McGILL LAW JOURNAL
[Vol. 5
LATREILLE v. ISABEL’
Promise of sale –
Seller retaining ownership
–
Buyer having
immediate occupation – House rendered uninhabitable by fire
during occupancy – Question of res pert domino
In a recent article, Professor LeDain 2 points out, “that the transfer of risk
in Quebec civil law takes place, in the absence of agreement or usuage to the
contrary, at the same time as the transfer of ownership.” This is expressed by
the maxim res perit domino which has often been held to prevail in our civil
law. In a recent Superior Court case, however, Mr. Justice Challies has
critically examined this maxim and has concluded that the risk is, on the
promising buyer who has possession of the immoveable, even though ownership
has been reserved by the vendor. The judgement of the trial court was confirmed
by the Court of Queen’s Bench, recently, but on different grounds.
The facts of the case are as follows. In August, 1953, Isabel, the defendant,
promised to sell a house and lot to Latreille for the price of $4500, of which
$450 was paid in cash with the balance to be payable at the rate of $40 ter
month. The plaintiff, Latreille, took immediate possession of the house, but it
was stipulated in the promise of sale that the defendant was to remain owner
until at least half the price was paid. A notarial deed of sale was executed.
It was also specifically provided that if the plaintiff failed to make any of
the required payments within sixty days of their due date, the vendor would
have the right to claim payment of the balance of price or, alternatively, to set
aside the promise of sale without any putting in default or legal proceedings.
In November 1953 the house was destroyed by fire and the vendor received
the insurance proceeds. The promising purchaser refused to make any more
payments unless the vendor rebuilt the house. This the vendor refused to do and
after sixty days had lapsed without receiving any payment, the promising
vendor informed the promissee that the promise of sale was null and void and
that he was keeping the amount paid as damages. The promissee instituted the
present action to have the promise of sale annulled and his money returned.
that risk
always falls on the owner. Since, in this case, the vendor reserved ownership
and he was the proprietor at the time of the fire, he must bear the loss.
Consequently, either he should rebuild the house or-else return the money
to the plaintiff. Justice Challies disagreed with this contention. He held that
the risk was on the promising purchaser, even though he was not the proprietor
at the time of the fire: therefore, he must bear -the loss.
The plaintiff based his action on the maxim –
res perit domino –
‘Superior Court, District of Montreal
1956); appeal [1958] B. R. 431.
2 Ledain, G. Transfer of Property,
(1954) 1 M.L.J. 239.
(decision unreported, no. 362,954 April 24,
No. 3]
CASE AND COMMENT
In examining this rule of res perit domino, Challies J., quotes Mignault 3 who
deals with the situation in which the parties have by express words postponed
to a later date the transfer of ownership, and asks whether in such a case the
purchaser would have to pay the price, since the thing was destroyed before
delivery. He mentions that Mourlon is of the opinion that the purchaser does
not have to pay the price because he is not the owner. However, in a footnote
Mignault says, “On a contest6 cette solution.” He concludes that the purchaser
would not be freed from his obligation to pay the price, and he states that he
would apply the same solution where the thing was delivered to the purchaser
under the stipulation that ownership would only be tranferred on payment of
the price. Justice Challies concludes that the footnote contains Mignault’s true
view, and he bases his decision on this authority, together with certain French
authors.
In order to appreciate the significance of this case, let us examine briefly
the law concerning the transfer of risk in a contract of sale. Article 1025 C.C.
says:
A contract for the alienation of a thing certain and determinate makes the
purchaser owner of the thing by the consent alone of the parties, although no
delivery be made.
The article goes on to say that the risk of the thing before delivery, is subject
to the general rules contined in the chapters on obligations. In art. 1200 C.C.
it is provided that when the certain specific thing which is the object of an
obligation perishes, or the delivery of it becomes impossible from any other
cause, without any act or fault of the debtor, and before he is in default, the
obligation to deliver is extinguished. But as the commentators point out, the
creditor is still obliged to pay the price. This is known as the principle of
res petit creditori –
the risk falls on the creditor of the obligation to deliver.
As we have seen, in the sale of a certain and determinate thing, the buyer
becomes proprietor as soon as the contract is signed. The seller is then under
the obligation to deliver the article to the buyer, who is the owner. If the
article is destroyed before delivery by a fortuitous event or through no fault
of the seller, the latter’s obligation to deliver is extinguished, although the
buyer is still obliged to pay the price. The risk is on the buyer: the obligation
for him to pay the price, despite the fact that he will not receive physical
possession of the property is the principle behind res perit domino. In this case,
the latter notion is an application of the general principle of res perit creditori.
The same result follows from the application of art. 1150 C.C. The Code tells
us here that if the object of a sale is deteriorated before delivery without any
fault on the part of the debtor or seller, his obligation to deliver is discharged
by delivering the object in its deteriorated state. Thus we see that risk falls on
the buyer or the creditor of the obligation to deliver. Consequently, in the sale.
of specific’and determinate objects, both ownership and risk pass simultaneously
3Mignault, Droit Civil Canadien, (1906 ed.), Vol. 5, p. 402.
McGILL LAW JOURNAL
[Vol. 5
to the buyer by consent alone of the parties, although the thing sold be not
then delivered.
According to art. 1478 C.C. although a simple promise of sale is not equivalent
to a sale, a promise of sale with tradition and actual possession is. Both owner-
ship and risk will pass to the buyer as soon as he takes possession of the
immoveable. Let us suppose, as occurred in the decision under review, that
the vendor witholds the transfer of ownership tintil some future date, and
meanwhile the promissee occupies the immoveable. Who bears the risk in the
interim? Should we maintain that risk is dependant on ownership? Since the
vendor reserves ownership, he automatically prevents risk from passing to the
buyer. Consequently, the risk would be on the vendor. Or, should we argue that
risk and ownership are two separate conceptions, and the fact that the vendor
reserves ownership in no way affects the transfer of risk? The risk would then
pass to the buyer, although he was not the owner.
In order to clarify this problem, we must look at the logic and reasons
underlying the theory of risk in a contract of sale. As we have seen, in the
sale of a determinate thing, both ownership and risk pass to the buyer by the
consent alone of the parties, although the thing sold be still in the hands- of
the vendor. If risk and ownership are independant and separate conceptions,
then one could argue that it is only logical and fair that the riik be on the
individual who has the control and possession of the object. Although owner-
ship passes to the buyer by consent alone, risk should remain with the vendor
until he has delivered the object. The Codifiers, however, did not adopt this
view; rather they maintained that both risk and ownership pass simultaneously
to the buyer. They argue that ownership and risk are not seperate and
independant, but rather that the risk attending a thing is a natural attribute of
the right of ownership. The object itself, all benefits which may attach to it,
and the risk of all loss or deterioration are transferred simultaneously. As
Mignault 4 points out, an individual, by nature, does not want to bear the risk
for something which is not in his patrimony. Applying this latter reasoning
to our case, it would follow that since ownership was reserved by the vendor,
he must bear the risks even though the object is in possession of the buyer.
Those who argue that risk and ownership are separate and independent, base
their contention primarily on the fact that the transfer of risk and ownership are
treated separately in the code: the former in articles 1025 and 1472 C.C. and
the latter under the general maxim of res perit creditori found in articles 1200
and 1150 C.C. They argue that only in the usual case where ownership passes
to the buyer by consent alone will the maxim of res petit domino be true; for
here, the buyer, the proprietor and the creditor of the obligation to deliver are
one and the same person. Hence, the maxim of res perit domino is only a
disguised name for the principle of res perit creditori. However, where owner-
ship is reserved, risk will still pass to the buyer who is the creditor of the
4Ibid., p. 401.
NTo. 3]
CASE AND COMMENT
obligation to deliver. Res perit domino will not apply. The Codifiers discussed
this argument when they dealt with article 1474 C.C. In a sale of an
indeterminate object, ownership does not pass to the buyer until the object has
been identified. Before this, the vendor is under an obligation to deliver and the
buyer is the creditor of this obligation. Hence- the buyer should bear the risk
res perit creditori. Yet in commenting on article 1585 C.N., the Codifiers
–
dismissed the contention of those French commentators who argued that in the
sale of an indeterminate object, ownership passes to the buyer while risk remains
with the vendor until the object is specified. Rather, they agreed with those
who argued that neither ownership nor risk is transfered to the buyer until the
object is identified. They adopted the maxim of res perit domino and not that
of res perit creditori. Mignault points this out explicitly. In the case where
A buys a 100 bshls. of wheat out of a pile at a certain price, ownership and
risk do not pass to the buyer until the goods are identified. Where the whole
pile of wheat is destroyed, some argue that the risk is on the buyer since it is
certain that the wheat that was sold to him was destroyed. Mignault disagrees :5
Cependant, je crois qu’il y a a appliquer ici, comme dans tous les cas analogues
la r~gle res perit domino si l’auteur n’est pas devenu propriftaire, il n’encourt pas
les risques de la chose.
Mignault points out that in the normal case ownership and risk pass by the
consent alone of the parties. Yet he says6 that where there is a clause:
art. 1025, 1200.
qui porte que la chose ne deviendra la proprifti de l’acheteur que lorsqu’il en aura
payi le prix; la perte de la chose par force majeure, tombe sur le vendeur. Enfin,
lorsque l’acheteur devient propri~tdire, les risques de la chose vendue sont A sa
charge. On disait en droit romain: res perit domino –
The above quotation from Mignault seems to contradict the one to which Mr.
Justice Chaillies referred; and after a study of Mignault’s treatment of sale,
it is submitted that it expresses his true view on the subject. It seems from
Mignault that ownership and risk pass simultaneously. to the buyer, except in
the case where the vendor has specifically retained risk by an express clause,
although ownership passed to the buyer; or where, although ownership was
retained by the vendor, the parties explicitly agreed that the buyer would bear
the risk. In the decision under review, there was no such agreement. The
vendor retained ownership, and due to the lack of a stipulation to the contrary,
one must conclude that he assumed the risk.
Roger Comtois, 7 in a recent comment on the Superior Court decision of
Latreille v. Isabel concludes:
Les risques de la chose 6taient donc 6, la charge du promettant-acqureur. Le dernier,
n’ayant pas prouv6 que l’incendie constituait un cas fortuit, devait succomber dans
sa demande.
5 Vol. 7,.p. 22.
6 lbid., p. 126.
7 Comtois, R. 1958 R. du N. 344 (March).
McGILL LAW JOURNAL
[Vol. 5
This statement, it is respectfully submitted, shows a misunderstanding of Mr.
Justice Challiess’ view. It implies that had the plaintiff proven that the fire
was caused by a fortuitous event, then the risk would have been on the seller;
it implies that there is a presumption of liability on the part of the buyer, while
the actual risk is on the seller. However, Challies J., maintained that the
ultimate risk is on the buyer, and the seller, once he delivers the object sold,
bears no more risk for the loss or deterioration of the object.
Marler8 seems to adopt the maxim of res petit domino completely and un-
conditionally. He says that:
a thing is always at its omer’s risk.
French authorities also seem to agree with Marler as to the generality of
this maxim. In Larombi~re’s words .
Les risques ne sont pas en effet attaches i cette circonstance qu’on a 6t6 mis ou
qu’on devait 6tre mis en possession, mais bien i cette seule et unique circonstance
qu’on est propriftaire.
Mazeaud,’ 0 the most recent French authority, says:
Dans la vente les risques sont pour l’acheteur devenu propritaire, chaque fois que
le transfert de proprit6 se trouve retardE. C’est alors la r~gle g n&rale res petit
debitori qui joue: les risques demeurent
. l’alienateur. II en est aussi quand les
parties ont d~cid6 de retarder le transfert de propritY, par exemple,
jusqu’i
paiement complet de prix.
The case of Beaudry v. James” deals with a similar situation. The plaintiff
sold a barge to the defendant giving him possession and immediate use of it,
but he reserved ownership until a certain amount of the price was paid. In the
interim the barge was destroyed by force majeure, without the fault of the
defendant. The Court of Review applied the maxim of res perit domino and
held that the loss fell on the owner. In the words of the judge:
The Court finds that Beaudry was the owner of the barge when lost, and that
it perished for him. Res perit domino.
In the present case, discarding of the maxim led to an unfortunate result.
The promising vendor was not only entitled to keep the proceeds from the
insurance policy, but was allowed to collect the price of sale or retain the amount
paid as damages. Surely this was unjust enrichment at the buyer’s expense.
The decision was appealed to the Court of Queen’s Bench. In discussing this
question of res petit domino, Mr. Justice Montgomery said:
Considerable authority has been submitted by both partiei as to the applicability of
this maxim in the case of a sale with reservation of ownership in favour of the
vendor pending payment of price. I do not find it necessary to express an opinion
on this point…32
sMarler, Law of Real Property, no. 418.
0Larombi~re, Th~orie et Pratique des Obligations, (1885), Vol. 1, p. 465, no. 26.
aOMazeaud, Legons du droit civil, Vol. 2, p. 905, no. 1120.
1’Beaudry v. James, (1870)
l2At p. 432.
15 L.C.J. 118.
No. 3]
CASE AND COMMENT
203
Mr. Justice Montgomery went on to confirm the decision of the lower court
on the basis of article 1629 C.C. which creates the presumption that a fire is
the fault of the lessee. He maintains that this presumption applies not only
to the lessee but to any individual who occupies the property of another and
who is bound to conserve it. Hence he argues that it applies, in the present
case, to the intending purchaser: he must either rebut the presumption that it
was due to his fault or else bear the loss. Should he rebut the presumption,
the loss or risk would fall on the owner or vendor. Articles 1629 C.C. refers
to the case where the loss is presumed to be the fault of the possessor but where
the ultimate risk is on the owner. The fact that the Court of Queen’s. Bench
applied this article implies that the risk is on the vendor or owner and not
on the buyer. Thus the decision seems to affirm the general maxim res perit
domino and is in agreement with the weight of authority.
Louis DRAZIN*
*Of the Board of Editors; second-year law student.
