66

PART IV.

RIGHTS OF UNPAID SELLER AGAINST THE GOODS.

38.-(1.) The seller of goods is deemed to be an 'unpaid seller" within the meaning of this Act—

Sect. 38.

Unpaid

(a.) When the whole of the price has not been paid or seller tendered; 1

1

(b.) When a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise.2

(2.) In this part of this Act the term "seller" includes any person who is in the position of a seller, as, for instance, an agent of the seller to whom the bill of lading has been indorsed,3 or a consignor or agent who has himself paid, or is directly responsible for, the price.1

1 Hodgson v. Loy (1797), 7 T. R. 440; Feise v. Wray (1802), 3 East, 93, at p. 102; Van Casteel v. Booker (1848), 2 Exch. 691, at pp. 702, 709; Ex p. Chalmers (1873), L. R. 8 Ch. App. 289 (severable contract). As to tender after the appointed day, see Martindale v. Smith (1841), 1 Q. B. 389. 2 Feise v. Wray (1802), 3 East, 93; Griffiths v. Perry (1859), 28 L. J. Q. B. 204; Ex Ρ. Lambton (1875), L. R. 10 Ch. App., at p. 415; Gunn v. Bolckow, Vaughan & Co. (1875), L. R. 10 Ch. App. 491, at p. 501; cf. Ex p. Stapleton (1879), 10 Ch. D. 586, C. A. Whether a bill is given in absolute or conditional payment is a question of fact, Goldshede v. Cottrell (1836), 2 M. & W. 20.

3 Morison v. Gray (1824), 2 Bing. 260. See, too, the Bills of Lading Act, 1855, post, p. 156.

Feise v. Wray (1802), 3 East, 93; Tucker v. Humphrey (1828), 4 Bing. 516; cf. Ireland v. Livingston (1872), L. R. 5 H. L., at pp. 408, 409, per Blackburn, J. As to factors, see notes to Kruger v. Wilcox, Tudor's Merc. Cases, 3rd ed., p. 370.

defined.

Sect. 38.

Unpaid seller's rights.

Sub-sect. (1.) In a case where the seller had discounted the buyer's acceptances, but the latter failed before the bills matured, it was held that the seller was unpaid, and Mellish, L.J., says, "If the bill is dishonoured before delivery of the goods has been made, then the vendor's lien revives, or, if the purchaser becomes openly insolvent before the delivery actually takes place, then the law does not compel the vendor to deliver to an insolvent purchaser."

Sub-sect. (2.) The Courts show a strong inclination to give the rights of an unpaid seller against the goods to any one whose position can be shewn to be substantially analogous to that of an ordinary seller.2

39.-(1.) Subject to the provisions of this Act, and of any statute in that behalf, notwithstanding that the property in the goods may have passed to the buyer, the unpaid seller of goods, as such, has by implication of law

(a.) A lien on the goods [or right to retain them] for the price while he is in possession of them;

(b) In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has parted with the possession of them;

(c.) A right of re-sale as limited by this Act.

(2.) Where the property in goods has not passed to the buyer, the unpaid seller has, in addition to his other remedies, a right of withholding delivery similar to and co-extensive with his rights of lien and stoppage in transitu where the property has passed to the buyer.

1 Gunn v. B lckow, Vaughan & Co. (1875), L. R. 10 Ch. App., at p. 501, overruling on this point, it seems, Bunney v. Poyntz (1833), 4 B. & Ad. 568.

2 Cf. Cassaboglou v. Gibb (1883), 11 Q. B. D., at p. 804, per Lord Esher; and, for example, see Jenkyns v. Usborne (1844), 7 M. & Gr. 678, at p. 698 (re-sale by party who had contracted to buy goods); Imperial Bank v. Lond. & St. Katherine Dock Co. (1877), 5 Ch. D. 195 (surety who has paid the price); Benjamin on Sale, 4th ed., p. 847.

3 See sect. 47, post, p. 90, and the Factors Act, post, p. 136.

By sect. 62, post, p. 118, "lien" in Scotland includes right of retention. The words "or right to retain them" were inserted when the Bill was extended to Scotland. As to negativing implied terms, see sect. 55.

Sub-sect. (1.) The origin of the seller's lien in English law is doubtful. It is probably founded on the custom of merchants.1 The term "lien" is unfortunate, because the seller's rights, arising out of his original ownership, in all cases exceed a mere lien. They “perhaps come nearer to the rights of a pawnee with a power of sale than to any other common law rights." 2

Many of the cases fail to distinguish the seller's right of lien from his right of stoppage in transitu. But it is important to keep them distinct, because, though the rights are analogous, they are in certain respects governed by different considerations.3 The seller's lien attaches when the buyer is in default, whether he be solvent or insolvent. The right of stoppage in transitu only arises when the buyer is insolvent. Moreover, it does not arise until the seller's lien is gone, for it presupposes that the seller has parted with the possession as well as with the property in the goods. "The right of stoppage in transitu," says Bowen, L.J., "is founded upon mercantile rules, and is borrowed from the custom of merchants; from their custom it has been engrafted upon the law of England. The doctrine was at variance with the Civil Law, which laid down that, although the goods had been sold upon credit, and although the goods were in the possession of the vendee, there might be recaption by the vendor if the vendee became insolvent. But, according to the rules as to stoppage in transitu, the goods can be stopped only whilst they are passing through channels of communication for the purpose of reaching the hands of the vendee. This doctrine was adopted by the Court of Chancery, and afterwards by the Courts of Common Law."4

The Courts look with great favour on the right of stoppage in transitu on account of its intrinsic justice. The decisions on the

1 Blackburn on Sale, p. 318.

2 Ibid., p. 325; cf. Bloxam v. Sanders (1825), 4 B. & C. 941, at p. 948; Schotsmans v. Lancashire Railway (1867), L. R. 2 Ch. App., at p. 340. 3 Blackburn on Sale, p. 308; cf. Bolton v. Lanc. & Yrks. Railway (1866), L. R. 1 C. P., at p. 439, per Willes, J.

4 Kendall v. Marshall, Stevens & Co. (1883), 11 Q. B. D., at p. 368, C. A.; see Gibson v. Carruthers (1841), 8 M. & W. 321, at p. 326, per Lord Abinger; Blackburn on Sale, pp. 204-209. See Lord Bowen's statement as to the Civil Law criticised in Moyle's Sale in the Civil Law, p. 155.

5 Cf. Cassaboglou v. Gibb (1883), 11 Q. B. D., at p. 804; Kemp. v. Falk

Sect. 39.

Sect. 39.

Attachment by seller in Scotland.

subject are very numerous, but as Jessel, M.R., observes, "As to several of them there is great difficulty in reconciling them with principle; as to others there is great difficulty in reconciling them with one another; and, as to the whole, the law on this subject is in a very unsatisfactory state."1 The decisions now must be read subject to

the Act.

The seller's "right of retention" in Scotland was more extensive than the seller's lien in England. Apart from statute the seller had the right to retain the goods not only for the price, but also for any other debt due from the buyer even if there had been a sub-sale.2 But the Mercantile Law Amendment (Scotland) Act, 1856, sect. 2, altered the law in the case of sub-sales, and now the Act appears to apply a uniform rule to both countries.

The Scotch Law as to stoppage in transitu appears to be similar to English Law. The doctrine "was first applied to Scottish bargains of moveables by a decision of the House of Lords in 1790, in place of a rule of presumed fraud intra triduum, which had formerly been held to entitle a seller to restitution of his goods even after delivery." 3

As to France, see art. 1654 of the Civil Code, which is modified in commercial matters by arts. 574-576 of the Code de Commerce, and Bravard Demangeat, Droit Commercial, 7th ed., p. 621. As to India, see sects. 95-106 of the Indian Contract Act, 1872.

Sub-sect. (2) was necessary because it would be a contradiction in terms to speak of a man having a lien upon his own goods. The enactment is declaratory.1

40. In Scotland a seller of goods may attach the same while in his own hands or possession by arrestment or poinding; and such arrestment or poinding shall have the same operation and effect in a competition or otherwise as an arrestment or poinding by a third party.

(1882), 7 App. Cas., at p. 590; Tucker v. Humphrey (1828), 4 Bing., at p. 519.

1 Merchant Banking Co. v. Phænix Co. (1877), 5 Ch. D., at p. 220 (case of seller's lien).

2 Mercantile Law Commission, 1855, 2nd Rep., pp. 8, 9, 44; Melrose v. Hastie (1851), 13 Sess. Cas. 880.

3 Bell's Principles, 9th ed., § 1307; Allen v. Stein (1790), M. 4949.

• Grifiths v. Perry (1859), 28 L. J. Q. B. 204, at p. 208; Ex p. Chalmers (1873), L. R. 8 Ch. App., at p. 292.

This section is taken from sect. 3 of the Mercantile Law Amendment (Scotland) Act, 1856. It is probably restrained by the provisions of sect. 47, post, p. 90.

Unpaid Seller's Lien.

Sect. 40.

lien.

41.-(1.) Subject to the provisions of this Act, the Seller's unpaid seller of goods who is in possession of them is entitled to retain possession of them until payment or tender of the price in the following cases, namely::

(a.) Where the goods have been sold without any stipulation as to credit; 1

1

(b.) Where the goods have been sold on credit, but the term of credit has expired; 2

(c.) Where the buyer becomes insolvent.8

(2.) The seller may exercise his right of lien notwithstanding that he is in possession of the goods as agent or bailee [or custodier] for the buyer.1

As to the term "unpaid seller," see sect. 38, ante, p. 75; and as to the term "insolvent," see post, p. 121. By sect. 62, post, "bailee" in Scotland includes custodier, and "lien" includes right of retention.

1 Benjamin on Sale, 4th ed., p. 767; Bloxam v. Sanders (1825), 4 B. & C. 911, at p. 918; Miles v. Gorton (1834), 2 Cr. & M. 504, at p. 511. 2 Benjamin on Sale, 4th ed., p. 839. The point has been twice decided at Nisi Prius, New v. Swain (1828), 1 Dan. & Lloyd, 193, per Bayley, J.; Bunney v. Poyntz (1833), 4 B. & Ad. 568, at p. 569, per Littledale, J.; see, too, dicta in Martindale v. Smith (1841), 1 Q. B., at p. 395; Valpy v. Oakeley (1851), 16 Q. B., at p. 951, and sects. 95, 96 of the Indian Contract Act, 1872.

3 Bloxam v. Sanders (1825), 4 B. & C. 941; Bloxam v. Morley (1825), 4 B. & C. 951; Griffiths v. Perry (1859), 28 L. J. Q. B. 204; Ex p. Lambton (1875), L. R. 10 Ch. App., at p. 415, Gunn v. Bolckow, Vaughan & Co. (1875), L. R. 10 Ch. App. 491, at p. 501.

4 Benjamin on Sale, 4th ed., p. 771; Townley v. Crump (1835), 4 A. & E. 58; Grice v. Richardson (1877), 3 App. Cas. 319 P. C. Aliter before the Act if the buyer was solvent, Cusack v. Robinson (1861), 30 L. J. Q. B., at p. 264, per Blackburn, J.; and Blackburn on Sale, p. 224. Sub-sect. (2) was originally confined to the case where the buyer was insolvent. It was altered to its present form in Committee.