A lien depends upon possession and may be asserted if the buyer is in default, though solvent. On the, other hand a right of stoppage in transitu can arise only after the seller has parted with possession and can be exercised only if the buyer is insolvent. The history of the right of stoppage in transitu and the extent of the right itself are fully discussed in the judgments in Booth Steamship Co. v. Cargo Fleet Iron Co. [1916] 2 K.B. 570. Scrutton J., at p. 597, said:

The right of stoppage in transitu came into the English law in the seventeenth century from the custom of merchants, both English and foreign - a custom, therefore, which had grown up with no special reference or congruity to the English law. As it enabled an unpaid vendor whose purchaser, was insolvent to exercise some control over goods in which he had no property and of which he had no possession, while in the hands of a shipowner with whom he had no contract, and to prevent that shipowner from performing a contract to which the unpaid vendor was no party, it was obvious there would be considerable difficulty in fitting in this international usage and the national law. As Lord Abinger says, in the well-known judgment in Gibson v. Carruthers, 1841, 8 M. & W. 321, at pp. 338, 339, 340, " In Courts of Equity it has been a received opinion that it was founded on some principle of common law. In Courts of Law it is just as much the practice to call it a principle of equity, which the common law has adopted . . Many unsatisfactory and inconsistent attempts have been made to reduce it to some analogy with the principles which govern the law of con-tract, as it prevails in this country between vendor and vendee . . ." And, again, he refers to "the reasoning and dicta by which it has been attempted, not very successfully, to develop the principle, and to make it conformable in appearance and dress . . with the family of English law into which it has been adopted."

The right of stoppage in transitu is the right of the unpaid seller, on discovery of the insolvency of the buyer, and notwithstanding that he has made constructive delivery of the goods to the buyer, to resume possession of them, if he can, while they are in course of transit and before they come into the actual possession of the buyer. The Sale of Goods Act contains various provisions as to the duration of the transit, as to the manner in which the seller may exerelse his right of stoppage in transitu, and as to the effect of the exercise of the right. As to re-sale by the seller, see 76. If the property in the goods has not passed to the buyer, or if the seller has reserved the right of disposal, the seller's control over the goods depends upon his ownership or his right of disposal, and the question of stoppage in transitu does not, strictly speaking, arise. As to the reservation of the right of disposal, see chapter 3, 38.

The Sale of Goods Act (Ont. s. 43; U.K. s. 44) provides: 43. Subject to the provisions of this Act, when the buyer of goods becomes insolvent, the unpaid seller who has parted with the possession of the goods, has the right of stopping them in transitu, that is to say he may resume possession of the goods as long as they are in course of transit, and may retain them until payment or tender of the price. In the United States the Uniform Sales Act provides: 57. Subject to the provisions of this act, when the buyer of goods is or becomes insolvent, the unpaid seller who has parted with the possession of the goods has the right of stopping them in transitu, that is to say, he may resume possession of the goods at any time while they are in transit, and he will then become entitled to the same rights in regard to the goods as he would have had if he had never parted with the possession.

The insertion in the Uniform Sales Act of the words "is or" before "becomes" is intended to make it clear that the buyer's right exists even though the buyer was insolvent at the time of the contract. The concluding words are intended to cover not only the right of re-sale which the seller has under the Sale of Goods Act as well as the Uniform Sales Act, but also the right to rescind which he has under the Uniform Sales Act.

The Sale of Goods Act (Ont. s. 44; U.K. s. 45) provides: 44. - (1) Goods are deemed to be in course of transit from the time when they are delivered to a common carrier by land or water or other bailee, for the purpose of transmission to the buyer, until the buyer or his agent in that behalf takes delivery of them from such common carrier or other bailee.

(2) If the buyer or his agent in that behalf, obtains delivery of the goods before their arrival at the appointed destination, the transit is at an end.

(3) If, after the arrival of the goods at the appointed destination, the common carrier or other bailee acknowledges to the buyer or his agent that he holds the goods on his behalf and continues in possession of them as bailee for the buyer, or his agent, the transit is at an end, and it is immaterial that a further destination for the goods may have been indicated by the buyer.

(4) If the goods are rejected by the buyer and the common carrier or other bailee continues in possession of them, the transit is not deemed to be at an end even if the seller has refused to receive them back.

(5) When goods are delivered to a ship chartered by the buyer, it is a question depending on the circumstances of the particular case, whether they are in the possession of the master as a common carrier, or as agent to the buyer.

(6) Where the common carrier or other bailee wrongfully refuses to deliver the goods to the buyer, or his agent in that behalf, the transit is deemed to be at an end.

(7) Where part delivery of the goods has been made to the buyer or his agent in that behalf, the remainder of the goods may be stopped in transitu unless such part delivery has been made under such circumstances as to show an agreement to give up possession of the whole of the goods.

In the Ontario statute the word "common," which does not occur in the original statute, has been inserted before the word "carrier." The object of the change is not obvious, as the meaning of the section appears to be unchanged.

In the United States the corresponding section of the Uniform Sales Act is to the same effect, but the various provisions have been re-arranged.

As to questions regarding the duration of the transit, now provided for by this section of the Sale of Goods Act, see Ellis v. Hunt, 1789, 3 T.R. 464, 23 R.C. 416; Bird v. Brown, 1850, 4 Exch. 786, 23 R.C. 422; London & North Western Ry. Co. v. Bartlett, 1861, 7 H. & N. 400, 23 R.C. 434; Chalmers, Sale of Goods, 7th ed. 1910, pp. 106 ff.; 25 Halsbury, Laws of England, pp. 248 ff.

The Sale of Goods Act (Ont. s. 45; U.K. s. 46) provides: 45. - (,1) The unpaid seller may exercise his right of stoppage in transitu either by taking actual possession of the goods or by giving notice of his claim to the common carrier or other bailee in whose possession the goods are. Such notice may be given either to the person in actual possession of the goods or to his principal. In the latter case the notice to be effectual, must be given at such time and under such circumstances that the principal, by the exercise of reasonable diligence, may communicate it to his servant or agent in time to prevent a delivery to the buyer.

(2) When notice of stoppage in transitu is given by the seller to the common carrier or other bailee in possession of the goods, he must re-deliver the goods to or according to the directions of the seller. The expenses of such re-delivery must be borne by the seller.

In accordance with the law prevailing prior to the stat-. ute, this section authorizes the seller to exercise the right of stoppage in either one of two ways, namely, by taking actual possession, or by giving notice to the carrier, the latter alternative being a relaxation of the old rule requiring actual possession to be taken. The effect of the notice is to give the seller the right to possession of the goods. He is not entitled to require the carrier to interrupt the transit, but he is entitled to prevent delivery to the buyer at the contractual place of delivery and to require delivery to himself.

Booth Steamship Co. v. Cargo Fleet Iron Co., [1916] 2 K.B. 570; as to notice to the "principal" instead notice to the person in actual possession of the goods, see Litt v. Cowley, 1816, 7 Taunt. 169, 23 R.C. 411; Whitehead v. Anderson, 1842, 9 M. & W. 518; Kemp v. Falk, 1882, 7 App. Cas. 573, 23 R.C. 399.

The seller, having by exercising his right of stoppage in transitu prevented delivery to the buyer, is under an obligation to take delivery himself, or give directions for delivery, and in order to obtain delivery he must discharge any lien which the carrier has for particular charges or freight on the goods in question (including not merely a common law lien for freight on delivery, but also a contractual lien for advance freight), but he need not discharge any general lien which the carrier has by contract or usage for other sums owing by the buyer but not due in respect of the particular goods. The seller may withdraw the stop and release the goods before the end of the transit, and thus discharge himself from the obligation of taking delivery, but if he does not withdraw the stop he will be liable to the carrier for damages for the failure to take delivery and these damages may be equivalent in amount to the freight. Booth Steamship Co. v. Cargo Fleet Iron Co., supra;

United States Steel Products Co. v. Great Western Ry.

Co., [1916] 1 A.C. 189.

In the United States the corresponding section of the Uniform Sales Act (s. 59) contains the following additional provision in sub-s. 2:

If, however, a negotiable document of title representing the goods has been issued by the carrier or other bailee, he shall not be obliged to deliver or justified in delivering the goods to the seller unless such document is first surrendered for cancellation.