In re Arctic Stores

• Decision Date: 17 June 1919
• Citation: 258 F. 688
• Parties: In re ARCTIC STORES. Petition of WILLIAM SILVER & CO.
• Court: U.S. District Court — District of New Jersey

258 F. 688

In re ARCTIC STORES. Petition of WILLIAM SILVER & CO.

United States District Court, D. New Jersey.

June 17, 1919

Charles E. Hendrickson, Jr., of Jersey City, N.J., for petitioner William Silver & Co.

Furst &amp Furst, of Newark, N.J., for trustee.

RELLSTAB District Judge.

William Silver & Co., a corporation (hereinafter called the petitioner), has brought here for review the referee's order denying its petition to recover the value of a car of tomato pulp sold by the receiver of the Arctic Stores bankrupt. The pulp was originally sold by the petitioner to the Arctic Stores on credit. From the bill of lading it appears that the car of pulp was consigned to the 'Arctic Stores, Cussen's Siding, Marion, New Jersey, f.o.b Salem, New Jersey. ' The car arrived at Marion, and was placed on the siding referred to, before 7 o'clock a.m on October 18, 1917, at which hour it was seen by the consignee's chief clerk on his arrival at the consignee's warehouse. This siding bore the name of the president (Cussen) of the Arctic Stores, and was alongside the latter's warehouse.

About noon of that day, upon the filing of an involuntary petition in bankruptcy against it, and its written admission of inability to pay its debts and willingness to be adjudged a bankrupt, the Arctic Stores was so adjudged. Later in the day a receiver was appointed to take charge of the assets of said bankrupt. On October 19th the receiver had the pulp removed from the car to the bankrupt's warehouse, and later on that day the carrier removed the empty car from the siding. On the following day (October 20th) the petitioner ordered the carrier not to make delivery of the pulp.

The referee found that both actual and constructive delivery of the pulp had been made to the receiver 'before the shipper gave the railroad company notice to stop the goods in transit, and that therefore the petitioner's notice to the carrier came too late,' and he thereupon made the order here under review. The petitioner seeks a reversal of this order on the ground that the possession of the receiver was not that of either the bankrupt, who, by the adjudication, was bereft of all interest in that property, or of the trustee, who had not yet been appointed, but of the persons who would be ultimately found entitled to the property, and that, as the right of stoppage in transitu was exercised before the appointment of the trustee, it was in time to reinvest the petitioner with the title to, and the right of possession of, the property in question.

The pulp so shipped was sold to the Arctic Stores on credit, and when it was delivered to the carrier for transportation to the purchaser the title passed to the latter. Leonard v. Davis, 66 U.S. (1 Black.) 476, 483, 17 L.Ed. 222; National Bank v. Dayton, 102 U.S. 59, 62, 26 L.Ed. 77; McElwee v. Metropolitan Lumber Co. (C.C.A. 6) 69 F. 302, 305-307, 16 C.C.A. 232; Canadian Northern Ry. Co. v. Northern Miss. Ry. Co. (C.C.A. 8) 209 F. 758, 760, 126 C.C.A. 482; Benj. on Sales (5th Ed.) 218, 837, 838. See, also, N. J. Uniform Sale of Goods Act, approved May 7, 1907 (N.J.P.L. 1907, p. 311); 4 N.J.Comp.Stat. 4645, Sec. 19, rule 4(2), and section 46(1).

While the right to stop delivery of goods sold on credit is predicated on the insolvency of the buyer, yet neither insolvency nor bankruptcy of the buyer works a rescission of the contract of sale, and an effective stoppage in transitu does not in itself annul the sale or divest the purchaser of the title to the goods, which passed on delivery to the carrier. Sheppard v. Newhall (C.C.A. 9) 54 F. 306, 4 C.C.A. 352; Benj. on Sales (5th Ed.) pp. 808, 809, 816; N. J. Uniform Sale of Goods Act, supra, Secs. 57, 61. It has been said that 'the right of stoppage in transitu is merely an extension of the lien for the price which the vendor has after contract of sale and before delivery of goods sold on credit. ' Johnson v. Eveleth, 93 Me. 306, 45 A. 35, 48 L.R.A. 50. A more nearly accurate statement seemingly is that the insolvency of the buyer gives the vendor a right to reobtain possession of the goods from the carrier, while they are on their way to the vendee, and that upon giving notice not to deliver before the carriage is at an end he may retake and retain the goods as security for the price. See Arnold v. Delano, 4 Cush. (Mass.) 33, 50 Am.Dec. 754; N. J. Uniform Sale of Goods Act, supra, Sec. 57.

However, this right to retake only continues while the goods are in transit. When the goods reach their destination, the vendor's right to repossession is gone, his potential security is lost, and his status in relation to such goods is no different from that of a general creditor of the vendee.

In the instant case, when the carrier placed the car containing the pulp on the siding designated in the bill of lading, it had reached its destination and the transit was at an end. The Eddy, 72 U.S. (5 Wall.) 481, 495, 18 L.Ed. 486; Conyers v. Ennis, 6 Fed.Cas. 377, No. 3149; In re M. Burke & Co. (D.C.W.D. Pa.) 140 F. 971, 15 Am.Bankr.Rep. 495; In re W. A. Paterson Co. (C.C.A. 8) 186 F. 629, 108 C.C.A. 493, 25 Am.Bankr.Rep. 855, 34 L.R.A. (N.S.) 31; Shepard & Morse Lumber Co. v. Burroughs, 62 N.J.Law, 469, 41 A. 695; 2 Kent, Comm.pp. 706, 707; Johnson v. Eveleth, supra; Benj. on Sales (5th Ed.) pp. 906, 907; Scott v. Pettit, 3 B. & p. 469; Ellis v. Hunt, 3 T.R. (D. & E. 464; Kendal v. Marshall Stevens & Co. (C.A.) 11 Q.B.D.L.R. (1882-83) 356; Sawyer v. Joslin, 20 Vt. 172, 49 Am.Dec. 768.

When the carrier placed the car on the designated siding, its duty as a carrier was ended. If that were not a delivery, what would be one on such a shipment? Certainly the carrier would not have to unload the car. It would not be liable to the vendor for failing to stop delivery, for delivery had been made at the very place designated in the bill of lading. If the carrier's placing the car on the siding was a delivery, so as to exonerate it from liability to the vendor it is none the less so when the vendor...