Inexperience or some untoward circumstances may easily bring about an involved condition in the affairs of a dealer whose motives and intentions are of the very best. If he is thrown into bankruptcy thru the inconsiderate course of some creditor, his business life is usually wiped out along with his business. The loss to creditors is therefore not only that which they sus tain directly thru a partial loss of their accounts, but also that which comes indirectly thru the loss of his future business. ,With the exercise of proper care, not only might the accounts in such a case ultimately be paid in full, but the delinquent himself would be able to continue in business and remain a customer of the creditor-houses.
The local bureau of the Association will, upon re quest, investigate the affairs of any debtor reported to be insolvent or .financially embarrassed, and will thereafter take such steps for the protection of cred itors as may be required by the circumstances. The bureau is prepared to act as assignee, trustee, or re ceiver in bankruptcy whenever called upon to do so.
It should be remembered, of course, that similar services are rendered by many trade associations and by credit bureaus other than those of the National Association of Credit Men. The trend of modern credit management is noticeably toward protection of the , debtor's assets, and preservation of his business existence. The fact that adjustment bureaus, con ducted by local branches of the association are found in more than sixty cities, is proof of the popularity of this service among members of the Association and others.
8. Means of the object of sales is profit, the seller is necessarily anxious to have each sale go thru in order that the profit may be realized. There are times, however, when it is prudent to aban don hopes of profits and to take account of the means available for preventing losses. In other words there are times when remedies that have to do with salvag ing the goods after a contract of sale has been made, viz., foieclosure of the unpaid seller's lien, stoppage in transitu, and recovery of goods transferred under a fraudulent contract.
9. Unpaid seller's lien.—An unpaid seller who ac tually has possession of the goods may in any one of the three following cases, retain possession of them till he is offered payment: (1) when no credit was antici pated by the contract; (2) when the term of credit has expired; (3) when the buyer becomes in solvent.
10. Stoppage in transitu.—Even if the seller no longer has possession, he may protect himself against an insolvent purchaser by resorting to the remedy known in law as stoppage in transitu. But to avail hilnself of this relief be will have to act quickly. If he can get notice to whoever is in charge of the goods while they are in transit, i.e., before they get into the possession of the buyer, that person will be bound to return the goods to the seller, who will then have the same rights in them as if he had never parted with their possession.
Nice questions frequently arise as to whether the goods are still in transitu. Goods are still in transit while they are in the hands of the carrier. The right of stoppage in transitu is lost in any one of the follow ing cases, because the goods are no longer technically in transit : if the buyer or his agent gets possession before the goods arrive at their destination; or if, hav ing arrived, the goods are confessedly held by the car rier as the bailee of the buyer; or, if having arrived, they are wrongfully withheld from the buyer.
When the carrier is properly notified, he must re deliver the goods to the seller, upon whom falls the burden of expense. Moreover, if a negotiable docu ment of title, i.e., a bill of lading, has been issued by the carrier, the goods should be withheld by the carrier till this instrument has been surrendered for cancella tion.
The right of stoppage is open to the seller only after the buyer has become insolvent. The Uniform Sales Act which has been adopted in a number of states reads, in part, as follows: A person is insolvent within the meaning of this Act who either has ceased to pay his debts in the ordinary course of business, or cannot pay his debts as they become due, whether he has committed an act of bankruptcy or not, and whether he is insolvent within the meaning of the federal bankruptcy law or not.
There is no Uniform Sales Act in Canada, but the general rule may be laid down that if, after shipping the goods, the seller finds that the purchaser has be come insolvent or is on the eve of insolvency, he may stop the goods in transit. A person who has ceased to pay his debts in the ordinary course or who cannot pay his debts as they become due, would be deemed to be on the eve of insolvency.