MEGAW L.J. I shall ask Roskill L.J. to deliver the first judgment.
ROSKILL L.J. This appeal, from a judgment of Mocatta J. dated February 11, 1975, arises out of a dispute between the plaintiffs, a Dutch company, who amongst other things manufacture aluminium foil in Holland, and the defendants, an English limited company, regarding entitlement, first to certain quantities of aluminium foil admitted to be physically in the defendants' possession and secondly to certain proceeds of sale of other aluminium foil delivered to the defendants by the plaintiffs and sold by the defendants to sub-purchasers in this country for which those sub-purchasers had paid the defendants but for which the defendants had not paid the plaintiffs by the time the defendants - whose business has been in the hands of a receiver since November 1, 1974 - got into the serious financial difficulties which led to that receiver being so appointed. At that date the defendants were indebted to the plaintiffs for over £122,000.
The value of the foil concerned in the first head of claim is said to be just over £50,000. The sum involved in the second head of claim is just over £35,000. The present action is thus an attempt by the plaintiffs to reduce that very substantial loss which they have suffered in their trading operations with the defendants, albeit at the expense of the debenture holders by whom the receiver was appointed and to whom the defendants remain very heavily indebted in respect of two advances of £100,000 each made to the defendants by the debenture holders.
The business which has led to these heavy losses was not always conducted between the defendants and the plaintiffs. Before September 1973, it had been conducted by the plaintiffs with a partnership called Romalpa Aluminium (for brevity I shall call it "the partnership") the two partners in which became the two principal directors of the defendants, the third director of the defendants being a nominee of the debenture holders who first of all financed the defendants in return initially for the issue of unsecured loan stock and later in return for the debentures which the defendants issued to them.
There is no doubt what the express terms were upon which the plaintiffs did business with the partnership. They did their business upon certain general selling terms and conditions dated February 1971, which were deposited or registered with all district or county courts in Holland. The significance of such deposit, in Dutch law, was not the subject of any evidence; nor does it matter, though it would have been interesting to have known what the position was under Dutch law, as indeed it would have been interesting to know how a Dutch lawyer would have construed some of those express terms. Those conditions were in Dutch, but there was what one might describe as an authentic and specially prepared, though not perhaps very well expressed, English translation of the Dutch conditions. On April 4, 1972, the plaintiffs obtained from the partnership the signature of the two partners on a copy of that English translation. The conditions were expressed to be subject to Dutch law, the Amsterdam court being given exclusive jurisdiction by clause 30.
The relevant conditions for present purposes were clauses 13, 22, 25 and 26. I shall read parts of those later. Thereafter, and until the defendants took over the business with the plaintiffs previously done by the plaintiffs with the partnership, there can be no doubt that that business was done, inter alia, upon those express conditions. Individual invoices covered specific transactions incorporated both in Dutch and in English what was described as an "epitome" of the plaintiffs' general conditions to which I have just referred. One hesitates to criticise such a document, for one knows the difficulties of translation of this type of document from one language to another; but it cannot be said that the English translation is happy. Clause 13 is. not referred to in the epitome at all - an omission upon which the defendants placed considerable reliance in connection with their submission that though the general conditions had governed the relationship of the plaintiffs with the partnership, they never governed the plaintiffs' relationship with the defendants, notwithstanding that exactly the same printed form of invoice was used for business both with the partnership and with the defendants.
It was argued by Mr. Price for the defendants that since the same procedure had not been gone through with the defendants as with the partnership, that is to say, by obtaining the signatures of the defendants' directors on a copy of the conditions, those general conditions did not apply to the transactions between the defendants and the plaintiffs; and he went on to argue that the knowledge of the partnership was not the knowledge of the defendants even though those two partners were the defendants' two principal directors.
The avowed purpose of this argument was to enable the defendants, if they could, to escape, in particular, from the bonds of clause 13 of the general conditions. For, if the defendants were not bound by those conditions, and in particular by clause 13, the whole of the plaintiffs' claim must fail and Mocatta J.'s judgment would be manifestly wrong. If, however, the defendants were bound by clause 13, it was admitted that, as indeed Mocatta J. held, the plaintiffs must succeed on their first head of claim, though it was strenuously contended on their behalf that, even so, clause 13 did not enable them to succeed on their second head of claim. Indeed before us the major part of the argument was directed to this latter question which the judge also decided in the plaintiffs' favour. Indeed Mr. Price, if he will forgive my saying so, for reasons which I can well understand and indeed sympathise with, argued the second point first.
The opening sentences of clause 13 read:
"The ownership of the material to be delivered by A.I.V." - those
initials, I should interpose, stand for the plaintiffs - "will only be
transferred to purchaser when he has met all that is owing to A. I.V.,
no matter on what grounds. Until the date of payment, purchaser, if
A.I.V. so desires, is required to store this material in such a way
that it is clearly the property of A.T.V."
In argument those first two sentences in clause 13 were referred to for convenience as the first part of that clause. Following those first two sentences, which only occupy just over four lines of typescript, there are some 20 further lines of small print dealing with, and as I think only with, what were called in argument mixed or manufactured goods, that is to say goods manufactured from the material supplied by the plaintiffs, so that that material thus lost its original identity.
At one stage in his argument Mr. Price submitted that the second part of clause 13 also applied to unmanufactured goods - by which I mean goods which remained in the state in which they were delivered to the defendants; but ultimately he did not press this part of his argument - rightly, as I think; for it seems to me plain that the two parts of this clause are dealing with separate subject matters, the first part with unmanufactured goods and the second with mixed or manufactured goods. The second part is, however, relevant, especially in light of the argument which Mr. Price sought and obtained leave yesterday to advance by virtue of his amendment to the notice of appeal which we allowed, for in determining what implication is to be made in the first part of the clause - which is the all-important issue in this appeal - it is clearly right to look at clause 13 as a whole and not merely at one part of it. The second part reads:
"A.I.V. and purchaser agree that, if purchaser should make (a) new
object(s) from the material, mixes this material with (an)other
object(s) or if this material in any way whatsoever becomes a
constituent of (an)other object(s) A.I.V. will be given the ownership
of this (these) new object(s) as surety of the full payment of what
purchaser owes A.I.V. To this end A.I.V. and purchaser now agree that
the ownership of the article(i) in question, whether finished or
not, are to be transferred to A.I.V. and that this transfer of
ownership will be considered to have taken place through and at the
moment of the single operation or event by which the material is
converted into (a) new object(s). or is mixed with or becomes a
constituent of (an)other object(s). Until the moment of full payment of
what purchaser owes A.I.V., purchaser shall keep the object(s) in
question for A.I.V. in his capacity of fiduciary owner and, if
required, shall store this (these) object(s) in such a way that it
(they) can be recognised as such. Nevertheless, purchaser will be
entitled to sell these objects to a third party within the framework of
the normal carrying on of his business and to deliver them on condition
that - if A.I.V. so requires - purchaser, as long as he has not fully
discharged his debt to A.I.V. shall hand over to A.I.V. the claims he
has against his buyer emanating from this transaction."
Clause 22 reads:
"Payment has to be made nett cash by purchaser not later than 14 days
after the date of invoice, preferably by payment by transfer to the
postal giro or banking account of A.I.V. If required a bill of exchange
can be drawn. The place of payment for all deliveries is Vaassen." That
was where the plaintiffs carried on their business. "This also holds
good when a bill is returned unpaid. In spite of any complaints about
flaws in the material delivered, purchaser is obliged to pay the
purchase price at the time laid down."
The provision regarding 14 days was varied (assuming for the moment that the general conditions applied) in that 75 days' grace was allowed to the defendants and not the 14 days for which clause 22 alone provided. While, as I think, one must deal with the question of construction and implication upon the footing that the credit allowed was 75 days, I do not think that that question can be answered differently according to whether the credit period was 14 or 75 days or some other period. Clause 13 appears in the general conditions with clause 22 unvaried. Clause 25 reads:
"Should purchaser remain in default of any payment for which he is liable to A.I.V. - which would be the case in exceeding the time within which purchaser should have paid - then A.l.V. is entitled to stop all deliveries, irrespective of which contract with purchaser they spring from, and to rescind the contract in question without judicial interposition, all this without prejudicing their right to full compensation and without prejudicing their right to take back at once from purchaser the material [which], by virtue of what is laid down under 13, is still their property."
It is to be noted that the rights given by clause 25 (again assuming that the general conditions apply) are not limited to non-payment of individual debts due under each individual contract evidenced by individual invoices but apply in the case of default "of any payment" for which the purchaser (that is to say the defendants) is liable to the plaintiffs - a fact which I regard as of great importance. Clause 26 gives the plaintiffs an additional right to interest on outstanding invoice debts.
I shall deal first (as did the judge) with the question of the alleged incorporation of the general conditions into the transactions with the defendants, it being conceded that those general conditions applied to the antecedent transactions with the partnership. The judge had no difficulty in holding that the business done with the defendants was done on exactly the same terms as the antecedent business with the partnership. [His Lordship said he entirely agreed with Mocatta J.'s conclusion on that matter, and that it was obvious that the defendants' directors, the two ex-partners, knew precisely what the terms of business had been before the defendants came on the scene as a contracting party with the plaintiffs, and what those terms were going to be thereafter, and in fact were at all material times; and that their knowledge, to his Lordship's mind, was manifestly the knowledge of the defendants. He accordingly held that the foil physically held by the receiver was the plaintiffs' foil, to which they were now entitled, and the appeal against that part of Mocatta J.'s judgment must clearly fail. His Lordship continued:]
I turn to the second part, which Mr. Price argued first. Are the plaintiffs entitled to the proceeds of sales to sub-purchasers now held by the receiver? We were told both by Mr. Price and by Mr. Lincoln that the receiver received these moneys after he had entered into his receivership from sales made by the defendants to sub-purchasers before that date. The receiver, properly if I may say so, kept those moneys separate; and we were told that there is no complication arising of those moneys having become mixed with other moneys, because they were always kept separate. There was no suggestion that the sub-sales in question were other than authorised by the plaintiffs or that the sub-purchasers concerned did not acquire a valid title to the several quantities of foil which each of them bought. The sole question is whether, on the facts and on the true construction of the bargain, including the general conditions, between the plaintiffs and the defendants, the plaintiffs, are entitled to trace and recover those proceeds of the sub-sales, upon the well-known principles laid down in the judgment of Sir George Jessel M.R. in In re Hallett's Estate (1880) 13 Ch.D. 696. 7hose principles are so well known that it is not necessary to quote the Master of the Rolls' famous judgment or from the various restatements of principle in the several textbooks to which Mr. Price has referred. The most relevant passages from that judgment will be found in Mocatta J.'s judgment (ante, pp. 681A-B et seq.).
The critical question is whether there was a fiduciary relationship between the plaintiffs and the defendants which entitles the plaintiffs successfully to claim these moneys in the way and upon the footing which I have just described. Mr. Price strenuously argued that the bargain between the parties was a perfectly ordinary bargain, creating the ordinary contractual relationship of seller and buyer, with the consequence that if the buyers - that is to say the defendants - became insolvent before payment for the goods was made by them to the sellers, - that is, the plaintiffs - the sellers were left with their ordinary contractual or, as he put it, personal remedy as unsecured creditors of the buyers, and that there was no additional proprietary remedy (again to borrow his language) available to them justifying their seeking to trace and recover the proceeds of the sub-sales which had come from the sub-purchasers into the hands of the receiver.
It seems to me clear that, but for the provisions of clause 13 - which have to be read in conjunction with the other relevant clauses 1 have mentioned - this would be the position. The individual contracts were for delivery ex the plaintiffs' works in Holland, and, apart from special provisions, in English law at least - as already stated, there is no evidence of Dutch law and therefore we must apply English law to these contracts - both property and risk would have passed to the defendants upon such delivery.
But clause 13 plainly provides otherwise. The defendants as sellers were to retain the property in the goods until all - and I underline "all" - that was owing to them had been paid. It is a curious fact that the first part of clause 13 is so short while the second part is so long and detailed. But, as Mr. Lincoln said, the problems with which the second part had to deal were infinitely more complex than those with which the first part had to deal. It is obvious, to my mind, that the business purpose of the whole of this clause, read in its context in the general conditions, was to secure the plaintiffs, so far as possible, against the risks of non-payment after they had parted with possession of the goods delivered, whether or not those goods retained their identity after delivery. I unhesitatingly accept that part of Mr. Lincoln's submission. In the case of unmanufactured goods this was to be achieved by the plaintiffs retaining the property until all payments due had been made, to which were added the special rights given by clause 25. In the case of mixed or manufactured goods, more elaborate provisions were made and indeed were obviously required if the avowed object of clause 13 were to be achieved in the case of the latter class of goods. The plaintiffs were to be given the ownership of these mixed or manufactured goods as "surety" for "full payment." "Surety" I think in this context must mean, as Mr. Lincoln contended yesterday, "security." This is as between the defendants and the plaintiffs, and it is not necessary to consider how far this provision would protect the plaintiffs against adverse claims, at any rate in this country, by third parties. Further, the clause later provides that until "full payment" is made the defendants shall keep the mixed goods for the plaintiffs as "fiduciary owners" - not perhaps the happiest of phrases but one which suggests, at least to an English lawyer, that in relation to mixed or manufactured goods there was produced what in English law would be called a fiduciary relationship in this respect. The clause goes on to give to the defendants an express power of sale of such goods, and the right to deliver them; and adds an obligation upon the defendants, if required by the plaintiffs so to do, to assign (to use English legal language) to the plaintiffs the benefit of any claim against a sub-purchaser so long as the defendants have not fully discharged all their indebtedness to the plaintiffs.
For my part I accept that this last-mentioned provision is not itself an equitable assignment in English law. But I think that Mr. Lincoln is right in his general approach to the construction of the second part of clause 13. Like the first part, it contemplates the resale by the defendants of goods which at the time of such resale were to be the property of the plaintiffs and not of the defendants. The second part of clause 13 clearly contemplates the creation of a fiduciary relationship in relation to mixed goods; and the assignment provisions are, as I think, clearly designed to give the plaintiffs, if they so require, an additional security to recover debts otherwise payable to the defendants but not paid to them by the sub-purchasers, if the defendants have failed to discharge all or any of their current indebtedness to the plaintiffs.
The burden of Mr. Lincoln's argument was, first, that all goods dealt with in pursuance of clause 13 were, until all debts were discharged, the plaintiffs' goods which the defendants were authorised to sell on the plaintiffs' behalf and for the plaintiffs' account but only within the framework of clause 13. Since the goods were the plaintiffs', the defendants remained accountable to the plaintiffs for them or for their proceeds of sale, so long as any indebtedness whatever remained outstanding from the defendants to the plaintiffs. Hence the creation of the fiduciary relationship upon which Mr. Lincoln sought to rely. The burden of Mr. Price' s argument was, as already stated, that the clause created in the first part no more than the ordinary debtor/creditor, buyer/seller, relationship, and that nothing in the second part justified placing additional fiduciary obligations upon the defendants in respect of unmanufactured goods, referred to in the first part of the clause.
It was common ground at the trial and during argument in this court that some implication had to be made into the first part of clause 13; since otherwise the defendants could not lawfully sell the unmanufactured goods in their possession, at least until they were paid for - for, as already pointed out, they were the plaintiffs' and not the defendants' goods. To hold otherwise, as I think both parties accepted, would be to stultify the whole business purpose of these transactions. What (if any) implication is to be made beyond that? The first part of clause 13 is silent not only as to the power of sale but as to the dealing with any proceeds of the goods lawfully so sold by the defendants. Is the admitted power of sale (if I may respectfully borrow Goff L.J.'s phrase during the argument) fettered or unfettered? If it is fettered, is the fetter that, so long as any indebtedness remained outstanding in any respect from the defendants to the plaintiffs, the defendants after a sub-sale remained accountable to the plaintiffs for all proceeds of sub-sales - not even, as Mr. Price pointed out in argument, being able to retain for themselves the profit upon any such sales?
Mr. Price relied much upon the 75-days' credit - though, as I have already ventured to point out, the problem is the same whatever the length of the credit. But the longer the period it can fairly be said the greater the business, if not the legal, force of this part of Mr. Price's argument. If the plaintiffs were right, Mr. Price argued, then whenever sub-purchasers paid the defendants before the 75 days' credit had expired the defendants could not use those proceeds in their business for any purposes whatever save for paying their creditors, the plaintiffs: they must always retain those proceeds specifically for the plaintiffs' account and pay them over to the plaintiffs unless and until the entirety of outstanding indebtedness was discharged. This, he said, would deprive the defendants of all day-to-day finance and, so far from according with business efficacy, would produce precisely the opposite result, for it would cause acute cash-flow problems and make conduct of the defendants' business impossible. This is a formidable argument if one looks at the matter solely from the point of view of the defendants. But this matter has to be regarded in the light of the contractual provisions agreed upon by both parties, and the question of business efficacy, in relation to which there are here obvious competing business considerations, must be answered in the light of what both parties expressly agreed upon and therefore must be taken also impliedly to have agreed upon, and not unilaterally from the point of view of one party only.
Now, the crucial facts to my mind are two: first, that the defendants wen selling goods which the plaintiffs owned at all material times; and secondly, that clause 13 as a whole is obviously designed to protect the plaintiffs, in the event of later insolvency, against the consequences of having parted with possession of, though not with legal title to, these goods before payment was received, 75 days' credit being allowed. When, therefore, one is considering what, if any, additional implication has to be made to the undoubted implied power of sale in the first part of clause 13, one must ask what, if any, additional implication is necessary to make effective the obvious purpose of giving the requisite security to the plaintiffs? One is, I think, entitled to look at the second part of clause 13 to answer this; for it would be strange if the first part were to afford no relevant security when the second part is (as I think) elaborately drawn to give such security in relation to manufactured or mixed goods.
I see no difficulty in the contractual concept that, as between the defendants and their sub-purchasers, the defendants sold as principals, but that, as between themselves and the plaintiffs, those goods which they were selling as principals within their implied authority from the plaintiffs were the plaintiffs' goods which they were selling as agents for the plaintiffs to whom they remained fully accountable. If an agent lawfully sells his principal's goods, he stands in a fiduciary relationship to his principal and remains accountable to his principal for those goods and their proceeds. A bailee is in like position in relation to his bailor's goods. What, then, is there here to relieve the defendants from their obligation to account to the plaintiffs for those goods of the plaintiffs which they lawfully sell to sub-purchasers? The fact that they so sold them as principals does not, as I think, affect their relationship with the plaintiffs; nor (as at present advised) do I think - contrary to Mr. Price' s argument - that the sub-purchasers could on this analysis have sued the plaintiffs upon the sub-contracts as undisclosed principals for, say, breach of warranty of quality.
It seems to me clear (and so far from helping Mr. Price I think the second part of clause 13, properly construed, helps Mr. Lincoln) that to give effect to what I regard as the obvious purpose of clause 13 one must imply into the first part of the clause not only the power to sell but also the obligation to account in accordance with the normal fiduciary relationship of principal and agent, bailor and bailee. Accordingly, like the judge I find no difficulty in holding that the principles in Hallett's case, 13 Ch.D. 696 are of immediate application, and I think that the plaintiffs are entitled to trace these proceeds of sale and to recover them, as Mocatta J. has held by his judgment.
Mr. Price relied upon the conduct of the parties after the defendants took over from the partnership, pointing out (as was the fact) that the defendants were never required to account to the plaintiffs in the way I think, as a matter of law, the plaintiffs were entitled to require them to account. As a matter of business I would not have expected the plaintiffs so to have required the defendants to account. But, as Mr. Lincoln forcefully replied on this point, clause 13 is directed to a state of insolvency, not to what he described as to the halcyon days of solvency; and it is only upon insolvency that the question of what the powers are under clause 13 comes into play.
On the view which I have formed of this case it is not necessary to discuss some of the other interesting points on which we had the benefit of argument from counsel on both sides, and I refrain from doing so.
For the reasons I have given, for my part I would unhesitatingly uphold Mocatta J.'s judgment and dismiss this appeal.
GOFF L.J. I need not repeat any general statement of the facts. They have been fully set out in the judgment just delivered by Roskill L.J.
The first question which arises for determination is whether clause 13 of the general selling terms and conditions applied to the contracts made between the plaintiffs and the defendants or only to those made whilst the business was still being carried on by the partnership. If it did apply to the defendants, then it follows that the plaintiffs are entitled to recover the unsold stock and the appeal must fail as to that item. There is, however, then a second question whether, even so, the judgment is right in allowing the plaintiffs to recover the £35,000 odd proceeds of sale. I turn to the first of these questions. [His Lordship said that there was in his view no doubt at all that, the partners having accepted and signed the translation of the general terms and conditions, the whole of those terms, including clause 13, applied to the contracts made by them and he agreed with Roskill L.J. that the reasoning of Mocatta J. on that part of the case was quite unchallengeable. His Lordship continued:]
In my judgment the second part of the case comes down to a short question of construction. It is common ground that a power of sale during the period that any money remains owing to the plaintiffs must be implied; but the question is upon what terms.
I do not think it is necessary to go into the cases cited before Mocatta J., since it is clear to me, and was for a long time during the argument, that the plaintiffs must, on the principle of In re Hallett's Estate, 13 Ch.D. 696, be entitled to trace their aluminium into the proceeds of sale so as to enable them to take the £35,000, and to take that sum in priority to the general body of the defendants' creditors and in priority to the secured creditor Hume, unless, as the defendants contend, one ought to imply a power to sell and apply the proceeds of sale for their own purposes, or, as they put it, to sell for their own account. In the end this was accepted by both counsel, and nothing short of that will serve the defendants' purpose.
The plaintiffs say that the power should be qualified so as to maintain for them the security which they Eave themselves by providing that property in the aluminium should not pass so long as any money remains owing to them, and accordingly it could only be exercised for their benefit in this sense, that the proceeds of sale must be held in trust for them until all the defendants' indebtedness to them on any contract be discharged.
In considering this problem, one may at the outset dispose of one point. The provisions in the latter part of clause 13 dealing with cases where there has been admixture cannot, in my judgment, as a matter of construction apply to the type of case with which we are concerned where there has been no admixture. Those provisions are, however, as Roskill L.J. has said, relevant in so far as they throw light upon what the implication in the earlier part should be; and indeed in an alternative submission, introduced by amendment, to which I must return later, the defendants submit that the power of sale to be implied is the same as what expressly provided in that latter part of clause 13.
In considering what should be implied in a contract the court has to consider what is required to give it business efficacy; but I agree with Roskill L.J. that there are two distinct and opposing approaches to "business efficacy." The one, looking at the matter from the point of view of the defendants, suggests that an unqualified power is required, because they would need to use the money in carrying on their business, and indeed, so it is suggested, anything else would largely stultify the agreement that they should have 75 days' credit. The other is, from the standpoint of the plaintiffs, that the power should not be so wide as to frustrate the whole purpose of clause 13, which it is submitted, and in my judgment rightly submitted, discloses a manifest intention to preserve the vendors from being left in the position of unsecured creditors.
In the end, in my judgment, the question is which of these ought to prevail; and I have come to a clear conclusion that the plaintiffs' contention should be preferred.
There is no doubt force in Mr. Price's argument that this as a matter of strict law destroys the benefit of the 75 days' credit. I would observe, as Roskill L.J. has pointed out, that the General Selling Terms and Conditions as originally accepted by the partners provided for 14 days' credit only, and it may well be that in considering what should be implied one should disregard the later extension of time, in which case the point would be much weakened, although not altogether destroyed. I will assume, however, that the court ought to consider the matter in the light of that extension. Even so, in my judgment this is not enough to require, or entitle, the court to imply a term plainly and utterly inconsistent with the clear intention of the clause into which it is to be implied.
The difficulty arises largely because the general conditions tie the passing of the property not to the particular contract but to all indebtedness. But for that, the qualified power would not prevent the defendants from enjoying reasonable advantages from the 75 days' credit. No doubt in practice, so long as all went well the plaintiffs would allow the defendants to use the proceeds of sale in their business, as I understand they did; but things ceased to go well, and now one has to determine the strict rights of the parties, and in my judgment the difficulty so imported is not enough to drive one to imply a term defeating the whole object of clause 13.
I turn to the alternative argument which I have already mentioned. I do not myself think it is a correct approach simply to imply in the first part of clause 13 the same power as is expressed in the latter part and which as a matter of construction does not apply to the first part and which is dealing with a different state of affairs. Even, however, if one does, it does not in my view help the defendants.
The argument is that under that clause there is no equitable assignment of the book debts until the plaintiffs require the defendants, in the words of the translation before us, to "hand over to A.I.V. the claims he has against his buyer," and, further, that as no such requirement was made before the security crystallised by the appointment of the receiver any equitable assignment resulting therefrom could only be subject to the security created by the debentures.
I accept that as far as it goes, but it still leaves the question whether one should then construe the power as entitling the defendants to sell and use the proceeds as and when received for their own benefit unless and until required to assign the debt, or whether on the contrary, as the plaintiffs contend, it is implicit that the proceeds of sale when received are received on their account and the right to call for an assignment is ancillary only. In my judgment that would be the right view, even if one simply implied a power in precisely the same terms as expressed concerning mixed cases.
In short, my conclusion is that the power of sale to be implied where none has been expressed must be so qualified as not to defeat the intention clearly shown by clause 13 as a whole, including the latter part, which only emphasises this. It follows that there was, as Roskill L.J. says, a sufficient fiduciary relationship between the parties, and this is indeed expressly contemplated in the reference to a fiduciary owner in the second part of clause 13. The implied power must, therefore, in my judgment be a power to sell, not for the defendants' own account, but for the account of the plaintiffs unless and until all moneys owing be paid.
For these reasons, I agree that this appeal fails as to both parts and should be dismissed.
MEGAW L.J. Ground (1) of the notice of appeal raises the question whether Mocatta J. was wrong in holding that the terms of clause 13 of the plaintiffs' General Selling Terms and Conditions (I quote from the notice of appeal) "applied to and were incorporated in contracts for the sale of aluminium foil made between the plaintiff and the defendant"? If the defendants were right on this issue, they would succeed on the whole appeal - each part of it. If they are wrong on this issue, they would fail in their appeal as regards the part of the claim by the plaintiffs which relates to the aluminium foil still in the possession of the defendants, or the receiver. They would still have their further argument that, even so, the plaintiffs are not entitled to recover the moneys held by the receiver as moneys received from customers of the defendants. [His Lordship said that in his judgment the judge was clearly right to hold as he did on that first issue, for the reasons given by him. He agreed with that part of Mr. Price's submission in which he had contended that more might be required to establish that a contracting party was to be treated as bound by a particular intended term, of the contents of which he was in fact unaware, when that term was an unusual one, than was required when the term was a usual one. He adhered to the view which he had expressed on that point in Thornton v. Shoe Lane Parking Ltd.  2 Q.B. 163, 172. But in the present case the defendants were not unaware of the contents of the particular term. His Lordship continued:]
As regards the other ground put forward on behalf of the defendants, relating to the moneys in the hands of the receiver deriving from material which had been delivered by the plaintiffs to the defendants, the point is I think indeed, as it ultimately was defined in this court, a short one, though, I would agree, by no means an easy one. It is a question of the true construction of clause 13 of the general selling terms and conditions. It is accepted by both parties that in the first part of the clause, dealing with, as it is called, "the material" - that is, aluminium foil not made up with other constituents into a "new object" - some further term must be implied. There must be implied a right on the part of the defendants to arrange sales of the material. But are those sales to be made, as the defendants contend, on their own account; or are they to be made on account of the plaintiffs?
For the reasons given by Roskill L.J. and Goff L. J., I agree that the submissions made in this court on behalf of the plaintiffs are correct. The power of sale to be implied in the first part of clause 13, where none has been expressed, must be such as not to defeat the intention shown by clause 13. It is not a power to sell for the defendants' own account, but it is a power to sell for the account of the plaintiffs.
I agree that the appeal should be dismissed.
Appeal dismissed with costs.
Leave to appeal refused.
Crown Copyright acknowledged
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