SECTION V.

WHAT INSOLVENCY WILL GIVE THIS RIGHT.

It seems to be held that if the seller knew that the buyer was insolvent when he sent the goods, he cannot stop them afterwards. This seems reasonable enough. But if the seller knew the insolvency, it is impossible to suppose that he would send them, in good faith, unless on some special ground of security, or at least of belief of payment. And if the transaction were honest, and this security failed and the belief passed away, we know not why the seller might not stop the goods. It has however been held that to give the vendor the right to stop the goods in transitu, the insolvency must take place between the time of the sale and the exercise of the right of stoppage. But we are not without much doubt whether this can be laid down as a positive and universal rule. For if there be such a rule, the mere fact of insolvency at the time of the sale, whether known or unknown to the vendor, would destroy the right of stoppage.3

could not be returned. The property of the vendee was afterwards assigned to trustees, and the keys of the warehouse delivered to them. The court held that the transit was ended when the goods were first put in the warehouse, and that there was no valid and mutual rescission of the contract of sale. But see Grout v. Hill, 4 Gray, 361. » 1 Buckley v. Furniss, 15 Wend. 137.

2 This question seems to have been first raised in Rogers v. Thomas, 20 Conn. 53. Storrs, J., there said: "The remaining inquiry respects the time when such insolvency must occur, in order to confer this right. On this point, we are of opinion, that it is not sufficient it exists when the sale takes place, but that it must intervene between the sale and the exercise of such right. It is well settled, that after the sale, and before the vendor has taken any steps to forward the property to the vendee, the former has a lien upon it, by virtue of which he may, on the occurrence of the insolvency of the latter, retain the goods in his possession, as a security for the price. This is a strictly analogous right to that of stopping them after they have been forwarded, and while they are on their way to the vendee, and depends on the same principles. And it may be here remarked, that the cases decided on the subject of that right of lien, confirm the views which we have expressed as to the meaning of insolvency as applied to the right of stoppage, after the transitus has commenced. The same equitable principle, which authorizes a retention of the possession, in the one case, and a recovery of it, in the other, would seem to authorize the latter, where the insolvency occurred after the sale and before the forwarding of the property. The right of stopping it after the

Only a vendor can stop the goods; for no one else has a lien for the price. But a foreign merchant, who in compliance with orders from here, sends goods, the price of which abroad he has paid or is responsible for, is a seller or consignor within the requirement of the law of stoppage in transitu.1 And so is one who sends goods to be sold by the consignee on the joint account of the sender and the consignee. And an alien enemy who sent goods to England under a British license was there permitted to stop them.3 But one who is only a surety for the consignee to the consignor, in whatever form, whether as indorser, guarantor, or otherwise, cannot, as we have already said,1 have any lien on the goods, and therefore has no right to stop them; even if they are sent through his hands. It might be in such a case, that he might otherwise obtain indemnity or security on the goods, as by attachment, if the circumstances permitted it; but not by a stoppage in transitu. Even if the sender has a lien on the goods, if it be not the lien of the seller for the

transitus has commenced, may not, therefore, be limited to the case where insolvency occurs after it has left the possession of the vendor, but it may extend to cases where it occurred at any time after the sale. However that may be, we are clear that it must occur after the sale. In favor of this position there is the same argument, from an entire absence of authority against it, as was derived from that source on the point which we have just considered; and it applies with equal force. We find no decided case, in which the right in question has been sanctioned, excepting where the insolvency occurred subsequent to the sale. And although the language of the courts may sometimes seem to import, that the right exists, irrespective of the time when the insolvency took place, it is quite plain, that, applying their expressions to the cases they were considering, and which did not involve this point, they were not intended to have that construction. But in most of the decided cases on this subject, it will be seen that their language is most unequivocal, and in terms limits the right of stoppage to cases of bankruptcy or insolvency, occurring while the goods are in transitu, and of course after the sale." In this case the vendee was insolvent at the time of the sale, ⚫ and had been so for a long time previous. Precisely the same state of facts existed, in this respect, in Buckley v. Furniss, 15 Wend. 137, 17 id. 504, but the vendor there was allowed to exercise his right, though it was thought that if the vendor knew the facts it would be different. This case was cited by counsel in Rogers v. Thomas, but was not noticed by the court. See also, Conyers v. Ennis, 2 Mason, 236, where no notice was taken of this distinction. It was unnecessary, however, to consider it, as there had been a delivery to the vendee. And see Biggs v. Barry, 2 Curtis, C. C.

259.

1 See ante, p. 341, n. 1.

2 Newsom v. Thornton, 6 East, 17.

3 Fenton v. Pearson, 15 East, 419.

4 See ante, p. 340, n. 3.

price, he cannot stop them; as if the sender had worked upon them and had a lien for the wages or payment for what he has done.1 Indeed, no one can exercise the right of stoppage in transitu who has not a property in the goods.

Nothing but the insolvency of the buyer gives this right to the seller; and indeed it may be called a principle of maritime law, that a consignor cannot vary or interfere with a consignment once made, except on the ground of insolvency.2 But this need not be legal or formal bankruptcy or insolvency; it is enough if the buyer cannot pay his debts. The seller who stops the goods

1 Sweet v. Pym, 1 East, 4.

2 Snee v. Prescot, 1 Atk. 245; The Constantia, 6 Rob. Adm. 321.

3 In Rogers v. Thomas, 20 Conn. 54, Mr. Justice Storrs, on the meaning of the phrase insolvency, said: "The cases on this subject generally mention insolvency as one of the conditions on which the right of stoppage in transitu accrues; but they are wholly silent as to what constitutes such insolvency; and, therefore, its sense,, as thus used, is to be gathered from the circumstances of the cases. For it is a term which is used with various meanings. In a technical sense, it denotes the having taken the benefit of an insolvent law; in the popular sense, a general inability to pay debts; and, in a mercantile sense, a stoppage of payment, or failure in one's circumstances, as evinced by some overt act. That a technical insolvency is sufficient to authorize the exercise of the right of stoppage in transitu, has always been conceded. That it is not indispensable for that purpose, is equally clear. Mr. Smith, in his Compendium of Mercantile Law, p. 549, n., expresses his belief, that merchants have very generally acted as if the right to stop goods was not postponed till the occurrence of insolvency in the technical sense, and pertinently adds: The law of stoppage in transitu is as old, it must be recollected, as 1670, on the 21st of March, in which year Wiseman v. Vandeput was decided; so that if insolvency is to be taken in a technical sense, the law of stoppage in transitu has been varying with the varied enactments of the legislature regarding it.' That stoppage of payment amounts to insolvency, for this purpose, is assumed in many of the cases. Lord Ellenborough, in Newson v. Thornton, 6 East, 17, places the right of the vendor to stop the property on the 'insolvency' of the consignee, where there had been only a stoppage of payment by the vendee, when notice was given to the carrier, by the vendor, to retain the goods. In Vertue v. Jewell, 4 Camp. 31, the terms used were, 'stopped payment.' See also, Dixon v. Yates, 5 B. & Ad. 313. We have been able to find no case in which the right of stoppage in transitu has been either sanctioned or attempted to be justified on the ground of the insolvency of the vendee, where there was not a technical insolvency, or a stoppage of payment, or failure in circumstances, evidenced by some overt act; and Mr. Blackburn, in his Treatise on the Contract of Sale, p. 130, where this subject is very minutely examined, says, that there seems to have been no such case; and adds, that although the text-books and dicta of the judges do not restrict the use of the term 'insolvent,' or 'failed in his circumstances,' to one who has stopped payment, there must be great practical difficulty in establishing the actual insolvency of one who still continues to pay his way; and as the carrier obeys the stoppage in transitu at his peril, if the consignee be in fact solvent, it would seem no unreasonable rule to require, that at the time the consignee

takes this risk on himself. The buyer, if not insolvent, can pay the price, or if they were sold on credit, secure it, and then claim the goods. And if the seller stopped them maliciously, or without actual belief of insolvency on good grounds, he would doubtless be answerable for any damages the buyer should sustain thereby. If the goods were to be paid for by acceptances or notes, and the buyer is willing to accept the bills or sign the notes, and is not insolvent, the seller cannot stop the goods.1 But if a compliance with the terms of the sale is refused by the buyer, then the seller may refuse to deliver the goods, or, what is the same thing, stop them in transitu. It is in fact insolvency so far as he is concerned.

The seller's right to stop the goods cannot be defeated by any bargain between the consignee and his assignee; or by any claim, or lien, or attachment of any other person. It may be

was refused the goods, he should have evidenced his insolvency by some overt act. Mr. Smith, in his work which has been mentioned, clearly favors the same view. Comp. Merc. Law, 130, n. Hence, it appears that the authorities and text writers furnish no support to the claim, that a mere general inability to pay debts, unaccompanied with any visible change in the circumstances of the debtor, constitutes insolvency, in such a sense as to confer the right of stoppage in transitu.”

The rule generally laid down is, that a person is insolvent when he is not in a condition to pay his debts in the usual and ordinary course of trade and business. Shone v. Lucas, 3 Dowl. & R. 218; Bayly v. Schofield, 1 M. & S. 338; Biddlecombe v. Bond, 4 A. & E. 332; Thompson v. Thompson, 4 Cush. 127, 134. In Secomb v. Nutt, 14 B. Mon. 324, on the question whether the vendee was insolvent, the court said: "To establish insolvency it is not necessary to prove that he is not able to pay a cent, or any particular sum, but it is sufficient to show that he is unable to pay his debts. The true meaning and effect of the preference given to the vendor, while the goods sold on a credit are in transitu, is that he is relieved from the necessity of a race for priority, and of sharing with general creditors the proceeds of goods sold by himself. To save him from this scramble it is sufficient to show with reasonable certainty, that is, with probability, that the vendee is embarrassed and not able to make full or general payment of his debts. And it would seem that the vendee's own admission of the fact to his vendor would be sufficient to authorize the latter to act upon it, and should, unless disproved, sustain his claim, to stop the goods in transitu." In Hays v. Mouille, 14 Penn. State, 51, the vendee was indebted some $60,000, and his assets were only $26,000. His creditors were watching for the goods which the vendor had sold, and attached them while in transitu. The court held, that the jury were warranted in finding from these facts that the vendee was insolvent. See also, Naylor v. Dennie, 8 Pick. 198, 205. 1 Walley v. Montgomery, 3 East, 585. See also, The Constantia, 6 Rob. Adm.

321.

2 See ante, p. 362, note 2.

3 Smith v. Goss, 1 Camp. 282; Le Ray De Chaumont v. Griffin, cited 15 Wend.

necessary for the seller to discharge the claim, as if it be a lien for freight; but even this is not necessary, where the attachment is by a creditor of the buyer or consignee; for the seller's lien takes precedence. But if the goods have arrived at the journey's end, and are only prevented by the attachment from removal by the consignee, this may prevail, on the ground that the transit has ended and the lien gone.2

SECTION VI.

HOW THE RIGHT OF STOPPAGE MAY BE EXERCISED AND ENFORCED.

The insolvency of the buyer alone, however complete, or however manifested, will not operate as a stoppage in transitu.3 The goods must be actually stopped, in some way which the law recognizes as adequate, by the seller or his authorized agent. It seems to have been supposed formerly, that an actual taking possession by the seller was requisite to complete this stoppage. That is now, however, not necessary; or, at least, not in all cases; although actual possession should always be taken if possible, and as soon as possible. And this right of taking possession is so complete that it justifies any mode of getting possession that is

144; Buckley v. Furniss, 15 Wend. 137; Covell v. Hitchcock, 23 Wend. 611; Naylor v. Dennie, 8 Pick. 198; Hause v. Judson, 4 Dana, 7; Secomb v. Nutt, 14 B. Mon. 324; Wood v. Yeatman, 15 B. Mon. 270; Parker v. M'Iver, 1 Des. 274; Sawyer v. Joslin, 20 Vt. 172. But a conveyance by an insolvent debtor of goods, in trust, to pay the debt of a creditor, will not defeat an attachment made before he assents to the transfer; for the goods still remain the property of the debtor, and as such are liable to attachment. Lane v. Jackson, 5 Mass. 157, 163.

1 See ante, p. 350, D.

2 In Hitchcock v. Covill, 20 Wend. 167, Nelson, C. J., seems to have been of this opinion though the case was decided on another ground. If the goods have arrived at their place of destination, but before they are delivered to the vendee, they are attached by a creditor of his, and he takes no step to obtain the possession of them, the right of the vendor still remains. Naylor v. Dennie, 8 Pick. 198. But if, while they are attached, he takes such possession as he is able to, prior to the assertion of the right of the vendor, the transitus will be held to have terminated. Ellis v. Hunt, 3 T. R. 464. 3 Haswell v. Hunt, cited 5 T. R. 231; Ellis v. Hunt, 3 T. R. 464; Scott v. Pettit, 3 B. & P. 469, 471; Mottram v. Heyer, 5 Den. 629.