and the buyer agrees to pay for them in installments at given
dates, each promise is a consideration for the other. If either
the buyer or the seller fails to do his full duty under the
contract he is in no position to demand that the other shall do
what he has agreed to do. In other words, as soon as either is
guilty of any breach of the contract the other may declare the
whole agreement at an end; he may refuse to do anything further
under the contract himself, and may demand damages of the person
who was guilty of the breach. If a buyer fails to meet any
payment promptly when it is due, the seller, if he chooses to do
so, may immediately rescind the contract and bring suit for the
unpaid installments and for damages. If he had not this
privilege he might be compelled to go on for months delivering
his goods to one who had already shown his unwillingness or
inability to make good his promise of payment.
=Opinion No. 47.=
LUMBER ON A CONSIGNEE’S SIDE-TRACK IS IN CUSTODY AND AT THE RISK OF THE
CONSIGNEE.
Question—When does the railway’s liability end and the consignee’s begin
on lumber delivered in cars on the consignee’s side-tracks; i. e., if a
carload was burned in forty-eight hours after being placed for the
consignee, would the loss fall on the transportation company or the
consignee?
Reply: When a carload of merchandise is delivered upon the
consignee’s own side-track and the consignee has notice, express
or implied, of that fact, then all liability of the railroad
company for the safety of the merchandise ceases at once. The
goods are still in the company’s cars, but that is not
sufficient to make the company liable, for the cars themselves
are in the custody of the consignee and upon his premises. The
goods have been delivered to the consignee, and that is the last
of the duties the carrier undertook to perform. A railroad
company cannot be expected, and in some cases would not be
allowed, to place its watchmen in private freight yards and to
extend over and through those yards its system of protection
against fire. When cars containing goods have been delivered
upon the consignee’s premises the goods themselves have been
delivered there. The carrier is no longer liable, either as
carrier or as warehouseman and the courts have so decided.
=Opinion No. 48.=
WHERE A SELLER REFUSES TO MAKE DELIVERIES, BUYER CAN PROTECT HIMSELF.
Question—A places a contract with B for future delivery of lumber
beginning in October; B, for certain reasons, does not care to deliver
this contract. A has the opportunity to buy the identical goods for the
same delivery from competitors at the same price, after being notified
by B that he does not care to deliver this contract. Does the fact that
A has the opportunity to cover himself on the same conditions release B
of damages arising from non-delivery of the contract, or can A wait
until the time of delivery before buying goods in the open market
against the contract of B which the latter refuses to deliver?
Reply: If B is under contract to deliver goods to A in October,
and if, before October, he notifies A that he does not intend to
fulfill his contract obligation, A may accept that statement as
final and protect himself at once. He may make other
arrangements for an October delivery and compel B to pay the
loss, if any, or he may sue at once for breach of contract. The
buyer is not bound to pursue this course, however. He may act
upon the supposition that, upon further consideration of the
matter, the seller will conclude to do his duty after all; and
so the buyer, A in this case, may wait till the time arrives for
the October delivery, and may then buy goods to replace those
that the seller ought to have delivered, holding the seller
liable for the loss, if any, or he may then sue for breach of
the contract. If this costs the seller more than the other plan
might have cost him, the fault is his own. He will not be heard
to complain because the buyer has taken it for granted that he
really would perform his contract obligation when the time
arrived, in spite of his previous statement that he did not
intend to do so.
=Opinion No. 49.=
ALL CONDITIONS OF A CONTRACT MUST ACTUALLY BE EMBODIED IN THE CONTRACT.
Question.—The following is a general form that is frequently printed
across the top of the letter heads of manufacturers: “All agreements are
contingent upon fires, strikes, delays of carriers, accident and other
contingencies beyond our control.” What effect does this have on a
contract when such letter heads are used when quoting prices and when
accepting the order?
Reply: Any provision that is intending to form part of a
contract ought to be introduced into it in express terms or else
referred to so that there can be no mistake regarding it. In the
particular case under consideration the clause should be
incorporated in the contract or acceptance, or the contract
should state that the sale is made subject to the terms and
conditions printed across the top of the paper. Either one of
these would be a simple, easy procedure and would remove all
doubt. A contract usually begins with the name of the place and
a date, or with the names of the parties; and it ends with one
or more signatures. Both parties are bound by all that lies
within these limits and by everything beyond that is referred to
as forming part of the agreement; but neither party is, as a
rule, expected to look anywhere else—even around the margins of
the same paper—to ascertain his rights and liabilities. It may
be possible, in some cases, to make a provision printed on the
margin of the paper containing the contract part of the contract
itself, but there is always more or less doubt upon this point,
and no doubt should be left where it is so easy to make the
meaning plain. If the marginal printing is to be useful at all
it will be mainly in connection with a statement that the
contract was made subject to a certain usage of the business, or
a certain custom of that particular house, and that this custom
was well known to the buyer; as proof of this fact the words
across the top of the paper would be useful.
=Opinion No. 50.=
A CARRIER IS LIABLE FOR ANY LOSS CAUSED BY HIS DELAY IN DELIVERING
GOODS.
Question.—Inform us what recourse we would have against a railroad for a
shipment of lumber from Buffalo to New York, which has already been on
the road eighteen days, as shown by the shipping documents, and has not
arrived yet. In the meantime the market dropped some 10 per cent. in
price. This lumber was bought f. o. b. Buffalo.
Reply: A carrier is bound, not only to deliver the lumber
entrusted to him for carriage, but to deliver it with reasonable
promptness. The courts recognize the fact that promptness of
delivery has an importance second only to the fact of delivery
itself. What is to be held as constituting reasonably prompt
delivery is to be decided in accordance with nature of the goods
and all the circumstances of the particular case; it is such
delivery as carriers of the kind in question, carriers by rail
or vessel, as the case may be, ordinarily make in handling goods
of the same kind as those in question. When the time arrives for
delivery to be made, under this rule, and the goods are not
delivered the consignee is entitled to sue for their value at
destination on the day on which delivery ought to have been
made. If the carrier is able to deliver the goods, and offers to
do so, at any time before he has been required to pay for them
as goods lost, the consignee cannot refuse to accept them and
still recover their full value. He is bound to accept the goods
whenever they are tendered, no matter how great the delay may
have been; but in such a case he still has a valid claim for any
loss he may have sustained as a result of the delay. His damages
are at least as great as that amount by which the market value
of the goods on the day of delivery is below their market value
on the day on which delivery ought to have been made; to this is
to be added any other loss or expense brought upon him as a
direct result of the carrier’s delay.
=Opinion No. 13.=
THERE IS NO REMEDY AFTER ACCEPTING LUMBER.
Question.—I purchased some lumber from a party in New York State at a
given figure f. o. b. shipping point, and had it forwarded by the
railroad company according to my instructions. Upon arrival my customer
reported to me a shortage of several hundred feet, of which I in turn
notified the party from whom I bought. He stated that he hardly thought
such a shortage was possible and asked me to retally the lumber. I
communicated with my customer, who told me that the shortage reported
was correct, and that he had used up the lumber as he was in need of the
lumber, although I requested him to hold it intact. My customer in
settling with me deducted for the full amount of the shortage, whereas
the party who sold to me refuses to accept settlement on this basis,
offering me an affidavit from his shipper that the quantity alleged to
have been shipped by him was correct. Am I compelled according to the
New York court rulings to remunerate the party who sold to me as per his
invoice? He claims that the lumber ceased to belong to him when he
placed it at the railway company’s depot subject to my instructions. For
this reason he demands full payment. I am in a position to furnish an
affidavit from the party to whom I sold the lumber to the effect that
the shortage actually occurred at destination, although the lumber was
received in good condition.
Reply: This lumber was sold f. o. b. shipping point and it is
true, as the seller says, that title passed to the buyer at that
point. This fact, however, does not excuse the seller for
delivering short count or tally, if he made such delivery. He
undertook to deliver a certain quantity of goods at the shipping
point, and his contract obligation was not fulfilled unless he
delivered that quantity. It does not appear, however, that the
contract was such as to allow the buyer to accept less than the
quantity sold at a pro rata price. As the contract is described
to us, it was a sale of a definite quantity for a stipulated
price, with no other provision. That being the case, the buyer,
when tender was made to him had no choice other than to accept
the tender as satisfactory, or else to reject it and claim
damages for breach of contract. He did accept the goods and he
used them. It is too late now for him to say that the tender was
in any respect unsatisfactory. The buyer might have rejected the
goods on account of short tally, and then he could either have
claimed damages for breach of contract, as we have suggested, or
he could have communicated with the seller, offering to take the
shipment at less than the contract price—could have made a new
contract, in short. He did neither. He accepted the goods. He
will not be heard now to say that they were, in any respect, not
such goods as the contract called for. Our correspondent can be
compelled to pay for these goods the full contract price, and
the person to whom he sold them can be compelled to do the same.
=Opinion No. 31.=
PROPOSED FREIGHT RATE ADVANCE.
In view of the agitation regarding the proposed advance in freight rates
it is suggested that our members protect themselves as fully as possible
in making quotations. It is believed advisable to use a clause either
printed or stamped on the letter-head or quotation stating substantially
the following:
“All quotations made and orders accepted are based on present
freight rates.”
Where this clause is used it should be printed or stamped in such a way
that it becomes a part of the quotation or correspondence. Stamping the
clause on the margin of a letter-head is considered inadvisable.
=Opinion No. 110.=
ACCEPTANCE OF AN AMOUNT OFFERED AS “PAYMENT IN FULL” MAY OR MAY NOT
CANCEL THE DEBT.
Question—A customer sends me a check for a certain amount and inserts
the following on the face of his check: “In full to June 1.” Does my
indorsement give my receipt in full to this date or not? Can I indorse
his check and write him a letter advising him that I am using the check
only to apply on the account?
Reply: Suppose A owes B a certain sum of money and there is no
doubt or dispute as to the amount actually due. Then if A pays
to B less than the amount, in cash or by check, saying at the
time, “this I tender as payment in full,” B may keep the money
or cash the check without losing the right he previously had to
demand what was still due and unpaid. No man, without the
consent of his creditor, can discharge the whole of his debt by
paying part of it, if the amount is liquidated and certain.
Suppose, however, that there has been no agreement as to the
amount due or that there is an honest and well-founded dispute
concerning the matter. Then when the debtor sends any reasonable
amount, with a statement that it is tendered and is to be
accepted, if at all, as payment in full, that is his estimate of
the sum due. The creditor cannot accept the tender without
accepting the estimate; if he does accept the tender the amount
due is thereby agreed upon and fully paid. If the creditor is
not willing to accept the tender as payment in full he must
return it. Then an agreement may be reached as to the amount
actually due, or if the two cannot agree the matter may be left
to the courts. The debtor has this privilege, in a case of this
kind, because it would be unfair to him to allow the creditor to
keep what the debtor honestly believed to be the whole sum due,
and still allow him to sue for more, when, if he had brought his
suit in the first place it is possible he might not have been
able to recover even as much as the debtor has already paid him.
=Opinion No. 51.=
PROTEST IS NOT NECESSARY TO HOLD PARTIES PRIMARILY LIABLE.
Question—Is it necessary, or is it in any way helpful to have a note or
an accepted draft protested, regard being had only to the maker of the
note or the acceptor of the draft?
Reply: The object of a protest is to inform a person who is
secondarily liable upon a bill or note that the person primarily
liable has been properly called upon and has refused to pay the
amount. There could be no object in conveying formal information
of this kind to the parties primarily liable, because they know
what the facts are, they know, that is, that demand has been
duly made of them and that they have failed to comply with it.
Accordingly it is held that protest and notice are not necessary
to charge the maker of a promissory note or the acceptor of a
bill of exchange. We believe this to be the sound rule in all
cases.
=Opinion No. 52.=
F. O. B. SHIPMENTS.
Question.—Please advise us, what the position of a shipper is who takes
an order for a full carload of material at a price including freight to
destination, but where the shipper takes out a bill of lading in the
name of the buyer. The shipper claims he simply guarantees freight to
destination, and having the bill of lading issued in the name of the
buyer places the risk of loss or damage in transit on the buyer.
Reply: A buyer of goods takes title to them wherever they may be
at the time of the sale unless the contract provides otherwise
or unless the seller by some act of his own reserves the title
to himself during transportation. A mere agreement on the part
of the seller to pay the freight is not sufficient to rebut the
presumption that title was to pass on delivery to the carrier.
When goods are sold f. o. b. destination the seller undertakes
to carry them to their destination and there deliver them. They
are his goods, and the risk is his, until he has tendered
delivery at that place; this is true because the buyer cannot be
compelled to accept a tender made at any other place; but a mere
agreement that, for a given price, the seller will furnish the
goods and pay freight upon to a given place, does not make him
liable for their delivery in that place. If he was bound to
deliver them at destination the contract would say nothing about
freight; an obligation on the seller’s part to deliver the goods
at destination is, in itself, an obligation to pay freight upon
them or to carry them himself, and it is not for the buyer to
choose which he shall do. If the agreement to pay freight did
place the risk on the seller during transportation he could not
escape that obligation by his own act in taking out a bill of
lading in a particular form. If he was at liberty, under the
contract, to deliver the goods at the shipping point, however,
he could increase his obligation by his own act, and taking the
bill of lading to his own order would, if not otherwise
explained be sufficient for this purpose. In this case the bill
of lading was taken in the name of the buyer, and that is
consistent with the seller’s claim that a valid delivery could
be and was made at the shipping point and the carrier was an
agent of the buyer.
=Opinion No. 53.=
PAYMENT OF FREIGHT NOT ALWAYS TRANSFER OF TITLE.
Question.—Please advise us if in selling lumber freight paid to
destination we are liable for damage in transit. As we understand it,
when we sell lumber delivered at destination we are liable, but when we
sell it freight paid the buyer is liable.
Reply: The person who owns goods while they are in transit must
bear the expense of damage or loss if they are not insured. If
the goods have been sold the title during transit may be either
in the seller or the buyer. It is sometimes perfectly clear that
title is in one or the other, while in some cases it is a very
difficult question. Payment of freight is one item to be taken
into consideration, but it is generally not alone absolutely
conclusive of the question one way or the other. Our
correspondent is correct in saying: “When we sell goods
delivered at destination we are liable.” It is equally correct
to say: “When we sell them, otherwise than for delivery at
destination the buyer is liable.” It is not always true,
however, that the buyer is liable when the seller pays the
freight. Goods that had not been ordered, for example, or goods
slightly different from those ordered might be sent in the
expectation that the buyer would accept them. In such a case the
seller would probably prepay the freight but title would remain
in him, and the risk would be his, until the buyer had received
the goods and accepted them. If the contract requires the seller
to pay freight that is good evidence, if there is nothing on the
other side to offset it, that title and risk are to be in the
buyer during transit; this is so because if the seller was bound
to deliver the goods at the buyer’s end of the route he would be
bound to pay the freight, as a part of this obligation, and
would not separately agree to pay the freight. If the contract
is silent on that subject the mere fact that the seller pays the
freight is not sufficient to show that he reserves title. All
the facts of the case are to be taken into consideration, the
presumption being that title passes when the goods are
delivered, properly directed, to the carrier. If the buyer
claims that title did not pass to him at that instant the burden
of proof is on him, and the mere fact that the seller paid the
freight is not alone sufficient to overcome the presumption.
=Opinion No. 54.=
FILING CERTIFICATES IN MARYLAND.
Some of our members have recently received communications from the
Secretary of State of Maryland calling their attention to a law which
went into effect in Maryland June 1st, 1908, regarding filing
certificates permitting foreign corporations to transact business. The
Secretary of State’s letter reads in part as follows:
“The name of your company appears on the records of this office as a
Foreign Corporation doing business in Maryland. As the recently enacted
Act of the Legislature repeals the law under which you are authorized
to transact business in this State, it will be necessary for you to
comply with the provisions of the new law, a copy of which I enclose
herewith, together with a blank form, convenient for use in connection
therewith.”
Our attorney at Baltimore writes as follows regarding the necessity of
complying with the provisions of the law above referred to:
“It is not necessary for a foreign corporation who maintains no office
or agency, or has no assets in this State, to file a certified copy of
its charter, the required certificate under the act and the franchise
tax. A foreign corporation under the facts above stated may send any
number of salesmen for the purpose of making sales in this jurisdiction
without having to comply with the foreign corporation law.”
=Opinion No. 55.=
RAILROADS CAN INSIST ON ACCEPTANCE OF DELAYED SHIPMENTS.
Question.—I shipped a carload of lumber to a customer consigned to
myself and it was apparently lost in transit. The delay caused my
customer to cancel this order with me, whereupon I notified the railroad
that I would not accept delivery and would hold it responsible for not
only the value of the car, but any damages resulting to me. The car has
just turned up and the railroad insists that I must take it and put in
claim for loss. Am I compelled to accept the car?
Reply: If the road offers to deliver the lumber now the
consignee should accept it. A carrier is not a dealer, and goods
tendered by it cannot be refused, however late the tender may
be, or however seriously the goods may be damaged, provided they
are recognizable as the goods actually shipped and have any
value at all. The consignee cannot leave them in the hands of
the carrier and demand full value for them. He must accept them
and do the best he can with them. His acceptance of them does
not relieve the carrier of its liability, and the consignee is
entitled to recover all loss caused by delay, or by damage to
the goods, as soon as the loss has been ascertained. If the
market price has declined since the day on which delivery should
have been made that difference in value is to be included in the
damages; usually that is the principal part of the loss, and
frequently it is the whole of it.
=Opinion No. 56.=
QUESTION OF DISCOUNT.
Question.—I take an order from my customer, the terms of payment being
stated 2 per cent. 10 days. The buyer makes settlement in 20 days and
claims that he is entitled to the discount by paying interest for the
extra time which he has taken over and above the ten days. On the other
hand, I claim that the bill not having been paid within the discount
period becomes net, and that face amount of the bill therefore becomes
due on the eleventh day Which is right?
Reply: If a contract of sale gives the buyer no right to a
discount he has no such right. If the contract does give him a
right to a discount, upon certain terms, he must comply
absolutely with those terms in order to entitle himself to the
discount. The situation is just this: A seller who is entitled
to demand the full face of his bill, says to the buyer, “I will
deduct part of the amount if you will do a certain thing at a
certain time in a certain way.” The buyer cannot fail to do the
thing so specified at the time and in the manner named, and
still claim a discount as if he had done it. The buyer is
entitled to no discount at all in the case here put.
=Opinion No. 57.=
LUMBER MAY BE RETURNED TO THE CONSIGNOR IF THE CONSIGNEE WILL NOT ACCEPT
IT.
Question.—We ordered a carload of lumber from a shipper in the South and
advanced $200 on account before the shipment arrived at its destination.
This shipper received from the railroad company a bill of lading in his
name marked “non-negotiable,” which he indorses to us and mails to us
and notifies the railroad by letter that the shipment is for us. On
arrival we find that the lumber is not in accordance with our order and
we refuse to accept it, whereupon the railroad stores it for account of
the owner. We notified the railroad that we would release the car to the
shipper upon the latter paying to us the $200 advanced. The railroad has
since delivered the car back to the shipper on the latter’s instructions
by their giving the railroad the usual bond, which the railroad insisted
upon having, and we still retain the original bill of lading indorsed to
our order. We put in a claim against the railroad company for the $200
advanced, taking the position that they had no right to deliver the car
to the shipper without the bill of lading or an order from us. The
railroad refuses to pay our claim, saying that the bill of lading was a
non-negotiable one, and inasmuch as the shipper took it out in his own
name he had a right to regain possession of the car, and that we waived
our rights, although retaining the bill of lading, by refusing to accept
the lumber on arrival. We did not pay the freight. What course can we
pursue to recover the $200 advanced?
Reply: If a consignee refuses to accept goods shipped under a
non-negotiable bill of lading they may be returned to the
consignor. The carrier is not bound to act as agent or
intermediary for the settlement of any differences between the
two. Here our correspondents have simply extended a credit of
$200 to the shipper. If he does not voluntarily meet the
obligation the amount may be recovered by suit.
=Opinion No. 58.=
RAILROADS MUST PAY VALUE AT DESTINATION FOR DAMAGES ON LOST LUMBER.