Stoppage In Transitu, in law, the arresting by the seller of goods on their passage to a distant purchaser who has become insolvent. When and how the doctrine of stoppage in transitu became a part of our law cannot be definitely asserted. Its introduction was comparatively recent. The right exists only between a buyer and a seller. A surety for the price of the goods, bound to pay for them if the buyer does not, has not this right; but one who is substantially a seller has. Thus, one ordered by a foreign correspondent to buy goods for him, and then buying them in his own name and on his own credit, and sending them as ordered, may stop them in transitu. So may a principal who sends goods to his factor, or one who remits money for any particular purpose. The reception and negotiation of a bill for the goods does not defeat the right, nor does part payment. But goods cannot be stopped when they are sent to pay a precedent and existing debt. - The right arises only upon actual insolvency, which need not be legal or formal bankruptcy or insolvency. It is enough if the buyer cannot pay his debts, and also that he refuses to comply with the specially agreed terms of the sale, for this is insolvency so far as the seller is concerned.

When the goods are stopped, the buyer may, by payment of the price or by tender of security if they were sold on credit, defeat the stoppage and reclaim the goods. If the seller stop the goods maliciously, and without actual belief of the insolvency on good grounds, he would doubtless be answerable for any damages which the buyer might sustain. The seller's right to stop the goods cannot be defeated by any sale or mortgage thereof by the buyer, or by any claim or lien or attachment of any other person, except such lien as may arise in favor of any carrier by whom they have been conveyed. - Nice questions have arisen in respect to the transitus. Generally speaking, the goods are in transit when they are not in the actual possession either of the buyer or of the seller. But the law goes sometimes further than this, and inquires into the constructive possession; for the goods may be in the actual possession of the seller, and yet so far constructively in the possession of the buyer that the seller cannot retain them; or they may be in the actual possession of the buyer, but under such circumstances that the seller's right is not taken away. It becomes, therefore, very important in many instances to ascertain whether the transit is complete.

A carrier of goods, by land as well as by sea, acquires a lien on the goods which he carries for the freight money. The goods are still in transit, and may be stopped, so long as the carrier withholds them from the buyer by his lien for the freight, and a seller who seeks to stop them then must discharge this lien. In general, whenever a carrier enters into a new arrangement with the consignee, by which he agrees to hold the goods as the property of the consignee and at his disposal, there is a termination of the transit. Yet all acts in reference to such question must be open to explanation by existing circumstances, the general inquiry in such case being whether the carrier, warehouseman, wharfinger, or other person having actual possession of the goods at the time of the intended stoppage in transitu, was then acting as the agent of the seller or of the buyer; for if of the latter, the transit was terminated.. If the buyer order the goods to be sent to some other person by any suitable conveyance without designating any one especially, or by a designated carrier who is not specifically his agent or servant, the goods remain in transitu until they reach that second person. Questions of constructive possession arise very frequently in respect to goods in the charge of warehousemen.

In general, every warehouseman is the agent of any party who puts the goods in his warehouse and can take them out at his pleasure; and therefore his possession is the possession of such party. On this point it is a material question whether anything remains to be done by the seller; if nothing, this goes far to make the warehousing a delivery to the buyer. If a seller of goods that are warehoused delivers an order for them to a buyer, this alone may not transfer the possession; but if the buyer delivers the order to the warehouseman, this in general transfers the possession, and still more so if the warehouseman enters the same in his books or otherwise accepts the order, so as to be responsible for the goods to the buyer. If the buyer sells to a third party, to whom the warehouseman certifies that the goods are transferred to his account, and who thereupon pays the price, the warehouseman becomes responsible to this third party; and if the original seller, though there remained something material to be done by him to the goods, consented to the warehouseman's so certifying, he would be held to have lost his right of stoppage in transitu. - The effect of the bill of lading upon the right of a seller to stop the goods in transitu is very important.

The law regards the bill of lading, not as a mere receipt which the carrier gives for the goods, but rather as a muniment of title, carrying property with it, and being itself quasi negotiable. An indorsement and delivery of the bill for value operate as a symbolic delivery of the goods mentioned in it. It results from this doctrine that a consignee, who sells for value goods to arrive and indorses over the bill of lading, confers upon the purchaser a title and property which destroy the right of the seller of the goods to stop them in transitu. But if the party buying from the consignee knows that the sale is in fraud of the original seller, it is voidable by that seller of course; and if he knows that the consignee is, or is about to become, insolvent, this knowledge would probably have the same effect, as would also knowledge or notice of any circumstances which rendered the bill of lading not properly assignable. If the bill of lading be transferred and indorsed by way of pledge to secure the consignee's debt, the consignor does not lose entirely his right to stop the goods, but holds it subject to the rights of the pledgee; that is, he may enforce his claim to hold the surplus of the goods after the pledgee's claim is satisfied, and he holds this surplus to secure the debt of the consignee to him. - The insolvency of the buyer, however complete or however manifested, will not operate of itself as a stoppage in transitu.

The goods must be actually stopped, in some way which the law recognizes as adequate, by the seller or his authorized agent. An actual taking possession by the seller is not necessary, at least not in all cases, although actual possession should be taken if possible, and as soon as possible. A constructive possession may be acquired by giving notice to the carrier or warehouseman, forbidding him to deliver the goods to the buyer, and requiring him to give them up to the seller or his agent, or to hold them subject to his order. Delivery in disregard of this notice does not defeat the seller's right; he has still a constructive possession, and the carrier is responsible to him for all the injury he may sustain. Or, if the buyer becomes insolvent, and the goods pass into the possession of his assignees, the seller may maintain an action of trover against them. What the consignor may do personally, he may do by his agent; and if the demand be made by one who acts as agent, but without authority, a subsequent adoption and ratification will have the effect of a previous authority, provided this be made before the goods are demanded by the buyer.