shipwreck, deprive the other party of the fruits of what has been
already done, the benefit resulting to him is more obvious, and the
element of hardship is wanting that appears in many of the cases. The
value of his services or the materials he may have used may therefore
be recovered. In one of the cases A agreed that he and his wife should
live in B's house and maintain him for life. As A's wife died the
contract could not be performed. Nevertheless, A recovered the value
of the service he had rendered to B during the lifetime of his wife.
Wagering contracts either by statute or judicial decision are illegal
and void in most or all the states. In many of them the statute
permits the recovery of the money from the stakeholder or the winner.
Payment over to the winner after notice or demand by the loser is not
a good defense in an action against the stakeholder. Again, the winner
is liable who, when receiving the money, knows that the stakeholder
has been notified not to pay it over, or has received notice not to
take it.
The legality of contracts made or to be performed on Sunday is
determined generally by statute. Generally, when a contract is made on
Sunday, or is fully performed on both sides, the money paid or other
thing done in execution of it cannot be recovered. Again, one who is
induced by fraudulent representations to enter into a contract which
is in violation of a Sunday law is not so much in the wrong as the
other, and consequently may recover a benefit he has conferred on the
other party in performing the contract.
If a member of a firm gives a promissory note signed by the
partnership name, for a debt of his own, which his partner is
compelled to pay, he may recover the money from the other. So, if a
carrier by mistake delivered goods to the wrong person who keeps them,
and the carrier is obliged to pay for their value, he can recover the
amount of the other person who thus wrongfully keeps them.
Whenever a person makes a payment to another under such a mistake of
the material facts as to create a belief in the existence of a
liability which does not really exist, the money may be recovered
back. Such an obligation arises where money is paid as due on the
basis of erroneous accounts, and on a true statement of account is
found not to have been due. A voluntary payment with knowledge of all
the facts cannot be recovered, even though there may have been no
obligation to pay.
A person cannot recover money paid under a mistake of fact who has
received the equivalent for which he bargained, because there is no
failure of consideration. Nor is the fact immaterial that he need not,
and would not have made the payment had he known the true state of
things. A bank, for example, that pays the check of a depositor under
the erroneous belief that it has sufficient funds, may not recover
from the payee the excess to the depositor's credit. But if the
purchaser of goods has paid the price, and the seller fails to deliver
them, the purchaser may recover his money. And in any case, a person
who has paid money under an agreement which he may rescind and does
so, because there was a failure of consideration, may recover what he
has paid. An action will lie against a person who sells goods as his
own, but which do not belong to him, whenever the real owner claims
them from the purchaser. In like manner an action will lie against a
person who sells bills, notes, bonds, stock or other securities which
prove to be worthless, or against a person who agrees to transfer the
title to land which, for lack of title or other reason, cannot pass.
As a rule, the consideration of a contract must totally fail to
entitle a person to recover back the money he has paid. If the
consideration has only partly failed, the remedy, if there is any, is
for a breach of the contract, and not to recover back the money he has
paid. Thus, if an article is sold with a warranty of its quality, and
it is not worthless, his remedy is an action to recover damages for a
breach of the warranty, and not an action to recover back the money
paid for the thing purchased.
A liability cannot be imposed on a person without his act or consent.
One man cannot force a benefit on another without his knowledge or
consent, and then compel him to pay for it. "If a person," says Clark,
"intentionally and knowingly performs services for another or
otherwise confers a benefit on him without his knowledge, so that he
has no opportunity to refuse the benefit, the law will not create a
liability to pay for it. So, where a person supplies another with
goods, the latter supposing that he is being supplied by another
person with whom he had contracted for the goods, the law will not
even imply a promise to pay for the goods." Where benefits are
conferred by one person on another under such circumstances as to
raise no promise in fact or in law to pay for them, he may,
nevertheless, become liable by retaining them. Thus, if a person were
to receive goods from another reasonably but mistakenly believing them
to be intended as a gift, and, after learning of his mistake, should
retain them, when he might return them, or if he should receive part
of the goods purchased from another, and retain them after failure of
the latter to supply the rest of the goods, the law would compel him
to pay for them. And the same rule applies where benefits are in any
other way received under such circumstances as to create no
contractual obligation, and are retained when they should in justice
be returned. If, however, the benefits thus received are incapable of
being returned, as where they consist of services, or of materials
which have been used in repairing a house, no liability is created.
=Sale.=--By a contract to sell goods the seller agrees to transfer the
property in them to the buyer for a consideration called the price.
There is an important distinction between a contract to sell in the
future and a present sale. The first is called an executory, the other
an executed, sale. If the goods are to be transferred, there is an
executed sale even though the price is not to be paid at the same
time. But if the price is paid, and the goods are not then to pass,
the transaction is a contract to sell, or an executory sale. Both
kinds of sales may be by deed or sealed contract as well as by parol
or orally.
Sales and contracts to sell are based on mutual assent, the intent,
therefore, of the parties fixes the nature and terms of the bargain.
If the offerer understood the transaction to differ from that which
his words plainly expressed, it is immaterial, "as his obligation must
be measured by his overt acts." Thus, if an offer to buy or sell is
sent by telegraph, and is improperly transmitted by the telegraph
company, an acceptance by the offeree creates a binding bargain. By
using the telegraph as an agency of communication, the offerer makes
himself responsible for the offer actually delivered. Of course the
telegraph company would be responsible to the offerer for any damage
he may have suffered unless relieved by some neglect or fault of the
sender of the message.
A contract of sale may be conditional, for example, that the property
shall not be transferred until the price is paid. Though the property
is transferred by the sale, promises or obligations may still be
unperformed by the seller. Or the transfer of the title may be
conditional on payment of the price. In such sales the goods are
delivered to the buyer, but the title is retained by the seller until
payment.
The capacity to buy and sell is regulated by the general law
concerning the capacity to contract, transfer and acquire property.
When necessaries are sold and delivered to a minor, or to an insane or
drunken person, or to a married woman, who is lacking in mental
capacity to make a contract, he must, by the general Sales Act, pay a
reasonable price therefor. Necessary goods by this act mean those
suitable to the condition of the life of the minor or other persons
above mentioned at the time of their purchase and delivery.
As we have seen (See _Minor_) a minor may avoid his contracts. The
right to do this is given for his protection, and should not be
stretched beyond his needs. Therefore the right is confined to himself
or his legal representatives. Neither creditors, nor trustees, nor
assignees in bankruptcy can do this, but his heirs can do this, and
probably his guardian. By the common law a purchaser for value who did
not know that the seller bought them of a minor could not retain them
if the minor wished to reclaim them as his own. This rule has been
changed by the Sales Act, and a bona fide purchaser is therefore safe
in purchasing such goods even though the seller did buy them from a
minor.
As a minor may disaffirm his contract, any act clearly showing this
intent is sufficient. "It was early settled," says Williston, "that an
infant's conveyance of realty could be avoided only after he attained
his majority. In the case of personal property a sale may be avoided
during his minority by an infant seller or buyer. Though an infant may
thus avoid his sales, purchases or contracts during infancy, he can
make no effective ratification until he becomes of age, for an
infant's ratification clearly can be no more effective than his
original bargain."
In the Sales Act the Statute of Frauds (See _Statute of Frauds_) has
been reënacted, and provides that in a sale or contract to sell goods
amounting to five hundred dollars or more, it cannot be enforced
unless the buyer shall accept a part of the goods, or give something
in earnest to bind the contract, or in part payment, or makes some
note or memorandum in writing of the sale which is signed by the party
or his agent against whom the other party seeks enforcement.
This statute applies to a contract for goods that may be intended for
future delivery, but not to goods that are to be manufactured by the
seller especially for the buyer and are not suitable for sale to
others in the ordinary course of the seller's business.
The Sales Act contains an important section relating to the sale of an
undivided share of goods. If the parties intend to effect a present
sale, the buyer becomes an owner in common with the owner of the
remaining shares. How important is this section may be easily learned.
The grain of many owners is often mingled in an elevator. It is
delivered to those who call for it, the kinds and quantities mentioned
in the receipts given to them at the times of storing it. The grain in
the elevator may be delivered many times before a particular depositor
makes his demand. The elevator company must keep on hand enough grain
to meet all outstanding receipts. Each depositor thus retains title
to some portion of the grain in the elevator. The company is the
bailee with the power to change the bailor's separate ownership into
an ownership in common with others of a larger mass, and back again.
At any given moment all the holders of receipts for the grain are
tenants in common of the amount in store, each owning a share and all
owning the entire amount, each having the right to sell his share and
demand its separation and delivery in accordance with custom and the
terms of the receipt.
When a party has specific goods which, without his knowledge, have
perished partly or wholly, the buyer may treat the sale as avoided, or
as transferring the property in all of the existing goods and as
binding him to pay the full agreed price if the sale was indivisible,
or if divisible the agreed price for the goods in which the property
passes. One can readily imagine trouble when none of the goods have
been destroyed but all are in a condition inferior to that supposed at
the time of the bargain. In such a case the "only question is whether
the article has been so far destroyed as no longer to answer the
description of it given by the contract."
The price may be fixed by the contract or in such a manner as the
parties may agree, and may be made payable in personal or real
property. When the price is not determined in the way mentioned in the
Sales Act, the buyer must pay a reasonable price. This is a question
of fact in each case. Usually, the price, either in an executed sale
or in a contract to sell, is fixed by the parties at the time of
making the bargain. In the agreement to sell there must be a
consideration on both sides to sustain it. Sometimes the parties agree
that the amount of the price shall vary according to the happening, or
failure to happen, of a future event. Such a contract may be a wager,
which is forbidden by law, or it may be legal, as we shall soon learn.
Whenever no price has been fixed the law has established a rule, a
reasonable price. It is the intention and understanding of the parties
that a buyer who orders a barrel of flour from his grocer will pay a
reasonable price. Likewise a buyer who orders a carriage to be made
for him and says nothing about the price.
What is a reasonable price? Generally the market price at the time and
place fixed by the contract or by law for delivering the goods, but
not always. Under unusual conditions the market price does not furnish
the only test. Said the court in one of these cases: a reasonable
price may or may not agree with the current price of the commodity at
the place of shipment at the precise time of making it. The current
price of the day may be highly unreasonable from accidental
circumstances, by the action of the seller himself in purposely
keeping back the supply.
With respect to warranties the Sales Act provides that when the sale
is made on a condition which is not performed, the party for whose
benefit the condition was made may refuse to proceed with the contract
or sale, or may waive performance of the condition. The nonperformance
may be treated as a breach of warranty. Thus time may be an important
element in a contract, and an agreement to deliver goods by a
specified time is a condition or warranty. And if there is a delay in
delivering, unless it may be a trifling one, the buyer may refuse to
accept the goods.
A common condition in more recent times qualifying the obligation of
the buyer is that the goods shall be satisfactory to him. By this is
meant the satisfaction of the buyer after the exercise of an honest
judgment. In New York and some other states a somewhat different rule
prevails. Unless the things covered by the contract involve personal
taste, the contract imposes on the seller the requirement only that a
reasonable man would be satisfied with performing it, thus not leaving
the question of its satisfactory performance entirely to the buyer.
This, Williston says, is an arbitrary refusal of the court to enforce
the contract that the parties made and seems unwarranted.
Warranties may be express or implied. By the Sales Act any affirmation
of fact or any promise by the seller relating to the goods is an
express warranty if the natural tendency of such affirmation or
promise is to induce the buyer to purchase the goods, and if the buyer
purchases the goods relying thereon.
In a contract to sell or a sale, unless a contrary intention appears,
there is an implied warranty on the part of the seller that in the
case of a sale he has the right to sell the goods, also, in the case
of a contract to sell them, he will have the right to do this at the
time of passing the property. More briefly the seller warrants the
title to the property which is the subject of sale. Whether the seller
is in or out of possession of the property, he can by appropriate
words sell such interest as he may have therein. But persons also sell
property not owned by themselves by authority of others or of the law.
Unless they expressly warrant the title they are not liable for lack
of it. Sales of this nature are made by a sheriff, or other judicial
officer, auctioneer or mortgagee, assignee in bankruptcy, executor or
administrator, guardian, or simply an agent.
When there is a contract to sell, or a sale of goods by description,
there is an implied warranty that they shall correspond with the
description; and if the contract or sale is by sample, as well as by
description, it is not sufficient that the bulk of the goods
corresponds with the sample if these do not also correspond with the
description. The Sales Act contains elaborate provisions relating to
implied warranties of the quality of things sold. There is no implied
warranty of the quality or fitness of goods for any particular purpose
unless the buyer makes known to the seller the purpose for which they
are required, and he also relies on the seller's judgment of their
fitness for the use he intends to make of them. Again, if the buyer
has examined the goods there is no implied warranty of the defects
which such an examination ought to have revealed. An implied warranty
as to quality or fitness for a particular purpose may also be annexed
by the usage of trade. There is an implied warranty that the bulk
shall correspond with the sample in quality, and that the buyer shall
have a reasonable opportunity of comparing the bulk with the sample.
When does the transfer of ownership occur? When there is an
unconditional contract to sell them the property therein passes to the
buyer on the making of the contract, regardless of the time of payment
or delivery or both. When goods are delivered to the buyer "on sale or
return," giving the buyer an option to return them instead of paying
the price, the property passes to the buyer on delivery, but the
property may go back to the seller by returning or tendering the goods
within the time specified in the contract. When the goods are
delivered to the buyer on approval or on trial or other similar terms,
the property passes to the buyer, (1) when he signifies his approval
or acceptance of them, (2) or if he retains them beyond the time fixed
for their return, or if none has been fixed, beyond a reasonable time.
It is the duty of the seller to deliver the goods, and of the buyer to
accept and pay for them, in accordance with the terms of the contract
of sale. Unless otherwise agreed, delivery of the goods and payment of
the price are concurrent conditions, the seller, therefore, must be
ready and willing to give possession of the goods to the buyer in
exchange for the price, and the buyer must be willing and ready to pay
the price in exchange for the possession of the goods.
Whether it is for the buyer to take possession of the goods or for the
seller to send them to the buyer, is a question depending in each case
on the contract, express or implied, between the parties. Apart from
contract, or usage of trade to the contrary, the place of delivery is
the seller's place of business, if he have one, and if not, his
residence. Again, when by the contract of sale of goods no time for
sending them has been fixed, the seller must send them within a
reasonable time.
Vast quantities of goods are bought and sent forward to buyers, which
are not to be delivered until payment. The Sales Act provides that
where goods are shipped and by the bill of lading that is given for
them they are to be delivered to the order of the buyer or of his
agents, but possession of the bill of lading is to be retained by the
seller or his agent, he thereby reserves his right to the possession
of the goods as against the buyer. Very often a buyer of wheat, for
example, will draw a bill of exchange on his principal or company
living in the place where the goods are to be delivered and will have
it discounted by a bank using the money to pay the seller. The wheat
may be in an elevator, or it may be in transit. In either case the
bank receives a document, elevator receipt, or bill of lading, and
thus becomes the real owner of the wheat, and can control it afterward
until it is actually delivered to the consignee, whoever he may be.
This is the bank's security for making the loan. The bank sends
forward the bill of exchange to its correspondent bank in the place
where the consignee lives and the wheat is to be delivered with
instructions to deliver it when the bill is paid.
With respect to speculative sales of stock, so well known by every
one, a contract, says Williston, giving one party or the other an
option to carry out the transaction or not at pleasure, is not a
wager, unless forbidden, as in some states is done by statute. A
contract to sell goods in the future, which the seller does not own at
the time is, aside from the statute, not only legal but common. "The
test," says Williston, "adopted in the absence of statute,
distinguishes between contracts to buy and sell in which the actual
delivery of the property is contemplated, and similar contracts in
which it is contemplated merely that a settlement shall be made
between the parties based on fluctuations in the market price. A
contract of the former kind is legal; one of the latter kind is a
wagering contract, and illegal."
=Shipping.=--The federal statutes require that every ship or vessel of
the United States shall be registered or enrolled in the office of the
collector of customs of the district that includes the home port of
the vessel. None but citizens of the United States can have their
vessels registered. Consequently the sale of a vessel to a foreigner
denationalizes her. If sold to an American, she must be registered
anew. On arriving at a foreign port masters of vessels must deposit
their registers with the consul or commercial agent at that port.
Enrollment is the term used to describe the registry of a vessel
engaged in coastwise or inland navigation or commerce. Registration is
applied to vessels engaged in foreign commerce. License means the same
as enrollment, but is applied to small vessels of twenty tons burden
or less. The federal laws on this subject do not apply to vessels that
are used on nonnavigable waters of the country.
The title to a vessel may be acquired by purchase or building. If a
vessel is built for a party no title thereto passes until she is ready
for delivery and has been approved and accepted by him. This, however,
is no arbitrary rule, and is often modified especially when payment is
made in installments and during the construction of the vessel.
Nowadays many vessels are owned by corporations, and the rules that
apply to corporations of course determine the ownership of their
property. In other cases the several owners of a vessel are tenants in
common, and not co-partners, unless by agreement they have established
other relations among themselves. They may, of course, become partners
and be governed by the rules that apply to persons thus related. When
they are related as tenants in common one part owner has no power to
bind the others in any way beyond the necessary and regular use of the
vessel. He cannot sell or mortgage the interests of the others, draw
drafts or notes in their name, apply the freight money earned to pay
his individual debt, or procure insurance for the other owners.
The majority rule governs in employing the vessel. The majority
therefore have the right to control the use of the vessel on giving
security to the minority, if required, to bring back and to restore to
them the vessel, or if lost to pay them for the value of their shares.
The minority owners in like manner may use the vessel if the majority
are unwilling to employ her. A court of admiralty will in such a case
act for the parties.
Each part owner is entitled to his share of the profits, and is also
liable for the expenses of the vessel unless he has dissented from the
voyage. But part owners who dissent from the voyage and take security
for the safe return of the vessel are not entitled to share in the
profits, nor are they liable for the expenses.
A part owner may bind the others for necessary supplies and repairs
required that are procured on credit, unless his general authority to
do this has been restricted. The ship's husband or managing owner has
authority to do whatever is necessary for the prosecution of the
voyage and earning the freight money. For such purposes he is the
agent of the owners and can bind them by his contracts, unless his
authority is revoked or modified.