On 2 January 1973, the defendant sold B seven lorries, under retention of title until final payment of the purchase price, and delivered the vehicles to B.

As part of two agreements on the provision of collateral of 14 January 1974 and 24 July 1975, B and the plaintiff concluded agreements on the transfer by way of security of the expectancy in rem in respect of five of the vehicles still under retention of title. This transfer was meant to safeguard all other outstanding and future claims the defendant might have against B from existing invoices and other legal titles. The plaintiff and B concluded a concurrent agreement on the loan of the vehicles to B.

On 20 November 1975, the defendant and B amended their purchase contract of 2 January 1973 to the effect that the lorries should remain the defendant's property as security for all current and future main and ancillary claims stemming from the entire existing business relationship. Thereafter the defendant granted B several loans.

On 19 December 1975, the defendant demanded that the vehicles be returned, since B had allegedly failed to meet his obligations in respect of payments. On the same day, the defendant fetched the vehicles from B and sold them to third persons.
The plaintiff was of the opinion that he had obtained ownership of five vehicles, since B had paid the full purchase price; He claimed damages from the defendant.

The Landgericht and the Oberlandesgericht ruled in favour of the plaintiff. The further appeal is unsuccessful.

Reasons

I.

1. The appeal court held that by the contract of 2 January 1973, B had acquired an expectant right of ownership in respect of the lorries. As a result of further contracts, concluded between B and the plaintiff on 17 January 1974 and 24 July 1975 regarding five of the vehicles, the defendant could no longer transfer full ownership. The latter contracts must be interpreted to mean that the plaintiff acquired an expectant right in rem in respect of the five lorries. The court's findings are correct and not the subject of this appeal.

2. The appeal court's assumption can be followed that prior to 20 November 1975 the condition was not met under which the plaintiff, as a person entitled under an expectancy in rem could acquire full ownership of the five vehicles named in the contracts as collateral security. The appeal court found that the purchase price for the vehicles had not been fully paid at that time, i.e. when B and the defendant amended the purchase contract of 2 January 1973 by agreeing on a extended retention of ownership. (....)* Translation by Irene Snook

3. The appeal court found and the further appeal does not dispute that B's obligation to pay the purchase price for all vehicles had fully been met on 10 December 1975. Any further claim thereafter raised by the defendant was not based on the purchase contract of 2 January 1973.

4. Whether or not on 10 December 1975 the plaintiff became owner of the five vehicles which had been assigned to him as collateral and whether or not, as a result, he can claim damages from the defendant for breach of ownership through the sale of the vehicles depends on whether or not the defendant and B needed the plaintiff's approval for their amendment agreement of 20 November 1975 on the suspensive condition of full payment of the purchase price, i. e. on the condition by which, according to the purchase contract of January 1973, the point in time was determined at which the expectancy in rem developed into a full title. The question had to be answered whether the plaintiff's approval was needed for the result that, according to the amendment , the change of ownership in the five vehicles could only take place once all other claims which the defendant had against B were met.

II.

The appeal court held that B, when reaching the agreement of 20 November 1975, acted without authority when he dealt with the plaintiff's expectancy in respect of the five vehicles. Extending the retention of tile not only amounted to an amendment of the purchase contract but also directly resulted in a change of the agreement between the plaintiff and B (Erfüllungsgeschäft). The provisions made by B in respect of the plaintiff's expectancy in rem are null and void. Once the purchase price had been fully paid, i.e. on 10 December 1975, the expectant right transferred to the plaintiff had matured to a full right of ownership.

The appeal brought against this result must fail.

1. As correctly held by the appeal court, it is basically possible subsequently to extend a retention of title thereby allowing the vendor of goods sold under retention of title to use his rights in the goods for other claims against the purchaser. When goods are sold under retention of title, as long as the condition for full transfer of title has not yet been met, vendor and purchaser can alter their agreement. They can rescind or change it by adding further conditions. Ownership then transfers once all conditions are met, including the one subsequently added (BGHZ 42, 53, 58).

2. The validity of the claims here brought by the plaintiff against the defendant depend on whether or not such an agreement on the conditions for transfer of ownership is still at the disposition of the transferor, i.e. the first purchaser, once the latter has transferred his expectancy in rem to a third person (the second purchaser of the expectancy in rem)..

a) The further appeal alleges that this question is to be answered in the affirmative. It thereby follows the opinion held in particular by Serick (Eigentumsvorbehalt und Sicherungsübertragung, 1963, vol. I, 251 et seq., 253), according to which the second acquirer of the expectancy obtains a legal position of which he cannot be unilaterally deprived by the vendor who retained ownership in the goods. But he can so be deprived by an arbitrary act of the conditional purchaser who transferred his expectancy to him, since it still depends on the purchaser whether or not the original condition is met. The original contractual relationship, i.e. the underlying contract, continues until both parties have fulfilled all obligations under it. The acquisition of the expectancy by a third person does not mean that the acquirer becomes a party to that contractual relationship. Thus the conditional purchaser remains entitled, without consent of the second acquirer of the expectancy, to influence the purchase contract. With approval from the vendor who retained ownership in the goods, he can rescind the contract with the result that the condition, i.e. full payment, can no longer be fulfilled and that the expectancy in rem expires. He is also entitled to agree changes in the methods of payment with the vendor (see also Raiser Dingliche Anwartschaften, 1961, 31; Schlegelberger/Hefermehl, HGB, 4. ed., para. 368, addendum, n.34; Esser, Fälle und Lösungen zum Schuldrecht, 1963, 54, n. 14). The further appeal also submits that the second acquirer of the expectancy must accept an agreement between the parties to the purchase contract in respect of an extension of the retention of ownership.

b) This court cannot follow the reasoning submitted in the further appeal. Like the appeal court, it holds that an extension of the retention of ownership as affected by the agreement of 20 November 1975 constitutes an invalid disposition by B in respect of the plaintiff's expectancy.

aa) it is correct that even after transfer to a third person, the existence of an expectancy is linked to the underlying purchase contract, the outcome of which is determined by the contractual partners, to whom the second acquirer of an expectancy does not belong. This view was held by the court of appeal. Thus, no expectant right comes into being where the contract under the law of obligations does not exist, is null and void or has no effect. In such cases, even acquisition in good faith is impossible, since good faith in the existence of the claim for the purchase price is not protected (Raiser, op. cit., 38; Serick, op. cit., 271). The second acquirer's expectant right also directly expires where the vendor retaining title rescinds the contract because the purchaser is in default(BGHZ 35, 85, at 21) or where the contract is successfully rescinded for other reasons. The existence of the expectant right, a precursor to ownership (BGHZ 28, 16, at 27), as a personal right in rem (subjektiv-dingliches Recht) is weakened by its dependency on the underlying contract. which is subject to the law of obligations (schuldrechtlicher Vertrag) (see Serick, op. cit.). This dependency affects any second acquirer, who must accept any effects on the existence of his rights stemming from the performance of the purchase contract. He must, for instance accept that the purchaser rescinds the contract which eliminates the condition under which the expectancy turns into a full right. In these instances the purchaser exercises no right to which he is not entitled.

bb) On the other hand, the appeal court's reasoning must be followed that the dependency of the expectant right on the underlying contract does not necessarily mean that the second acquirer of the expectancy must tolerate any arbitrary behaviour of the first conditional purchaser which affects his expectancy in rem .

Without approval by the second acquirer of an expectant right, the conditional purchaser cannot arbitrarily make provisions in respect of the expectancy. "Making provision" in this context means any legal transaction by which a person directly affects a right, i.e. by transfer to a third person, or by encumbering the right or by relinquishing it or changing its contents (BGHZ 1, 294, at 304). Where the retention of title originally agreed upon as part of the purchase contract is later on extended in such a way that the agreement on the transfer of ownership, previously merely conditional on full payment of the purchase price, now includes a further condition, i.e. the performance of additional obligations from an overall pending business relationship whereby the purchased goods act as collateral for financing other claims which are not based on the original purchase contract, this further agreement directly results in a change in the contents of the expectant right , i.e. the conditional right to acquire ownership in the goods (BGHZ 35, 85, at 93).

The conditional purchaser is no longer capable of altering the contents of the expectancy, for lack of entitlement (para. 185 BGB), after he has transferred this right to a third person. In so far as the further appeal stresses that the third person (second acquirer of the expectancy) has not become part of the original contract and must therefore accept any effects on the condition which originate from a change of the underlying contract, it fails to grasp that the conditional purchaser is not entitled to make any legal provision affecting the expectancy which is not part of the performance of his original purchase contract concluded under the law of obligations. It is not decisive that the conditional purchaser still has rights and obligations from the original purchase contract. The important point is that he, after transfer of the expectancy, can no longer make provision in respect of this right and that he, as a result of the close link (dependency) between the expectancy and the contract under the law of obligations, can no longer arbitrarily affect a change in the agreed conditions for a transfer of ownership which directly affects the contents of the expectancy in rem to the detriment of the second acquirer of this expectancy, unless this change is founded on the conditions of the original purchase contract (see Ermann/Weitnauer, BGB, 6. ed., para. 455, n. 28; Flume AsP 161, 385, 394).

cc) The appeal court rightly pointed out that jurisprudence and legal doctrine have given the acquirer of an expectancy in rem a strong legal position, enabling him to use its value for credit purposes, expressed as the opportunity to acquire a full title (BGHZ 20, 88, at 98; 35, 85, at 89). In particular, it is recognised that the holder of an expectancy in rem under paras 929, 930 BGB can transfer it as collateral to a creditor (BGHZ 28, 16, at 18 and 25). It would therefore be inconsistent and contradictory to the justifiable interests of commercial life if the provider of a collateral (conditional purchaser) without the consent of the recipient of his collateral (second acquirer of the expectancy) could re-use that expectancy as personal collateral for a credit agreement with his conditional vendor thereby, for instance, extending the latter's retention of title. In practice, he thus commercially devalues the right which he transferred to the first recipient of the collateral (see BGHZ 28, 16, as above; 35, 85, as above).

The following considerations also give rise to strong misgivings in respect of the further appeal's opinion: Under para. 267 BGB, the acquirer of an expectancy can pay up the purchase price for and on behalf of the conditional purchaser, thereby acquiring ownership. The purchaser, i.e. his debtor (para. 267 II BGB) cannot raise any objection (decision by this Senate of 31 May 1965 - VIII ZR 302/63 = WM 1965, 701, 703), since he has transferred his expectancy and lost his power of disposition even under para. 267 II BGB (see BGH decision of 24 May 1954 - IV ZR 184/53 = NJW 1954, 1325, 1328). The chance that the acquirer of an expectancy by his payments under para. 267 BGB can acquire full ownership, even without consent from the conditional purchaser who lost his power of disposition, could be undermined if the conditional purchaser agrees with the vendor, to the detriment of the acquirer of the expectancy, that this expectancy will now only mature once further claims are met which the vendor who retained his title in the goods has against the conditional purchaser.

dd) Contrary to the view held by the further appeal, the result, arrived at for doctrinal and commercial considerations, that any later extension of the retention of title, for instance a further use of the retention of ownership as means of safeguarding credits received by the first acquirer of the expectancy in rem over and above what had been agreed in the original purchase contract, requires the consent of the acquirer of the expectancy, does not have the effect that the acquirer is thereby given the position of an owner before the condition is met, thereby curtailing the vendor's legal position. As before, the vendor can exercise his right of ownership. Thus , by rescinding the contract, he can annul the expectancy if the purchase price is not paid (para. 455 BGB). But, as against the conditional purchaser and first acquirer of the expectancy, the vendor cannot unilaterally alter the original conditions for the transfer of ownership for instance because he later on intends to link his right to retain the tile to further claims. No reason can be found why the vendor should be allowed to extend his legal position as regards the second acquirer of the expectancy, even with the consent of the purchaser who already relinquished his power of disposition. Far less can a justifiable interest of the conditional purchaser be discerned to re-use the transferred expectancy as a means of securing further credit. The second acquirer of the expectancy obtained no stronger position than that of the conditional purchaser since the conditional vendor retains all rights from the purchase contract and from his retention of ownership as set out in the original agreement.

3. (....)

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