(a) If title has not passed.
What the seller may do if title has passed where price is not paid is considered hereafter. If no title has passed (according to the rules above considered) the seller may of course withhold the possession and refuse to pass the title if the price is not paid as agreed upon; assuming of course, that the sale was not to be on credit. And he may treat the contract as broken by the buyer and therefore rescind; or he may hold the buyer to damages, as will be considered, post.
Under the sales act, the seller may sue for the price agreed upon even though the title has not passed (1) if the price irrespective of delivery is payable on a day certain; (2) if the goods are not readily resellable at a reasonable price, providing an offer of delivery has been made to the purchaser.
Text of Sales Act. "Where under a contract to sell or a sale, the price is payable on a day certain, irrespective of delivery or of transfer of title, and the buyer wrongfully neglects or refuses to pay such price, the seller may maintain an action for the price, although the property in the goods has not passed and the goods have not been appropriated to the contract. But it shall be a defense to such an action that the seller at any time before judgment in such action has manifested an inability to perform the contract or the sale on his part or an intention not to perform it." 89
89. Uniform Sales Act, SEC. 63 (2).
"Although the property in the goods has not passed, if they cannot readily be resold for a reasonable price, and if the provisions of Section 64 (4) are inapplicable, the seller may offer to deliver the goods to the buyer, and, if the buyer refuses to receive them, may notify the buyer that the goods are thereafter held by the seller as bailee for the buyer. Thereafter the seller may treat the goods as the buyer's and may maintain an action for the price." 90
The Sales Act gives the seller a right to sue for the price even if title has not passed where the payment is to be made on a day certain. This is evidently to be construed to refer to those cases in which the buyer is to make payment or payments on a certain day or days irrespective of the transfer of title, as where advance payments on certain days are provided for. These cases would be comparatively unusual.
Another case in which a right to sue for the price is given although ownership has not passed is that in which the goods cannot readily be resold for a reasonable price. There has been a difference of opinion as to this right under the decisions, for it is said that if the seller can sue for the price, this amounts to compelling the buyer to take title, and is specific performance by the seller where the buyer, if the case were turned around, could not get specific performance - certainly not in law courts. But the weight of authority, now affirmed by the Sales Act, allows the recovery of the price 91 - that is, does not put the seller to a proof of his damages. In fact, many cases do not include the provision that it shall be necessary to this right that the goods be not readily resalable.92
90. Uniform Sales Act, SEC. 63 (3).
91. Dustan v. McAndrew, 44 N. Y. 72.
92. Habeler v. Rogers, 131 Fed. 43.
If title has not passed and the buyer refuses to perform, the seller may sue for his damages.
Still considering that title has not passed, and that the goods are undelivered, the buyer may sue for the damages by him sustained, that is, need not accept the election to sue for the price in cases in which we have considered, but may treat the contract as a broken contract and have his damages for the non-acceptance.
Rule of Damages. The rule of damages in such cases is variously stated, but is substantially as follows: that the buyer (if he does not sue for the price, as in the last section), may recover the difference between the contract price and the market value of the goods at the time and place of delivery. That is, if he was to get 6 cents a pound by the contract and the market price is 4 cents, he may recover 2 cents per pound as his damages.93 If there is no market price then the rule is that he may recover his actual loss, taking into consideration the value of the property on hand to the seller.94
If the buyer repudiates the sale, while the goods are yet in preparation, the seller cannot go ahead in the performance of the contract and sue for the price or his additional damages. The seller must stop at the time of repudiation, and his damages will be ascertained as of that time.
Example 30. Cameron made a contract of sale with White for sale of lumber to be manufactured by Cameron. After Cameron purchased the logs, but before the lumber was sawed, White repudiated the contract. Held, that the rights of the parties were fixed at that time. Cameron could not go on and perform an entirely useless act and charge the expense thereto to the defendant. His damages were the profit that he would have made had the contract been performed.95
93. Habeler v. Rogers, 131 Fed. 43.
94. Habeler v. Rogers, 131 Fed. 43; Uniform Sales Act, SEC. 93.
(b) If title has passed (goods being still undelivered).
Where title has passed and the goods are still undelivered the seller has a lien on the goods for their price and his incidental expenses caused by the buyer's default.
Assuming (1) that title has passed; (2) that the goods are still undelivered; and (3) that the sale is not on credit; the unpaid seller has a lien, frequently called a vendor's lien - that is, a right to hold the goods awaiting the payment.
This lien assumes that the seller has possession. With such assumption, the seller has a lien:
(a) Where the goods have been sold without any stipulation as to credit;
(b) Where the goods have been sold on credit, but the term of credit has expired;
(c) Where the buyer becomes insolvent. An unpaid seller loses his lien:
(b) Where the buyer lawfully obtains possession;
(c) By a waiver of his lien.
95. Cameron v. White, 74 Wis. 425.
A seller who has a lien may (1) rescind the contract; (2) resell the goods; or (3) may sue for the price. If he gets judgment, this does not destroy his lien. See these rights considered in following sections.
Although title has passed to the buyer, an unpaid seller, still having possession of the goods, the sale not being on credit, and the buyer being in default, may resell the goods (1) where they are of perishable nature; (2) where seller reserves right of resale, or (3) where buyer has been in default an unreasonable length of time.
In the three cases stated, the buyer, being in default, a seller still being in possession of the goods, notwithstanding they have become the property of the buyer, may execute his lien upon them by a resale, and can give a good title to the second buyer.
Notice of his intention to resell is not essential, but where goods are not perishable, and where the right to resell has not been reserved in the contract, the lack of notice is proper in consideration whether the buyer has been in default an unreasonable length of time. Such being the case, it would be safer in any event for the seller to give notice.
The sale may be either public or private but should be made in the exercise of reasonable care and judgment.
If the resale brings more than the contract price, the seller may retain the surplus; if it brings less the seller may sue the buyer for the loss.
A seller may rescind, that is, re-vest the title in himself, keep the goods, and sue for damages, where (1) he has reserved the right to do so; (2) the buyer is in default an unreasonable length of time.
A seller being rightfully in the possession of the goods, may, if he chooses, instead of reselling or instead of bringing suit, take back the title in himself in the cases mentioned, and that means in every case where the buyer persists in his non-performance.
The seller may under the circumstances stated sue for the purchase price.
The goods being the buyer's even though the seller still is retaining the possession by virtue of his vendor's lien, the vendor may sue for the purchase price. His judgment will not destroy his lien. The buyer is of course in that event entitled to the goods upon payment of such price or judgment.