If a vendor, who has sent goods to a purchaser at a distance, finds that the purchaser is insolvent, he may stop the goods at any time before they reach the purchaser. This right is called the right of stoppage in transitu. It has been held, although it cannot be considered as settled, that the discovery of the falsehood of material representations on the part of the buyer, gives the seller this right. (a)1
This right exists, strictly speaking, only when the vendor has parted with the goods. If they have never left his possession, he has a lien on them for the full payment of their price; but not this right of stoppage. (b) 2
While insolvency is necessary to create this right, it is not perfectly well settled what constitutes, for this purpose, insolvency. It would seem, however, that it should be not merely a general inability to pay one's debts, but the having taken the benefit of an insolvent law, or a stoppage of payment, or a failure evinced by some overt act. (c) Or, as it has been defined, " an inability
(a) Fitzsimmons v. Joslin, 21 Vt. 129.
(b) Parks v. Hall, 2 Pick. 212. As to the difference between these rights, see McEwan v. Smith, 2 H. of L. Cas. 309. See also Gibson v. Carruthers, 8 M. & W. 321; Jones v. Bradner, 10 Barb. 193.
(c) In Rogers v. Thomas, 20 Conn. 54, Storrs, J., on the meaning of the phrase
" insolvency" said " The cases on this subject generally mention insolvency as one of the conditions on which the right of stoppage in transitu accrues, but they are wholly silent as to what constitutes such insolvency; and therefore its sense, as thus used, is to be gathered from the circumstances of the cases. For it is a
1 Stoppage in transitu is called into existence for the vendor's benefit after the buyer has acquired title and right of possession, and even constructive possession, but not yet actual possession, Keeler v. Goodwin, 111 Mass. 490, 492; Treadwell v. Ayd-lett, 9 Heiskell, 388; for the reason, it is said, that the seller's property ought not to be used in paying the buyer's debts, Keeler v. Goodwin, 111 Mass. 490, 492. As to a seller in such a case becoming the bailee of the buyer, see Farmeloe v. Bain, 1 C. P. D. 445; Gunn v. Bolckow, L. R. 10 Ch. 491. As to estoppel of a vendor generally who has given a delivery order, see Voorhis v. Olmstead, 66 N. Y. 113. - K.
2 That his remedy is not impaired by giving a delivery order, if countermanded before his bailee attorns to the buyer, see Keeler v. Goodwin, 111 Mass. 490. - K.
*to pay one's debts in the ordinary course as persons generally do. "(d)1
The mere insolvency or bankruptcy of the vendee will not, per se, amount to a stoppage in transitu; for there must be some act on the part of the consignor indicative of his intention to repossess himself of the goods. (e) But if it was ever considered necessary for the consignor, or some one in his behalf, to take actual possession of the goods, in order to perfect and term which is used with various meanings. In a technical sense it denotes the having taken the benefit of an insolvent law; in the popular sense, a general inability to pay debts, and in a mercantile sense, a stoppage of payment, or failure in one's circumstances, as evinced by some overt act. That a technical insolvency is sufficient to authorize the exercise of the right of stoppage in transitu has always been conceded. That it is not indispensable for that purpose is equally clear. Mr. Smith, in his Compendium of Mercantile Law, p. 549, n., expresses his belief that merchants have very generally acted as if the right to stop goods was not postponed till the occurrence of insolvency in the technical sense, and pertinently adds: ' The law of stoppage in transitu is as old, it must be recollected, as 1670, on the 21st of March, in which year Wiseman v. Vandeput was decided; so that if insolvency is to be taken in a technical sense, the law of stoppage in transitu has been varying with the varied enactments of the legislature regarding it.' That stoppage of payment amounts to insolvency for this purpose, is assumed in many of the cases. Lord Ellenborough, in Newsom v. Thornton, 6 East, 17, places the right of the vendor to stop the property on the ' insolvency ' of the consignee, where there had been only a stoppage of payment by the vendee, when notice was given to the carrier by the vendor to retain the goods. In Ver-tue v. Jewell, 4 Camp. 31, the terms used were ' stopped payment.' See also Dixon v. Yates, 5 B. & Ad. . 313. We have been able to find no case in which the right of stoppage in transitu has been either sanctioned or attempted to be justified on the ground of the insolvency of the vendee, where there was not a technical insolvency, or a stoppage of payment, or fail ure in circumstances, evidenced by some overt act; and Mr. Blackburn, in his Treatise on the Contract of Sale, p. 130, where this subject is very minutely ex amined, says, that there seems to have been no such case; and adds, that although the text-books and dicta of the judges do not restrict the use of the term 'insolvent,' or 'failed in his circumstances,'to one who has stopped payment, there must be great practical difficulty in establishing the actual insolvency of one who still continues to pay his way; and as the carrier obeys the stoppage in transitu at his peril, if the consignee be in fact solvent, it would seem no unreason able rule to require, that at the time the consignee was refused the goods, he should have evidenced his insolvency by some overt act. Mr. Smith, in his work which has been mentioned, clearly favors the same view. Comp. Mere Law, 130, n. Hence it appears that the authorities and text-writers furnish no support to the claim that a mere general inability to pay debts, unaccompanied with any visible change in the circumstances of the debtor, constitutes insolvency, in such a sense as to confer the right of stoppage in transitu." But see Hays v Mouille, 14 Penn. St. 51 , Biddlecombe v. Bond, 4 A. & E. 332; Naylor v. Dennie, 8 Pick. 205, Chandler v. Fulton, 10 Tex. 2; Lee Kilburn, 3 Cray, 594.