is the chance of benefit. But one class of goods seems to illustrate this: Where an animal is sold conditionally and during the period when the animal sold is in the buyer's possession, but before the price has been paid and the property passed, the animal has young, it is held that the young are subject to the same condition as the mother. That is, the property is in the seller, but passes to the buyer on the payment of the price originally stipulated for. Thus the buyer secures the benefit of the increase without paying anything additional for it.62 § 966. Risk where goods are shipped under a bill of lading. It is evident there can be no possibility of throwing risk of loss or deterioration upon the buyer where goods are shipped to him unless the goods are sent in conformity with an order or contract and by a proper method of shipment." The property will not otherwise pass to him, and no reason can be suggested for imposing the risk upon him of goods which he did not order or which for any reason were improperly sent. On the other hand, if goods are properly shipped to the buyer, in accordance with an order or contract, the buyer being named as consignee in the bill of lading, there can be equally little doubt that the risk of loss and deterioration is upon the buyer, for the property has passed to him. This is very evident if the bill of lading is a straight bill-that is, one which names the buyer as consignee without making use of the word "order," for here the bill of lading does not in any way qualify the inferences to be drawn from the shipment.64 The same principle is applicable, moreover, even though the bill is an "order" bill and negotiable, provided that the buyer is named as consignee. It is true that the seller by retaining the possession of the bill may prevent the buyer from obtaining the delivery of the goods. This, however, is because the seller is enabled to control the possession S. E. 68, 10 L. R. A. 526, 22 Am. St. 62 Anderson v. Leverette, 116 Ga. 732, 42 S. E. 1026; Allen v. Delano, 55 Me. 113, 92 Am. Dec. 573; Bunker v. McKenney, 63 Me. 529; Buckmaster 64 Williston, Sales, §§ 281, 282, 286. of the goods by means of the bill of lading. The goods are the buyer's, but the carrier will not surrender them until the bill of lading is surrendered. The situation is similar where an order bill is taken by the shipper in his own name and indorsed and delivered to the buyer.65 In the cases thus far considered in this section, the general principle that risk attends title is, therefore, applicable. But it may be supposed that the seller instead of consigning the goods directly to the buyer, either by a negotiable or a nonnegotiable bill, consigns them to himself or to a third person, with a view to retain title until the buyer pays the price, and has not indorsed and delivered the bill prior to the loss. The situation on principle seems analogous to that where a conditional sale is made. The seller either retains the property himself or transfers it to a third person for the purpose of securing payment of the price, but the beneficial interest in the goods vests in the buyer on shipment, assuming always that the goods were properly shipped in conformity with the buyer's order. Where the bill of lading names a third person as consignee, who advances the price on the security of the bill of lading, it is evident that the risk must be with the buyer and not with the holder of the legal title. The consignee has the legal title of the goods, but he has no interest in the shipment other than to secure repayment of the money which he has advanced. He is usually a banker and the transaction is merely one form of making a loan on security.67 It is evident then that the holder of the legal title in such a case does not bear the risk, nor can the risk remain with the seller, for it may be that the price has already been paid or a bill of exchange accepted for the price. It, therefore, rests on the buyer. In 65 Forcheimer v. Stewart, 65 Iowa, 593, 22 N. W. 886, 54 Am. Rep. 30; Washburn-Crosby Co. v. Boston & Albany R. Co., 180 Mass. 252, 257, 62 N. E. 590. 66 Williston, Sales, § 272. 67 "This 'security title' of the bankers cannot have the force of an unqualified ownership of the goods, with complete right of disposition irrespective of the importer's interest. The ex porters having 'relinquished the whole of their interest' on transmission of the bills of lading to the bankers, the title acquired by the bankers for security must have a 'residue of ownership' of some character in the importer under a contract of purchase and consignment of the goods." In re Richheimer, 221 Fed. 16, 22, 136 C. C. A. 542, per Seaman, J. substance the transaction is the same where the seller retains the security title himself instead of introducing a banker into the matter. That the risk should fall on the buyer follows not simply from the foregoing process of elimination of the other parties, but also from a direct consideration of the buyer's position. The shipment has been made in accordance with his order and is solely for his benefit. The English law sustains the view here suggested.68 The same doctrine has been expressed in a New York decision," and so it has been 68 The question was one much considered in the case of Browne v. Hare, 3 H. & N. 484, 4 H. & N. 822. The defendants, merchants at Bristol, contracted to buy of the plaintiffs, merchants at Rottendam, ten tons of refined oil to be shipped "free on board" at Rotterdam at £45 15s. per ton to be paid for on delivery of the bills of lading by bill of exchange, payable in three months and dated on the day of shipment of the oil. The plaintiffs, accordingly, shipped on a general ship, trading between Rotterdam and Bristol, five tons of the oil, and the master signed a bill of lading making the oil deliverable to "shippers' order." The plaintiffs indorsed the bill of lading specially to the defendants and forwarded it with a bill of exchange drawn on the defendants to the broker through whom the original contract had been made. On the following night the ship was wrecked and the oil lost. The plaintiffs' letter reached its destination shortly afterward and the broker presented the bill of lading with the bill of exchange to the defendants, requesting acceptance of the latter. The defendants refused. It was held that the plaintiffs were entitled to recover upon the defendants' promise to pay the price of the oil. This decision was affirmed by the Exchequer Chamber. The court rested the decision on the ground that the property in the oil passed to the buyer on ship ment of the goods but as the court also admitted that the seller had control of the oil, and as it is evident from other decisions that the seller had complete power of disposition of the oil by virtue of the form of the bill of lading (see Williston, Sales, § 283), it follows that the court's decision must be taken as holding that the beneficial interest as distinguished from a mere title for security was in the buyer. See also Shepherd v. Harrison, L. R. 4 Q. B. 196, per Cockburn, C. J.; Mirabita v. Imperial Ottoman Bank, 3 Ex. D. 164; Inglis v. Stock, 10 A. C. 263. 69 Farmers' & Mechanics' Bank v. Logan, 74 N. Y. 568. In this case Sears & Daw, commission merchants, who had bought wheat for one Brown with their own money, shipped the goods under a bill of lading in which they were named as consignees, but which contained a direction to notify Brown. The court, in its opinion, asserts both that the title remained in Sears & Daw and that the risk was upon Brown, saying: "We are asked, would not the profit have been Brown's, had the wheat advanced in value, and the loss his, had it declined, or if it had been destroyed by fire? To which the ready answer is, whatever had chanced to it, it would not have been his, as between him and Sears & Daw and the plaintiff, until he complied with the conditions on which it was bought for him, that is held under the Sales Act.70 In some cases, however, courts have somewhat hastily assumed that the risk necessarily accompanied legal title, and on being satisfied that the legal title was by virtue of the bill of lading or mode of shipment in one party or the other, have assumed that the risk necessarily was there also.71 Under what is known as a c. i. f. to say, had accepted and paid the draft. As soon as he paid the draft, it would have been his, with whatever enhancement of value. Had it lessened in value, or been burned up, he would still have been liable to Sears & Daw, for the price of their services and for their expenses, and to the plaintiff, first, on his promise to accept the draft, and after acceptance, on that obligation to pay it." See also Sawyer v. Dean, 114 N. Y. 469, 21 N. E. 1012; Glanzer v. J. K. Armsby Co., 100 N. Y. Misc. 476, 165 N. Y. S. 1006. 70 Alderman Bros. Co. v. Westinghouse Air Brake Co., 92 Conn. 419, 103 Atl. 267; Kinney v. Horwitz, (Conn. 1919), 105 Atl. 438. 71 In Willman Mercantile Co. v. Fussy, 15 Mont. 511, 39 Pac. 738, 48 Am. St. Rep. 698, the plaintiff received an order for a carload of apples from the defendant. The apples were to be f. o. b. cars at the seller's residence, "sight draft with bill of lading attached." The apples were shipped in good order but froze on their way. The plaintiff took a bill of lading for the consignment in his own name, and forwarded this, with sight draft attached, through a bank to the defendant who refused to honor the draft. The court said, no doubt with truth: "The plaintiff, the vendor in this case, dealt with the bill of lading with the manifest purpose of securing the payment for the apples," but the court seems wrong in holding that it necessarily follows that the risk is on the seller because the control remains with him. In Vaughn v. New York, etc., R. R. Co., 27 R. I. 235, 61 Atl. 695, it ap peared that a carload of corn was shipped by one Shultis of Boston, to the plaintiff, to Davisville, R. I. The corn was duly shipped and a bill of lading, with draft attached, was sent through a bank to the plaintiff. While the corn was standing on a spur track of the defendant, adjacent to the plaintiff's warehouse, a fire broke out which consumed both the warehouse and the car of corn. The court held that the plaintiff could not recover from the railroad for the loss of the corn, saying: "As to the carload of corn, we are of the opinion, upon all the testimony, that title to the same had not passed to the plaintiff at the time of the fire. He could only obtain title to the same by paying the draft and obtaining the bill of lading, which he had not done prior to the destruction. The sale was conditional upon the payment of the draft, and title still remained in Shultis at the time of the fire; and the carload of corn had not been delivered to the plaintiff at that time; it was still locked and sealed with the lock and seal of the defendant." See also Cragun v. Todd, 131 Iowa, 250, 108 N. W. 450 (where the loss caused by injury to peaches damaged in transit was thrown upon the seller); Graham v. Laird Co., 20 Ont Law Rep. 11 (where the facts were almost identical with those in the Montana Case); Henderson v. Lauer, (Cal. App. 1919), 181 Pac. 811; St. Louis & San Fr. R. Co. v. Allen, 31 Okl. 248, 120 Pac. 1090, 39 L. R. A. (N. S.) 309. On the other hand, courts sometimes go too far in the other direction and assert the buyer has the legal title and that contract, where the shipper takes out an insurance policy for the benefit of the buyer and the price is payable on tender of the bill of lading and insurance policy it is obvious the risk is on the buyer, and the seller on tendering the documents is entitled to the price, even though prior to the tender the goods have been lost and the seller is aware of the fact.72 § 967. Effect of default upon risk. There has not been much discussion in our law upon the effect of default by buyer or seller upon the risk of loss or deterioration. The principles which must govern the question are, however, reasonably clear. If the buyer repudiates or commits a total breach of the contract it is obviously impossible for the seller to retain the goods as his own, or deal with them as such, and yet claim that the risk of their continued existence rests with the buyer, even if the property in the goods had already passed to the buyer. The seller must choose what attitude he will take. As repudiation or breach by the buyer where the property has passed relates merely to taking delivery of the goods, the risk has clearly passed to the buyer under the principles stated in the preceding sections, and his default cannot enable him to get rid of the burden. The seller, however, in such case may by rescission or resale of the goods deprive the buyer of his title,73 and if the seller elects to do this, the risk thereupon is removed from the buyer. Until manifestation of an election by the seller to rescind, or until a resale, as the property remains in the buyer, so the risk will remain with him. If the buyer's repudiation or default relates not simply to taking delivery, but to taking title to the goods, the situation is different. Here, as the seller has the property he normally would bear the risk, and as the buyer's conduct will generally amount to a total breach of the contract, whatever rights the seller has will arise immediately. In England, and many of the United States, the seller's right is limited to a right of action for the difference between the contract price and the market price of the goods the seller's interest is merely a lien. Robinson v. Houston, etc., Ry. Co., 105 Tex. 185, 146 S. W. 537. 72 Manbre Saccharine Co. v. Corn Products Co., [1919] 1 K. B. 198. 73 Williston, Sales, §§ 501 et seq. |