CHAPTER VII.

RIGHTS OF UNPAID SELLER AGAINST THE GOODS.

§ 93. Definition of unpaid seller. "1. The seller of goods is deemed to be an unpaid seller within the meaning of this act: (a) When the whole of the price has not been paid or tendered. (b) When a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has been broken by reason of the dishonor of the instrument, the insolvency of the buyer, or otherwise. 2. In this part of this act the term 'seller' includes an agent of the seller to whom the bill of lading has been indorsed, or a consignor or agent who has himself paid, or is directly responsible for, the price, or any other person who is in the position of a seller" (1).

Where the property in the goods has passed to the buyer, the remedies of the seller are solely for enforcing the payment of the price. In Martindale v. Smith (2) there was a sale of a stack of oats standing on the ground of the seller on April 23d, to be paid for in 12 weeks, i. e. by July 16th, the buyer to be at "liberty to let the stack stand, if he sees fit, until the middle of August next.' The buyer did not pay on the 16th of July, but requested

time, which the seller refused to give, saying that as he had failed in the payment at the time appointed by the contract he should not have the stacks. Two or three days later, the buyer tendered the money, which the seller refused to accept, and on the 14th of August the buyer demanded the stacks, repeating the tender, which was refused. The seller afterwards sold the stacks and the buyer brought suit for a conversion of his property. It was held that he was entitled to recover. "The sale of a specific chattel on credit, though that credit may be limited to a definite period, transfers the property in the goods to the vendee, giving the vendor a right of action for the price, and a lien upon the goods, if they remain in his possession, till that price be paid. But that default of payment does not rescind the contract. In a sale of chattels, time is not of the essence of the contract, unless it is made so by express agreement." The seller's right to detain the thing sold is a right of lien till the price is paid, not a right to rescind the bargain. The seller does not lose his lien by the acceptance of payment of part of the price (3).

§ 94. Receipt of negotiable instrument as payment. Whether or not the receipt of a promissory note or draft or check is payment is a question of the intention of the parties. If intended as payment, there is a substitution of a new liability for the old one, and the buyer is discharged from his previous obligation for the price of the goods. The seller relies upon a new cause of action upon the instrument, and, if it be dishonored, may bring suit

(3) Hodgson v. Lay, 7 T. R., 436.

for the price of the goods. But the instrument may be accepted conditionally, the seller taking the negotiable instrument instead of immediate payment, but upon condition that if the negotiable instrument be dishonored at maturity, the seller shall be entitled to his original cause of action. As a general rule, the English and American courts hold that the presumption, in the absence of proof to the contrary, is that the instrument is taken conditionally. A few states hold that the presumption is that it is taken absolutely. But, in either case, if there is any evidence of intent the question becomes one of fact for the jury; if there is no evidence the presumption must control (4).

§ 95. Remedies of an unpaid seller. "1. Subject to the provisions of this act, notwithstanding that the property in the goods may have passed to the buyer, the unpaid seller of goods, as such, has: (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 transit after he has parted with the possession of them. (c) A right of resale as limited by this act. (d) A right to rescind the 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 transit where the property has passed to the buyer" (5).

(4) Anson, Law of Contract (2d Am. ed.), 350, n. 1. Sales Act, sec. 53.

(5)

Where the property in the goods has not yet passed to the buyer, and the seller still has possession, the seller has full power to deal with the goods, so far as his disposition of them is concerned, having the possession coupled with the legal title. The adjustment of their rights and liabilities is merely a matter of contractual rights and obligations. Where the goods are still in the seller's possession, but the property therein has passed to the buyer, the seller may have one or more of the four remedies given above. They will be considered in order in the following subsections.

§ 96. Unpaid seller's lien: When right of lien may be exercised. "1. Subject to the provisions of this act, the unpaid seller of goods who is in possession of them is entitled to retain possession of them until payment or tender of the price in the following cases, namely: (a) Where the goods have been sold without any stipulation as to credit. (b) Where the goods have been sold on credit, but the term of credit has expired. (c) Where the buyer becomes insolvent. 2. The seller may exercise his right of lien notwithstanding that he is in possession of the goods as agent or bailee for the buyer” (6).

In the absence of an agreement to the contrary, the seller is entitled to payment upon delivery of the goods to the buyer. He has, then, a lien upon the goods for the price, unless there is an express agreement to extend credit. Where the goods have been sold on credit, but the term of credit has expired, the seller in possession of the goods is still entitled to retain possession until the

(6) Sales Act, sec. 54.

price is paid or tendered. "When goods have been sold on credit, and the purchaser permits them to remain in the vendor's possession till the credit has expired, the vendor's lien, which was waived by the grant of credit, revives upon the expiration of the term, even though the buyer may not be insolvent" (7).

Where the buyer becomes insolvent, the seller is entitled to retain possession, although the goods were sold on credit. One who contracts to sell goods on credit, thereby agrees to waive his lien for the purchase money; but he does so on the implied condition that the purchaser shall keep his credit good. If, therefore, before payment, and while the seller still retains possession of the goods, he discovers that the purchaser is insolvent, he may hold the goods as security for the price (8). Although the seller is in possession as agent or bailee for the buyer, yet such possession by the seller is actual possession, in which case he may exercise his right of lien.

§ 97. Same: Lien after part delivery. "Where an unpaid seller has made part delivery of the goods, he may exercise his right of lien on the remainder, unless such part delivery was made under such circumstances as to show an intent to waive the lien or right of retention" (9).

The lien attaches to every part of the goods for the full amount of the price. If a part of the goods have been delivered, the seller has a lien upon the goods, which