Any sale contravening this rule may be treated as fraudulent by the buyer.

This follows Section 58 of the English Act, and is believed to express the existing law..

SECTION 22.- [RISK OF Loss.] Unless otherwise agreed, the goods remain at the seller's risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer the goods are at the buyer's risk whether delivery has been made or not, except that

(a.) Where delivery of the goods has been made to the buyer, or to a bailee for the buyer, in pursuance of the contract and the property in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery.

(b.) Where delivery has been delayed through the fault of either buyer or seller the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault.

The exception (a) is not contained in the English Act. Otherwise the section is in substance the same as Section 20 of the English Act. The new exception represents the weight of authority and seems sound on principle. The principal situation at which it is aimed is where a conditional sale has been made, the goods delivered to the buyer, and very likely in use by him. The title is retained instead of taking a mortgage back as would be done in the case of real estate. The beneficial interest is in the buyer, and the risk should be on him. See 9 Harv. L. Rev. 109; Mechem, § 635.

Where goods are sent in compliance with an order, but marked "C. O. D.,” even though the effect of this were to withhold the title (as to which, however, see Section 19, Rule 4 (2) the risk would be thrown on the buyer. See Mechem, §840 note (p. 616).

TRANSFER OF TITLE.

SECTION 23. [SALE BY A PERSON NOT THE OWNER.] (1.) Subject to the provisions of this act, where goods are sold by a person who is not the owner thereof, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell.

(2.) Nothing in this act, however, shall affect

(a.) The provisions of any factors' acts, recording acts, or any enactment enabling the apparent owner of goods to dispose of them as if he were the true owner thereof.

(b.) The validity of any contract to sell or sale under any special common-law or statutory power of sale or under the order of a court of competent jurisdiction.

This follows Section 21 of the English Act, except in (2) (a) “recording acts” has been added.

SECTION 24.-[SALE BY ONE HAVING A VOIDABLE TITLE.] Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller's defect of title.

This follows Section 23 of the English Act. to sales in market overt and is omitted here.

Section 22 of that Act relates

SECTION 25.-[SALE BY SELLER IN POSSESSION OF GOODS ALREADY SOLD.] Where a person having sold goods continues in possession of the goods, or of negotiable documents of title to the goods, the delivery or transfer by that person, or by an agent acting for him, of the goods or documents of title under any sale, pledge, or other disposition thereof, to any person receiving and paying value for the same in good faith and without notice of the previous sale, shall have the same effect as if the person making the delivery or transfer were expressly authorized by the owner of the goods to make the

same.

This follows Section 25 (1) of the English Act. It is comparatively new to the English Law being first enacted in the Factor's Act of 1889. But, so far as purchasers are concerned, it states in effect the principle commonly laid down in this country, that delivery is not necessary between the parties, but is as against third persons. The rights of creditors are dealt with in the next section. Section 25 (2) of the English Act provides that a buyer in possession without title shall have power to transfer title. This is contrary to American law and has been omitted. Mechem, § 599.

SECTION 26. [CREDITORS' RIGHTS AGAINST SOLD GOODS IN SELLER'S POSSESSION.] Where a person having sold goods continues in possession of the goods, or of negotiable documents of title to the

goods, and such retention of possession is fraudulent in fact or is deemed fraudulent under any rule of law, a creditor or creditors of the seller may treat the sale as void.

The law in this country as to the effect of retention of possession on the rights of creditors is in such conflict and the different rules are locally so firmly fixed, that it seemed unwise to try to provide a uniform rule. All states, however, agree that if the retention is fraudulent in fact, the sale is void as to creditors. The draft, therefore, so provides, and as to other cases-cases of constructive fraud-adopts the locally prevailing rule.

SECTION 27.-[DEFINITION

OF

NEGOTIABLE DOCUMENT OF

TITLE.] A document of title in which it is stated that the goods referred to therein will be de ivered to the bearer, or to the order of any person named in such document, is a negotiable document of title.

This definition, following as it does the definition of negotiable promises to pay money, represents the mercantile understanding in regard to documents of title.

SECTION 28.- [ NEGOTIATION OF NEGOTIABLE DOCUMENTS BY DELIVERY.] A negotiable document of title may be negotiated by delivery

(a.) Where by the terms of the document the carrier, warehouseman, or other bailee issuing the same undertakes to deliver the goods to the bearer, or

(b.) Where by the terms of the document the carrier, warehouseman, or other bailee issuing the same undertakes to deliver the goods to the order of a specified person, and such person or a subsequent indorsee of the document has indorsed it in blank or to bearer.

Where by the terms of a negotiable document of title the goods are deliverable to bearer or where a negotiable document of title has been indorsed in blank or to bearer, any holder may indorse the same to himself or to any other specified person, and in such case the document shall thereafter be negotiated only by the indorsement of such indorsee.

Here too both mercantile practice and the analogy of bills and notes are followed.

BY

SECTION 29.- [NEGOTIATION OF NEGOTIABLE DOCUMENTS INDORSEMENT.] A negotiable document of title may be negotiated by the indorsement of the person to whose order the goods are by the terms of the document deliverable. Such indorsement may be in blank, to bearer, or to a specified person. If indorsed to a specified person it may be again negotiated by the indorsement of such person in blank, to bearer or to another specified person. Subsequent negotiation may be made in like manner.

The note to the preceding section is again applicable.

SECTION 30.- [NEGOTIABLE DOCUMENTS OF TITLE MARKED "NOT NEGOTIABLE."] If a document of title which contains an undertaking by a carrier, warehouseman, or other bailee to deliver the goods to the bearer, to a specified person or order, or to the order of a specified person, or which contains words of like import, has placed upon it the words "not negotiable," "non-negotiable," or the like, such a document may nevertheless be negotiated by the holder and is a negotiable document of title within the meaning of this act. But nothing in this act contained shall be construed as limiting or defining the effect upon the obligations of the carrier, warehouseman, or other bailee issuing a document of title of placing thereon the words "not negotiable" "non-negotiable," or the like.

It is a well-known custom of the railroads to stamp upon bills of lading, even though running to order or assigns, the words "Not Negotiable." The object of carriers in so doing seems to be to limit their own liability, but not to interfere with the transfer of the bills between buyer and seller or with the practice of the banks to advance money on such bills. How far the carrier is justified in attempting to limit its liability by such a device may be questioned, but as this act is concerned, not with the liability of the carrier, but with the rights of the various holders of the bill of lading as against each other, it seemed wise to provide merely that as between those parties the words "Not Negotiable" do not change the legal effect of the document.

SECTION 31.- [TRANSFER OF NON-NEGOTIABLE DOCUMENTS.] A document of title which is not in such form that it can be negotiated by delivery may be transferred by the holder by delivery to a purchaser or donee. A non-negotiable receipt can not be negotiated and the indorsement of such a receipt gives the transferee no additional right.

The distinction between warehouse receipts and bills of lading negotiable in form and those which are not does not seem to be observed in the English decisions; but it is observed in this country both in the usages of warehousemen and carriers and in the decisions of the courts. See Hallgarten r. Oldham, 135 Mass. 1; Gill v. Frank, 12 Oreg. 507; Forbes v. Boston & Lowell R. R., 133 Mass. 154; Litchfield Bank v. Elliott, 83 Minn. 469.

SECTION 32.- [WHO MAY NEGOTIATE A DOCUMENT.] A negotiable document of title may be negotiated

(a.) By the owner thereof, or

(b.) By any person to whom the possession or custody of the document has been entrusted by the owner, if, by the terms of the document, the bailee issuing the document undertakes to deliver the goods to the order of the person to whom the possession or custody of the document has been entrusted, or if at the time of such entrusting the document is in such form that it may be negotiated by delivery.

By this section a negotiable document of title is not given the full negotiabilit y of a bill of exchange inasmuch as neither a thief nor a finder is within the terms of the section. Any person entrusted with a document running to bearer or indorsed in blank, irrespective of the terms of the trust is intended to be given the power of negotiating. While the true owner may claim protection against the theft or accidental loss, if he has voluntarily given such paper to a servant or agent he should bear the loss in case of a wrongful disposition of the document by the servant or agent, rather than a bona fide purchaser.

SECTION 33.-[RIGHTS OF PERSON TO WHOM DOCUMENT HAS BEEN NEGOTIATED.] A person to whom a negotiable document of title has been duly negotiated acquires thereby,

(a.) Such title to the goods as the person negotiating the document to him had or had ability to convey to a purchaser in good faith for value, and also such title to the goods as the person to whose order the goods were to be delivered by the terms of the document had or had ability to convey to a purchaser in good faith for value, and

(b.) The direct obligation of the bailee issuing the document to hold possession of the goods for him according to the terms of the document as fully as if such bailee had contracted directly with him.

This section follows the custom of merchants. It makes the document represent the depositor's right in the goods, so that a purchaser of the document, if he acquires a good title thereto, acquires not simply the rights of his vendor, but whatever property the original depositor had, that being what the document represented. 32 (b) makes the obligation of the warehouseman in regard to the goods negotiable.

Many states already have statutes making warehouse receipts negotiable.