Railroad Company to withhold delivery of the television sets. What should the XYZ Railroad Company do?

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Railroad Company to withhold delivery of the television sets. What should the XYZ Railroad Company do?

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The ABC Company, located in Chicago, contracted to sell a carload of television sets to Dodd in St. Louis, Missouri, on sixty days’ credit. ABC Company shipped the carload to Dodd. Upon arrival of the car at St. Louis, Dodd paid the freight charges and reshipped the car to Hines of Little Rock, Arkansas, to whom he had previously contracted to sell the television sets. While the car was in transit to Little Rock, Dodd went bankrupt. ABC Company was informed of this at once and immediately telephoned XYZ Railroad Company to withhold delivery of the television sets. What should the XYZ Railroad Company do?

Explanation & AnswerSolution by a verified expert

Explanation

The seller of the goods gets the right to reclaim the goods if the buyer gets insolvent. In this case, Person D is the buyer to Company A, which gets insolvent. Person D purchased the goods on 60 days credit. However, Company A cannot reclaim the goods as the goods are being reshipped to Person H in this case.
Title of goods would depend upon the contract between Person H and Person D. So, Company X cannot redeliver the goods to Company A. The goods must be delivered to a new consignee, that is, Person H.
 
If the goods are not reshipped, and Person D is the goods' ultimate buyer, then Company X could have delivered the goods to Person D's trustee in bankruptcy, and from there, Company A could have reclaimed the goods.

Verified Answer

In this case, Person D is reshipping the goods to Person H. So, Company X is obliged to deliver the goods to Person H. Company X cannot take the goods for redelivery to Company A as they have lost their right of stoppage of goods in transit after Person D took the goods for reconsignment.
 
As a seller, Company A has the right to recover the price of goods from the buyer.

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