Case ID: tenn_74/html/0616-01.html
Source: Caselaw Access Project
Author: {"author": "Freeman, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Bloomingdale, Rhine & Co. v. Memphis & Charleston Railroad Company.
    Stoppage in Transitu. Case stated : B. R. & Co. sold and shipped to V. R. & H., on the 22d September, 1875, on font months’ time, a bill of goods. They telegraphed M. & Bros, to stop the goods. The telegram was taken to the freight agent- of the railroad, who promised to do so and that he would reship them to the seller^, who wore notified. The goods wore afterwards, by mistake or negligence, delivered to V. R. & II., who failed on the 23d December following. Upon maturity of the account, B. R. & Co. brought suit against Y. R. & II., recovered judgment, but failed to make their debt, the property of the debtors being absorbed by prior judgments. B. R. & Co. sued the railroad company for wrongfully delivering .the goods. Held:
    
    
      1. The notice was sufficient. There need be no express demand. The notice is sufficient, if the carrier is clearly informed that it is the intention and desire of the seller to exercise the right of stoppage m transitu.
    
    2. It is not required, when the right of stoppage in, transitu is exercised, that the buyer should have been declared a bankrupt or insolvent by legal proceedings, or that he should have made an assignment, but insolvency fairly means that the party should be shown to have been unable to meet the debt due the seller, at the time of the exercise of the right, when the debt should fall due. The purchaser may not have actually failed or have gone to protest, but might be hopelessly insolvent. But the objection that the purchaser was not insolvent at the time of the stoppage, can only be taken by the purchaser and not by the carrier, except that he may show as a matter of defense that the debt could have been made by due diligence.
    3. The bringing suit upon the debt when due and recovery of judgment, does not estop the seller from suing the carrier for wrongful delivery.
    FROM SHELBY.
    Appeal in error from tbe Circuit Court of Shelby county. C. W. Heiskell, J.
    T. B. EdgINUtox for plaintiffs.
    Humes & Poston for defendants.
   Freeman, J.,

delivered the opinion of tbe court.

This is an action brought before a justice of tbe peace originally, in Memphis, to recover from the railroad company the value of goods, which had been sold by plaintiffs to Van_ Rouble & Heiliger, a firm doing business in the city of Memphis.

The facts are, that plaintiffs, sold a bill of goods to said firm in the city of Philadelphia, on the 22d of September, 1875. Some days after the goods were shipped by rail to tbe purchasers, tbe sellers learning on inquiry of other merchants, that the firm of Van Ronkle & Heiliger were doubtful as to solvency, and that other parties were refusing to ship goods to them, telegraphed Menken & Bros., of Memphis, to stop the goods, if not delivered, on their arrival. This telegram tvas taken to the general freight agent of the railroad, and he promised to do as requested. He after wards wrote to Menken & Bros, that he would reship them to the plaintiffs at Philadelphia, on same terms as to freight they had been charged for when shipped from that place. This letter and these facts were immediately, on the 8th day of October, 1875, sent to plaintiffs, who thereupon relied on defendant to do what had been promised.

The goods, however, were in a few days after this, as stated by the freight agent, by mistake of his orders, by. some employee of the company, delivered to the consignees, and plaintiffs thereby lost the possession, which would have accrued to them, had their orders been obeyed as to retention of the goods, and the company complied with their agreement to refain the goods, or reship them.

On the 23d of December after this, the firm of Van Ronkle & Heiliger went to protest, and immediately thereafter, attachments were issued and levied on all their property, the same sold under judgments rendered in these cases, and failed to pay • all their debts, leaving plaintiffs5 debt unpaid.

The goods were sold originally on four months5 time. Plaintiffs, on the 29th of December, 1875, however, brought suit on their account for $477, obtained judgment, liad execution levied, subject to the attachments, but failed to realize their debt by reason of the prior liens. They thereupon brought this suit against the company for the wrongful delivery of the goods. On the trial in the circuit court, under the charge of Judge Heiskell, a verdict was had for defendants, from which there is an appeal in error to this court.

Several questions have been debated before us. Some of which, so far as necessary to determine the case, we proceed to dispose of.

There is nothing in the objection, that the notice was insufficient, as given to the agent of the company. Whether sufficient or not, as shown in the proof, the defendant’s agent was satisfied with it, and evidently knew its object, which was to exercise the right of the vendor, to stop goods sold while in transitu, and before delivery. Acting on this, the company, by their agent, agreed to retain the goods, and plaintiffs, relying on this promise, were probably prevented from taking more active steps to secure themselves in the exercise of their right to stop the goods. It is too late now for defendants to insist on any defects, if' any existed, in the notice given them.

It is settled law, that the seller of goods may exercise the right of stoppage in transitu at any time before the delivery of the goods to the consignee, or-a bona fide sale of them to a third person, as by endorsement of the bill of lading in good faith for a valuable consideration: See Wait’s Actions and Defenses, vol. 5, p. 616, and authorities citqd. It is equally clear that a carrier, upon notice of tire exercise of this right, or demand of control of the goods by the seller, is bound not to deliver the goods to the purchaser, and will become liable, as for conversion of the goods, if he decline lo deliver them to the seller, or delivei*s to the vendee; and a notice by the vendor, without an express demand of the goods, *is sufficient to charge the carrier. If the latter is clearly informed that it is the intention and desire of the former to exercise the right, the notice has been held sufficient: See Wait, vol. 5, p. 615, and cases cited.

It is clear, on these principles, that the defendant was liable to plaintiffs for the wrongful delivery of the goods to the purchaser, .whether purposely or by neglect of their agent, after what had occurred upon the notice given, unless there is some other ground of defense shown in the record.

It is said the seller has the right to stop in transitu only in case of insolvency of the purchaser at the time of the exercise of that right, and so his Honor substantially charged the jury. This might be found as the statement of the rule in most cases, and is certainly substantially correct as between the seller and the buyer; but we think, as between a third party, such as the carrier is in this case at least, no strict proof of insolvency should be required in order to support the right of the seller to resume possession of the goods as against a purchaser of doubtful solvency. In fact it does not lie in the mouth of a derelict carrier to interpose the objection that the right was being wrongfully exercised. He may well show, however, the fact that the party was solvent after the-delivery, and that by due diligence the debt might bave been made, and therefore the plaintiff was not injured by his wrongful delivery of the goods. But we think, if the purchaser submit to the stoppage of his goods, or does not contest the right, the carrier could not interpose properly the objection that the party was solvent, and therefore the right not properly exercisable by the seller, in case the carrier had improperly converted the goods. .

Be this as it may, however, we think the sounder-statement of the ground, for exercise of the right is, as given by Mr. Wait, vol. 5, p. 614, that “it is not necessary to prove or make out insolvency, that the buyer should have been declared a bankrupt or insolvent by a judicial tribunal, or shown to be so by legal proceedings, or that he should have made an assignment of his property, or the like — but that insolvency, in a case like this, fairly means that the party shall be shown to have been unable to meet the debt due the seller, at the time of the exercise of the right, when that debt should fall due; and if this fact satisfactorily appears, no matter how proven, the law requires no more”: See cases cited.

A purchaser may not have actually failed, not have gone to protest, yet it might be - clear that he was hopelessly insolvent, and would be totally unable to pay, in a case like this., when the debt fell due. To require the seller to deliver the goods under such circumstances, would be to require him to- throw away his goods — in effect, practically would be to deny him the right to resume possession before delivery — and at the same time there exist a certainty, or a reasonable ■one at least, that he would never be paid for them— probably a certainty that if delivered they would at ■once, or in a short time, be appropriated by other creditors. This cannot be the law in such cases, in a system professing to «be based on reason and have for its aim the attainment of justice.

His Honor, the Circuit Judge, made the whole case ■turn with the jury on -the question whether the party had been shown to be actually insolvent on the 10th of October, 1875, when- the goods were delivered. They did not go to protest until the 23d of December after this, but it is clear from the proof, so far as this record shows, that the parties were in such condition that the seller would have had no prospect of receiving payment for his goods at the time his debt fell due; and this being so, we hold he might well exercise his right to stop them, and resume his possession.

It is insisted, however, that the fact that after this wrongful delivery, the plaintiffs sued on their account, as for a debt due them for the goods sold, estops them from recovering against the company. This would go on the idea, that the exercise of the right ■of stopping in transitu is a rescission of the contract ■of sale, and a suit for the price would be a waiver ■of this, and an affirmance of the sale.

Our first impression was that this might present some difficulty, but upon examination of the authorties, it seems now well settled, that the exercise of the right to stop is not a rescission of the sale, but simply places the parties, as nearly as may he, in the same situation they would have been if the vendor had not parted with the possession: See Wait, vol. 5, p. 618, and numerous cases cited; also Indermaur’s Principles ■of Common Law, p. 95; 10 M. & Welby, 436, 451, there cited.

The vendor, in exercising the right of stoppage, does not take possession of the goods as his own, but as the goods of the purchaser, on which the vendor has a lien for the unpaid purchase money: Wait,p. 618. It is simply, in other words, a resumption of his possession, the incidents of such possession of goods sold thereby attaching. This being so, it follows that the vendor, thus resuming his possession, may pursue any other remedies he may have to. enforce his debt. In a case like the present, the carrier might well have insisted it was his duty to have done so, and probably interposed it as a defense to this action, if the plaintiffs could have made their debt by law, and had failed in diligently prosecuting such legal remedy.

It follows, the court erred in its charge to the jury, and the judgment must be reversed and case remanded for a new trial.