(a) Where title has not passed.
If the goods have been delivered to the buyer or his agent, and title has not yet passed, and the buyer is in default, the seller may sue for the purchase price or for damages.
Almost always title has passed at least at the delivery. If a seller who has not delivered may sue where the title has not passed, it would follow logically that a seller who has made delivery would be in no worse position.
A seller may reclaim goods if title has not passed where the buyer is in default.
Assuming the unusual situation of the buyer having the goods and the title not having passed, and the buyer being in default, the seller can obviously recover the property unless there has been an agreement to the contrary. Let us consider the case of a seller of goods who has made delivery but has reserved title for purposes of security.
In a conditional sale, the buyer may retake the same without court action if he may do so peaceably, or by an action of replevin; some courts holding that he may retain what has been paid; some that he must repay what has been paid, unless it has been agreed to the contrary. Or he may sue for the price, letting the buyer retain the goods.
The law of conditional sale is not in a satisfactory and uniform state as shown by the decisions. In all courts the seller may enforce the sale by a suit for the price; but if he attempts to reclaim the goods, which is his right conceded everywhere, there is a difference of opinion whether he must account for what he has received. Some courts hold he need not.96 If the contract provides for retention of payments as liquidated damages, as is generally the case, and such a provision is a fair one, it would seem enforceable anywhere.97
96. Fleck v. Warner, 25 Kan. 492; Latham v. Sumner, 89 111. 233.
(b) Where title has passed.
In this case the seller's remedy is to sue for the price; he has no right to reclaim the goods.
One who has sold goods and delivered them to the buyer, thereby extending credit, either pursuant to the original contract or by waiving his rights to cash payment, has the remedy simply of suing for the price if the buyer will not pay it. He cannot reclaim the goods. He has been contented to take the credit of the buyer and has passed the title to him in return therefor. His ownership is gone and he has no lien. He must sue for the price.
A seller notwithstanding he has delivered the goods to a carrier for transmission to the buyer under circumstances that pass the title to the buyer and amount to a delivery to the buyer, so that the seller's lien is gone, may nevertheless in case of insolvency of the buyer re-attach that lien if he does so while the goods are still in transit and before any third party has purchased them or acquired a lien upon them.
Though it has been noted, the carrier is the agent of the buyer except where specially agreed otherwise, and therefore delivery to such carrier is delivery to the buyer, and property passes, yet the common law has extended, the lien of a seller to the goods during transit in case the buyer becomes insolvent; not otherwise.
97. See Williston on Sales, SEC. 579.
The right ceases when the transit is ended and the carrier has made delivery to the buyer.98
The right is exercised by notifying the carrier of the insolvency and requesting it to hold the goods. The carrier then will deliver the goods to the buyer at its peril.
If before the exercise of the right the buyer has sold the goods by a transfer of the bill of lading, the right of stoppage cannot be asserted against the innocent purchaser.
98. Re W. A. Patterson Co., 186 Fed. 629.