reach the buyer's possession, and thus avoid having his property applied in payment of the debts due by the buyer to other people" (p). The two essential conditions to the seller's exercise of the right of stoppage in transitu are (1) that the buyer is insolvent; and (2) that the goods are in course of transit (as defined in s. 45), i.e., are "in the custody of some third person, intermediate between the seller, who has parted with, and the buyer, who has not yet acquired, actual possession" (q). S. 44. Buyer... becomes insolvent.-Insolvency is thus defined by Meaning of s. 62 (3):-"A person is deemed to be insolvent who either has "insolvency." ceased to pay his debts in the ordinary course of business, or cannot pay The term "insolvency" has had attached to it, both at common law and by statute, a wider meaning than attaches to the term "bankruptcy." It imports a general inability to pay debts in the ordinary course of trade or business (s). The fact that the buyer has "stopped payment" has been held, as a matter of course, to amount to "insolvency" justifying stoppage in transitu; and the failure to pay one just and admitted debt would probably be sufficient proof of a general incapacity (†). It is not necessary that the buyer should have been found, or should be, insolvent at the date of the stoppage, provided he be so in fact when the goods arrive at their destination. "If the buyer is then insolvent, the premature stoppage will avail for the protection of the seller; but if the buyer remain solvent, the seller would be bound to deliver the goods with an indemnification for the expenses which may have been incurred" (u). The unpaid seller. The seller may be wholly or partially unpaid (ante, p. 209). As to the persons who stand in the position (p) Benj. p. 843. (4) Per Parke, B., in Gibson v. Carruthers (1841), 8 M. & W. at p. 328, approved by Lord Cairns, in Berndtson v. Strang (1868), 3 Ch. Ap. at p. 590; and by James, L.J., in Ex parte Rosevear China Clay Co. (1879), 11 Ch. D. at p. 569. (r) See Bell's Dict. Law of Scotland, p. 79. (8) Biddlecombe v. Bond (1835), 4` A. & E. 332; Parker v. Gossage (1835), 2 C. M. & R. at p. 620, per Parke, (t) See Benj. p. 851. (u) Benj. p. 852; see The Constantia (1807), 6 Rob. Adm. R. at p. 326, per Lord Stowell; cf. also The Tigress (1863), 32 L. J. Adm. at p. 101. S. 44. of sellers, and have been held entitled to exercise the right of stoppage, see s. 38 (2), ante, p. 212. Has the right of stopping them in transitu.-The right of stoppage can be exercised only over the actual goods while in transit. If the goods have been damaged in transit, the seller cannot claim a right of stoppage as to the proceeds of insurance accruing to the buyer in respect thereof (x). Nor, when the right to stop the actual goods has once been lost by the transfer of the bill of lading to a sub-buyer, can the seller claim to stop the proceeds of the sub-sale (y). He may resume possession.-The effect of the exercise of the right is under s. 48 (1) to restore the seller to his old position, and not to rescind the contract. Stoppage in transitu is "a retaking by the unpaid vendor, either on the cancellation of the contract, as some people say, or, as I should rather say, on resuming possession for the purpose of insisting on his lien for the price" (z). And as the possession of the goods must be resumed with a view to their retention "until payment or tender of the price," the seller will acquire no new right of lien when the goods are delivered to him, after the termination of the transit, for some special purpose (a). The converse case, where the seller's lien is not divested by delivery to the buyer as special bailee, is noticed ante, p. 229. "The unpaid seller's right of stoppage is higher in its nature than the carrier's lien for his general balance (b), though not for the special charges on the goods sold; and he may also maintain his claim as paramount to that of a creditor of the buyer who has attached the goods whilst in transit, by process out of the Mayor's Court of the city of London " (c). In course of transit.-Defined by s. 45. Until payment or tender of the price.-Such payment or tender divests the resumed lien. (See s. 38 (1) (a).) ILLUSTRATIONS. 1. A. sells goods to B., and sends them by C., a carrier, to L. directed to B. B. becomes insolvent, and A. stops the goods in transit. On (x) Berndtson v. Strang (1866), 3 Ch. 588. (y) Per Lords Selborne and Blackburn in Kemp v. Falk (1880), 7 App. Ca. at pp. 577, 582; cf., however, judgment of Cotton, L.J., in Ex parte Golding, Davis & Co. (1880), 13 Ch. D. at p. 638. (2) Per Cotton, L.J., in Phelps v. Comber (1885), 29 Ch. D. at p. 821. (a) Valpy v. Gibson (1847), 4 C. B. 837. (b) Oppenheim v. Russell (1802), 3 B. & P. 42. (c) Smith v. Goss (1808), 1 Camp. 282; Benj. p. 850. arrival of the goods at L., they are, by mistake of C.'s clerk, delivered to B. A. may maintain_trover against B.'s assignees in bankruptcy. Litt v. Cowley (1816), 7 Taunt. 169. 2. A. sells goods to B., and consigns them to him by C., a carrier. B. becomes insolvent, and A. stops the goods in transit, and requires C. to re-deliver to him. C. nevertheless delivers to B. C. is liable to A. in the value of the goods for his wrongful act in delivering to B. after A.'s notice, as A. is entitled to resume possession. Pontifex v. Midland Ry. Co. (1877), 3 Q. B. D. 23. S. 44. transit. 45.-(1.) Goods are deemed to be in course of Duration of transit from the time when they are delivered to a carrier by land or water, or other bailee or custodier for the purpose of transmission to the buyer, until the buyer, or his agent in that behalf, takes delivery of them from such carrier or other bailee or custodier. This sub-section states the general rule as to the duration of the transit. The following sub-sections show its special application to particular facts. In course of transit. The principles of law which relate to the duration of the transit are clearly settled; the difficulty arises in their application to the facts and circumstances, often complex or equivocal, of each particular case. The transit commences when the seller parts with the possession of the goods to a carrier for the purpose of their transmission to the buyer, up to which moment the seller may exercise his right of lien, as already described; it ceases when the buyer, or his agent for custody, takes actual possession of the goods. In some cases there is no transit, because the carrier is the buyer's servant. There is then no delivery to "a carrier" within this section. For example, the buyer may send his own cart, or barge, or ship, for the goods, and then a delivery of the goods to the carter, or bargeman, or master of the ship (unless the seller receives his power of disposal under s. 19 (2)), is a delivery into the buyer's possession (d), and the right of stoppage in transitu never exists. The only question, then, which arises for ascertaining the duration of the transit is, In what capacity has the agent taken possession of the goods? Is he an agent to forward the goods to the buyer, or is he an agent to hold goods at the buyer's disposal? (d) See, however, per Jessel, M.R., in Merchant Banking Co. of London v. Provincial Banking Co. (1877), 5 Ch. D. at p. 219, where he treats the S. 45 (1). To a carrier or other bailee.-The chief difficulty arises when the agent acts in two capacities, as, e.g., as a carrier, and also as bailee, e.g., as a warehouseman or wharfinger. The carrier may then lodge the goods in his warehouse or on his wharf, either as a place of deposit in connection with the carriage, i. e., "for the purpose of transmission," or as a place of deposit subject to the buyer's orders. In such a case, as the fact of possession "is in itself ambiguous, it is necessary to gather the intention of the parties from their minor acts" (e). "Goods may be still in transit, though lying in a warehouse to which they have been sent by the seller on the buyer's orders. Goods sold in Manchester to a merchant in New York may be still in transit while lying in a warehouse in Liverpool. The question, and the sole question, for determining whether the transitus is ended is, In what capacity the goods are held by him who has the custody? Is he the buyer's agent to keep the goods? or, the buyer's agent to forward them to the destination intended (f) at the time the goods were put in transit? If, in the case supposed, the goods in the Liverpool warehouse are there awaiting shipment to New York, in pursuance of the buyer's original order to send him the goods to New York, they are still in transit, even though the parties in possession in Liverpool may be the general agents of the New York merchant for selling as well as forwarding goods. But if the buyer ordered his goods to Liverpool only, and they are kept there awaiting his further instructions, they are no longer in transit. They are in his own possession, being in possession of his agent, and may be sold in Liverpool or shipped to the East, or disposed of at the will and pleasure of the buyer" (g). And it is well observed by Lord Blackburn (h) that, "it then becomes a question depending upon what was done, and what was the intention with which it was done; and as the acts are often imperfectly proved, and in themselves equivocal, and the intention often not clearly known to the parties themselves, it is not surprising that there should be much litigation upon the point." The term "carrier" in this connection includes the master of the buyer's own ship, or ship demised to him, when the circumstances of the case show that the seller has interposed the master as a carrier between himself and the buyer, as where he takes (e) Blackb. p. 364. (f) i.e., not necessarily by the terms of the contract, or directions to the seller at the time. See p. 241, infra, and per Lord Esher, M.R., in Bethell v. Clark (1887), 20 Q. B. D. (g) Benj. p. 859. the bill of lading to his own order. Ordinarily, of course, the delivery of the goods on board the buyer's own ship, or ship demised to him, is a delivery to the buyer's agent, who then "takes delivery.” "But if the seller desire to restrain the effect of a delivery of goods on board the buyer's own vessel, he may do so by taking bills of lading so expressed as to indicate that the delivery is to the master of the vessel as an agent for carriage, not an agent to receive possession for the buyer. This point was decided in Turner v. Trustees of Liverpool Docks (i), and that case was recognized as settled law in Schotsmans v. Lancashire and Yorkshire Ry. Co. (k), decided by the full Court of Chancery Appeals (2). "And there is no difference in the effect of the delivery, whether the buyer's ship was expressly sent for the goods, or whether it was a general ship belonging to the buyer, and the goods were put on board without any previous special arrangement" (m). ILLUSTRATION. A. sells goods to B., and delivers them on board B.'s own ship, employed as a general trader, and takes the bill of lading to the order of B. The transit is ended on shipment, as B.'s agent has received the goods, A. not having restricted the delivery by taking the bill to his own order. Schotsmans v. L. & Y. Ry. Co. (1867), 2 Ch. Ap. 332. In In re Bruno, Silva & Son (n), the seller took a receipt from the mate of the buyer's own ship, and then handed it to the buyer's agent, who thereby got the bill of lading; and it was held that the transit ended on shipment. The case would be apparently otherwise if the carrier was a third person (o). As to the effect of delivery on board the buyer's chartered ship, see sub-s. 5, infra. S. 45 (1). terden's definition of For the purpose of transmission.-It will be useful here to cite Lord Tenthe definition of the transit given by Lord Tenterden (p), and amplified by Lord Esher (q). "Goods are deemed to be in transit. transitu not only while they remain in the possession of the carrier, whether by water or land, and although such carrier may have been named and appointed by the consignee, but also when they are in any place of deposit connected with the transmission and delivery of them, having been there deposited by (i) (1851), 6 Ex. 543. (k) (1867), 2 Ch. Ap. 332. (1) Benj. p. 855. (m) Ibid. p. 856. (n) (1887), 56 L. T. N. S. 577. (1890), 15 Ap. Ca. at p. 398. (p) Abbott on Shipping, Part 3, ch. 9, p. 374 (5th ed.); Part 4, ch. 10, p. 409 (12th ed.). (q) Loc. cit. in Kendal v. Marshall (1883), 11 Q. B. D. at p. 364. |