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STOPPAGE IN TRANSITU
This is the name of that act of a vendor of goods, upon a credit, who, on learning that the buyer has failed, resumes the possession of the goods, while they are in the hands of a carrier or middle-man, in their transit to the buyer, and before they get, into his actual possession.
The subject will be considered with reference to, 1. The person who has a right to stop goods in transitu. 2. The property whicli may be stopped. 3. The time when to be stopped. 4. The, manner of stopping. 5. The failure of the buyer. 6. The effect of stopping.
The right of stopping property in transitu is confined to cases in which the consignor is substantially the seller; and does not extend to a mere surety for the price, nor to any person who does not rest his claim on a proprietor's right.The property stopped must be personal property actually sold or bartered, on a credit.
It must be stopped during the transit, and while something remains to be done to complete the delivery; for the actual or symbolical, delivery of the goods to the buyer puts an end to the right of the seller to stop the goods in transitu but it has been decided that if, before delivery, the seller annex a condition that security, shall be given before taking possession; or that the price shall be paid in ready money; or that a bill shall be delivered; the property will not pass by the mere act of the buyer's attaining the possession. When the seller has given the buyer documents sufficient to transfer the property, and the buyer, upon the strength of such documents, has sold the goods to a bona fide purchaser without notice, the seller is divested of his rights but a resale by the buyer does not, of itself, and without other circumstances, destroy the vendor's right of stoppage in transitu. The manner of stopping the goods is usually by taking corporal possession of them; but this is not the only way it may be done; the seller may put in his claim or demand of his right to the goods either verbally or in writing.The buyer must have actually failed, or be in actual and immediate danger of insolvency.
The stopping of goods in transitu does not of itself rescind the contract. The seller may, therefore, upon offering to deliver them, recover the price. But inasmuch as the seller is permitted in equity to annul the transfer he has made, by stopping the goods on their transit, and by that means to deprive the general creditors of the buyer of property, which, in strict law, has passed to their debtor, it has been considered as equitable, on the other hand, that this act should be accompanied by a rescinding of the whole contract, and a renunciation of any further claim; since it would be a great bardship to give a preference to the seller over, the other creditors; and subject the divisible funds, which have derived no benefit from the contract, to a further claim of indemnification.