pay for it at our cost price or at the current market price?
Reply: Unless the contract between the shipper and carrier
provides for some other measure of damages, the principal amount
to be paid by the carrier when the lumber is lost or destroyed
is the market value at destination. If the freight has not been
paid in advance it is to be deducted from market value. There is
to be added, on the other hand, interest at the legal rate from
the day on which delivery should have been made to the day of
settlement; and there is to be added also any incidental expense
to which the consignee may have been put as a direct result of
the carrier’s failure to do his duty. This is the only way in
which the consignee can be placed in as favorable a position as
he would have occupied if the carrier had done his duty, the
only way in which the whole of the loss can be placed upon the
carrier, who has caused it; and this is what the law aims to do
in every case.
=Opinion No. 59.=
SUIT CAN BE INSTITUTED IN NEW JERSEY ON JUDGMENT OBTAINED IN ANOTHER
STATE.
Question.—Some time ago I secured a judgment in Pennsylvania against a
party who now lives in New Jersey, and has some property there. Can I
make collection in New Jersey?
Reply: A judgment of a Pennsylvania court can be enforced by a
levy on property in New Jersey, without regard to the place of
residence of either the plaintiff or defendant. If this judgment
was secured in Pennsylvania it is without force in New Jersey.
In that case, however, another suit can be started in New
Jersey, and the proceedings will be brief and inexpensive; he
will have to prove merely that suit was previously brought in
Pennsylvania, in a court of competent jurisdiction, and judgment
rendered in his favor. Judgment in New Jersey will follow
immediately and as a matter of course; under that judgment he
can levy on property in New Jersey.
=Opinion No. 60.=
NOT ALWAYS NECESSARY FOR CARRIER TO NOTIFY CONSIGNOR THAT SHIPMENT IS
REJECTED BY CONSIGNEE.
Question.—Have we a claim on the transportation company for the invoice
value of the shipment under the following conditions: We made a shipment
of a car of lumber, and when it arrived at destination the railroad
offered it to consignee and he refused it. Some time later the railroad
sold the lumber for what it would bring, which, it appears, was only
about 50 per cent. of our invoice. Is the transportation company under
obligation, in a case of this kind, to notify the shipper that the
lumber is at destination refused and thereby give the shipper an
opportunity to dispose of the lumber without loss?
Reply: If a carrier has no notice to the contrary, he is
entitled to assume that the consignee is owner of the lumber and
that any delivery or disposition of it of which the consignee
cannot complain will be satisfactory to all persons. If the
goods are sent C. O. D. or if the carrier is instructed not to
deliver them to the consignee until they are paid for, or if he
receives any instructions from which he may infer that the
consignor retains title to the goods, in any such case, it
becomes the carrier’s duty to inform the consignor of the
consignee’s refusal to accept the goods. The same result follows
if the carrier is expressly directed to give such notice and if
he accepts the goods under these directions. In any other case
the carrier is not bound to assume that the goods have been sold
and that the consignor is retaining title to them to secure
payment of the purchase price, or that the consignor has any
interest in them at all. He may assume that the consignee has
already paid for them, or that they were the property of the
consignee before shipment. The consignor has put it in the power
of the consignee to take the goods and do as he pleases with
them, and the carrier is bound merely to act in such manner that
the consignee may have no valid ground of complaint. In the
absence of special instructions to the carrier, or of knowledge
on his part that the goods belong to the consignor, the rule is
simply this: That the carrier is not to be expected to deal with
two different persons with reference to a single shipment or the
disposition to be made of it; that he may safely assume such an
understanding between consignor and consignee that they will
keep each other informed, if necessary, and that anything that
satisfies the consignee will satisfy the consignor. There is
nothing in the question asked to show that it was the carrier’s
duty to notify the consignor in this case.
=Opinion No. 61.=
LUMBER IS ACCEPTED UNLESS REJECTED PROMPTLY.
Question.—A retailer goes away leaving his son in charge of the
business. The son asks us to ship a car of lumber and we sell it to him,
acting for his father, invoicing the car and mailing the bill of lading.
The car arrives, the son surrenders the bill of lading to the railroad
and orders the car placed on his father’s siding for unloading. For some
reason the son decides not to unload the car before the arrival of the
father, which will be in about a week. When the father arrives he claims
the lumber is not up to grade and refuses to accept same, unless we make
an allowance. Does not the acceptance of the bill of lading and its
surrender to the railroad constitute a delivery of the lumber and
entitle us to our money without question whether we are right or wrong
about the quality of the lumber? It is possible, of course, that a very
small proportion of this lumber may be a little off, but the difference
is very slight, and would show only the difference that any two
inspectors would make in going over the car of lumber.
Reply: A buyer of goods is bound to inspect them with reasonable
promptness, after he has an opportunity to do so, and then
accept or reject them at once. Reasonable promptness is greater
promptness than was shown in this case, unless there were some
unusual facts in connection with it of which we are not
informed. A buyer is seldom justified in delaying his inspection
beyond the next day after arrival of the goods. If he does not
reject the goods with reasonable promptness, whether he sees fit
to inspect them or not, then he is held to an implied
acceptance. They are placed in his hands. He may do as he likes
about examining them, but he must reject them promptly, if he is
to reject them at all. If he does not reject them promptly any
remedy he may have had is gone unless the goods were sold to him
under a warranty of quality.
=Opinion No. 62.=
NEW YORK INCORPORATION LAW.
In view of a recent decision regarding the corporation law of New York
State and its probable effect upon foreign corporations doing business
in this State, we have asked our attorney in New York for information,
and the following is submitted:
“At the end of January last there was handed down a decision in the
Court of Appeals, which was later printed in 190 N. Y., settling the
disputes which had arisen as to the necessity for obtaining
certificates of license to do business in this State as a condition
precedent to suing here.
“It holds that in compliance with the General Corporation Law it must
be alleged and proved by a foreign corporation in order to establish a
cause of action in the courts of this State. The cases holding
otherwise, should be regarded as overruled and the conflict of
authority ended.
“And it is further held that an objection to a complaint on this ground
is not waived by the failure to raise it in the defendant’s pleadings,
but can be raised at any time.
“A little later the court also held that this rule applied just as much
as to the assignee of a foreign corporation’s claim, except as to
negotiable paper taken in good faith from the corporation before
maturity.
“It follows that any foreign corporation desiring to do business in New
York, whether on a large or small scale, must comply with the statute
and take out a license and pay the franchise at the end of the first
year, and I suggest that this should be brought to the attention of
your foreign lumber corporations.”
(If further information is wanted by any members whose business is
incorporated under a State law other than New York, we shall be pleased
to hear from them.)
=Opinion No. 63.=
NEW JERSEY INCORPORATION LAW.
Question.—Under New Jersey laws a New York corporation doing business in
New Jersey must register in Trenton. We did a large amount of business
before we were aware of this, but ultimately registered. In suing one of
our customers we were nonsuited because we were not registered at the
time the goods were sold, but this was in an inferior court. Does the
fact that we were not registered in Trenton at the time the goods were
sold completely shut us off from recovering in the State of New Jersey?
Reply: We believe that our correspondents will not be allowed to
maintain this suit; they are prevented from maintaining it as
much by the laws of their own State of New York as by those of
New Jersey. The law of the case stands thus: The New Jersey
statute requires all foreign corporations to file certain
documents with the Secretary of State and to take out a
certificate authorizing them to do business in New Jersey. It is
further provided that “until such corporation so transacting
business in this State shall have obtained said certificate of
the Secretary of State, it shall not maintain any action in this
State, upon any contract made by it in this State.” If this were
all our correspondents could take out a certificate any time and
then sue; this section only forbids them to sue before taking
out a certificate. It is further provided, however, that when
another State imposes any greater penalties on New Jersey
corporations than the laws of New Jersey impose upon
corporations of that State, the same penalties shall be imposed
on corporations of such other State doing business in New
Jersey. Now, it is provided by the General Corporation law of
this State (Sec. 16) that foreign corporations must take out
certificates as in New Jersey, and that “no foreign stock
corporation doing business in this State shall maintain any
action in this State upon any contract made by it in this State
unless prior to the making of such contract it shall have
procured such certificates”; that is the reason a New York
corporation doing business in New Jersey is not allowed to sue
in the courts of that State on a contract made therein unless it
had taken out its certificate before the contract was made.
=Opinion No. 64.=
A LARGE CONTRACT SHOULD BE IN WRITING.
Question.—In the summer one of our salesmen sold a car of lumber for
September delivery, the salesman handing the buyer copy of the order at
the time of purchase. On previous purchases made by this same customer
he has been in the habit of sending in a confirmation of the order on
which appear the words “No order valid unless signed by one of the
members of the firm.” No such confirmation was received by us for the
last order placed, the same having been overlooked by us, and we shipped
the goods to them upon the agreed delivery date. And they write us now
that as no confirmation was given they cannot accept the goods and hold
them subject to our order. They write further that their former buyer
brought up the memorandum order for these goods, but that they declined
to confirm; but of this latter act we had no knowledge. Please inform us
where we stand in this matter.
Reply: In nearly every State there is a statute declaring that
the purchaser of goods to the value of $50 or more shall not be
legally liable unless he signs a written contract or part of the
price is paid or part of the goods are accepted. The wording of
the statute in New York State is as follows: “Every agreement,
promise or undertaking is void, unless some note or memorandum
thereof be in writing, and subscribed by the party to be charged
therewith, or by his lawful agent, if such agreement, promise or
undertaking—is a contract for the sale of any goods, chattels or
things in action for the price of $50 or more, and the buyer
does not accept and receive part of such goods, or the
evidences, or some of them, of such things in action, nor at the
time pay any part of the purchase money.”
=Opinion No. 65.=
USING CHECKS MARKED “IN FULL SETTLEMENT.”
In connection with several claims recently handled by our Collection
Department in Pennsylvania and the question of using checks marked “in
full settlement” or “in settlement of all demands to date,” we have the
following communication from a prominent attorney in Pennsylvania:
“I desire to state that it is elementary law that if pending the
adjustment of a disputed claim, the debtor sends the money to his
creditor in full payment of the demand, the latter cannot receive and
retain it as a credit upon a larger sum claimed by him, without
discharging the debtor as to the whole.
“123 Pa., p. 576. 147 Pa., p. 607. 70 Pa., p. 315.
“These cases have been decided by the Supreme Court of Pennsylvania,
the court of the last resort. Therefore it does not lie in the province
of your members to cancel the words ‘in full settlement’ without
destroying their right in respect to prevailing for the balance.
“I might further state that in the absence of any dispute in respect to
any claim, the payment of a smaller amount will not operate to
discharge the whole, because there is no accord and satisfaction; the
absence of any dispute in respect to the amount being the material
circumstances in this regard.”
=Opinion No. 66.=
A CUSTOMER BUYING ON CREDIT MUST KEEP HIS CREDIT GOOD.
Question.—If a bill of lumber is sold on credit and before delivery to
the customer the seller considers he has good reason to question the
purchaser’s ability to settle when the bill is due, can the seller
withhold the delivery and demand either better terms or cash without
making him liable for the non-fulfillment of the contract?
Reply: A man who has bought goods on credit is bound, as the
courts phrase it, “to keep his credit good.” If he does not do
that the seller need not ship the goods; if he has shipped them
and then finds that the buyer has not kept his credit good, he
may stop the goods and take them back into his own possession at
any time before they have actually been delivered to the buyer
or his agent. In making his decision the seller must, of course,
take his own risks. He has entered into a contract and he must
fulfill it or pay the resulting damages unless he has a legal
excuse for refusing to go on with it. It is not sufficient that,
as the question says, “the seller considers he has good reason
to question the purchaser’s ability to settle”; nor that the
seller has good grounds for believing that the buyer’s credit is
impaired. It is not a question of any man’s belief, but a
question of fact. The goods must be shipped unless the buyer is
actually insolvent. This does not mean that he must have made an
assignment or gone into bankruptcy or made any other public
acknowledgment of the fact that he is insolvent. It means he has
become unable to pay his debts as they fall due. The seller must
be able to show that at least one debt has fallen due against
the buyer and that he has not paid it promptly. Of course, it
must be a debt the validity of which the buyer himself does not
dispute upon any tenable ground. If he has paid his debts as
they fell due he has “kept his credit good,” no matter what any
one may suspect as to the future; if he has failed to pay any
just debt promptly he has not kept his credit good. If the
seller has no right to refuse delivery of the goods altogether
he has no right to demand better terms than his contract gives
him.
=Opinion No. 67.=
DISCOUNT MUST BE IN ACCORDANCE WITH THE CONTRACT.
Question.—We sold to a concern and the terms of sale were “2 per cent.
discount for cash in ten days or sixty days net.” The buyer in his
settlements has taken fifteen to twenty days’ time and has deducted 2
per cent. discount and has added 6 per cent. per annum for the extra
days beyond ten. We claim that this settlement is entirely wrong, and if
he wishes the discount in full he must send a check within ten days
after the date of the bill.
Reply: No debtor is to be excused from paying the full amount of
his debt except in strict accordance with some provision to that
effect in his contract. Here is a debtor who would have been
bound to pay the full amount immediately if there had been no
special provision to the contrary. Any such provision as there
may be is a kind of grace to him and it is not to be extended
beyond the strict terms in which it is expressed. He may take 2
per cent. off if he pays at any time within ten days. When the
ten days are passed the contract stands precisely as if it had
said nothing at all about discount for payment within ten days.
This debtor had no right to deduct the 2 per cent. He is trying
to take an advantage which his contract does not give him. If he
were asked to point out a clause in the contract giving him a
right to take off the discount later than the tenth day, of
course, he could not do it.
=Opinion No. 69.=
A BILL OF LADING TO ORDER RETAINS TITLE TO THE GOODS.
Question.—If a shipper sells a carload of lumber f. o. b. shipping point
with draft attached to bill of lading and bills the car to his own
order, notify the purchaser, and if the car should be wrecked in transit
or should never reach its proper destination, would the buyer who bought
the car f. o. b. be compelled to pay the draft and take up the bill of
lading and seek recourse against the carriers? Should the shipper bill a
car to the order of a bank, notify the f. o. b. purchaser and sell the
draft and bill of lading to the bank outright, would the purchaser be
compelled to pay for same?
Reply: When a sale is made f. o. b. shipping point the seller
can make a valid delivery at that point. If he delivers the
goods to a carrier there, takes a bill of lading making them
deliverable to the buyer and forwards it to the latter, his full
duty is done and the goods are at that moment, in legal effect,
delivered to the buyer; they are actually delivered to the
buyer’s agent, the carrier, and that is equivalent to a delivery
to the buyer himself. This is the kind of delivery the seller is
at liberty to make, under the contract, but he may not do so. He
might, conceivably, carry the goods in his own arms to the
buyer, or he may deliver them to one who is unquestionably his
own agent. In either of these cases delivery to the buyer does
not occur until the goods reach their destination. If A ships
goods to the place in which B resides and takes the bill of
lading to his own order the goods are not in any sense delivered
to B or to his agent. They are A’s goods. He can stop them where
he will and take them back into his own possession. When they
reach their destination he can take charge of them or have them
delivered to anyone he may choose to name. Those goods could be
seized by a creditor of the seller and they could not be seized
by a creditor of the buyer. If they are lost in transit it is
the seller’s loss. A seller must either deliver the goods or
retain them. He cannot do both. He cannot deliver them so as to
make the buyer liable in case of loss and still retain them so
that they will be his, to do with as he will if there is no
loss. The same result follows if the bill of lading is sold to a
bank. A bill of lading represents goods in transit and transfer
of the bill transfers the goods. The direction to the carrier to
“notify” one person or another is of no importance. Goods may be
consigned to B and the carrier, for one reason or another or for
no reason at all, may be directed to “notify” X or Y or Z of the
fact that they have arrived. Notification is not to be
substituted for delivery.
=Opinion No. 70.=
ONE WHO BUYS ON CREDIT MUST KEEP HIS CREDIT GOOD.
Question.—A, in New York, has with B, a manufacturer, three separate
contracts made in December, February and March, respectively, each
contract specifying the grade and price of material, date of delivery
and terms of payment. The deliveries called for in the December contract
have been completed by A; the date for the first delivery of the
February contract is due this month; but B is overdue 30 days on his
payment on the first delivery of the December contract and payment on
the delivery of balance of the December contract is now due. Because B
has failed to comply on his part with the conditions of the first
contract, must A deliver the material according to the terms of the
second and third contracts, thereby unduly increasing the amount of
credit extended to B beyond his general credit limit? From information
obtained which would lead A to question the credit of B, such as his
taking a contract at a loss (this occurring since the contracts were
made) can A demand payment before delivery of the goods, although the
contract specifies 30 days from certain dates? Can A cancel the two
uncompleted contracts for any of the above reasons, viz.,
non-fulfillment of the condition of the first contract by B or doubt as
to B’s credit? If cancelled by A would B have any legal redress such as
buying the quantity and grade of material stipulated by the contracts in
the open market and compelling A to pay the difference in price should
the present market price be higher than the prices stipulated in the
contracts?
Reply: When a man buys goods on credit it is always an implied
condition of the contract that he shall “keep his credit good,”
as the courts phrase it, till the time of delivery arrives. If
he becomes insolvent before that time he cannot demand that the
seller shall ship the goods. If the seller does ship them, and
then learns of the insolvency, he may stop the goods before they
reach the buyer and take them back into his own possession. A
buyer on credit has no right to demand that the goods shall be
delivered to him at a time when he is insolvent and when there
is reason to believe, accordingly, that the goods may have to be
sold to pay his other debts. That is the situation in the case
our correspondent puts, and the seller is certainly not bound to
deliver the merchandise. By insolvency, in a case of this kind,
is not meant an actual assignment for creditors; neither does it
mean that the buyer has gone into bankruptcy or made any other
public acknowledgment of the fact that he is insolvent. It means
that he has become unable to pay his debts as they fall due. The
seller must be able to show that at least one debt has fallen
due against the buyer and that he has not paid it promptly. Of
course, it must be a debt the validity of which the buyer
himself does not dispute upon any tenable or reasonable ground.
The buyer in this case has failed to pay such a debt. The seller
has ample proof of the fact because the debt was owing to him.
The buyer has not “kept his credit good,” and he has no right to
demand that goods sold to him on credit shall be delivered. If
they are not delivered he will have no legal ground of complaint
or cause of action against the seller. It is not the seller who
is guilty of a breach of contract, but the buyer; he is guilty
of a breach of the implied condition which enters into all such
contracts—the condition that the buyer shall “keep his credit
good.”
=Opinion No. 71.=
A SELLER IS BOUND BY HIS OWN MISTAKE UNLESS IT IS OBVIOUS.
Question.—We sent an inquiry for certain sizes of lumber to a mill
asking for quotations. Our inquiry was delayed in the mails, and, as it
did not reach the mill in time enough to quote we placed the order with
the mill, but did not specify prices. The mill acknowledged our order,
saying, “We have entered your order as per enclosed carbon,” and after
each item they named a price. The lumber was shipped and an invoice sent
us, but on two of the items a larger amount is charged than specified in
the communication from the mill, saying our order had been entered. In
remitting we deducted the difference between the prices mentioned in
reply from the mill and the invoice, but the mill claims they made a
clerical error and that we are bound to pay the invoice price. What is
our position in the matter?