4.2. Mixtures
In relation to fungible assets, the requirement for identification implies that the collateral must be either marked or separated on a continuous basis as the identity can easily be lost through mixtures with other claimants' assets. The starting point is that the right of separation is lost when the claimant's assets have been mixed with the debtor's or with other claimants' assets <1>. The traditional view is therefore that it is impossible to pledge a quantity of a larger pool of assets without separating the collateral <2>. There are, however, exemptions from this rule, the most important being the Accountable Funds Act. Under the Act a mixture is permitted if the funds are immediately available to be separated and as long as the separation occurs without delay. The right of separation is also preserved if the funds are separated at a later stage if the person accountable was solvent and the separation was made for the purpose of accounting for the funds (cf. Sect. 3.2 above).
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<1> Cf.: NJA, 1976. P. 251.
<2> Svensk I. P. 60 ff.; Rodhe K. Handbok. P. 196 f.; . P. 335 f.; Myrdal S. . P. 480 f.
Mixtures are also to a certain extent allowed outside the scope of the Accountable Funds Act. In the preparatory works to the Act it is stated that under certain circumstances the owner and the debtor can have co-ownership rights to an amount that is separated from the rest of the debtor's assets even if the Act does not apply. The intention is thus not to violate property rights that follow from general rules <1>.
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<1> Cf.: NJA, 1944. P. 411, 419; NJA, 1959. P. 590; NJA, 1994. P. 506; NJA, 1995. P. 367, II; NJA, 1998. P. 275; NJA, 2009. P. 500.
One case where a right of separation was provided despite there being a mixture of the owner's and the debtor's assets is NJA, 1994. P. 506. In this case the question was whether Carl-Gustav R. had the right to separate an equivalent quantity of grain left for storage in the depositee Swedcorn AB's (Swedcorn) silo, even though the mixture of Carl-Gustav's grain with the other depositors' and Swedcorn's grain had led to a loss of the identity of his grain. The Supreme Court stated that it was undisputed that a quantity of the grain corresponding to what had been stored by the different depositors remained when Swedcorn became bankrupt. It was, moreover, undisputed that the mixture had taken place for practical reasons. The Court acknowledged that the inquiry did not show that the agreement between Carl-Gustav and Swedcorn included a right for Swedcorn to dispose of the grain, nor that the agreement should be interpreted as anything but a deposit agreement. A right to separate deposited assets in a bankruptcy generally requires that the assets can be identified. This does not exclude a right of separation of fungible assets in certain cases, however, even if the assets have lost their identity as a result of being commingled with other assets. As the mixture in this case not only had been made of the different depositees' assets but also with the depositor's assets, the Accountable Funds Act did not apply. It was nevertheless recognised that a right of separation could exist on some other ground. Thus it was acknowledged that the Act is not intended to be interpreted e contrario. Based on the above, and taking into account the fact that Carl-Gustav's grain was part of a pool of assets that clearly was separated from Swedcorn's other assets, the Supreme Court came to the conclusion that the grain was sufficiently identified and that Carl-Gustav's right of separation was not lost.
Another case that concerns an asset that is even more fungible - money - is NJA, 1995. P. 367 II. In this case a finance company had mixed the rent for leased property which had been received with accountability in an account denoted "client funds account" with its own funds. The question was whether the rent that the customers had paid had been separated. It was also a matter of burden of proof in relation to whether the funds had been mixed with the company's own assets. The Supreme Court held that where the question was to determine whether funds that had originally been classified as "accountable funds" had lost their special character through a number of dispositions, the bankruptcy estate was considered best-suited to present an investigation. The evidence presented was considered insufficient as it did not show the extent of the transactions and the type of transactions that had taken place on the account. The bankruptcy estate had therefore not shown that the funds had lost their character of being "accountable funds".
NJA, 1994. P. 506 and NJA, 1995. P. 367, II provide some guidance as to the extent to which the principal can have a protected property right in fungible assets that are mixed with the debtor's assets. It is, however, difficult to ascertain a general principle from them. N evertheless, it is argued that where the circumstances and practical needs require a mixture and this is made with a separated part of a debtor's assets, a right of separation to the share or quantity is probable. When a mixture concerns different principals' assets the situation is clearer; the principals are deemed to have a co-ownership right in the pool of assets <1>. Should a shortfall arise, the deficit is deemed to be shared on a proportionate basis in relation to each principal's stake. It can also be established that where the mixture is made with the general assets of the debtor, the principal's property rights are lost <2>.
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<1>
Cf.: Accountable Funds Act; NJA, 1994. P. 506;
.
P. 177; Rodhe K. Handbok. P. 196 - 197; Hessler H.
.
P. 158; Walin G.
.
P. 88.
<2> NJA, 1994. P. 506; NJA, 1995. P. 367, II; Rodhe K. Handbok. P. 196 - 197; . P. 168 ff.