Unpaid Seller's Rights.

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two other documents of a different separate value but together making up £96, say, one valued at £40 and the other at £56, is that transaction protected by section 5? Does it make any difference as regards the banker if the second set of documents belong to a different owner-the factor's principal-from the first set?

My answer is: Provided that the factor has obtained possession of the documents with the consent of the owner, such a transaction is protected by section 5 of the Factors Act; and it makes no difference as regards the banker to whom the documents actually belong. If, however, the factor has obtained possession of them without such consent the transaction is, of course, not protected.*

Stoppage in Transitu.

It is now necessary to say a few words with respect to stoppage in transitu, because it is impossible to follow the meaning of many questions arising in mercantile cases without some knowledge of this right. But, as it rarely affects the rights of bankers-the dispute in such cases being usually, though not invariably,‡ between rival claimants to the balance, after the bank's claim has been satisfied-I do not purpose dealing with it at length.

The unpaid seller's rights are now defined by section 39 of the Sale of Goods Act, which declares as follows:

39.-Unpaid seller's rights.—(1.) Subject to the provisions of this Act, and of any statute in that behalf, § notwithstanding that

* See s. 5, ante, p. 70; and s. 2 (1), ante, p. 63.

† See e.g. Re Westzinthus (1883), 5 Barnewall and Adolphus' Rep. 817; and Kemp v. Falk (1882), 7 A.C. 573.

For instance, if the buyer of goods, having obtained with the seller's consent possession of the documents of title, pledges these to a banker who knows not merely that the buyer has not paid for the goods, but also that he is then insolvent, the transaction is not protected. See Cuming v. Brown (1808), 9 East's Rep. at 514-516; and per Lord Ellenborough, C. J., in Vertue v. Jewell (1814), 4 Campbell's Rep. 31; and the latter case discussed in C.A. in Leask v. Scott (1877), 2 Q.B.D. at 380-381. In such a case the banker would not have received "the same in good faith and without notice "of any lien or other right of the original seller in respect of the goods see s. 25 (2) of the Sale of Goods Act, 1893; nor it seems, " in good faith within the meaning of s. 47, cited ante, p. 75; cf. ss. 9 and 10 of the Factors Act, ante, pp. 73, 75; and as the banker knew that the pledge was made in fraud of the seller's right to stop in transitu, the seller's right would prevail over the pledge.

§ See the Bills of Lading Act, 1855, and the Factors Act, ss. 8--10, which are in pari materiâ.

The frequent use in the Sale of Goods Act of the expression "subject to the provisions of this Act,” is apt to lead the reader into a labyrinth, extrication

the property in the goods may have passed to the buyer, the unpaid seller of goods, as such, has by implication of law—

(a.) A lien on the goods or right to retain them for the price while he is in possession of them;

(b.) In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has parted with the possession of them;

(c.) A right of re-sale as limited by this Act.

(2.) Where the property in goods has not passed to the buyer, the unpaid seller has, in addition to his other remedies, a right of withholding delivery similar to and co-extensive with his rights of lien and stoppage in transitu where the property has passed to the buyer.

It is important to bear in mind the distinction between the seller's lien, which attaches when the buyer is in default, whether he be solvent or insolvent, and is lost by the seller's giving up possession; and his right of stoppage in transitu, which arises after he has given up possession, but only in the case of the buyer's insolvency.

The right of stoppage in transitu is derived from the law merchant, and it enables the seller on learning of the buyer's insolvency to stop the goods whilst they are passing through channels of communication for the purpose of reaching the hands of the buyer. The right is regarded with great favour by the Courts on account of its intrinsic justice.* The right is now

from which calls for considerable ingenuity. The expression occurs in ss. 21, 39, 41, 44, 47, 48, amongst others.

"Mark how the labyrinthian turns they take,

The circles intricate, and mystic maze ! "

The above cited s. 39 enacts that the unpaid seller has a lien on the goods for the price while he is in possession of them, and s. 41 enacts that he is entitled to retain possession until payment or tender of the price in certain specified cases; and each of these sections is "subject to the provisions of this Act." There can be little doubt the true interpretation would be held to be that that provision in s. 39 is subject to the provision in s. 41, but this result is arrived at after an expenditure of time and thought on the reader's part, which might well have been saved, only because other interpretations seem to lead to absurd results. In the words of Brett, M.R. (in reference to another statute): "I enter an earnest protest that this mode of drafting Acts of Parliament does not promote clearness." Hough v. Windus (1884), 50 Law Times Rep. at 315.

*See Kemp v. Falk (1882), 7 A.C. at 590; Cassaboglou v. Gibb (1883), 11 Q.B.D. at 804, C.A.

Stoppage in Transitu.

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governed by the provisions of ss. 39 and 44 to 46 of the Sale of Goods Act, 1893.*

Section 44 of the Sale of Goods Act, provides as follows: :

44.-Right of stoppage in transitu. 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.

"The essential feature of a stoppage in transitu is that the goods should be at the time in the possession of a middleman, or of some person intervening between the vendor who has parted with and the purchaser who has not yet received them."†

In order to form a clear notion of the meaning of the term transitus, writes Mr. Chalmers, two points should be noted:

1. The goods may be in transitu although they have left the hands of the person to whom the seller intrusted them for transmission. It is immaterial how many agents' hands they may have passed through if they have not reached their destination.

2. The term does not necessarily imply that the goods are in motion, for, if the goods are deposited with one who holds them merely as an agent to forward and has the custody as such, they are as much in transitu as if they were actually moving.

Goods, therefore, may be in course of transit

1. While being transported, so long as they are in possession of the carrier as carrier, and it is immaterial that the carrier is nominated or appointed by the buyer;

2. While deposited, so long as they are in the possession of the carrier as carrier, or in the possession of some other bailee in course of transmission to the buyer.§

When goods, which have been sold, are in the actual possession

* A good idea of the effect of these provisions can be obtained from the notes on them in Chalmer's Sale of Goods Act, 1893; and the whole law on the subject is treated with admirable completeness and lucidity in Ker and Pearson-Gee's excellent treatise on that Act.

† Per Cairns, L.J., in Schotsmans v. Lancashire and Yorks. Ry. (1867), L.R., 2 Ch. Ap. at 338.

Chalmers on the Sale of Goods Act, 4th ed., 84-85.

§ This passage is taken from Ker and Pearson-Gee on the Sale of Goods Act, p. 240, where the authorities are cited.

of a carrier or other bailee, Mr. Chalmers points out* that three states of fact may exist with regard to them :—

1. First, the carrier or other bailee may hold them as agent for the seller; in that case the seller preserves his lien, and the right of stoppage in transitu does not arise.

2. Secondly, the goods may be in medio. The carrier or other bailee may hold them in his character as such, and not exclusively as the agent of either the seller or buyer. In that case the right of stoppage in transitu exists.

3. Thirdly, the carrier or other bailee may hold the goods either originally or by subsequent attornment, solely as agent for the buyer. In that case either there has been no right of stoppage or it is determined.

When the right of stoppage in transitu exists and the seller exercises it, it is incumbent upon the carrier to give effect to it, unless he is aware of a legal defeazance of the claim. If after notice lawfully given the carrier delivers to the consignee, or refuses to deliver to the seller, he is guilty of a conversion of the goods. In case of real doubt he should resort to an interpleader. The seller has also a remedy by injunction, or, if the goods be in the hands of the master of a ship, by arrest of the ship.†

I will not trouble you with the elaborate provisions as to the duration of the transitus and how stoppage in transitu may be effected, which are to be found in sections 45 and 46 of the Sale of Goods Act, 1893.

Lien.

We now pass on to consider the subject of lien. Before coming to that particular kind of lien with which we are more specially concerned-bankers' lien-it will be well to see that we have a clear conception of the meaning of the term lien, and also of the different kinds of lien that may exist.

Lien is a right which a person has to retain that which is lawfully in his possession belonging to another until certain pecuniary demands are satisfied.t

Liens are either I. Particular, or II. General.

I. Particular Liens.

Particular liens are where persons claim a right to retain

* Chalmers on the Sale of Goods Act, 4th ed., 85-86.

+ Chalmers on the Sale of Goods Act, 4th ed., 90, where the authorities are cited.

‡ See Hammonds v. Barclay (1802), 2 East's Rep. at 235; and ante, p. 5.

goods in respect of labour or money expended upon those goods; and these liens are favoured in law.*

If a man takes his watch to a watchmaker to be repaired, the latter has a lien on the watch for his remuneration-i.e. the right of retaining the watch until his reasonable charges are paid. This is a particular lien, because it exists only as a security for the particular debt incurred in respect of the watch.

II. General Liens.

General liens, on the other hand, are claimed in respect of a general balance of account; and although these are sometimes based on agreement between the parties, they are usually founded on custom only, and on that account are to be taken strictly.t

A general lien is available as a security for all debts arising out of similar transactions between the parties. Thus, if a solicitor has possession of title deeds belonging to his client, he has a general lien on them; that is to say, he is entitled to retain them until he is paid not only his charges for the particular work and expenses done and incurred in connection with those title deeds and the property to which they relate, but also the whole amount owing to him from that client for professional services.‡

Liens, whether particular or general, either: A. arise by operation of law; or, B. are created by statute; or, C. are based on agreement between the parties.

* See per Heath, J., in Houghton v. Matthews (1803), 3 Bosanquet and Puller's Rep., at 494.

This is the ordinary meaning of particular lien, but lien is a word of wide signification, and where goods or deeds or other documents are deposited with a person as a security for the repayment of a particular debt or as an indemnity for a particular liability, that person has a particular lien, but it is not a mere lien, as his rights are more extensive than such as accrue under a simple lien (which confers no power of sale: see ante, p. 5), since on the debtor's default a power of sale will be inferred: see per Gibbs, C.J., in Pothonier v. Dawson (1816), Holt's Rep. at 385; and cf. Donald v. Suckling (1866), L.R. 1 Q.B. at 604.

† See per Heath, J., in Houghton v. Matthews, ubi supra.

Cf. Sweet's Law Dictionary, "Lien,” at p. 490.

The meaning of the term general lien appears to be frequently misunderstood a fact illustrated by some of the answers to the Examination Paper set on these Lectures. Instead of the correct answer that a lien is said to be general when it is in respect of a general balance of account, in some answers it was stated to be general when it extended to all the debtor's property which was in the hands of the creditor; and in others, when it was not confined to any particular property but to the general property of the debtor; and mortgage debentures of a Company charging its property for the time being were mentioned as an instance of general lien. Such a floating security, however (as to which see ante, p. 6), cannot properly be called a lien, nor would such a debenture afford the holder a security for anything beyond the particular amount for which it was issued.