in this very important matter.

Apart from this consideration, have the respondents established that, at the time of the incorporation, they were the proprietors of the machinery ? It is admitted that the contract under which they claim this right was not signed at the date it bears, a fact which was, however, taken for granted by the Court of Appeal; it was signed some time afterwards, but how long after, (1) 18 Can. S. C. R. 1.

(2) Q. R. 4 Q. B. 354.

(3) Q. R. 10 S. C. 343.

whether before or after the incorporation, does not clearly appear from the evidence.

It was incumbent upon them to prove this fact beyond doubt, for the presumption of law is that the possessor is the pro- T. prietor of moveable property, or even improvements or constructions on the land. (Arts. 415, 2194 and 2268

C.)

To remove this legal presumption, they were bound to prove that, at the time the machinery was Gironard J. incorporated, it was their property under the contract.

Mr. Waterous, the manager of the company, respondents, says that he cannot tell if the machinery had been placed in the mill when the contract was sigred;

and Kelly, the purchaser, says likewise that he cannot say when he signed the contract.

And it must not be forgotten that a contract perfect in itself had been signed by both parties, containing no reservation whatever, long before the machinery was delivered.

But this question of fact is not the important point at issue. Admitting that the contract relied upon by the respondents had been signed on the day it bears date, namely, on the 10th March, 1888, or at least before the delivery of the machinery and its incorporation with the building, can they revendicate the same as against an hypothecary creditor?

The Quebec Code, art. 379 says:

The French version says:

Therefore the only condition the Quebec law recuires for incorporation, is that it should be done by the proprietor of the immoveable property, and for the very good reason that he is the best judge as to whether the incorporation would improve his estate or not; it matters not, however, whether the incorporation is to be permanent or only temporary; it will last so long as the moveable property is there.

There is marked difference between the French Code and the Quebec Code upon the subject.

Article 524 of the French Code says:

Nothing is said of the mere incorporation by the proprietor for a limited time. It is contended by some commentators that the French Code contemplates only permanent incorporations.

The French Code immediately adds:

Here a doubt may be left open as to the meaning of the word " proprietor."

Does it mean the proprietor of the immoveable property, or the proprietor of the moveable property, or both ? I must confess that, in the second paragraph as in the first one, the French Code refers only to the proprietor of the immoveable property. The Quebec Code is not, however, open to any doubt; "Thus," it declares, " within these restrictions, the following and other like objects are immoveable," etc.

No reference is again made to the proprietor, and the point remains as determined by the first paragraph of the article. Therefore, the French authorities are not applicable in the province of Quebec.

Their opinion is based upon the principle of the French Code, that immobilization by destination can take place only when the moveable things have been placed on the immoveable property, " pour le service et 1'exploitation de ce fonds," or as explained by many writers and decisions, for a permanency d perpituelle demeure, whereas, under the Quebec Code, it can also be effected by their mere incorporation

"therewith," with or without the intention of a permanency, " so long as they remain there."

The only question under the Quebec Code is whether there was incorporation the proprietor of the immoveable property. In this case, the incorporation was so complete that, without the machinery incorporated, the immoveable property would cease to exist as a saw- So when a manufacturer, or any other person, has leased or lent to the proprietor of a mill, for a certain time, the whole or part of a machinery required to run the same, it becomes immoveable by destination as to hypothecary creditors, if the proprietor of the immoveable property incorporates it therewith, either for a permanency or not, so long as it will remain there.

We have so decided in Laind v. Beland and if we had not done so we should so decide in the present case.

Even in France, the jurisprudence and the text writers are far from being unanimous.

A very interesting dissertation by DeVilleneuve will be found in

Sirey, Recueil in support of the contention of the appellants.

The following decisions may also be quoted in their favour:

Rej. 9 Dec. 1835 (3); Rennes,

31 Aoftt, 1864 (4); Cass. 20 D6c.. 1875 (5); Amiens, 12

Mars, 1884; Cass. 16 Juin, 1885 (6); Bourges, 26 D6c.,

1887 (7); Cass. 11 Janvier, 1887 (8); Cass. Juillet,

1895 (9).

The question in this cause is not whether the contract entered into was valid between the parties. This is not, and cannot be, disputed.

The point is whether the machinery was immoveable by destination, at least so far as hypothecary creditors are concerned.

Mr. Justice Wurtele, who apparently expressed the LA BANQUE views of the Court of Appeal, does not refer to article D'HocHE- 379 of the Quebec Code, but merely repeats the definition by the French writers of the immobilization by destination, arguing, as they do, from a very different ENGINE text of law.

He says, and this is the only part of his WORKS opinion which requires notice:

Girouard J.

Moveable things which are attached to a building or to the soil, to remain there permanently as an accessory, and which are fastened with iron and nails or in such a way that they cannot be removed without breakage or destroying or deteriorating the building or property to which they are attached, become immoveable by destination. But in order to be so immobilized, it is necessary that they be placed in the building or on the land by its proprietor and also that they belong to him (1).

Baudry-Lacantinerie does not express any opinion of his own; he merely reproduces, without comment, the decision of the Court of Lyons of the 10th of August, 1888 (2), and so does Huc, in his recent commentary No article of the French Code is quoted, and no argument is offered.

We are simply told that the law is so because that court has so decided.

And likewise the judgment of the Court of Lyons is not based upon any article of the French Code, or any high judicial authority; it merely states, referring to the conditions required to constitute immobilization by destination: Attendu que la premilre de ces conditions est d'6tre A la fois propri6taire du fonds et de 1'objet h immobiliser lui-m~me; que le locataire ne rend pas plus immeuble une chose mobilibre & lui appartenant, et qu'il apporte dans un bAtiment qui n'est pas le sien, que le propriftaire d'une usine ne rend immeuble une chose mobilibre de sa nature, non employbe h Ja construction et dont il n'est possesseur qu'h titre pr6caire.

The reasoning of this arrai is evidently bad. The French Code (4), says in express terms that immobi- (1) 1 Baudry-Lacantinerie, no.

(2) S.

(4) C. N. art. 524.

lization by destination must be made by the proprietor of the land, but is silent as to the proprietor of the moveable effects immobilized.

It is not, therefore, surprising that nearly all the commentators are likewise silent upon that point.

For the same reason, it is not astonishing to notice that the reporter of the

Lyons decision observes that the point is controverted, and quotes many decisions even of the Court of Cassation, where the very opposite doctrine was maintained.

Let us suppose, for argument's sake, that the French and Quebec Codes are alike; where is the authority to guide us in this conflict of legal opinions ? For my own part, I do not feel inclined to adopt in preference the theories of writers, however learned and popular they may be, when contradicted by a long array of decisions, and not supported by clear and sound arguments. It is not my intention to review the French decisions on the subject, as I contend that our Code is different from the French Code; it is sufficient to refer* to them.

I hope I will be excused for calling attention to the two last arrets of the Cour de Cassation quoted above, the first rendered on the 11th of January, 1887,

(1); and the second on the 17th of July, 1895. (2)

In the first case, the manufacturer had supplied the machinery under the following stipulation:

which article provided that the proprietor of the mill might become proprietor of the machinery on payment of certain sums of money payable at fixed periods.

It was further agreed that until full payment the latter was mere tenant of the machinery and was bound to, pay a certain rent. It was held:

pour le service et Pexploitation de la dite usine, et soient ainsi devenus immeuble par destination ; Attendu que Paction en rdsolution des D'HoCHEventes de meubles, comme le privilbge 4tabli par Part. 2102 s. 4, C. civ., ne pent 6tre exerc au pr~judice des crdanciers ayant hypothbque V* sur 1'imneuble dont les meubles vendus sont devenus les accessoires; qu'en effet cet exercice serait contraire h Part 524 C. civ. et A tout le systeme hypothdcaire; qu'il suit de qu'en repoussant la demande de la Soci6t6 francaise la Diffusion, Parrit attaqu6 n'a viold on faussement appliqu6 aucun des articles citbs, et a fait, au contraire, une juste Girouard J. application des principles en la matiore.

In a foot note the reporter says:

(6) En ce sens : Cass., 9 juin 1847. Rivibre, Code civ. ann., sur Part. 2102 note K.-Rennes, 31 aoftt 1864, S. V. 65,2, 111, P. 65, 490.-Comp. Cass., 9 dicembre 1835, S. V. 36, 1, 177.-Rivibre. Jurispr. de la Cour de cassation, n. 558, et suiv.-Cependant la question est controverse, mais plus gindralement rbsolue dans le sens ci-dessus. (V. Table g~n., Devill. et Gillo, vo. Privil6ges, n. 115 et suiv. ; Rep. g6n. Pal., et Suppl. eod. verbo, 360 et suiv. ; Marcad6, t. VI, sur Part. 1654, n. 2; Mass6 et Verg6, sur Zachariae, t. V, p. 143, 791, note 27; Aubry et Ran, t. III, p. 409, s. 284, Art. 4, p. 400, s. 356; Pont, Priv. et hyp. n. 156).

. The second arre't is more remarkable as the contest was not with a hypothecary creditor, but with ordinary creditors.

It was held :

Les tribunaux ont le droit d'appricier souverainement le vIritable caractbre des conventions, sans s'arrater & la qualification qui leur a 6td donnde par les parties.

En matibre de liquidation judiciaire on de faillite, il pent 6tre d6clard qu'un acte qualifi6 bail, constatant la location de certains meubles trouvds en la possession du failli, avec r~serve de la propri6t6 jusqu'au paiement int6gral de loyers stipulds, est fictif et contient en rdalitd une vente ferme et & crddit, qui n'est pas opposable aux autres crdanciers de la faillite.

(C. Com. Art. 550.)

Some allusion has been made to the recent decision -of the Court of Review sitting in Montreal, in Leonard v. Boisvert (1).

It was stated at the hearing that only Mr. Justice Pagnuelo criticised the decision of the Court of Appeal in this case. True, Mr. Justice Jett6 and Mr. Justice Doherty made some reservation as to .some remarks of Mr. Justice Pagnuelo bearing upon (1) Q. R. 10 S. C. 343.

another branch of the case ; but, upon the point as to whether the moveable effects were immoveable by destination, the judges were unanimous, although the incorporation had been made by one who at the time had sold the immoveable property subject to afacultd de rdmir.

Mr. Justice Pagnuelo, after having recited the contract, said:

Le contrat de vente (that is of the machinery) n'est done ni sus- Girouard J.pendu, ni risolu.

L'objet de la clause ne serait que de conserver aux vendeurs un privilge sur la chose pour le paiement du prix, privilbge exorbitant du droit commun quant aux tiers (Art. 2,000 C. C.)

Nous sommes unanimes sur ce point. et ce sera le motif donn6 pour infirmer le jugement.

Mr. Justice Jett6, speaking for himself and Mr.

Justice Doherty, said:

Pour la majorit6 de la cour, Phon. juge Doherty et moi, il ne se pr6sente, dans 'espce, qu'une simple question d'appriciation du contrat fait entre le demandeur et le d6fendeur, Adolphe Boisvert.

Ce contrat, suivant nous, n'6tait pas suffisant pour conserver au demandeur la propri6t6 des engins et machines vendues, jusqu'au paiement du prix.

C'est par consdquent, le seul point que d6cide le jugement de cette cour, et M. le juge Doherty et moi, desirous faire les r6serves les plus absolues quant aux autres questions discuties par notre honorable coll6gue M. le juge Pagnuelo.

The contract in this case is stated in the head note of the report and in the opinion of Mr. Justice

Pagnuelo as follows:

It is distinctly understood and agreed that the property in the goods.

so to be furnished by you (Leonard) to me (Boisvert), is not to pass to me until you are fully paid the price for same, and that the notes so to be given are to be held by you as collateral security in respect of such purchase money. If default be made in the payment of said.

notes, or if the said goods are attempted to be disposed of by me, or are seized in execution in respect of any debt dueby me, then you areat liberty to take possession of the goods and re-sell the same by public auction or private sale, crediting me with the proceeds only,.

less all expenses.

The ground of the judgment is as follows:

Considering that the effect of said stipulation was at most to give.

plaintiffs a personal right against said Boisvert to enforce their claim.

429, Taking for granted that Boisvert was proprietor of Tkn rne htBivr rpitro the mill within the meaning of article 379 C. C., this decision is undoubtedly correct, and is in accord with Laind v. B6land and the Quebec Code. Under that Code, as already observed, permanency or perpd/uelle demneure is not necessary to constitute immobilization by destination; it may also result from the mere incorporation with the immoveable property by its proprietor. The erroneous notion of immobilization by destination under the Quebec Code was the cause of the error in the judgment of the Court of Appeal. It also explains why, in Quebec, Baudry-Lacantinerie, or any other French authority, does not apply even to cases of immobilization by means of a permanency, or d perpituelle deneure, because article of the Quebec Code shows that the immobilization of moveable things in all cases takes place as a matter of fact, " so long as they remain there," irrespective of the intention of the proprietor of the immoveable property or of his rights to the moveable things, so far at least as third parties are concerned; provided of course, I am willing to concede for the purposes of this case, the incorporation is made with the consent express or implied of the proprietor of the moveable effects. True, art. 1027 of the Quebec Code enacts that sales are perfect not only between contracting parties, but also as to third parties, by mere consent, but they are Of course, the rights of the respondents were perfect, so long as their machinery remained moveable property, but the moment it became immoveable by destination or otherwise, their rights became subject to the special

T. provisions of the Code respecting immoveable property, as the Court of Appeal and this court decided in Laind v. Bland

Some arguments have been advanced that the pro- Girouard prietors of the mill could not grant or create greater rights than they had.

We have also answered this

-objection in Laind v. B6land

In the latter case, the proprietor of the mill was not proprietor of the machinery, yet we held that the hypothec extended to it as being immoveable by destination. In Thibaudeau v. Mailley. Re Steele the Court of Appeal. composed of Dorion C.J., Ramsay, Tessier, Cross and Baby

JJ., went so far as to hold that, when the incorporation of the machinery has been made by a mere tenant of the immoveable property who subsequently became proprietor thereof, the sale of the machinery by the tenant while mere tenant, conveyed nothing as against a

-creditor who had obtained a hypothec after the tenant, became proprietor of the land.

This decision was undoubtedly correct.

As Laurent, vol. 30, no. 233, points out:

If the machinery had been incorporated without the consent or the knowledge of its proprietor, some serious argument might be offered that it did not take place, although I do not wish to express any opinion upon this point.

In this case, we have the formal acquiescence of the proprietor of the machinery to its incorporation; it was even done by him, and so we have the proof that the incorporation was made by both the proprietor of the real property and the owner of the moveable effects.

Therefore, the respondents must have known that by doing so, it became part the real estate par destination, and subject to mortgages, liens and alienations generally.

J.

The respondents are estopped from invoking their contract in this respect. They are supposed to know the laws of Quebec as to immoveables by destination and hypothecs.

Their contract protected them so long as the machinery was moveable property, but not so when it had ceased to be. Estoppel is not peculiar to the English system of laws; it is known in Quebec by the name of acquiescement.

It is said that the presumption of acquiescence is rebutted by the very terms of the contract.

The contract is, however, perfectly silent as to the incorporation by the respondents of the machinery with the building.

Likewise are the specifications attached to the contract, or any other specifications subsequently agreed to.

The evidence does not show that it was at first intended that the machinery was to be placed by the respondents.

Beer, their millwright, sent several months after the sale to place the machinery, states that the placing had been partly done before he arrived at Joliette.

If we decide that, in a case like the present one, hypothecary creditors have no lien upon the machinery which has been incorporated with the mill, we destroy the whole economy of Quebec real estate system. Even a purchaser in good faith, who has carefully examined the premises and the books of the registry office, will be exposed sooner or later to find that the most valuable part of the estate he intended to acquire is gone.

Such was not the intention of the legislature and is not the law.

We must not overlook article 2017 of the Civil

Code:

property

The Code does not distinguish as to the party who makes these improvements, yet we are now told that the hypothec does not extend over improvements made Girouard J. before or after it was created, which are not the property of the proprietor of the immoveable.

We have decided otherwise in Laind v. Bdland (1).

The Code has provided for only one exception to the rule that a hypothec extends to all the improvements, and that is when the third party is a tiers detenteur in possession of the immoveable as proprietor; and then he cannot remove the improvements he has made while such proprietor; he has merely "a right to retain the property," until he is reimbursed.

Art. 418.

Expressio unius exclusio est alterius.

It must be noted that one of the mortgages held by the appellants was created in 1884, long before the sale by the respondents.

If the decision of the Court of Appeal be allowed to stand as law, bondholders, secured by mortgages railways or mills and factories in the province of

Quebec, have no security upon the rolling stock or machinery which might have been supplied under contracts and circumstances similar to those alleged by the respondents.

If the law be so, parties, dealing with proprietors of mills, factories and railways, must make an inquiry into the actual position, as a matter of fact, of the machinery, rolling stock and other accessories, and satisfy themselves that they are the property of the proprietor of the land, an inquiry which is far from being a safe guide, as the present case proves.

Two deeds or memoranda of sale were made, one with a reservation as to the ownership of the things sold till full payment was made, and the other without any such reservation.

The mortgage creditor even the vendee, upon production of the latter document, might naturally consider himself perfectly secured, but he will soon, and unfortunately too late, discover that another deed with a suspensive clause ssge was signed sometime afterwards, at least before the moveable effects were placed.

Can such a state of Girouard J affairs be authorized by law ? I answer no, without hesitation, at least so far as hypothecary creditors are concerned, which is the only point before us.

To hold that the respondents continued to remain proprietors, is to introduce a system far more dangerous than that of chattel mortgages, for at least there some publication is necessary and the public can protect itself, but here no protection is possible. Courts of justice should hesitate before giving to a clear and complete text of law an interpretation so pregnant with disastrous consequences to the community. Article 379 is not open to such unreasonable construction; quite the reverse.

It merely requires that the incorporation be made by the proprietor of the immoveable property, whether for a permanency or a term, and is entirely silent as to the proprietor of the moveable things incorporated; and I think that it is the duty of courts of justice to apply the law as they find it.

For these reasons, and without expressing any opinion as to the rights of chirographary creditors in a case like the present one, I have come to the conclusion that Laind v. Bdland (1) decides this case, and that the appeal ought to be allowed with costs.

Appeal dismissed with costs.