
    The Wheeling and Lake Erie Railroad Company v. Koontz et al.
    
      Sale and delivery of goods — Vendor may stop goods in transitu, when — Consignee sells undelivered goods to common carrier for unpaid freight — Carrier not a bona ñde purchaser.
    
    1. When goods have been shipped by common carrier, and have arrived at the point of destination, and notice thereof has been given to the consignee, who does not pay the freight •nor indicate an intention to receive the goods, and the goods thereafter remain in the custody of the carrier without any agreement that the carrier shall hold the same as agent or warehouseman for the consignee, there is no delivery to the consignee, and the vendor may recover the goods by stoppage in transitu.
    
    2. A sale by the consignee to the carrier, under such circumstances, in consideration of the unpaid freight on such goods, and other pre-existing debts, does not constitute the carrier a bona fide purchaser.
    (Decided January 30, 1900.)
    Error to the Circuit Court of Lucas county.
    The defendants in error sued the plaintiff in error, before a justice of the peace, for a conversion of one car-load of lumber, and obtained judgment. An appeal having been taken to the court of common pleas, the plaintiffs below filed their petition, setting forth that the defendant connects with the Ohio River Railroad at Wheeling, West Virginia; that on or about February 1, 1895, they delivered to The Ohio River Railroad a car of lumber to be carried to the city of Toledo, Ohio, via defendant’s line of railway for a compensation to be paid at the determination of the carriage; that the lumber was carried over the defendant’s road and arrived in Toledo about Feb. 5, 1895, and remained in possession of the defendant up to and after February 21, 1895, at which time the consignee of said lumber, The Gashe Lumber Company, was insolvent and has remained so since that date; that said lumber had been sold to The Gashe Lumber Company on credit, and that the purchase price has not been paid; that on February 21, 1895, the plaintiffs gave notice to the defendant of stoppage in transit and requested it to hold the lumber subject to the order of the plaintiffs; that they demanded possession of defendant and tendered the amount claimed by defendant to be due for freight, but defendant refused to give possession of the lumber and has converted the same to its own use; and that the lumber was reasonably worth, after allowance for the freight thereon, the sum of |262.00.
    The answer of defendant admitted that on or about February 5, 1895, the said car of lumber was by it transported to Toledo, and alleged that on or about the 7th day of February, 1895, it delivered the lumber to the said Gashe Lumber Company; and that after said delivery The Gashe Lumber Company sold the same to the defendant and the same thereby became the property of the defendant.
    The plaintiffs replied, denying that the car of lumber was ever delivered to The Gashe Lumber Company) and alleging that it was in the exclusive possession of defendant as a common carrier to and after February 21, 1895; that said company was insolvent on February 7,1895, and that defendant knew it; that the alleged sale did not take place until after February 9, 1895, on which date a receiver was appointed for The Gashe Lumber Company, and that the only consideration for such sale was the reduction of the then existing debt of The Gashe Lumber Company to the defendant. It is further stated in the reply that The Gashe Lumber Company obtained the lumber on credit by falsely and fraudulently representing that it was solvent and able to pay for the lumber when the credit expired, and that on February 21, 1895, on learning of the insolvency of said lumber company, they elected to rescind said sale and retake said lumber, and on that day notified the defendant to hold the lumber subject to the order of the plaintiffs.
    The court of common pleas, there being an agreed statement of facts and a jury being waived, found for the plaintiffs and rendered a judgment against the defendant, The Wheeling and Lake Erie Railway Company, for $295.41, with interest and costs. This judgment was affirmed by the circuit court; and the case comes into this court by petition in error to reverse the judgment of the circuit court and of the common pleas.
    
      Swayne, Hayes & Tyler, for plaintiff in error.
    1. It is conceded that the lumber in controversy was sold by the plaintiffs to The Gashe Lumber Company upon credit. Therefore, the absolute title thereto and the right to the possession thereof passed to and vested in the vendee. Benjamin on Sales, 6th Ed., Sec. 677.
    2. A sale of goods upon credit vests in the vendee the absolute title thereto, which is not divested by reason of his insolvency or failure to pay the contract price therefor.
    3. A sale of goods upon credit vests in the vendee the right to the immediate possession thereof, and of this right he may be divested if, before the goods are in his actual or constructive possession, he becomes insolvent. Bloxam v. Sanders, 4 B. & C., 941.
    4. It is conceded that the plaintiffs delivered the lumber in controversy to a common carrier for transportation to the vendee, The Gashe Lumber Company, of Toledo, Ohio.
    It is well settled that when the vendor assumes or undertakes to send goods to the vendee a delivery thereof to a common carrier is a delivery to the purchaser. Emery’s Sons v. Bank, 25 Ohio St., 360; Wigton v. Bowley, 130 Mass., 252.
    5. From these principles of law and conceded facts it is evident that when the plaintiffs delivered the lumber they had sold on credit, to the railway company, for transportation, the absolute title thereto and the right to the possession thereof vested in The Gashe Lumber Company.
    It is, however, well settled that, in every sale upon credit there is implied an agreement that the buyer shall remain solvent until the goods purchased come into his possession, and a breach of this implied agreement revests in the vendor the right of possession for the sole and only purpose of enabling him to enforce his lien for the contract price. It is upon this principle that the doctrine of stoppage in transitu is based. Benjamin on Sales, Section 828; Penna. Co. v. American Oil Works, 126 Pa. St., 485.
    6. In order that the right of stoppage in transitu may be exercised, the goods must be in transit; that is, in the possession of the carrier as carrier. Benjamin on Sales, section 841.
    7. The right of stoppage in transitu cannot be exercised after the goods have come into the actual or constructive possession of the vendee. Hutchison on Carriers, section 416a. Benjamin on Sales, Sec. 839.
    A failure to observe the different senses, in which the words “constructive possession” and. “constructive delivery” are used by the courts, has led to some confusion. Am. & Eng. Ency. Law, 908.
    There are many cases illustrative of the well-recognized principle of law that even a constructive delivery by carrier to the consignee will defeat the vendor’s right of stoppage in transitu. Foster et al. v. Frampton, 6 B. & C., 111; Whitehead v. Anderson, 9 M. & W., 518; Langstaff et al. v. Stix et al., 28 A. & E. R. R. Cases, 85; Williams et al v. Hodges et al., 18 S. E. Rep., 83; Wright v. Lawes, 4 Esp., 82; Hutchinson on “Carriers,” section 417.
    
      
      Marshall & Fraser, for defendants in error.
    1. What is the right of stoppage in transit? Benjamin on Sales, section 828 (Bennett’s Edition); Diem v. Koblitz, 49 Ohio St., 41.
    2. In what favor is this right held? Calahan v. Babcock, 21 Ohio St., 281; Cabeen v. Campbell, 30 Pa. St., 254; Benjamin on Sales, Sec. 830 (Bennett’s Edition); Morris v. Shyrock, 50 Miss., 590; Harris v. Pratt, 17 N. Y., 249; Anderson v. Fish, 16 Ont., 476; Lewis v. Mason, 36 U. C. Q. B., 590; Kingman v. Dennison, 48 N. W. Rep. (Mich.) 26; Inslee v. Lane, 57 N. H., 454.
    3. What will cut off the right of stoppage in transitu?
    
      (a) The right of stoppage in transitu is not cut off or defeated by an attachment or other legal process issued on behalf of a creditor of the vendee.
    This decision is supported by all the authorities of which we cite: Kitchen v. Spear, 30 Vt., 545; O’Brien v. Norris, 16 Md., 122; Blum v. Marks, 21 La. Ann, 268; Clark v. Lynch, 4 Daly (N. Y.), 83; Mississippi Mills v. Bank, 9 B. J. Lea (Tenn.), 314; Cox v. Burns, 1 La., 64; Blackman v. Pierce, 23 Cal., 509; Wood v. Tateman, 15 Mon. (Ky.), 270; Rucker v. Donovan, 13 Kan., 251; Agmire v. Parmalee, 22 Conn., 473; Sherman v. Rugee, 55 Wis., 346; Seymour v. Newton, 105 Mass., 272; Durgy Cement Co. v. O’Brien, 123 Mass., 12; Covell v. Hitchcock, 23 Wend. (N. Y.), 611.
    
      (b) The right continues, although the carrier at the end of his route has put the goods into his own warehouse or into a public warehouse preparatory to delivery to the consignor upon payment of freight and charges. Hoover v. Tibbits, 13 Wis., 79; More v. Lot, 13 Nev., 376; Halff v. Allyn, 60 Tex., 278; Clapp v. Peck, 55 Ia. 270; O’Neill v. Garrett, 6 Ia., 480.
    
      (c) When the goods have reached the end of the route and have been put into the hands of the vendee’s agent, whether warehouseman or other agent, although not' quite delivered at such vendee’s store or place of business, the transit is at an end and the right of stoppage gone. McFetridge v. Piper, 40 Ia., 627; Lane v. Robison, 18 B. Mon. (Ky.), 623; Brooke Iron Co. v. O’Brien, 135 Mass., 442.
    
      (d) A demand for the goods by the vendee from the carrier does not cut off the right of stoppage.
    (e) Without actual or constructive delivery an offer or even payment of freight does not avail to cut off the right. Sc. 17 App. Rep., 28; Mottram v. Heyer, 5 Denio (N. Y.), 629; Donath v. Broomhead, 7 Pa. St., 301.
    
      (f) The mere arrival of the goods at the town or city of the buyer, if they still remain in the hands of the carrier, as carrier, does not terminate the right of stoppage. White v. Mitchell, 38 Mich., 390; Greve v. Dunham, 60 Ia., 111.
    
      {g) A vendor’s right of stoppage in transitu is not terminated by the goods coming to the hands of a shipping agent appointed by the vendee. The transit continues until the goods come into the possession of the vendee or of some agent authorized to act in respect to the disposition of them otherwise, and by forwarding them to the vendee. Hays v. Mouille, 14 Pa. St., 48; In re Foote, 11 Blatch U. S., 530; Holbrooke v. Vose, 16 Bosw. (N. Y.), 76.
    
      (h) But where new orders to the agent from the vendee are necessary to put the goods in motion, the right is cut off. Kendall v. Stevens, L. R., 11 Q. B. Div., 356.
    (i) Whether a delivery of part of the goods will cut off the right of stoppage as to the remainder, must depend upon the facts of each case. Tanner v. Scovill, 14 Mess. & W., 28; Secomb v. Nutt, 14 B. Mon. (Ky.), 324; Buckley v. Furniss, 17 Wend. (N. Y.), 504.
    
      (j) A notice of stoppage given by an unauthorized person is good, if ratified by the consignor before the consignee makes a proper demand for the goods. Cement Co. v. O’Brien, 123 Mass., 12.
    But not if ratified after a proper demand for the goods by the consignee; for the carrier cannot prolong the transitus and so extend the time for stoppage.
    (7c) The right is not cut off, though the vendor be partly paid or have the notes or acceptances of the insolvent consignee for the price. Lewis v. Mason, 36 U. C. Q. B., 590; Feise v. Wray, 3 East, 93; Edwards v. Brewer, 2 Mess. & W., 375; Diem v. Koblitz, 49 Ohio St., 41.
    (7) While stoppage in transitu is an adverse proceeding and must be exercised adversely to the consignee, that is, it must not be asserted under a title derived from the vendee, still it need not be asserted in hostility to the vendee. Cox v. Burns, 1 La., 64; Naylor v. Dennie, 8 Pick. (Mass.), 198.
    
      (m) Lapse of time between the sale of the goods and notice of stoppage does not defeat the right.
    
      (n) The entry of goods at custom house by the vendee for the payment of duties, does not terminate the right of stoppage in transitu. In such case, goods are in the possession of the United States or their officers. Fraschieris v. Henriques, 6 Abb. Pr. N. S., Rep; Mottram v. Heyer, 5 Denio, 629; Harris v. Hart, 6 Duer. (N. Y.), 606; Parker v. Byrnes, 1 Lowell (U. S.), 539; In re Bearns, 18 Bankruptcy Reg., 500.
    (o) Where the vendee intercepts the goods on their passage to him, and takes possession as owner, the delivery is complete, and the right of stoppage is gone. Sacomb v. Nutt, 14 B. Mon. (Ky.), 324; Wood v. Yeatman, 15 B. Mon. (Ky.), 270; Stevens v. Wheeler, 27 Barb. (N. Y.), 658.
    But the right of stoppage is not determined if the interception by the vendee is not made in good faith. Pool v. Railway Co., 58 Tex., 334.
    
      (p) A mere sale of property, unaccompanied by delivery, or by anything in legal contemplation operating as a change of possession, will not divest the right of the vendor to stop the goods. The purchaser from the vendee, in such case, takes only the vendee’s right, subject to the contingency which may, before the goods are received, entitle the original vendor to resume the possession and hold it until the price be paid. Isley v. Stubbs, 9 Mass., 65; Wait v. Scott, 6 Grants Sc., 5 Ch. & App. Rep., 154.
    If the consignee sells the goods and the purchaser buys them in good faith for a valuable consideration, and obtains possession, the vendor has no claim upon such purchaser. U. S. Wind Engine Co., v. Oliver, 16 Neb., 612.
    The right of stoppage is cut off by a re-sale when the vendee obtains the goods and sends or delivers them to a second vendee. Eaton v. Cook, 32 Vt., 58.
    And it is cut off when the vendor consents to a resale. Stoveld v. Hughes, 14 East., 308; Rowley v. Bigelow, 12 Pick., 307.
    Even if there is a delivery to a second vendee the right of stoppage is not cut off if the second vendee is not a bona fide purchaser from the original vendee. Rosenthal v. Dussau, 11 Hun. (N. Y.), 49; Chandler v. Fulton, 10 Texas, 2.
    (q) Constructive delivery.
    There is a constructive delivery to the vendee when the carrier, by agreement between himself and the vendee, undertakes to hold the goods for the vendee, not as carrier, but as his agent. Ex-parte Cooper L. R., 10 Chan. Div., 313; Coventry v. Gladstone, L. R. 6 Eq. Cases, 44; Reynolds v. Railroad, 43 N. H., 580; Hoover v. Tibbitts, 13 Wis., 79; Farrell v. Railroad, 102 N. C., 390.
    
    We have seen that even if there is a delivery to the second vendee, the right of stoppage is not cut off if the second vendee is not a bona fide purchaser from the original vendee.
    The sale in this case was clearly not for a valuable consideration. Eaton v. Davidson, 46 Ch. St., 355; Grever v. Taylor, 53 Ch. St., 621. retake the goods. Loeb v. Peters, 63 Ala., 243.
    We claim, that our right to retake the goods and to re-establish our vendor’s lien is analogous to the right of a defrauded vendor to rescind the sale and retake the goods. Loeb v. Peters, 63 Ala., 243.
    The carrier in this case was the agent of the vendor.
    The sale in this case from the vendee to the carrier was not good as against the vendor, for the reason that an agent cannot deal for his own interest in the matter of the agency. Jansen v. Williams, 20 L. R. A. (Neb.), 207; Tyler v. Sanborn, 4 L. R. A. (Ill.), 136; McNutt v. Dix, 10 L. R. A. (Mich.), 660.
    The common carrier is estopped from setting up title in himself as against either of the contracting parties. Kent’s Comm., Vol. 2, page 604; Story on Bailments, Sec. 582; Hutchison on Common Carriers, Sections 129, 414; 2 Waits Actions and Defenses, 557; Farrell v. Railroad, 102 N. C., 390; Pharr v. Collins, 35 La. Ann. Rep., 939; Edwards v. Powell, 1 Dev. N. C., 190.
   Davis, J.

The only right of the vendors, under the facts appearing in this case, if any, was to recover the possession of the cat-load of lumber by stoppage in transitu. This they might do at any time while the lumber remained in the possession of the carrier, as carrier. It had been carried to its destination, but it is not claimed that any manual delivery had been made to the consignee. There was no delivery to the consignee unless it was by construction. The facts which are claimed to constitute a constructive delivery, as they appear in an agreed statement of facts, are that the car arrived at its destination, Toledo, Ohio, on February 2, 1895; that the carrier notified the consignee of the arrival of the lumber and that thereafter, up to and including February 7, 1895, the car, with the lumber remaining thereon, remained upon the yard track of the defendant in Toledo, for delivery to the consignee; and that on or about the 7th day of February, 1895, the consignee sold the said car of lumber to the defendant for the sole consideration of a pre-existing indebtednéss, which consisted of the freight charges on the carload of lumber in question and other indebtedness. These facts show no delivery, either manual or constructive, unless the sale by the consignee to the defendant implies it. It does not appear that the consignee paid the freight or in any manner put himself in position to demand and enforce the possession of the lumber; nor does it appear that there was any agreement between the consignee and the defendant by which the former assumed the possession of the lumber and constituted the latter his agent to hold and care for the same. But in the absence of these necessary indications of a constructive delivery to the consignee, the defendant retained the custody and control of the property under a sale which is based partly on the consideration of the freight thereon, which must have been paid before a delivery could be presumed to have taken place, and partly on the consideration of other pre-existing debts, Avhich were admitted by counsel on the oral argument to consist also of unpaid freight bills. Such a sale Ave do not think would constitute the defendant a bona fide purchaser; and we are of the opinion that the lumber Avas still in transit at the time when the plaintiffs gave notice of stoppage in transitu and tendered to defendant the freight due to it for the transportation of the lumber. The case having been twice reported heretofore (5 N. P., 15; 15 C. C., 288) it is unnecessary to review the authorities cited by counsel, nor to cite others.

The judgment of the circuit court is affirmed.  