Shaw C. J.
delivered the opinion of the Court. Both tne parties to this suit are creditors, or representatives of the creditors, of an insolvent mercantile house, and the question ’.s, which shall have the benefit of the small amount of mercnandise, which is the subject of this action; and this question depends upon another, which party can establish the better legal title. It seems to have been thought by Williams, Putnam & Co., at the time of their assignment, that Morrall & Son were indebted to them ; yet it is now found as a fact in the case, that at that time a considerable balance, independent of the cost of the pipes, was due to Morrall & Son.
The facts appear sufficiently in the agreed statement, and it will not be necessary to recapitulate them. It was contended, on the part of the defendant, that by the shipment of the pipes in Liverpool, the bill of lading having never 6een delivered or forwarded to the consignees, but retained by the consignors and forwarded enclosed to their own agent, the .property never legally vested in the vendee. But the Court are strongly inclined to the opinion, that the orders [474]*474of Williams, Putnam & Co. to ship the pipes for their account, and the actual shipment of the goods, pursuant to such order, on board of a vessel designated by the vendees for that purpose, and for their account, and obtaining from the master a bill of lading for the goods, making them deliverable to the vendees, constituted a good contract of sale, and a good constructive delivery, so as to vest the property in the goods, in the vendees, and place them at their risk. This conclusion is founded, not upon the supposed specific effect of executing or delivering a bill of lading, or the peculiar character supposed to be attached to a bill of lading as a quasi negotiable instrument, but upon the general principle of the common law, applicable to the sale of personal property.
We are to understand, that the Morea was for this purpose a general freighting ship, and the master was acting in regard to goods on freight, as a common carrier ; and this being the case, the fact, if it were so, that the vessel was for some purposes consigned by the defendant, the owner, to the house of Morrall & Son, made no difference in regard to these goods. It then appears that the delivery of the goons on board the vessel was not conditional, and nothing was then done by the consignors, to prevent the general property in the goods from vesting in the consignees. The withholding of the bill of lading, and enclosing it to their own agent to be delivered only in case the vendees should pay for the goods, could not convert the absolute delivery into a conditional one, or divest the property in the goods, which had vested by the delivery of them on board the vessel designated, pursuant to the order of the consignees.
But though by these proceedings the property vested in the consignees, it was subject to the well established right of the vendors, to stop the goods in transitu, in case the goods are sold on credit, and the consignees become insolvent; and this right may be exercised at any time before the goods reach their ultimate destination and come to the possession of the consignees. And the consignors have a right to judge for themselves of the danger of such insolvency, and to take measures to guard against it by stopping the goods in transitu, [475]*475should the insolvency occur before the goods come to the possession of the consignees. The effect of such stoppage in transitu is not to rescind the contract, or to revest the general property in the vendors, but to reinstate them in their lien and right to hold the goods in security for the price.
The consignors might have exercised this right at Liverpool, if they had ground to apprehend the insolvency of the consignees before the arrival of the goods, and such insolvency had occurred accordingly ; and perhaps the change of the destination of the goods, after the shipment, by enclosing the bill of lading to their own agent, with directions not to deliver the goods to the vendee, without receiving payment or security, might amount to such a stoppage. But it is not necessary to consider this point, because the Court are of opinion, that the acts done by the defendant here, under the express authority and direction of the shippers, especially as the defendant was the ship-owner and obtained actual possession of the goods before they could reach the hands of the vendees, or their assignees, was an effectual exercise of the right to stop in transitu, if it existed as against the plaintiffs.
And the Court are of opinion, that the plaintiffs, in this respect, stand precisely in the place of the original vendees, and not in the place of bona fide purchasers, claiming under a bill of lading, without notice of any lien, set-offor adverse claim. The plaintiffs were assignees,’ with full notice of the insolvency of the assignors. Had there been a balance due on genera] account from Morrall & Son, to Williams, Putnam & Co., at the time of the execution of the order, as it is said the assignees supposed there was, it would have presented a very different question. In that case, shipping the goods, pursuant to the order of the vendees, and charging them in account, would have been no more than an appropriation of their own funds, according to their own order, and not a sale upon credit, and the right to stop in transitu would not have existed. But although the assignees so supposed and believed, and were entirely without any imputation of blame in taking a conveyance of the goods, yet when it turns out, as upon the facts it anpears to have done in this case, [476]*476that Morrall & Son were already creditors of Williams., Putnam & Co., that the goods were ordered and put on board ship solely on the personal credit of the vendees, the right to stop in transitu is shown to be complete, against the vendees. And that right is equally perfect against all others, except a purchaser taking bona fide, by indorsement of the bill of lading, in the usual course of trade, without notice of the consignor’s right to stop the goods in transitu. In the present case these conditions are all wanting. The plaintiffs did not take under an indorsement of the bill of lading, the bill of lading not having been indorsed until after the action was commenced. It is said in answer, that at the time of the assignment, the consignees had not received a bill of lading, but they stipulated to indorse and deliver the bill of lading as soon as they should receive it, and that they did it accordingly. This is all very true, but it does not answer the objec tion. It shows that the insolvent house, in making their assignment for the benefit of creditors, intended to make as good a title as they could make to these goods, with the rest of their property, and entered into stipulations accordingly. But it leaves the case as it was before, that the assignees took as assignees all the interest which the assignors had in the goods, subject to all claims of lien and set-off, and not as indorsees of a bill of lading in the usual course of trade, or as purchasers, advancing money or giving credit upon the faith of such bill of lading. Indeed the consignors had taken effectual care to prevent them from, thus transferring the bill of lading by indorsement to a bond fide purchaser, by enclosing the bill of lading to their own agent, to be delivered to the consignees only on payment made or security given. Nor can the plaintiffs be considered purchasers without notice.
Free access — add to your briefcase to read the full text and ask questions with AI
Shaw C. J.
delivered the opinion of the Court. Both tne parties to this suit are creditors, or representatives of the creditors, of an insolvent mercantile house, and the question ’.s, which shall have the benefit of the small amount of mercnandise, which is the subject of this action; and this question depends upon another, which party can establish the better legal title. It seems to have been thought by Williams, Putnam & Co., at the time of their assignment, that Morrall & Son were indebted to them ; yet it is now found as a fact in the case, that at that time a considerable balance, independent of the cost of the pipes, was due to Morrall & Son.
The facts appear sufficiently in the agreed statement, and it will not be necessary to recapitulate them. It was contended, on the part of the defendant, that by the shipment of the pipes in Liverpool, the bill of lading having never 6een delivered or forwarded to the consignees, but retained by the consignors and forwarded enclosed to their own agent, the .property never legally vested in the vendee. But the Court are strongly inclined to the opinion, that the orders [474]*474of Williams, Putnam & Co. to ship the pipes for their account, and the actual shipment of the goods, pursuant to such order, on board of a vessel designated by the vendees for that purpose, and for their account, and obtaining from the master a bill of lading for the goods, making them deliverable to the vendees, constituted a good contract of sale, and a good constructive delivery, so as to vest the property in the goods, in the vendees, and place them at their risk. This conclusion is founded, not upon the supposed specific effect of executing or delivering a bill of lading, or the peculiar character supposed to be attached to a bill of lading as a quasi negotiable instrument, but upon the general principle of the common law, applicable to the sale of personal property.
We are to understand, that the Morea was for this purpose a general freighting ship, and the master was acting in regard to goods on freight, as a common carrier ; and this being the case, the fact, if it were so, that the vessel was for some purposes consigned by the defendant, the owner, to the house of Morrall & Son, made no difference in regard to these goods. It then appears that the delivery of the goons on board the vessel was not conditional, and nothing was then done by the consignors, to prevent the general property in the goods from vesting in the consignees. The withholding of the bill of lading, and enclosing it to their own agent to be delivered only in case the vendees should pay for the goods, could not convert the absolute delivery into a conditional one, or divest the property in the goods, which had vested by the delivery of them on board the vessel designated, pursuant to the order of the consignees.
But though by these proceedings the property vested in the consignees, it was subject to the well established right of the vendors, to stop the goods in transitu, in case the goods are sold on credit, and the consignees become insolvent; and this right may be exercised at any time before the goods reach their ultimate destination and come to the possession of the consignees. And the consignors have a right to judge for themselves of the danger of such insolvency, and to take measures to guard against it by stopping the goods in transitu, [475]*475should the insolvency occur before the goods come to the possession of the consignees. The effect of such stoppage in transitu is not to rescind the contract, or to revest the general property in the vendors, but to reinstate them in their lien and right to hold the goods in security for the price.
The consignors might have exercised this right at Liverpool, if they had ground to apprehend the insolvency of the consignees before the arrival of the goods, and such insolvency had occurred accordingly ; and perhaps the change of the destination of the goods, after the shipment, by enclosing the bill of lading to their own agent, with directions not to deliver the goods to the vendee, without receiving payment or security, might amount to such a stoppage. But it is not necessary to consider this point, because the Court are of opinion, that the acts done by the defendant here, under the express authority and direction of the shippers, especially as the defendant was the ship-owner and obtained actual possession of the goods before they could reach the hands of the vendees, or their assignees, was an effectual exercise of the right to stop in transitu, if it existed as against the plaintiffs.
And the Court are of opinion, that the plaintiffs, in this respect, stand precisely in the place of the original vendees, and not in the place of bona fide purchasers, claiming under a bill of lading, without notice of any lien, set-offor adverse claim. The plaintiffs were assignees,’ with full notice of the insolvency of the assignors. Had there been a balance due on genera] account from Morrall & Son, to Williams, Putnam & Co., at the time of the execution of the order, as it is said the assignees supposed there was, it would have presented a very different question. In that case, shipping the goods, pursuant to the order of the vendees, and charging them in account, would have been no more than an appropriation of their own funds, according to their own order, and not a sale upon credit, and the right to stop in transitu would not have existed. But although the assignees so supposed and believed, and were entirely without any imputation of blame in taking a conveyance of the goods, yet when it turns out, as upon the facts it anpears to have done in this case, [476]*476that Morrall & Son were already creditors of Williams., Putnam & Co., that the goods were ordered and put on board ship solely on the personal credit of the vendees, the right to stop in transitu is shown to be complete, against the vendees. And that right is equally perfect against all others, except a purchaser taking bona fide, by indorsement of the bill of lading, in the usual course of trade, without notice of the consignor’s right to stop the goods in transitu. In the present case these conditions are all wanting. The plaintiffs did not take under an indorsement of the bill of lading, the bill of lading not having been indorsed until after the action was commenced. It is said in answer, that at the time of the assignment, the consignees had not received a bill of lading, but they stipulated to indorse and deliver the bill of lading as soon as they should receive it, and that they did it accordingly. This is all very true, but it does not answer the objec tion. It shows that the insolvent house, in making their assignment for the benefit of creditors, intended to make as good a title as they could make to these goods, with the rest of their property, and entered into stipulations accordingly. But it leaves the case as it was before, that the assignees took as assignees all the interest which the assignors had in the goods, subject to all claims of lien and set-off, and not as indorsees of a bill of lading in the usual course of trade, or as purchasers, advancing money or giving credit upon the faith of such bill of lading. Indeed the consignors had taken effectual care to prevent them from, thus transferring the bill of lading by indorsement to a bond fide purchaser, by enclosing the bill of lading to their own agent, to be delivered to the consignees only on payment made or security given. Nor can the plaintiffs be considered purchasers without notice. No money was paid for the goods, no new credit given, no new dealings had upon the faith of this shipment of goods. The plaintiffs knew that the consignees were insolvent ; this is admitted, and indeed the whole proceedings were founded upon that assumption, and they took the conveyance, as that of a party declared to be insolvent; they knew that the consignors were described as creditors, in the same instrument under which they claimed ; they knew that by the general [477]*477mercantile law, if these goods had been shipped on credit, ihe vendors had a right to stop them in transitu. This was quite sufficient to put them fully on inquiring, and to bind them to the state of facts, as it should ultimately turn out. The effect is, that they took all the title which the assignors had, and no more ; that is, a title to the goods subject to the right of the vendors to stop the goods in transitu. And yet it was highly proper that these goods should be included in the assignment. It might turn out, that there was a balance due from Morrall &, Son, and that the goods were not shipped on credit, within the meaning of the rule, or that the consignors would not attempt to exercise their right of stoppage, or might not have an opportunity to do so, or might obtain security for the purchase money in some other way. In any of these cases, these goods would properly have gone into the general fund, provided for the vendees’ creditors. But in the events that have happened, it appears, that the vendors had the right of stoppage, and did seasonably and legally exercise it; that under the circumstances, it was equally available against the assignees as' against the original consignees ; and therefore that the plaintiffs, without tendering payment for the price of the goods, could not take them out of the custody of the defendant, rightfully holding them for the consignors.
Plaintiffs nonsuit.