Supreme Court of Canada
La Banque D’Hochelaga v. Waterous Engine Works Company, (1897) 27 SCR 406
Date: 1897-05-01
LA BANQUE D'HOCHELAGA (INTERVENANT)
Appellant;
And
THE WATEROUS ENGINE WORKS COMPANY (OPPOSANT)
Respondent.
1897: Mar 2; 1897: May 1
PRESENT —Sir Henry Strong C.J. and Gwynne, Sedgewick, King and Girouard JJ.
ON APPEAL FROM THE COURT OF QUEEN'S BENCH FOR LOWER CANADA (APPEAL SIDE).
Vendor and purchaser—Unpaid vendor—Conditional sale—Suspensive condition—Moveables incorporated with freehold—Immoveables by destination—Hypothecary charges—Arts. 375 et seq. G. C.
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. Béland (26 Can. S. C. R. 419), and Filiatrautt v. Goldie (Q. R. 2 Q. B. 368), distinguished.
Decision of the Court of Queen's Bench affirmed Girouard J. dissenting.
APPEAL from the judgment of the Court of Queen's Bench for Lower Canada (appeal side) (), reversing the judgment of the Superior Court District of Joliette and maintaining the respondent's opposition à 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.
[Page 407]
Béique Q.C. and Robertson for the appellant. This case is identical with Lainé v. Béland () and cases there relied upon.
The agreement constituted a sale upon credit with a resolutory condition. Leonard v. Boisvert (); Brown v. Lemieux (); Paquin v. Laverdière (); BeIlamy v. Burcher (). The unpaid vendor can only claim his goods whilst they remain in the possession of the vendee and clear of subsequent charges. Faure v. Alatliène (); Courroux v. Bouquet-Dupin (); Arts. 1478, 1536, 1543 & 1550 C. 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 and cement 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 Périer v. Veyrassat (); Mariaunaux v. Perrier (); Fiévet et al v. Bonduelle et al. (); Arts. 379 416 C C The recent decision in Hobson v. Gorringe () is directly in point; "posesssion 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. 294; 4 Aubry & Rau, no. 356, 400; Baudry-Lacantinerie, Dr. Civ. no 1220; 9 Dem. 208, 209; Rolland de Villard, vo. " Resolution," p. 23.
Lafleur and Laflamme for the respondent. The goods are not of a class specified to be immoveable by nature, (art. 376 C. C.); 1 Dem. des Biens, nos. 291, 292;
[Page 408]
Longueuil v. Grevier (); Boyd v. Wilson (); Budden v. Knight (); Chevalier v. Beauchemin (); S. V. '83, 1382; Aubry & Rau, 20; 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 v. Proulx (); Union Bank v. Nut-brown (). No person can give to a moveable which he does not own the character of an immoveable; Staron v. Compagnie des Moteurs à gaz et at. (); 4 Huc, no. 20; 5 Laurent, no. 482; Dal. vo. " Biens," nos. 128-132; 8 Fusier-Herman, "Biens," no. 215. There is quite a distinction between this case and Lainé v. Béland (). 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. 13) does not forbid such conditions; Richard v. Le curé et Marguilliers etc. de Québec (). There never was any intention here to immobolize, but the contrary is apparent, Wyatt v. Lewis & Kennebec Railway Co. (). The maxim " possesssion 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; Grange v. McLennan (); Lucas v. Bernard (); Gray v. Hôpital du Sacré
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Cæur (); Desautels y. Parker (). The machinery is separable from the mill and can at any time be removed without deteriorating what actually belongs to the realty, 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 (); Canadian Subscription Co. v. Donnelly (); Perkins v. Campbell Printing Press Manufacturing Co. (); 24 Laurent " Vente," nos. 4,54; Marcadé C. N., art. 1583, no. 2; 15 Laurent, no. 92; 4 Aubry & Rau, 71; Guillouard, no. 6.
The Chief Justice. The sheriff of the district of
Joloiette having, under a writ of Fieri Facias de bonis et de terris issued in an action brought by Edouard Migue against Francis Kelly, seized certain immoveables as being the property of the defendant in the action, the 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:
All the working machinery of the mills situated and. built upon lot no. 578 on the official plan and book of reference of the cadastre of the town of Joliette for registration purposes and all the saw-mills thereupon situated, as well as all the working machinery in front of the said mills, and all the machines, engines, boilers, tools, utensils and accessories attached or dependent thereto whatsoever.
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
[Page 410]
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 of 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 $8,456800, the appellants paid off the same and obtained a subrogation to the hypothec 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 $9,203.72.
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:
Notes to be in all cases given before removing machinery from works or station
$7000.00. Brantford, March 10th, 1888.
To the Waterous Engine Works Co. (Limited).
You will please manufacture for us and deliver F. O. B. cars at Brantford, on or about the 15th day of April, 1888, or as soon
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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 dollars 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.
Delivery as above is to constitute fulfilment of this contract by W. E. W. Co.
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 tobe 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.
TERMS AND CONDITIONS OF THIS SALE
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.
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Kelly & Brother affixed the machinery in their saw-* mill 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.
Upon this state of facts the Superior Court gave judgment for the appellants. This judgment was, however, unanimously reversed by the Court of Appeals, the judges present being the Chief Justice, and Bossé Blanchet, Hall and Würtele, Justices. The reasons upon which the latter court based their judgment are set forth in the considérants of the judgment itself, and are also fully developed in the notes of Mr. Justice Würtele which accompanied the judgment. The opinion of Mr. Justice Würtele is preceded by a -very full statement of the facts () which I may refer to as containing a history of the title to the immoveable 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 Würtele 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?
[Page 413]
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 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 of the sale under a resolutory condition, either express or implied by law, nor to a privilege in respect of the purchaee 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 the 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. No
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proof of the law of Ontario was made and the court had a right, therefore, to assume that it was identical with the law of Quebe upon the point involved, as indeed it is. Then it cannot for a moment be preteded that there was anything illegal in this stipulationthat the vendor should retain the property. Mr. Justice Würtele 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 & Ran, beyond all question state the law correctly. To these authori ties, 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 of 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 pronunced by Sir Alex ander 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 also refer on this head to a case reported m Sirey (), Staron v. Comp. des Moteurs à 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 pre sent case) were 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
[Page 415]
correctness of the arrêt 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 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 of 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 immovabee by nature under articles 376 and 377 The second paragraph of article 379, " Les ustensiles nécessaires à l'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 destinatonn from immoveables by nature
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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:
Pour pouvoir donner à un objet mobilier le caractère d'immeuble par destination ii faut étre à Ia fois propriétaire du fonds et propriétaire du meuble à immobiliser.
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:
4 Que le propriétaire du fonds soit en même temps propriétaire de l'objet placé sur le fonds. Si un propriétaire placait sur son fonds des meubles à lui remis en dépôt, ou à titre degage, de prêt, sa volonté ne suffirait pas à produire l'immobilisation et n'arrêterait en aucune façon Ia revendication des tiers, propriétaires des objects mobiliers.
The arrêt 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 en crine worked by gas, moteur à gazr had been furnished by the defendants to certain manu* facturérs who having affixed it in their factory, subsequently hypothecated the factory in favour of the plaintiff in the action. The hypothecary deed expressly
[Page 417]
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 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 arrêt of the Court of Appeal. The court say:
Attendu qu'il est certain d'après les documents produits que le moteur à gaz dont il s'agit de determiner le caractère au point de vue de la distinction des biens a été fourni aux Sieurs Guinard en mars 1881; qu'il a été placé dans leur usine, et qu'il s'y trouvait le 23 février 1884 comme faisant partie, en apparence tout an moins, des ustensiles nécessaires à l'exploitation de cette usine, qu'il devait donc être considéré comme une de ces choses mobilières de leur nature qui se confondent parfois avec les fonds où elles sont apportées et qui deviennent immeubles par destination, si les conditions exigées pour que cette destination puisse leur être donnée se trouvent accomplies. Attendu que la première de ces conditions est d'être à Ia Lois propriétaire du fonds et de l'objet à immobiliser lui-même, que le locataire ne rend pas plus immeuble une chose mobilière à lui appartenant et qu'il apporte dans un bâtiment qui n'est pas le sien, que le propriétaired d'une usine ne rend immeuble une chose mobilière de sa nature non employée à Ia construction et dont il n'est possesseur qu'à titre précaire.
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 Lainé v. Béland () has been much, relied on by the appellants. That case is, however, in no way inconsistent with the judgment of the
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Court of Queen's Bench. There could be no doubt that the boiler there in question was an immoveable by desttnation; 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 different 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 hypothecary 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 Würtele 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 () 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. The 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.
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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 the Civil Code of the province of Quebec that maxim has no place.
The appeal must be dismissed with costs.
GWYNNE 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 converedd into realty, and of the realty into which by incorporation therewith, the chattel is converted. The 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 authorizes—that 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.
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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 connectinn with the words " moveable things ") h has incorporated 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 of 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.
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SedgewCK and King JJ. concurred in the opinion that the appeal should be dismissed with costs.
GIROUARD J. (dissenting)—I am bound to admit that, as to one fact, this case is not analogous to Lainé v. Béland (), for in the latter case the incorporation had been originally made by the proprietor of both the immoveable and the moveable property, whereas in 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 Lainé v. Béland (1), in support of the judgment of the Court of Appeals;
La majorité des juges de la cour d'appel n'a pas songé à rechercher Ia nature du contrat du 7 avril 1893; à leurs yeux, sans doute, et je crois qu'ils avaient raison, ii importait peu que les appelants fussent vendeurs ou simples locateurs; ils avaient consenti à l'incorporation les machines à l'immeuble; ils les avaient vendues pendant qu'elles étaient ainsi incorporées; elles étaient donc devenues immeubles et frappées des hypothèques de l'intimé.
L'honorable juge en chef et M. le juge Bossé expriment l'opinion, dans leurs notes, que ces objets mobiliers peuvent être considérés immeubles par nature; mais le texte du jugement déclare simplement qu'ils étaient incorporés à l'iimmeuble et en faisaient partie intégrante sans s'expliquer sur la nature de leur immobilisation, Je crois qu'ils sont devenus immeubles par le seul fait de l'incorporation qu'en firent les propriétaires du fonds, et qu'ils sent immeubles par destination tant qu'ils y restent," aux termes de l'article 379 du Code Civil. Cet article déclare que:
"Les objets mobiliers que le propriétaire a placés sur son fends à perpétuelle demeure, ou qu'il y a incorporés, sont immeubles par destination, tant qu'ils y restent. Ainsi sont immeubles sous ces restrictions les objets suivants, et autres semblables: 1. Les pressoirs, chaudières,
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alambics, cuves et tonnes; 2. Les ustensiles nécessaires à l'exploitation des forges, papeteries et autres usines."
Il est incontestable, et le fait me paraît admis par l'appelant et tons lea juges, qu'il y a eu de fait incorporation des machines à l'immeuble, et que cette incorporation a été faite par le propriétaire du fonds. Voilà tout ce que l'article 379 de notre Code prescrit, il n'exige même pas que l'incorporation ait été faite à perpétuelle demeure. Il ne fait aucune mention du vendeur non payé, ou avec la condition résolutoire, pas méme de locateur on de tout autre propriétaire des objets mobiliers qui aurait consenti à leur incorporation.
And again on page 429:
Voilà d'ailleurs la doctrine que cette cour a consacrée à l'égard du vendeur non payé dans un jugement élaboéé et rempli d autorités, rendu en 1890 dans les causes de Wallbridge v. Farwell, et Ontario Car Foundry Co. v. Farwell (), qui jusqu'ici a cependant échappé à l'attention des parties. Cette cour décida que le créancier hypothécaire doit étre préféré au vendeur non payé, et je crois que cette décision s'applique au vendeur avec condition résolutoire, et méme an locateur, car le droit de revendiquer du vendeur non payé implique la resolution du contrat comme dans le cas du vendeur avec condition résolutoire ou du locateur, avec cette seule différence, que dans le premier cas, Ia resolution résulte de la loi, tandis que dans l'autre elle résulte du contrat.
In the present case the Court of Appeal took no notice of its former decision in Lainé v. Béland (). The Court of Review, per Pagnuelo J., in Leonard v. Boisvert (), has recently expressed the opinion that the two decisions are contradictory, and gave its preference to Lainé v. Béland (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,
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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 proprietor of moveable property, or even improvements or constructions on the land. (Arts. 415 2194 and 2268 C. C.) To remove this legal presumption, they were bound to prove that, at the time the machinery was 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 signed * 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 hears date, namely, on the 10th March, 1888, or at least before the delivery of the machinery and its incorporation with the building, can they revindicate the same as against an hypothecary creditor?
The Quebec Code, art. 379 says:
Moveable things which a proprietor 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 French version says:
Les objects mobiliers que le propriétaire a placss sur son fonds, etc.
Therefore the only condition the Quebec law requires 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
(1) See Cass. 20 Dec. 1875 S V. 76, 1, 208.
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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 '.
Les objets que le propriétaire d'un fonds y a placés pour le service et l'exploitation de ce fonds, sont immeubles par destination, etc.
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:
Ainsi sont immeubles par destination, quand ils ont été placés par le propriétaire pour le service et l'exploitation du fonds, etc.
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 l'exploitation de ce fonds, or as explained. by many writers and decisions, for a permanency à perpétuelle demeure, whereas, under the Quebec Code,
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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 by 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-mill. 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 Lainé v. Béland () 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 (); Rennes 31 Août, 1864 (); Cass. 20 Déc., 1875 (); Amiens, 12 Mars, 1884; Cass. 16 Juin, 1885 (); Bourges, 26 Déc., 1887 (); Cass. 11 Janvier, 1887 (); Cass. 17 Juillet 1895 ().
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.
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Mr. Justice Wurtele, who apparently expressed the views of the Court of Appeal, does not refer to article 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 text of law. He says and this is the only part of his opinion which requires notice:
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 m the building or on the land by its proprietor and also that they belong to him ().
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 () 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 reauired to constitute immobilization by destination:
Attendu que la premiere de ces conditions est d'être à la fois propriétaire du fonds et de l'objet à immobiliser lui-même; que le locataire ne rend pas plus immeuble une chose mobilière à lui appartenant, et qu'il apporte dans un bâtiment qui n'est pas le sien, que le propriétaire d'une usine ne rend immeuble une chose mobilière de sa. nature non employée à la construction et dont ii n'est possesseur qu'à titre précaire.
The reasoning of this arrêt is evidently bad. The French Code (), says in express terms that immobilization
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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 controverter 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 s 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 différent from the French Code it is sufficient to refer to them. I hope I will be excused for calling attention to the two last arrêts of the Cour de Cassation quoted above the first rendered on the 11th of January, 1887 (); and the second on the 11th of July 1895. ()
In the first case the manufacturer had supplied the machinery under the following stipulation:
Les appareils d'installation resteront Ia propriété de Ia société, sau ou suivant les conditions prévues à l'article 8 ci-après,
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:
Attendu qu'il n'est point contesté que les appareils fournis par la Société francaise la Diffusion aient été placés dans l'usine de Montfourny
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pour le service et l'exploitation de la dite usine, et soient ainsi devenus immeuble par destination; Attendu que l'action en resolution des ventes de meubles, comme le privilège établi par l'art. 2102 s. 4, C. civ., ne peut être exercé au prejudice des créanciers ayant hypothèque sur l'immeuble dont les meubles vendus sont devenus les accessoires; qu'en effet cet exercice serait contraire à l'art 524 C. civ. et à tout le système hypothécaire; qu'il suit de là qu'en repoussant la demande de la Société francaise la Diffusion l'arrêt attaqué n'a violé ou faussement appliqué aucun des articles cités, et a fait, au contraire, une juste application des principles en la matière.
In a foot note the reporter says:
(6) En ce sens: Cass., 9 juin 1847. Rivière, Code civ. ann., sur l'art. 2102 note K.—Rennes, 31 août 1864, S. V. 65,2,111, P. 65, 490.Comp. Cass. 9 décembre 1835, S. V. 36,1,177.—Rivière. Jurispr. de la Cour de cassation n. 558 et suiv.—Cependant la question est controversée, mais plus géneralement résolue dans le sens ci-dessus. (V. Tabee gén., Devill. et Gillo, v°. Privilèges, n. 115 et suiv.; Rép. gén. Pal., et Suppl. eod. verbo, 360 et suiv.; Marcadé, t. VI, sur l'art. 1654, n. 2; Massé et Verge, sur Zachariae, t. V, p. 143, 791, note 27; Aubry et Rau, t. III p. 409, s. 284, Art. 4, p. 400, s. 356; Pont, Priv. et hyp. n. 156).
The second arrêt 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'apprécier souverainement le véritable caractère des conventions, sans s'arrêter à Ia qualification qui leur a étŁ donnée par les parties.
En matière de liquidation judiciaire ou de faillite, il peut être déclaré qu'un acte qualifié bail, constatant la location de certains meubles trouvés en la possession du failli, avec reserve de la propriété jusqu'au paiement intégral de loyers stipulés, est fictif et contient en réalité une vente ferme et à credit, qui n'est pas opposable aux autres créanciers 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 (). It was stated at the heating that only Mr. Justice Pagnuelo criticised the decision of the Court of Appeal in this case. True, Mr. Justice Jetté .and Mr. Justice Doherty made some reservation as to some remarks of Mr. Justice Pagnuelo bearing upon
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another branch of the case; hut, 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 a faculté de réméré. Mr. Justice Pagnuelo, after having recited the contract, said:
Le contrat de vente (that is of the machinery) n'est donc ni Suspendu, ni résolu. L'objet de Ia clause ne serait que de conserver aux vendeurs un privilège sur la chose pour le paiement du prix, privilège exorbitant du droit commun quant aux tiers (Art. 2000 C. C.)
Nous sommes unanimes sur ce point. et ce sera le motif donéé pour infirmer le jugement.
Mr. Justice Jetté, speaking for himself and Mr. Justice Doherty, said:
Pour la majorité de Ia cour, l'hon. juge Doherty et moi, il ne se présente, dans l'espèce, qu'une simple question d'appréciation du contrat fait entre le demandeur et le défendeur, Adoiphe Boisvert. Ce contrat, suivant nous, n'était pas suffisant pour conserver au demandeur la propriété des engins et machines vendues, jusqu'au , paiement du prix. C'est là, par consequent, le seul point que décide-le jugement de cette cour, et M. le juge Doherty et moi, desirons faire les reserves les plus absolues quant aux autres questions discutées par notre honorable collŁgue 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 due by me, then you are at 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
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for the price of said effects, by bringing said goods to sale without resorting to judicial proceedings, and that said stipulation had Dot the effect of making the passing to said Boisvert of the property in the effects sold, subject to the payment in full of the price thereof as a suspensive condition and preventing the passing of said property to Boisvert until said price was paid, etc.
Taking for granted that Boisvert was proprietor of the mill within the meaning of article 379 C. C, this decision is undoubtedly correct, and is in accord with Lainé v. Béland (), and the Quebec Code. Under that Code, as already observed, permanency or perpétuelle demeure 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 destinatonn 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 à perpétuelle demeure, because article 379 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
subject in contracts for the transfer of immoveable property, to the special provisions contained in this Code for the registration of titles to and claims upon such property.
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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 provisions of the Code respecting immoveable property, as the Court of Appeal and this court decided in Lainé v Béland ().
Some arguments have been advanced that the pro- prietors of the mill could not grant or create greater rights than they had. We have also answered this objection in Lainé v. Béland (1). 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 Thibau--deau 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:
Vainement l'acheteur dirait-il que la vente seule mobilise les immeubles par destination; cela est vrai entre les parties cela n'est pas vrai à l'égard du créancier ¡hypothécaire qui a un droit reel dans la chose, droit qu'il conserve tant que la chose est attachée au fonds
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 ease, we have the formal acquiescence of the proprietor of the machinery to its
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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 of the real estate par destination, and subject to mortgages, liens and alienations generally
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 asreed 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 h ave 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.
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We must not overlook article 2017 of the Civil Code:
Hypothec is indivisible and subsists m entirety upon all the immoveables made liable, upon each of them and upon every portion thereof. Hypothec extends over all subsequent improvements or increase by alluvion of the property hypothecated.
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 before or after it was created, which are not the property of the proprietor of the immoveable. We have decided otherwise in Lainé v. Béland ().
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 détenteur or 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 on 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
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things sold till full payment was made, and the other without any such reservation. The mortgage creditor or 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 was signed sometime afterwards, at least before the moveable effects were placed. Can such a state of 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 Lainé v. Béland () decides this case, and that the appeal ought to be allowed with costs.
Appeal dismissed with costs.
Solicitors for the appellant: Béique, Lafontaine, Tuvgeon & Robertson.
Solicitors for the respondent: Greenshields, Green-shields, Laflamme & Glass.
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