STOPPAGE IN TRANSITU. The stoppage by an unpaid seller of goods while on their way from him to the buyer, after title has passed to the latter. The right ,;() to stop goods is not founded on any contract between the parties, nor upon any principle of equity, but upon mercan tile usage. Its first recognition in the judicial report, of England appears in an equity case de cided in 1690. Prior to this it was a well-estab lished rule of the law merchant (q.v.). From courts of equity it was adopted by the courts of common law, and for three centuries has been a recognized rule of English jurisprudence. The term 'unpaid seller' is here employed in a broad sense. It includes not only the ordinary seller, but the factor of the buyer, who has paid for goods placed to his credit for the price—any one, indeed, whose position can be shown to be analo gous to that of all ordinary seller, who is unpaid either wholly or in part.
The second requisite is that the buyer shall have become insolvent, and that the knowledge of this insolvency shall have come to the seller after dispatching the goods. Insolvency, in this connection, is used in its popular sense, meaning the financial condition of one who cannot pay his debts as they fall due in the ordinary course of business: and if he lets his commercial papers go to protest, or by other conduct affords the ordinary opponent evidence of insolvency, the unpaid seller is safe in treating him as insolvent.
The third requisite is that the goods shall have left the possession of the seller, but shall not have reached the possession of the buyer— that they shall be in transit. The transit begins as soon as they have left the seller's possession for transportation to the buyer. It continues as long as they are in the possession of a carrier, or other middleman, on their way to the buyer. "Such middleman may be the buyer's agent for certain purposes; and yet if, by the agreement of the parties or by the usage of trade, he is not a mere servant of the buyer, but is a person inter posed between the seller and the buyer, having a possession of his own and liable, in his capacity as bailee, to an action by the buyer, in case the goods arc carelessly lost or misdelivercd, the goods are still in transit." Such transit may be
intercepted by it new and distinct agreement be tween the carrier and the buyer, under which the carrier is thereafter to hold the goods subject to new orders from the buyer. It is not inter cepted, however, by the levy of an execution or an attachment on the goods on helmlf of a cred itor of the buyer. Such a levy gives the creditor only the right of the buyer: and that right is subject to the unpaid vendor's right to stop the goods. If a bill of lading (q.v.) has been given to the buyer by the seller, its transfer to a bona fide purchaser cuts off the seller's right. This comes from the quasi negotiable character of the bill of lading under the law merchant.
Although no particular form of notice is re quired, a valid stoppage in transits cannot be made without a notice of some kind to the car rier. If the goods are in the hands of an agent of the carrier, notice that the seller stops the goods may be given to either the agent or the principal. If given to the latter it must be given at such time and under such circumstances that the principal. by the exercise of reasonable dili gence. may eenummicate it to the agent in time to prevent a delivery to the buyer.
The exercise of this right restores to the seller the possession of the goods, hut does not revest title in him. The buyer or his transferee is entitled to the goods upon paying cash for them, but not otherwise.