#17307 - Destruction Of Property Rights

Many academics do not speak of ‘destruction’ of property rights at all but merely subsume these cases under the heading of transfer. We must ask whether what is happening in these cases can in fact be described purely as transfer of rights or whether something in the nature of destruction is occurring.

Remember that destruction need not be complete destruction. Sometimes title is destroyed as against only certain people but not others.

If a thing is destroyed, the right in relation to that thing must also by definition be destroyed. The destruction of the goods will sometimes create new rights (e.g. mixture) or no new rights may be created (e.g. accession).

When two separate goods are mixed (e.g. wine), the 2 existing goods will be destroyed and a new good will be created.

The basic rule is that Ownership of the mixture will be held by both A and B. When mixing is done on a consensual basis, the intention of the parties will govern the proprietary consequences. However, that intention may be difficult to ascertain and the default inference will be that A and B will be ‘co-owners’ of the mixture (Buckley v Gross). Each will have a share to the extent of the proportion each contributed to the mixture. They will have a tenancy in common in proportion to their contributions (Spence).

Buckley v Gross (1863)- Court of Queen’s Bench Facts: Tallow, that was the property of different persons, were deposited in warehouses on a bank of the Thames. A fire took place and the tallow melted and flowed down into the river, from which several portions of it were unwarrantably taken by different persons. A, one of those persons, sold some of it to B. It was taken by the police and A was charged with the possession of tallow supposed to have been stolen or unlawfully obtained. The magistrate dismissed the charge but ordered it to be detained. It was sold by the direction of the Commissioner of Police, before the 12 months limitation had expired. C, having purchased the tallow from the police. A maintained an action against C for conversion. Held: When property of different persons is mixed together, they continue to have property in the mixture. Therefore, when a 3^rd party finds it, he is committing a crime. “The tallow of the different owners was indeed mixed up into a molten mass, so that it might be difficult to apportion it among them; but I dissent from the doctrine that, because the property of different persons is confused together, that entitles a third person to steal it with impunity. Probably the legal effect of such a mixture would be to make the owners tenants in common in equal portions of the mass, but at all events they do not lose their property in it.” (Blackburn J)
Spence v Union Marine Insurance Co (1868)- Court of Common Pleas Facts: Cotton belonging to different owners were shipping in bales specifically marked. 43 bales belonged to C, and were insured by D against the usual perils. In the course of her voyage the ship was wrecked near Key West; all the cotton was damaged; some of was lost. Some was sold near the wreckage and the rest was conveyed in another vessel to Liverpool. The marks on a large number of the bales were obliterated by sea-water so that all of the bales sold at Key West were non-identifiable; and only 2 of C’s bales were identified out of the ones in Liverpool and were delivered to them. C claimed to recover against D for the loss of the other 41 bales. Held (Bovill CJ): “When goods of different owners become by accident so mixed together as to be undistinguishable, the owners of the goods so mixed become tenants in common of the whole, in the proportions which they have severally contributed to it.”

Buckley v Gross (1863)- Court of Queen’s Bench

Facts: Tallow, that was the property of different persons, were deposited in warehouses on a bank of the Thames. A fire took place and the tallow melted and flowed down into the river, from which several portions of it were unwarrantably taken by different persons. A, one of those persons, sold some of it to B. It was taken by the police and A was charged with the possession of tallow supposed to have been stolen or unlawfully obtained. The magistrate dismissed the charge but ordered it to be detained. It was sold by the direction of the Commissioner of Police, before the 12 months limitation had expired. C, having purchased the tallow from the police. A maintained an action against C for conversion.

Held: When property of different persons is mixed together, they continue to have property in the mixture. Therefore, when a 3^rd party finds it, he is committing a crime.

“The tallow of the different owners was indeed mixed up into a molten mass, so that it might be difficult to apportion it among them; but I dissent from the doctrine that, because the property of different persons is confused together, that entitles a third person to steal it with impunity. Probably the legal effect of such a mixture would be to make the owners tenants in common in equal portions of the mass, but at all events they do not lose their property in it.” (Blackburn J)

Spence v Union Marine Insurance Co (1868)- Court of Common Pleas

Facts: Cotton belonging to different owners were shipping in bales specifically marked. 43 bales belonged to C, and were insured by D against the usual perils. In the course of her voyage the ship was wrecked near Key West; all the cotton was damaged; some of was lost. Some was sold near the wreckage and the rest was conveyed in another vessel to Liverpool. The marks on a large number of the bales were obliterated by sea-water so that all of the bales sold at Key West were non-identifiable; and only 2 of C’s bales were identified out of the ones in Liverpool and were delivered to them. C claimed to recover against D for the loss of the other 41 bales.

Held (Bovill CJ):

“When goods of different owners become by accident so mixed together as to be undistinguishable, the owners of the goods so mixed become tenants in common of the whole, in the proportions which they have severally contributed to it.”

Roman Law

Where the mixing was non-consensual, Roman law distinguished between situations in which there was merely a loss of identifiability (commixtio), as with a mixing of sheep, and that where there was not only a loss of identifiability but a loss of physical integrity (confusio), such as a mixing of wines.

In cases of commixtio, so long as the constituent units retained their physical integrity, ownership remained unaltered. There was, in other words, a situation of ‘continuing separate ownership’.
In cases of confusio, it was no longer possible to talk of ownership of anything other than the mass itself. Thus, the parties were treated as co-owners of the mass.

English Law

In English law, we do not distinguish between fluid and granular mixtures. The law is that A will still acquire a property right in the new mixture. However, following general evidentiary principles, if A is a deliberate or careless wrongdoer, any evidential doubt as to the proportion of each party’s contribution to the mixture will be decided in favour of B.

Blackstone recommended a penal rule in such a case that would allocate Ownership of the mixture solely to B. This approach can be seen in FS Sandeman (Earl Loreburn)
This harsh approach was rejected in Indian Oil in cases where it could be ascertained how much was contributed by the innocent party. Thus, Indian Oil confined Blackstone’s rule to one of resolving evidential difficulty.

McFarlane analysis: It is important to note the contrast between the rules applying to manufacturing and those applying to mixing.

The manufacturing rules are consistent with the general principle that B1 acquires a property right through taking physical control of a thing.
In contrast, in a mixing case, B2 acquires a property right in the new thing even though he does not have physical control of that new thing.
- This rule could lead to a nasty shock to C, a bona fide purchaser, who is buying the mixture from B1 and may reasonably believe that B1 has Ownership of the mixture.

FS Sandeman & Sons v Tyzack and Branfoot Shipping Co (1913)- HoL (Scotland) Facts: Bales of jute specifically marked to various consignees were shipped under bills of lading stating that the ship was not to be liable for obliteration or absence of marks. On the discharge of the ship 14 bales were missing and 11 were not marked as labelled in the bills of lading and could not be identified. 4 consignees refused to accept any of the 11 bales. The shipowner was willing to account to the consignees for the value of the 14 bales missing, but claimed that the 11 bales ought to be allocated among them in the like proportion. C were missing 6 bales that did not correspond to the 11 unmarked bales. Held: Shipowner liable for the full value of the 6 bales “It may be that the six which the appellants complain have not been delivered to them were among these fourteen. So the shipowners cannot prove, at least they have not proved, that the failure to deliver these six was due to any absence or obliteration of marking of such six bales.” (Earl Loreburn) “The pursuers are, therefore, in the position of being unable to assert that they have delivered to the defenders the goods which they received on their account for carriage. Prima facie this is a condition of their right to demand the payment of freight.” (Lord Moulton)
Indian Oil Corporation v Greenstone Shipping (1987)- QBD Facts: Owners of vessel chartered to transport a quantity of Russian crude oil, the property of the receivers, from a Russian port to India, mixed the Russian oil with their own crude oil already on board the vessel. The mixture of oils could not be separated for practical purposes and the receivers obtained a quantity of oil less than the figure endorsed on the bill of lading. Receivers claimed that they were entitled to all the oil on board and an appropriate sum to that effect. Held (Staughton J): Where a party wrongfully mixed the goods of another with his own goods which were substantially of the same nature and quality, the mixture was held on common and the innocent party was entitled to receive from it a quantity equal to that of his goods which had gone into the mixture. “Where it is totally unknown how much of the innocent party's goods went into the mixture, the whole should belong to him. But I do not see that they require or justify the same result where it is known how much was contributed by the innocent party, or even what the maximum quantity is that he can have contributed, being something less than the whole.” “Where B wrongfully mixes the goods of A with goods of his own, which are substantially of the same nature and quality, and they cannot in practice be separated, the mixture is held in common and A is entitled to receive out of it a quantity equal to that of his goods which went into the mixture, any doubt as to that quantity being resolved in favour of A. He is also entitled to claim damages from B in respect of any loss he may have suffered, in respect of quality or otherwise, by reason of the admixture.”

FS Sandeman & Sons v Tyzack and Branfoot Shipping Co (1913)- HoL (Scotland)

Facts: Bales of jute specifically marked to various consignees were shipped under bills of lading stating that the ship was not to be liable for obliteration or absence of marks. On the discharge of the ship 14 bales were missing and 11 were not marked as labelled in the bills of lading and could not be identified. 4 consignees refused to accept any of the 11 bales. The shipowner was willing to account to the consignees for the value of the 14 bales missing, but claimed that the 11 bales ought to be allocated among them in the like proportion. C were missing 6 bales that did not correspond to the 11 unmarked bales.

Held: Shipowner liable for the full value of the 6 bales

“It may be that the six which the appellants complain have not been delivered to them were among these fourteen. So the shipowners cannot prove, at least they have not proved, that the failure to deliver these six was due to any absence or obliteration of marking of such six bales.” (Earl Loreburn)
“The pursuers are, therefore, in the position of being unable to assert that they have delivered to the defenders the goods which they received on their account for carriage. Prima facie this is a condition of their right to demand the payment of freight.” (Lord Moulton)

Indian Oil Corporation v Greenstone Shipping (1987)- QBD

Facts: Owners of vessel chartered to transport a quantity of Russian crude oil, the property of the receivers, from a Russian port to India, mixed the Russian oil with their own crude oil already on board the vessel. The mixture of oils could not be separated for practical purposes and the receivers obtained a quantity of oil less than the figure endorsed on the bill of lading. Receivers claimed that they were entitled to all the oil on board and an appropriate sum to that effect.

Held (Staughton J): Where a party wrongfully mixed the goods of another with his own goods which were substantially of the same nature and quality, the mixture was held on common and the innocent party was entitled to receive from it a quantity equal to that of his goods which had gone into the mixture.

“Where it is totally unknown how much of the innocent party's goods went into the mixture, the whole should belong to him. But I do not see that they require or justify the same result where it is known how much was contributed by the innocent party, or even what the maximum quantity is that he can have contributed, being something less than the whole.”
“Where B wrongfully mixes the goods of A with goods of his own, which are substantially of the same nature and quality, and they cannot in practice be separated, the mixture is held in common and A is entitled to receive out of it a quantity equal to that of his goods which went into the mixture, any doubt as to that quantity being resolved in favour of A. He is also entitled to claim damages from B in respect of any loss he may have suffered, in respect of quality or otherwise, by reason of the admixture.”

The cases of Farnsworth (Australian case) and Coleman v Harvey (New Zealand) suggest that the co-ownership rules also apply in cases where the mixing causes a loss of physical identity.

Coleman: consensual mixing cases where silver coins belonging to H were mixed with silver belonging to C. The mass was mixed so as to produce ingots. H sought to sustain an action in conversion against C.
- Held that the parties became tenants in common of the ingots and that a conversion action was maintainable

#17307 - Destruction Of Property Rights - Personal Property Law

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