provision is frequently made only for the matters which strike the parties as important. Where goods are shipped from a distance the question of risk naturally occurs to prudent business men as desirable to settle in the agreement. The more abstract question when the property in the goods passes is much less likely to occur to them. An agreement that risk shall pass to the buyer is, therefore, not justly construed as an agreement that the property shall remain in the seller, but rather as evidence that the property was intended to pass. It must be admitted that the question is one of fact in each case, and that the argument here suggested is more appropriate to a brief mercantile contract prepared by the parties than to an elaborate agreement based on legal advice.

§ 964. Risk is on the buyer where the seller retains a security title only.

That the risk should be thrown upon the buyer if the seller retains title merely to enforce performance by the buyer of his obligations under the contract, as enacted in the Sales Act, 52 is a consequence of the theory that such a bargain is, in effect, though not in form, a sale to the buyer and a mortgage back by him of the property to secure the price. Two classes of cases especially, commonly present the questionfirst, conditional sales; and, second, shipments under bills of lading. These two cases will now be separately considered.

§ 965. Risk is on the buyer in a conditional sale.

Where goods are delivered to the buyer but title is retained by the seller until the price is paid, the buyer immediately acquires the right to use the goods as his own, and has indeed exactly the same power over them, and right in regard to them, that he would have if he had bought them, and mortgaged them back to secure the price.53 The time for payment in such sales frequently extends over months and sometimes over years. It is necessarily to be expected by the parties

52 Sec. 22 (a), see supra, § 961.

53 See supra, §§ 734 et seq. The risk of loss is borne by a chattel mortgator. American Soda Fountain Co. v. Blue,

146 Ala. 682, 40 So. 218; Blue v. American Soda Fountain Co., 150 Ala. 165, 43 So. 709.

that the goods will deteriorate during this period, and, nevertheless, that the buyer will be bound to pay the price. It seems properly to follow that if the goods are accidentally destroyed or injured, the buyer must stand the loss; that is, he must pay the price in full at the time agreed. The decisions upon the point are in conflict, but the weight of authority sustains the view here expressed. 54 There are, however, a number of decisions to the contrary.55

Wherever the Uniform Sales Act is in force, 56 the seller's right of recovery should be clear. 57 By special terms in the

contract the question of risk may be settled by the parties in any way they please,58 and some of the apparently conflicting decisions may be reconciled on this basis. 59 But the parties frequently do not express a direct intention in regard to the matter and a rule based on general principles is, therefore, required. In a case on the point in Mississippi,60 where the plaintiff sued for the price of a soda fountain which had been delivered to the defendant under a conditional sale, the court held the plaintiff entitled to recover though the property had been destroyed and said: "Burnley unconditionally and absolutely promised to pay a certain sum for the property, the possession of which he received from Tufts. The fact that the property has been destroyed while in his custody, and before the time for the payment of the note last due, on payment of which only his right to the legal title of the property would have accrued, does not relieve him of payment of the price agreed on. He got exactly what he contracted for, viz., the possession of the property and the right to acquire an absolute title by payment of the agreed price. The transaction was something more than an executory conditional sale. The seller had done all he was to do, except to receive the purchase price; the purchaser had received all that he was to receive as the consideration of his promise to pay. The inquiry is not whether, if he had foreseen the contingency which has occurred, he would have provided against it, nor whether he might have made a more prudent contract, but it is whether, by the contract, he has made his promise absolute or conditional. The contract was a lawful one, and, as we have said, imposed upon the buyer an absolute obligation to pay. To relieve him from this obligation, the court must make a new agreement for the parties, instead of enforcing the one made, which it cannot do." This language was quoted with approval by the North Carolina Supreme Court in a case involving similar facts.61 Analogous to the risk of loss American Soda Fountain Co. v. Vaughn, 69 N. J. L. 582, 55 Atl. 54.

58 Hoobler v. International Harvester Co., 185 Ala. 533, 64 So. 567; Ryan v. Agricultural Ins. Co., 188 Mass. 11, 73 N. E. 849.

59 See a discussion based on the presumed intent of the parties in

60 Burnley v. Tufts, 66 Miss. 48, 5 So. 627, 14 Am. St. Rep. 540.

61 Tufts v. Griffin, 107 N. C. 47, 12

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.63 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. 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

64

S. E. 68, 10 L. R. A. 526, 22 Am. St.
Rep. 863.

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
v. Smith, 22 Vt. 203; Kent v. Buck, 45
Vt. 18; Clark v. Hayward, 51 Vt. 14.
63 Williston, Sales, § 278.

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

66

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.