Specificatio
(1) Nature
Suppose I have grapes that in fact belong to you, and make them into wine. To which of us does ‘natural reason' assign the end product?[1325] After all, while you supplied the materials, I supplied skill, labour and time.
This is the area with which specificatio (often anglicised as ‘specification') is concerned. Who owns the new thing, or new species, the manufacturer or the one who supplied the materials?[1326] We are concerned here only with the case where the manufacture happens without an agreement between the parties. Where the manufacturing process took place under an agreement between the parties, that agreement would determine the outcome.[1327] For example, where an employee manufactured something in the course of employment, the employer acquired ownership.[1328] Specificatio is accepted in Scots law, though, as we shall see, with some uncertainties as to its precise application.[1329](2) The Sabinian/Proculian Dispute
It is clear enough that, by specificatio, the form of the property is changed. What is not clear is what the property law consequence of that should be, if indeed there should be any consequences. It would be perfectly possible to say that the owner of the original materials would own the final product. On this view, if you take my grapes and turn them into wine, the wine belongs to me. This was the view adopted by one of the two classical schools of jurists,[1330] the Sabinians. By contrast, the Proculians took the position that the manufacturer owned the product. It is thought that these two views were influenced by the theories of Greek philosophers on the relative significance of the substance and the form of property.[1331] However, the Proculian view also addressed another, more practical consideration. As a matÂter of procedural law, if I wanted to recover property from you that I claimed to own, I had to identify that property.[1332] In the case of wine made by you from my grapes, I would have to assert that the wine was mine.
Yet, in that example, what I had owned was not the wine but the grapes. Thus, it has been said:The main reason why the Proculians awarded the final product to the maker was therefore the practical difficulty of the owner in identifying his or her materials.[1333]
Again:
In Roman law, change of identity was not simply a ‘component of specification’: it was the problem for which specification was the answer. If a person brought an action to recover an item of property, and the property had been substantially altered by some manufacturing process, the praetor would understandably hesitate to allow that person to prosecute the recovery of ‘his’ property... [T]he Romans did not actively seek out identity problems to solve.[1334] [1335] A similar point has been made in a Scots case, Oliver & Boyd v The Marr Typefounding Co Lid.'4 In this case, metal type had been stolen from the pursuers and was sold to the defenders, who melted it down and made new type. The Lord Ordinary observed: Here the shape of the article was changed so much, and its identity so completely lost, that it is impossible to say what has now become of the metal which was stolen: some or all of it may have been sold; some or all of it may still be among the defenders’ stock in the form of new type.143 (3) The Justinianic Law There seems to have developed an intermediate view (media sententia) between the Sabinian and Proculian positions, depending on whether the new thing could be restored to its original materials.144 If it could, then the owner of the materials owned the final product; otherwise, the manufacturer owned it. This position was modified where the manufacturer supplied part of the materials. In that case, the manufacturer owned the new thing regardless of whether it could be restored to its original materials.145 This intermediate view was adopted by Justinian.146 The position in the Justinianic law was therefore that the manufacturer owned the new thing where either he or she had contributed to the materials or the new thing could not be restored to its original materials. There could sometimes be questions as to whether there had been sufficient change of form for specificatio to operate. If I dyed wool belonging to you, specificatio did not operate and I did not become owner, as ‘there is no distinction between purple wool and wool that has fallen into the mud or mire and lost its original colour’.152 The threshing of grain from ears of corn did not amount to specificatio 143 (1901) 9 SLT 170, 171. D.41.1.7.7. J.2.1.25. J.2.1.24. It is not clear how this operated outside the question of ownership. For example, suppose that I left you a legacy of wool in a will, but then the wool was turned into clothes. Did this destroy the legacy, on the basis that the wool no longer existed? Both Ulpian (D.30.1.44.2) and Paul (D.32.1.88pr, 3) address this quesÂtion. Unfortunately, though, they give different answers, although Ulpian does make the question ultimately depend on the testator’s intentions. It also destroyed any other real right in the materials, such as a pledge: D.13.7.18.3. On pledge, see pp. 271—4. J.2.1.24. See also D.41.1.24. Actually a drink called mulsum, made from a mix of wine and honey. Mead in the modern sense is made using fermented honey. J.2.1.24. D.41.1.26pr. D.41.1.26.2. either, as ‘the grains have their perfect form while contained in the ears, so he who threshes the ears does not make something new, but only uncovers something that is already there'.[1336] By the same argument, it would seem reasonable to supÂpose that specificatio did not operate in the squeezing of grapes to make grape juice. In Scots law, Stair laid out various alternatives, including the Roman rules, suggesting that the law could ‘without injustice, follow any of these ways, repÂaration being always made to the party who loses his interest'.[1338] There is no doubt, however, that Scots law has adoptedJustinian's media sentential[1339] Thus, for instance, it has been held that specificatio operated when oil was used to make lard,[1340] when wheat was turned into flour,[1341] and when cloth was cut up and made into clothes.[1342] On the other hand, specificatio was held not to operate when the front part of a stolen car was welded to the rear part of another car, as the two parts could be separated again.[1343] Difficult questions can arise, as in Roman law. In Armour v Thyssen Edelstahlwerke AG,[1344] it was suggested by the Lord Ordinary that specificatio might occur when coils of steel were flattened and cut into differÂent lengths.[1345] This suggestion was disapproved in the Inner House, however,[1346] and the case was ultimately decided on different grounds.[1347] (4) The Role of Good Faith Was the state of mind of the manufacturer relevant? What if the manufacturer knew that the materials belonged to someone else, or at least had reason to suspect that? In other words, was good faith a requirement for the operation of specificatio? There is one text from Paul that suggests that good faith was required.[1348] However, the dominant view is that good faith was not required. The reason for this is that, in allowing the manufacturer to acquire ownership, specificatio proÂceeded on the basis that the original materials no longer existed.[1349] On this view, it could hardly make any difference that — say — the manufacturer of wine knew that the grapes it was made from belonged to someone else, as the grapes no longer existed. It is not clear whether Scots law follows Roman law on this point. The question is disputed,[1350] and there is no direct Scots authority on the point.[1351] It does seem counter-intuitive to reward with ownership a person manufacturing a thing in bad faith with someone else's materials. However, it must be borne in mind that the dispute is unlikely to be between the owner of the materials and a thief who has made a new thing with them. The dispute is much more likely to be with a third party acquirer from the thief. Moreover, it may be that to disregard bad faith is the more practical option. After all, the issues with identification, set out above, exist whether the manufacturer is in good faith or bad. The Draft Common Frame of Reference takes the approach of disallowing a manufacturer in bad faith from acquiring, ‘unless the value of the labour is much higher than the value of the material'.[1352] This, though, seems to introduce excessive uncertainty into the quesÂtion, and moreover is a test whose applicability will depend on differing values of labour and materials over time and in different places,[1353] rather than on anything intrinsic to the process of manufacture itself. (5) Compensation In Scots law, it is clear that the manufacturer is obliged to compensate the owner of the materials for their value.[1354] The Roman rules were somewhat more comÂplex, and depended on whether the manufacturer was in possession and whether he or she was in good faith or bad. The rules were similar to those applying to accession. Where the maker was in bad faith, he or she would be liable as having stolen the materials,[1355] although, as owner, he or she would be able to recover the product from any other person in possession. A manufacturer in good faith was also owner, and so could recover the property from anyone in possession, paying the value of the materials if attempting to recover from the owner of the materials.[1356] If a manufacturer in good faith was in possession, there is no direct evidence that the owner of the materials had any remedy at all. (6) Specificatio in Modern Law As we have seen, specificatio forms part of modern law. In more recent times, it has most often come up in cases on retention of title clauses in sales of goods. The situation is this. The owner of goods enters into a contract of sale with a purchaser, and delivers the goods to the purchaser. To protect the position of the seller, the contract of sale provides that the seller is to retain ownership until the goods are paid for in full. Suppose, though, that the purchaser performs work on the goods sufficient for specificatio to operate. Does this cause the purchaser to acquire ownership of the end product, defeating the retention of title clause?[1357] Arguably it should not, at least where the parties' contract makes express proviÂsion dealing with the issue,[1358] or the change was anticipated by the parties.[1359] [1360] [1361] After all, when the manufacturing process happens in accordance with a contract between the parties, ownership is normally determined in accordance with that contract rather than according to the general rules of specification One retention of title case has raised the interesting question of whether specificatio might apply to living things. In Kinloch Damph Ltd v Nordvik Salmon Farms Ltd,â„¢ a large number of salmon smolts (immature salmon) were sold, subject to a retention of title clause. The purchasers husbanded the smolts, which grew into mature salmon. The purchasers then went into receivership, without having paid in full. Ownership of the salmon was then disputed. The receivers claimed that the purchasers had acquired ownership on the basis of specificatio, as the adult salmon could not be restored to their original form.[1362] This argument is not implausible, and a similar argument was successfully made in a Dutch case.[1363] In Kinloch Damph, however, the argument was rejected. This seems correct, as the adult salmon were still clearly the same entities as the smolts. On the other hand, the Lord Ordinary may have gone too far in holding that specificatio had no application to living things at all. While it is reasonable to exclude the natural development of living things from specificatio, there is still scope for arguing for its application in cases where there has been some form of interference with that natural development. Examples might include the manipulation of a tree's development to make a bonsai,181 or the genetic manipulation and reproduction of living cells using modern scientific techniques.182 E.