Copping v Commercial Flour and Oatmilling Co Ltd

[1933] HCA 65

332 HIGH COURT

[1933.

[HIGH COURT OF AUSTRALIA.]

COPPING .

A ppellant;

Dependant,

COMMERCIAL FLOUR AND OATMEAL 1

R espondent.

MILLING COMPANY LIMITED

|

Plaintiff,

ON APPEAL FROM THE SUPREME COURT OF

SOUTH AUSTRALIA.

H. C. OP A. Contract—Sale [of wheat—Payment—First ^advance-—Final price lower than first

1933.                  advance paid to seller—Eight of buyer to recover difference between first advance and final price.

Melbourne, The respondent brought an action against the appellant for the return of

March 13.

moneys alleged to have been overpaid under a contract contained in documents

Sydney, described as bought and sold notes. The bought note was (in substance) in May II.the following terms :—“ We ” (the respondent) “ have this day bought from” the appellant “ about 1,800, all he has, bushels wheat at 3s. 4d. first

Rich, Starke,

Dixon, Evatt

advance per bushel when delivered. Must be sold to us before 31.12.1930.

and McTiernan

We guarantee to pay 6d. under Port Adelaide as quoted by papers for growers lots, as per sample f.a.q.” The sold note signed by the appellant corresponded in substance with the bought note. About 3,000 bushels of wheat were delivered pursuant to these documents, and the first advance of 3s. 4d. per bushel was paid. The appellant did not fix any date for the sale before 31st December 1930, on which date the price of wheat as fixed under the contract was Is. 8d. per bushel.

JJ .

Held, that the respondent was entitled to recover the difference between the 3s. 4d. per bushel paid to the appellant and the Is. 8d. per bushel which was the rate fixed by the contract as on 31st December 1930.

Decision of the Supreme Court of South Australia (FuU Court): Copping V . Commercial Flour and Oatmeal Milling Co. Ltd., (1932) S.A.S.R. 217, affirmed.

49 C.L.R.] OF AUSTRALIA.

333

Appeal from the Supreme Court of South Australia.

The respondent, the Commercial Flour and Oatmeal Milling Co. Ltd., brought an action against the appellant, AVilfred Burton

Copping

V,

Copping, in the Local Court at Mount Gambler, in South Australia. Commercial

The particulars of claim were as follows :—The plaintiff’s claim is

Oatmeal Milling

for the balance of moneys due by the defendant to the plaintiff, being

Co. Ltd.

the difference between an advance made by the plaintiff to the defendant at his request on 21st March 1930 on the anticipated future sale price of the defendant’s wheat of £500 3s. 6d., being at the rate of 3s. 4d. per bushel on 3,001 bushels 3 lbs. of wheat the property of the defendant stored by him with the plaintiff pending sale thereof free of charge and the sum of £250 Is. 9d., being the amount reahzed on the subsequent sale of the said wheat by the defendant to the plaintiff on 31st December 1930 and credited by the plaintiff to the defendant’s account. Alternatively, the plaintiff claims from the defendant the said sum of £250 Is. 9d. {a) as and for money paid by the plaintiff for the use of the defendant; (6) for moneys due and owing by the defendant to the plaintiff ; (c) for money lent by the plaintiff to the defendant.

The contract between the parties was evidenced by two docu­ ments adapting printed forms designed for use as bought and sold notes. The document signed by the defendant was in the following terms;—“ Sold Note.—Commercial Flour and Oatmeal Milling Co., Naracoorte, 20/1/1930.—I have this day sold to the Commercial Flour and Oatmeal Milling Company about 1,800 all he has bushels wheat at 3s. 4d.—ls< ad. payable per bushel when delivered. Must he sold to us before 31 /12/30. WeguMrantee to pay %d. under Pt. Adelaide as quoted by papers for growers lots. As per sample f.a.q. To be delivered 31/3/30. W. B. Copping.” The note signed by the plaintiff was as follows :—“ Bought Note.—Commercial Flour and Oatmeal Milling Co., 20/1/1930.—AVe have this day bought from Mr. ir. B. Copping about 1,800 all he has bushels wheat at 3s. 4d.—ls< ad. payable per bushel when delivered. Must be sold

to us before 31/12/30.

We guarantee to pay 6d. under Pt. Adelaide

as quoted by papers for growers lots.

As per sample/.a.g'. Commer­

cial Flour and Oatmeal Milling Co. Ltd. Per

S. D. McElray.”

The-

334 HIGH COURT

[1933.

H.C. OF A. italics in the above documents indicate the handwriting upon the

1933.printed forms. In these documents the expression “ ad.” means

Copping

“ advance.”

V.

Commercial

It appeared from the evidence that the plaintiff company was

F lour and

Oatmeal trading in competition with the South Australian Wheat Pool,

Milling which was advancing 3s. 4d. per bushel to the farmers upon the

Co. Ltd .

delivery of their wheat. The manager of the plaintiff’s mill called upon the defendant for the purpose of buying his wheat. The defendant enquired the price of wheat and was told it was 4s. 6d. at the mill. The defendant was informed that the conditions of storage were the same as in the previous year—3s. 4d. when delivered—and the defendant said that he thought he would store. After that the defendant called at the mill and said “ that he was storing his wheat at the mill that year.” The above documents were then prepared and signed. In or about February 1930 the defendant delivered 3,001 bushels 3 lbs. of wheat, and about 17th March 1930 he received from the plaintiff the sum of £500 3s. 6d. as the advance at 3s. 4d. per bushel on that quantity. When the contract was made the market price of wheat at Port Adelaide was 4s. lid . per bushel, and the general expectation was that it would rise. In February the price was falling, and in March it was about 4s. 2d. In April and May the price was fairly constant between 4s. 2d. and 4s. 4d., but in the latter part of June it fell to about 3s. lOd. In July and the first half of August it was falling, although the prices ranged from 3s. 7^d. to 3s. lO^d. (on 12th August) and from then onward the price fell steadily. In November it was about 2s. 6d. From 24th to 30th December 1930 it was 2s. 2d. Until about November the market was expected to recover, but early in November the plaintiff realized that the price was likely to go still further down, and on 18th November the plaintiff wrote to the defendant as follows :—“ Dear Sir,—Stored wheat.—Re stored wheat held by us on your account on which we have advanced the sum of £500 3s. 6d. We wish to point out that up to the present time you have not taken the advantage at any period of selling your wheat at market rates. Under the arrangements made you have the option of disposing of your stocks at current prices up to and inclusive of 31st December 1930. If, by that date, you do not exercise your option of selling we will take the

49 C.L.R.] OF AUSTRALIA.

335

wheat into stock at market price and credit your account wdth the C. oi' A.

1933.

proceeds.

Should the value of the wheat be in excess of the amount

of the advance we will then forward you our cheque for such amount,

Copping

If, on the other hand, the value of the wheat at the date of sale is Com.mercial

below that of the amount which we have advanced to you w'e will

then request payment of the balance due to us on such date of sale

or, as an alternative, we are prepared to accept wheat of equivalent

-----

value from the coming crop. Please note that all wheat stored with

,

us must be sold not later than 31st December 1930.” There was no reply to this letter, and on 17th December the plaintiff wrote again ; “ We beg to remind you that interest will be charged dating from 1st January 1931 on the amount owing to us on stored wheat if arrangements are not made immediately either to cover the amount by delivering wheat or settlement by cheque.” Between 17th and 31st December the managing director of the plaintiff company met the defendant, and other farmers similarly circumstanced, in con­ ference to discuss the position, as a result of which it was left to the plaintiff to do the best it could for the farmers. On 31st December the defendant was credited in the books of the plaintiff company, by proceeds 3,001 bushels 3 lbs. wheat at Is. 8d. per bushel and a further credit of 4d. per bushel, paid as a result of the conferences between the plaintiff and the farmers, with the sum of £300 2s. Id. That was against the debit “ advance on wheat £500 3s. 6d.”, and it left the balance of £200 Is. 5d. Subsequently there wms a further conference between the plaintiff and the farmers. On 9th January 1931 the plaintiff wrote to the defendant renewing the offer to pay the additional 4d. per bushel above the price of Is. 8d. per bushel, but intimating that, failing acceptance within ten days, interest would be charged, and the allowance of 4d. per bushel credited to the account would be cancelled. On 4th February 1931 the solicitor acting for the defendant and others wrote to the plaintiff claiming that the transactions with his clients “ were definite contracts of sale ” and that his clients “ w'ere thereby guaranteed a minimum price of 3s. 4d. per bushel.” The plaintiff thereupon brought the present action, crediting the defendant with Is. 8d. per bushel only. The special magistrate who tried the case held that the contract was one of bailment and gave judgment for the plaintiff for £250 Is. 9d.

336 HIGH COURT

[1933.

H. C. OF A. The defendant thereupon appealed to the Full Court of the Supreme

Court of South Australia, which afl&rmed the decision of the special

Copping magistrate. The majority of the Full Court was of opinion that

CoMMEBciAL upou the propor construction of this contract the advance was either Ôapmeâ ̂ a loan, or a provisional payment on account of the contract, and that

Milling

under either form the plaintiff was entitled to recover the amount ----- overpaid and that the judgment of the Local Court was right. Piper J. was of opinion that the onus was on the plaintiff to establish a promise, express or implied, by the defendant to refund any part of the 3s. 4d. in the circumstances, and considered that the plaintiff had not established any such promise : Copping v. Commercial Flour and Oatmeal Milling Co. Ltd. (1).

From this decision the defendant now by special leave appealed

to the High Court.

Moore (with him SJcewes), for the appellant. The property in the wheat passed on delivery (South Australian Insurance Co. v. Randell (2)). It then became a case of sale and not of bailment and was in effect a contract of sale at a minimum price of 3s. 4d. per bushel. The documents are ambiguous, and should be read against the plaintiff, who drew them up. No power was given to the plaintiff to fix the price as at 31st December in default of the defendant fixing a date, and such a power should not be implied (Peters American Delicacy Co. v. Champion (3) ). An amount on account of the price was paid, and to get an extra price the farmer had a right to fix a day. Each party was backing his own judgment as to the market fluctuations. The farmer would not have agreed to the introduction of such a term as one providing for the repayment of part of the money he had received, if such a term had been proposed (French Marine v. Compagnie Napolitaine d’Eclairage et de Chauffage par le Gaz (4)). There has in fact been payment under the contract and nothing has happened giving a right to repayment. There is

no case made for a claim for money lent. The payment was nothing

but part payment of the purchase money.

Mayo K.C. (with him Pyne), for the respondent. In the main the question is to be resolved by the interpretation of the contract.

(1) (1932) S.A.S.R. 217.(3) (1928) 41 C.L.B. 316.

(2) (1869) L.R. 3 P.C. 101.

(4) (1921) 2 A.C. 494, at p. 513.

49C .L .R .] OF AUSTRALIA.

337

The bought and sold notes involve two transactions, first, that of

the advance of 3s. 4d. per bushel, and second, that of payment of

the purchase price fixed in accordance with the arrangement made

Copping

in the document.

If the sale does not take place within the time Commercial

stipulated in the contract the advance is recoverable as a loan or

Oatmeal Milling

as money paid for a consideration which has wholly failed. The

Co. Ltd.

words requiring the wheat to be sold to the plaintiff before 31st December 1930 must be given a meaning. This was the last day on which the appellant could carry out his duty to fix the price, and in default of his fixing a time the proper price was that fixed at the last moment at which he could have carried out his agreement. The contract contains two separate provisions which may or may not imply storage. The question whether or not the property in the wheat pas.sed is not material. It cannot have passed, for there was no effective sale. The word “ advance ” in the contract must mean either a loan or a prepayment of the purchase money or a provisional payment of the purchase money. It does not matter very much which of those three shades of meaning is intended. The word never has had ascribed to it a meaning of an instalment of the purchase price. What is to be paid subsequently is not the l)alance of the purchase price. The right to recover the advance does not arise on account of its being an instalment but because it is an advance which can be set off against the purchase price w'hen the latter becomes actually payable [Mashiter v. Buller (1) ; Allison V. Bristol Marine Insurance Co. (2)). The fact that the plaintiff

undertook to pay sixpence under the Port Adelaide price shows that the whole of the purchase price must be paid, and that the 3s. 4d. is not a part payment but an advance. A previous payment camiot be a part of the price which is not fixed or payable. It is impossible to suggest that either the bought or the sold note contained any suggestion of a minimum price. The proper way to approach this matter is to look at the contract through the eyes of the contracting parties (If. N. llillas <& Co. v. Arcos Ltd. (3) ). An advance is never made on account of the purchase price but is against the purchase price. There may be an instalment on account of the

(1) (1807) 1 Camp. 84.

(2) (1876) 1 App. Cas. 209, at p. 219.

(3) (1932) 38 Com. Cas. 23, at p. 29.

VOL. XLIS.

23

338 HIGH COURT

[1933.

H. C. OF A. price, but not an advance.

“ Advance ” always means “ loan ” and

■

never “ instalment.” There is nothing in the contract to give

C O P I'IN I!

“ advancethe meaning of instalment. The prepayment is made

Commercial

to finance the vendor for a period of time. The word “ first ”

F lour and

cannot control the meaning of the word “ advance.” [Counsel also

Oatmeal

Millino

referred to Life Insurance Co. of Australia v. Phillips (1); Logan v.

C'o.

Ltd .

Le Mesurier (2); Sale of Goods Act 1895 (S.A.), sec. 51.]

Moore, in reply.

Cur. adv. vult.

May 11.

The following written judgments were delivered :—

R ich J. This case, which arises out of an obscurely expressed

contract of the kind which in South Australia appears to be described

as “ wheat storage,” has been very fully examined in the joint judg­

ment of Murray C. J. and Napier J. and the judgment of Piper J., who

dissented. Upon a consideration of the views presented in these

respective opinions I find myself in agreement with the majority of

the Court, and I have virtually nothing to add to their judgment.

Much of the judgment of Piper J. is in accordance with their opinions,

but he considered that the respondent was content to pay at least

3s. 4d. a bushel as a minimum price which the respondent was to

bear in any event. I do not think that the respondent or the appel­

lant had any real intention as to what was to happen if the price

fixed was below 3s. 4d., because they did not foresee such a disaster.

I am unable to agree with Piper J., because I think the consequences

must be determined, not by seeking an actual intention which was

never in fact entertained, but by considering the character of the

payment. I agree -with him that the 3s. 4d. was not a mere loan

against the wheat or against the price, but it was an advance pay­

ment in respect of the price, a sum paid at once to be applied in

discharge of the price. 'When the price turned out, however unex­

pectedly, to be less than the prepayment, it appears to me that, as

to the excess, the purpose of the prepayment failed and the appel­

lant’s right to retain it disappeared. One may speculate that, if

(1) (1925) 36 C.L.R. 60, at pp. 76-80.

(2) (1847) 6 Moo. P.C.C. 116, at p. 122 ; 13 E.R. 628, at p. G31.

49 C.L.R.] OF AUSTRALIA.

339

the question had, at the time when the bargain was struck, been C-

of A.

put to the respondent it might have agreed that in the then unex­

pected event of the price falling so much, the appellant should

Copping

retain the excess, but such an agreement would have added a new Commercial

term to the contract and not simply expressed one already implied q̂atmî ^°

therein.

“

I am of opinion that the appeal should be dismissed.

-----

^

Rich J.

St a r k e J. An action was brought in South Australia by the

Commercial Flour and Oatmeal Milling Co. Ltd., the respondent, against Copping, the appellant, for the return of moneys overpaid under a contract contained in documents described as bought and sold notes, in the following forms : “ Sold Note.—20/1/1930.—I ” (Copping) “ have this day sold to the Commercial Flour and Oatmeal Milling Company about 1,800 (all he has) bushels wheat at 3s. 4d.— 1st advance payable per bushel when delivered. Must be sold to us before 31/12/30. We guarantee to pay 6d. under Port Adelaide as quoted by papers for growers’ lots. As per sample f.a.q. To be

delivered 31/3/.30.”

“ Bought Note.—20/1/1930.—We ” (the com­

pany) “ have this day bought from Mr. W. B. Copping about 1,800 (all he has) bushels wheat at 3s. 4d.—1st advance payable per bushel when delivered. Must be sold to us before 31/12/30. We guarantee to pay Gd. under Port Adelaide as quoted by papers for grow'ers’ lots. As per sample f.a.q.”

About 3,000 bushels of wheat were delivered pursuant to these documents, and the first advance of 3s. 4d. per bushel was paid. The market price of wheat. Port Adelaide, at the date of the contract was 4s. lid . per bushel, but by 31st December 1930 it had fallen to 2s. 2d. per bushel. Sixpence under this price as quoted for growers’ lots. Port Adelaide, was Is. 8d. per bushel. The claim was for the difference between the advance upon the wheat delivered at the rate of 3s. 4d. per bushel and an amount calculated at the rate of Is. 8d. per bushel, a sum of £250 Is. 9d. The company recovered judgment for this amount in the Local Court at Mount Gambler, and the judgment was affirmed by a majority of the learned Judges of the Supreme Court of South Australia. An appeal is now brought to this Court.

340 HIGH COURT

[1933.

H. C. OF A. The bought and sold notes do not state the transaction between the parties with much precision or clearness, but it seems that they t'oppiNG are forms in common use and lead to but few disputes. I daresay

Commercial

the property in the wheat delivered under these contracts

J<'loue and

Oatmeal

passes to the company, but that is not a matter upon which I desire

Milling

in the present case to express any opinion. It seems clear enough,

Co. Ltd.

however, that the 3s. 4d. advance is intended to be a payment

Starke J.

towards, or on account of, or in anticipation of, purchase money if and when a date of settlement is fixed under the documents and a price is ascertained. Further, it seems clear enough that the docu­ ments enable the party who supplies the wheat to fix the date for settlement and the ascertainment of the price of the wheat, so long as it be no later than 31st December 1930. It follows, if the price thus ascertained is less than the amount paid in advance towards, or on account of, or in anticipation of, purchase money, that there has then been an overpayment of purchase money ; the amount in excess has been paid upon an unfounded supposition of fact, namely, that the purchase money would exceed the advance. In such circumstances the overpayment can be recovered [Cox v. Prentice (1) ; Kelly v. Solari (2)).

The appeal should be dismissed.

Dtxon j . The appellant, a wheat farmer at Naracoorte in South Australia, in January 1930 disposed of his wheat to the respondent, a milling company of the same place, upon terms contained in docu­ ments described as bought and sold notes. The respondent paid him a sum of three shillings and fourpence a bushel upon delivery and, by the judgment under appeal, it has recovered part of this sum, consisting of one shilling and eightpence a bushel, as an over­ payment. The question upon the appeal is whether any part of it is so recoverable. The written contract between the parties was not only inscribed upon an inappropriate printed form, but it was expressed with a compendiousness and vagueness which make the transaction fully intelligible only to those familiar with dealings between wheat farmers and millers in South Australia. The learned

(1) (181.5) .3 >1. & S. 344; 105 E.R.

(2) (1841) 9 M. & W. 54; lo2 E-3'

641.  24.

40 C.L.R.] OF AUSTRALIA.

341

Judges in South Australia, who were all experienced in such matters, R-

agreed upon the general character of the transaction, and their view

is supported by the conduct of the parties. In these circumstances

Copping

X .

I think we should not venture upon a reconsideration of the general Commercial

nature of the bargain, but should confine ourselves to the exact point

Oatmeal Milling

upon which the parties are at issue and in the decision of which a

Co. Ltd.

division of opinion arose in the Supreme Court of South Australia.

Dixoa J.

The substance of the agreement between the parties has been held to be that the farmer should deliver to the miller the whole of his wheat of the season for the purpose of a sale at a price to be fixed by the supplier “ selling ” on or before 31st December 1930 at six­ pence a bushel below the price quoted for Port Adelaide for the day of such “ sale,” and that the miller should make or pay to the farmer on delivery a “ first advance ” at the rate of three shillings and four- pence a bushel.

The price of wheat fell steadily throughout the year. By July it had reached a price at Port Adelaide rvhich, after the deduction of sixpence, left less than three shillings and fourpence a bushel, and, by the end of December, the price at Port Adelaide was only tw'o shillings and tw'opence. The appellant did not declare a “ sale ” under his agreement, although on 18th November he was notified by the respondent that, if before 31st December he did not “ exercise his option of selling,” the company would “ take the wheat into stock at market price and credit his account with the proceeds.” The amount which the respondent company has recovered in the action is the difference between the “ first advance ” of three shillings and fourpence and the price at Port Adelaide on 31st December 1930, less sixpence a bushel. At the time when the contract was made, 20tli January 1930, the price of wheat at Port Adelaide was four shillings and elevenpence, and neither party can be taken to have supposed that the price would fall below three shillings and ten- I)ence. It is, therefore, fruitless to seek in the language of the agreement any indication of their actual intention whether, if three shillings and fourpence proved a payment in excess of the price, the difference should or should not be repayable by the supplier of wheat. Probably neither of them adverted to such a possibility. In my opinion the question whether any excess is recoverable must be

342 HIGH COURT

[1933.

H. C. OF A. determined as a legal consequence of the character of the payment described by the parties as a “ first advance.” I think there can

(.'opping

be little doubt that the meaning of the contract was that the wheat

r.

.

(V)MMERciAL supplied should upon delivery become the absolute property of the

F lour and

Oatmeal

respondent milling company and that the price payable to the

Milling

(!o. Ltd.supplier, the appellant, should be fixed by his declaring that he sold

as on the day of his declaration, or as on a subsequent day specified

Dixon J.

in his declaration. If and when he so declared a sale as on a day, the price would become then payable and would be calculated at a rate per bushel sixpence below the Port Adelaide rate ruling on that day. Whether, upon the failure of the supplier, the appellant, to perform his obligation to declare a sale before 31st December 1930, the price fixed by the Port Adelaide price of that date became payable, may be a question, but it is a separate question. The agreement supposes that a price will be fixed by a declaration, and the primary question is : What is the character of the preliminary payment called a “ first advance ” ? The fixation of the price would create an immediate liability on the part of the milling company to pay. The advance made is plainly on account of this liability. It is intended to operate as part payment in advance of that liability. As Lord Campbell said in Timmins v. Gibbins (1) ;—“ It is difficult to say that there can be any case in which the debt is not antecedent to the payment. Even where the money is paid over the counter at the time of the sale, there must be a moment of time during which the purchaser is indebted to the vendor.” The payment is made in advance to be applied in discharge of an indebtedness eo instanti when it arises under the agreement. The legal character of the payment is that of money receivable in anticipation of an obligation, to be used in or towards its discharge when it is ascertained. It appears to me to be a necessary legal consequence of its character that the title of the recipient to retain it depends upon the liability arising, and, further, the title to retain the whole of it depends upon the amount of the liability being not less than the payment received in anticipation. I cannot agree that, when once it is determined that the true nature of the advance is a payment on account of the larice, an implication must be made in order to enable the resjiondent

(1) (1852) 18 Q.B. 722, at p. 726 ; 118 E.R. 273, at p. 274.

49 C.L.R.] OF AUSTRALIA.

343

H, C. or A.

milling company to recover any part of it.

On the contrary,

. .

1933,

appears to me to follow that, if in the event no price is established

pursuant to the contract, the purpose for which it is paid fails and

Copping

the title to retain it fails with it, and that an implication must be Com.mercial

F lour and

made in order to enable the recipient to retain it.

I think it also

Oatmeal Milling

follows that, if a price is ascertained low'er than the payment made Co.

Ltd.

in advance, the purpose of the prepayment fails pro tanto and an

Dixon J.

implication is needed to rebut the prima facie consequence that the excess is repayable. The excess represents the residue of a divisible payment made to answer an anticipated demand. In respect of the residue, the consideration expected to arise has completely failed.

If, because of the failure of the supplier of wheat, the appellant, to declare “ a sale ” and so fix a price pursuant to the contract, no price has become payable under the terms of the contract, I think the whole payment in advance would become repayable. No doubt, the respondent, the milling company, would in such a state of things be responsible upon a quantum valuit for the value of the wheat which became their property, and, no doubt, this would in the case supposed afford a set-off in an action by the respondent for the total sura. But I think the better interpretation of the contract is that the supplier bound himself to name a day by declaring a sale before 31st December 1930, so that upon each and every day up to the last he had an election, but that on the last day his duty became absolute, and, therefore that he, up to that time, having elected not to declare a sale, had no option but to accept the price ruling on the last day. This indeed was not disputed by the parties themselves.

For these reasons I think the appeal should be dismissed.

Kv a tt j . During the months of February and March 1930, the

appellant, a South Australian farmer, delivered to the respondent, a miller, a large quantity of wheat in pursuance of two memoranda .signed by the respective parties on January 21st preceding. These memoranda W’ere made upon forms of the respondent, one an ordinary tiought note, the other an ordinary sold note. The memorandum signed by the appellant commenced with the printed formula “ I have this day .sold to ” the respondent. The space left for the price

344 HIGH COURT

[1933.

H. C. OF A.

per bushel was filled by the written words “ 3s. 4d.—1st ad. payable

1933.

. .

. when delivered,” and the writing proceeded “ Must be sold

Coppingto us before 31/12/30. We guarantee to pay Gd. under Pt. Adelaide

V.

Commercial

as quoted by papers for growers lots.”

F lour and

Oatmeal

A payment of 3s. 4d. per bushel ŵ as made to the appellant at the

Milling

Co. Ltd.time of the delivery of the wheat. The market price w'as then

considerably higher than 3s. 4d., but during the later part of the year

Evatt J.

it gradually fell and on the last day of the year it was Is. 8d. But the farmer took no action whatever in “ selling ” or naming a day of sale. In these circumstances the respondent claims that the sum representing the difference betw'een Is. 8d. and the “ advance ” of 3s. 4d. per bushel is money payable, either for money lent or for money had and received to the use of the respondent.

In the first place I am of opinion that the property in the wheat passed to the miller upon delivery thereof. The learned magistrate came to a contrary opinion, thus stating his reasons :—

“ Mr. Skewes placed considerable reliance upon South Australian Insurance Co. V . Randell (1) in contending that the contract was one of sale. I think the case is distinguishable on this ground : that there it was a term of the contract that the miller should have the right to make the wheat part of his current consumable stock which he might grind, sell or use at his will and pleasure for his own profit. It may be inferred in the present case that the plaintiff did mix the defendant’s with other wheat and did grmd some of it, and that it would have been impossible for the plaintiff to have returned to defendant on demand the identical wheat delivered to him (plaintiff). But as to his right to do so the contract itself is silent, and 1 cannot say on the evidence that defendant consented to it. The contract here was, I think, intended to be one of bailment, and I cannot see that the plaintiff by committing what may have been a conversion can have altered the original character of the contract.”

It seems to me that the terms of the contract tend to negative any conclusion that the wheat wms to be held by the miller as bailee. Not only w’ere bought and sold notes signed by the two parties but there w'as nothing in the contract to suggest that, after delivery, the risk wms to remain w'ith the farmer. In this respect the case differs in a vital respect from that of Chapman Bros. x. Verco Bros,

d' Co. (2).

■

Although I agree wdth the magistrate’s observations upon RandeU’s Case (1), I infer from all the circum.stances that the intention of the

(1) (1869) L.R. 3 P.C. 101.

(2) A n t e , p. 3(Ki.

49 C.L.R.] OF AUSTRALIA.

345

parties was to transfer tlie property in the wheat upon delivery, the W.

C. of A.

farmer being under a contractual duty to name a day of sale before

December 31st, 1930.

Copping

V,

Tlie pre.sent contract differs in another respect also from that Commercial

considered by us in Chapman Bros. v. Verco Bros. & Co. (1). In eolrand ().\TME.\L

the latter case there was an express provision that if an “ advance ”

Milling

Co. Ltd .

was made to the farmer by the miller and it happened to exceed the

Evatt J.

market price at the time of the exercise by the farmer of his option, tlie miller was entitled to recover the difference from the farmer. Here, there is no such provision and the controversy between the parties falls to be considered upon more general principles.

It was suggested that the 3s. 4d. per bushel should be treated as a loan upon the security of the wheat delivered, and it appears that the magistrate based his judgment upon that footing. I do not think it possible to adopt this view of the contract. On the contrary, the property having passed, it was no longer available as a security. Nor was the 3s. 4d. intended to represent a mere loan of money.

The majority of the learned Judges in the Full Court of South Australia regarded the 3s. 4d. as a “ provisional ” payment. But Piper J. was of opinion that the phrase “ 3s. 4d. first advance ” was “ a minimum price which the miller was to bear in any event.”

The difficulty I have in adopting Piper J .’s interpretation of the contract is that, read as a whole, the promise of the miller is to pay a price fixed by reference to Port Adelaide market price, and, against the price so ascertained, the 3s. 4d. was intended to be placed. In the event of the price exceeding 3s. 4d., it is obvious that the miller Avas to be called on to pay only the amount of the excess. Yet this event is not sjiecially provided for, the words used—“ we guarantee to pay being in themselves consistent with a payment in addition to the 3s. 4(1.

In truth, the words “ 3s. 4d. first advance ” mean, and I think clearly mean, this—that, as the sale price was not yet fi.xed, money was being ]>aid by the purchaser in advance of his obligation to pay the price when it came to be fixed, and, further, the sum of 3s. 4d. was the first of such payments but was not necessarily the last.

(l) Ante, p. 300.

34(5 HIGH COURT

[1933.

H. C. OF A.

It seems to me that the word “ first ” conflicts with the idea of a

1933.

guaranteed minimum price of 3s. 4d. Of course it suggests that

('OPPINGthere may be a second payment to the farmer in addition to the ('oMMERciAL 3s. 4d., but it equally suggests that, if and when that additional

Flour and

Oatmeal

payment is made, it will retain the character of an “ advance.”

Milling

Co. Ltd.

That being so, would the sum of the two advances be also regarded

as making up a new guaranteed minimum ? I do not think so. In the circumstances, the right conclusion seems to be that the farmer was bound to credit the miller with the first or any other advance when the adjustment of price had to be made. In other words, all advances were to be put against the price, whatever the price turned out to be, and the balance was to be struck and accounted for.

Evatt J.

It follows that, if the farmer had nominated the day of sale in accordance with his duty under the contract, the miller would have been entitled to be credited with the payment of 3s. 4d. per bushel, whether the price as ascertained was greater than, equal to or less than 3s. 4d. And if the appellant had on December 30th fulfilled his duty he would have been under an obligation to pay to the respondent the sum for which he has been adjudged liable.

But I am also of opinion that, in these circumstances, the correct cause of action is for breach of contract, and the miller is not entitled to recover by the implication of a simple contract resulting in a mere debt.

The miller received consideration under the contract, he became owner of and, no doubt, used the wheat. Of necessity, therefore, he is affirming, and not disaffirming, the contract. I do not thiuk there was a failure of any part of the consideration, enabling the miller to recover as for money had and received. Nor do I think there was any mistaken assumption of fact capable of supporting a common money count. What occurred was no more than a bold display of optimism as to the future state of the wheat market.

But this view does not dispose of the case, because the appellant is liable to pay damages and the only question is, what is the measure thereof. The case is an unusual one upon this aspect, because there has not been any failure to deliver goods on the part of a seller. On the contrary the goods have been delivered and the breach consists in the failure on the part of the farmer to perform the act

49 C.L.R.] OF AUSTRALIA.

347

which would at once liquidate the transaction and quantify the H. C. of A.

appellant’s liability at the very amount for which he has been held

'

liable. It seems to me that the proper measure of damages is the

Copping

V.

estimated loss to the miller which would flow directly and in the Commercial

Flouk and

ordinary course of events from the farmer’s breach of contract.

Oatmeal Milling

But the farmer was not in breach until December 31st, 1930. The

Co. Ltd.

loss w'hich would necessarily be occasioned to the miller by the

Evatt J.

farmer’s failure to nominate any day of sale owing to the market price falling lower than the “ advance ” of 3s. 4d., and continuing to fall still lower, would be the difference between the advance and the price as at the day of breach, fixed in relation to the market and in accordance wdth the contract. That sum, the miller w'ould have been entitled to receive, if the farmer had not committed the breach which constitutes the cause of action. But this is the precise sum of money for wdiich liability has been affirmed in the Supreme Court of South Australia, though upon a different cause of action.

For these reasons the appeal should be dismissed.

McT ie r n a n J. I agree wdth the conclusion of the majority of the learned Judges of the Supreme Court that the moneys claimed by the respondent from the appellant are recoverable as moneys had and received. It is not necessary to describe again the peculiar nature of the transaction to which these obscure and ill-drawn documents gave rise. The question whether the appellant is liable to repay the moneys sued for turns upon the construction of the contract that is contained in these documents. Particularly, the •juestion turns upon the character w'hich the contract impressed upon the payment wdiich w'as made to the appellant as a “ first advance.” I adopt the considerations w-hich guided the majority of the Supreme Court in rejecting the view' that the moneys w'ere paid in consideration of the delivery of the w'heat or as a minimum price. It has been said that the parties never contemplated that the price which w'ould be fixed under the contract w'ould be lower than 3s. Id. per bushel. It is probably more correct that neither the appellant nor the respondent ever contemplated, wdien the contract was made, obtaining or paying for the wdieat more than the price which would be fixed. But the appellant is holding a sum in excess

348 HIGH COURT

[1933.

H. OF A.

of that price and he claims to hold it under the terms of the contract.

1933.

The moneys paid as a first advance were, in my opinion, upon the

C O I’FINOtrue construction of the contract, a first payment beforehand towards

COMMERCTAI,

the discharge of the debt whicli would become ascertained in amount,

F loifr

and

Oatmeal and immediately due and payable, when the wheat was “ sold ”

Milling

under the contract, and the appellant received the moneys in that

(’o.

Ltd .

character.

The parties agreed that the appellant was to declare

SIi'T icT iiiui

.1.

the contract price to be that ruling on any day before 31st December,

1930.     This was not done by him. I think the contract price became

that ruling on the last day before the above-mentioned date (see Leake on Contracts, 4th ed. (1902), at p. 595). The amount which was prepaid in excess of that sum is severable and recoverable as money had and received (cf. Devaux v. Conolly (1)).

In my opinion the appeal should be dismissed.

Appeal dismissed with costs.

Solicitor for the appellant, Edward Foster Skewes.

Solicitor tor the respondent, W. E. Pyne.

H. D. W.

(1) (1849) 8 C.B. 040 ; 1.37 E.R. 058.