accepts them at that price it is then too late for the seller to
demand more except in the following case: If the buyer knew that
a mistake had been made, or if the mistake was so gross and
palpable that he ought to have known it to be a mistake, then it
may be corrected. If a seller were to quote $1.25 when all
buyers knew that $12.50 was about the market price, the buyer
would not be allowed to claim the goods at the quotation without
making special inquiry as to its accuracy; if the quotation was
only slightly under the market, so that no suspicion attached to
it, and if there was nothing else to show that a mistake had
been made, and if the buyer had no actual knowledge of the fact,
the seller is bound. Taking the whole class of sellers together,
it would not be a safe rule to allow them to come around and
collect more after a sale had been made and concluded upon the
plea that they had not asked as much as they intended to ask.
=Opinion No. 72.=
A CARRIER SHOULD PAY VALUE AT DESTINATION FOR LUMBER LOST.
Question.—On what basis must a railroad company settle a claim by a
consignee on lumber damaged or lost? Must the consignee supply the
original invoices, or is he entitled to the selling price in his market?
Reply: If the contract does not provide otherwise, a carrier who
fails to deliver goods must, as a rule, pay to the consignee the
value of the goods at the time and place at which delivery
should have been made. The carrier is to retain his freight
charges out of this amount, of course, if freight has not been
paid in advance. This is the only rule by which the whole of the
loss can be placed upon the carrier, where it belongs. If he had
done his duty and delivered the goods the consignee could have
sold them at the prices there and then prevailing. If the
carrier pays the consignee less than this amount the consignee
himself must bear part of the burden of the carrier’s
negligence. Of course, if the contract provides that settlement
shall be upon some other basis, original cost, for example, the
contract will be enforced. The only other exception to the rule
is that which arises when the goods have already been sold for
an amount which is not so great as the market price at the place
and time at which delivery ought to have been made. If delivery
had been duly made, in such a case the owner of the goods could
not have taken advantage of ruling market prices; he had already
bound himself to deliver the goods at a price which proves to be
less than the market on the day fixed for delivery, and this
selling price is all that he can claim. The object in every
case, except where there has been a special contract of
carriage, is to place the owner of the goods as nearly as
possible in the same position he would have occupied if the
carrier had done his duty and to put upon the carrier, where it
belongs, the whole burden of his negligence and breach of
contract.
=Opinion No. 73.=
LIABILITY OF SHIPPER WHERE PART OF SHIPMENT IS ADMITTED BELOW GRADE.
Question.—I received from a customer an order for a carload of lumber of
a certain grade. A fair sized car would be 14,000 feet. The car arrives
and 2,000 feet of the lumber is admitted by me to be of a grade lower
than the order called for. Can I compel my customer to accept the
balance of 12,000 feet, which is up to the requirements of the order? He
claims that inasmuch as the car I have offered is not all up to grade, I
cannot compel him to accept even so large a proportion as 12,000 feet,
notwithstanding the fact that 12,000 feet will still be a pretty fair
sized car of lumber.
Reply: According to this statement the shipper undertook to
carry out an order and deliver a carload of lumber. According to
the admission 2,000 feet of the carload were contrary to the
terms of the contract. Under the circumstances a carload of
lumber has not been delivered and we doubt very much if you can
find a way to compel acceptance of a carload of lumber that is
admitted on the face of it as not being strictly according to
the terms of the contract.
=Opinion No. 76.=
NECESSITY OF FOREIGN CORPORATIONS FILING CERTIFICATES.
The Association has made some inquiry regarding the necessity of
so-called foreign corporations filing certificates in States other than
those under whose laws the corporation was organized. If any corporate
members are interested and desire information along these lines we shall
be pleased to render such assistance as we can.
In some States the requirements are strict, and recently some Western
States, particularly Oklahoma, have enacted legislation of much
importance to foreign corporations shipping into those States.
=Opinion No. 77.=
COURSE TO PURSUE WHEN LUMBER IS REFUSED ON ARRIVAL.
Question.—We took an order from a customer for a carload of lumber to be
shipped not later than September 15th. The car was shipped within the
specified time but did not reach destination as promptly as it should,
and our customer claims that he has been damaged to such an extent that
he refuses to take in the car, saying it arrived too late for his use.
The lumber is exactly in accordance with the order and is a special
worked car. We will be put to some expense in disposing of this
elsewhere and will probably have to sell it at a lower price. What
method should we pursue?
Reply: There are three courses:
First: The shipper may store the lumber for the buyer and sue
him for the invoice price.
Second: He may retain the property as his own and recover the
difference between the market price at the time and place of
delivery and the contract price.
Third: He may sell the lumber, acting as the agent for the
purchaser and recover the difference between the contract and
the price of resale.
This last course is usually considered best because it gives the
seller the use of the money realized on the resale. Of course in
reselling the lumber care must be taken to obtain the best
possible price, and in the event of the resale the seller is
entitled to recovery from the purchaser of all the costs which
he was obliged to lay out in bringing to pass a sale of the
property in question.
=Opinion No. 78.=
A CARRIER MUST STOP GOODS IN TRANSIT IF PROPERLY ORDERED TO DO SO.
Question.—A makes a shipment to a customer in another State and several
days after he receives information that leads him to believe it prudent
to hold up the shipment and have the goods reconsigned to himself. He
immediately takes the matter up with the initial carriers with the
request that they take immediate steps to stop the shipment in transit
and have same reconsigned to himself, all charges to follow. In the
event that the initial carrier fails to take prompt action and it
develops that the goods are delivered after the initial carrier has been
notified not to deliver them, thereby causing A the loss of the value of
the shipment, cannot A hold the initial carrier responsible for the
value of the shipment?
Reply: When goods are sold on credit and the buyer becomes
insolvent or gives proof of insolvency, before the goods are
delivered to him, it is the right of the seller to take them
back into his own possession and refuse delivery altogether;
this is because one who buys on credit is bound by an implied
contract that he will keep his credit good and be able to pay
for the goods when the due date arrives. When the carrier is
called upon to return the goods to the seller he must act at his
own peril. If he does return them and the buyer was not
insolvent, the carrier must answer to the buyer for his damages.
On the other hand, if the carrier fails to return the goods and
the seller can show that the buyer was insolvent the carrier
must respond to the seller for the value of the goods or for
such part of it as the seller finally loses. The seller, in the
case under consideration, must first establish the fact that he
had a right, within these rules, to stop the goods. Then if he
can show also that this might have been done except for
negligence or delay on the part of the initial carrier, he can
hold that carrier liable for his loss.
=Opinion No. 79.=
ACCORD AND SATISFACTION.
Frequently inquiries are sent us inquiring as to the advisability of
accepting checks marked “In full settlement of account to date,” etc.
The situation is not the same in all States but usually the questions
are covered in the doctrine of accord and satisfaction explained as
follows:
If an account between two parties be actively and openly in dispute and
the debtor sends to his creditor a remittance for a specific sum and
states that such sum is offered in full settlement, and if such sum be
accepted by the creditor he is bound thereby and cannot thereafter
recover anything on the account from his debtor. The mere sending of a
remittance, however, for an amount less than the amount due, where
there is no dispute between the parties, does not affect the right of
the creditor to bring suit for the balance due even though it is stated
in the letter accompanying the remittance that said remittance is in
full settlement.
The question as to whether a dispute is open or active can usually be
easily determined. If the seller and buyer have been in correspondence
regarding a dispute, that determines its activity, and if after such
correspondence a remittance is made marked “In full settlement,” etc.,
the acceptance is binding.
=Opinion No. 80.=
ACCEPTANCE IN NEW JERSEY MAY BE AFFECTED BY STATUTE.
Our attention has been called to a law passed by the New Jersey
Legislature in 1907, from which the following is quoted:
“Where the seller delivers to the buyer the goods he contracted to sell
mixed with goods of a different description not included in the
contract, the buyer may accept the goods which are in accordance with
the contract and reject the rest, or he may reject the whole.”
We are receiving inquiries as to the responsibility of a customer where
he had used part of a shipment of lumber of one description, the
customer claiming the statute above quoted permitted him to use such of
the shipment as was up to grade and reject the balance. Commenting on
the law above referred to where a shipment contains lumber under one
description it would seem to be the law that if the consignor delivers
to the consignee the goods contracted for of the same description
included in the contract, the debtor, with his right of inspection must
either reject or accept, and if the consignee does any act by which it
could be inferred that he is exercising the right of ownership of any
part of the merchandise so shipped and delivered, we believe he is
liable for the entire amount of lumber shipped and received. He cannot
take out what he wants of the order and reject the balance.
The New Jersey law covers mixed shipments, for instance, in a shipment
of barn boards, siding and moulding, the buyer would have the right to
accept either of these items without prejudicing his claim, or waiving
his privilege of rejection on the other two, but where a straight car
of barn boards is ordered the buyer is not privileged to use a portion
of them and reject the balance as not being up to contract.
=Opinion No. 81.=
CONDITIONAL CLAUSES REGARDING TERMS ON LETTERHEADS, INVOICES, ETC.
It seems again necessary to call the attention of our members to the
custom of printing a clause on the top of letter-heads used for
quotation to the effect that agreements or contracts are contingent upon
strikes, accident, other causes, etc. It frequently happens that this
clause is so printed on the letter-head or quotation form as not to make
it a part of the contract, and the following attorney’s opinion is
pertinent:
When a man has a proposal to make to another in writing he begins,
usually and naturally, with the name of the place from which he writes
and the date. Then he makes his proposal and closes by signing his
name. The paper upon which he writes may have printed at the top or
somewhere in the margin the name and address of the firm; the telephone
number and the number of the firm’s post office box; the cable address;
a list of five or six cable codes used by the concern; names of the
various articles in which it deals; facsimiles of some of its
trade-marks; pictures of certain gold medals that have been awarded to
its goods at fairs of one sort or another. Frequently there is much
other matter. There may also be something to the effect that agreements
are contingent upon strikes. Of course, the person to whom the
proposition is addressed is not concerned with any of these things.
What he has to read and consider is the matter found between the
address and the signature, and nothing more. That is the reasonable
interpretation of the matter, and, is, very naturally, the view that
the courts have taken of it. In 153 Ill., 102, to quote only one case,
the Supreme Court of Illinois decided that “the words ‘all sales
subject to strikes and accidents,’ printed as part of the letter-head
of a reply, do not form any part of the contract.” No court could very
well reach any other conclusion, so far as we can ascertain, and no
court has done so.
In the same manner a postscript on a letter or quotation blank is not
an actual part of the contract unless it is signed.
Other members have also attempted to enforce terms printed on their
invoices where such terms were not referred to in the original order or
contract of sale. The following opinion will be helpful in such
matters:
The question of the invoice may be settled with little difficulty.
Nothing upon the invoice is binding upon the buyer, whether it is
written or printed and whether it stands in the body of the document or
in the margin. A contract is made by two persons, and it is binding
only in so far as both have agreed to be bound by it. An invoice is
made, after all the terms of the contract have been irrevocably fixed,
and it is made by only one person. The seller would have things very
much his own way if he could go off alone, after a contract had been
made, and alter or amend or limit or explain it by his own act. He has
no such power, of course, and he cannot put anything upon his invoice
in writing or in print, that will bind the buyer.
=Opinion No. 82.=
INTERPRETATION OF “REASONABLE TIME,” “DUE NOTICE,” ETC.
Frequently our members ask what constitutes shipment within a reasonable
time, or what is the meaning of “due notice,” etc.
The courts are always careful not to give any general definition of
such words as “due,” “reasonable” and the like. What is due or
reasonable notice in one case might not be so in another; and each case
is made to stand on its own facts. “Due notice,” in one case or in any
other, is such notice as, all of the circumstances and conditions being
duly considered, would permit the person receiving the notice to do
that which was required of him. Evidence is to be presented, on the one
side, and on the other, to show whether due notice, within this
definition, was or was not given. Due notice is sufficient notice, and
that which is sufficient in one case may be too much or too little in
another.
=Opinion No. 83.=
IF SHIPMENTS ARE NOT TENDERED IN TIME THE BUYER NEED NOT TAKE THEM.
Question.—In December, 1909, we placed an order for nine cars of lumber
to be delivered in March, 1910. Part of the shipment was made in
February and March, leaving about a third unshipped on the first of
April. We wrote the sellers to cancel the order. They object to this
cancellation, saying that the delay was caused by a breakdown of their
mill which was unavoidable and say for this reason the order is in
force, as they are ready to make delivery of the balance of the goods
to-day, April 7th, one week after the contract date expired. Have we a
legal right to cancel under these conditions?
Reply: The man who runs a mill is entitled to all the profit he
can make from it; but if there is an interruption of the running
it is he who must stand the loss. He cannot ask a customer to
wait for goods, at his own expense and inconvenience, until it
may be found practicable and advisable to start up the works
again. The buyers may refuse to accept the belated delivery, in
the case our correspondent puts, and may demand damages for the
sellers’ breach of contract. If a breakdown of the mill is to
excuse the seller the contract of the sale must contain an
explicit stipulation to that effect.
=Opinion No. 84.=
WHEN A BUYER ACCEPTS A SHIPMENT, A WRITTEN CONTRACT IS NOT NECESSARY.
Question.—A customer called at our yards and arranged to buy six cars of
lumber, asking that one car be shipped at once. He took this car, but
refuses to order the balance out as per agreement. He offers to pay for
what he has already had, but he says we cannot hold him for any more
because the contract was not in writing. Is he right?
Reply: This buyer can be held for the value of the six cars. A
written contract or memorandum is not necessary where part of
the goods have been delivered and accepted. There are three ways
in which a sale of goods for $50 or more may be made valid and
binding: (1) By a written contract or memorandum; (2) by
delivery and acceptance of part of the goods; (3) by payment of
part of the purchase price. Thus a buyer sometimes pays a small
part of the price at the time of the agreement, “to bind the
bargain,” as he says, and it has that effect.
=Opinion No. 86.=
IT IS TOO LATE TO CLAIM DAMAGE FOR DELAY IN SHIPMENT WHEN LUMBER IS
ACCEPTED.
Question.—We took an order from a customer for ten cars of lumber to be
shipped one car every two weeks. The first three cars were shipped on
time, but there was a lapse of four weeks before the fourth car got out
and weather at the mill delayed our getting the balance out as per
agreement, although we finally got off all the cars. When the delayed
shipments began to arrive our customer complained of the delay, and said
he would charge us back with any cost he had to allow his customer. We
objected, but our customer said we agreed to time deliveries, and would
hold us to same. He took in all the shipments, but now wants to charge
us with a loss he claimed he allowed his customer.
Reply: If the lumber was offered to the buyer at a time later
than any date agreed upon at time of sale, the buyer could have
refused to accept it, and would have had a claim against the
seller for damages occasioned by the delay. On the other hand,
the buyer might accept the goods, notwithstanding the delay, if
he chose to do so. He had no option except one of these two,
accept the goods and pay for them, or reject them as not having
been sent in time to constitute a fulfillment of his order. He
could not accept the goods at any other than the contract price.
This is the situation in which the case would have stood if
there had been no correspondence between the ordering of the
goods and their shipment. It is barely possible that the
correspondence may contain some modification of the original
contract, introduced into it by mutual consent, which would give
the buyer the right he now claims. If the original contract was
allowed to stand as made then the buyer has mistaken his remedy
if he had any remedy at all. The goods were offered in
fulfillment of the contract. He could accept them as such, or
reject them. Having rejected them, it is possible that he would
have had a claim against the seller for failure to deliver the
goods in time. This much, however, is perfectly well settled.
The buyer had no right to the goods at all except in fulfillment
of his contract. If he accepts them, the contract is fulfilled
and he cannot turn about and demand damages because it is not
so. If he thinks the delivery is not a good one, because of
delay, let him refuse it and then say that the contract has not
been carried out. It has been or it has not been, and his
acceptance of the goods shows that it has been.
=Opinion No. 87.=
NOTICE TO AN AGENT IS NOTICE TO THE PRINCIPAL
Question.—A, a shipper in the South, ships to B, in New York, a carload
of lumber at a price based on delivery f. o. b. New York City. The
material is offered to B on a lighter at the agreed upon point of
destination, and B, on inspecting it, comes to the conclusion that it is
not what he ordered, and refuses to accept it, simply telling the
railroad that the material is not what he ordered, and refuses to
unload. B does not notify the shipper, A, and the latter knows nothing
of B’s rejection or refusal to accept until about a month later, when he
receives a notice from the railroad that B has rejected the material. A
claims that B should have notified him immediately by mail or telegram
that the material was not what he ordered, but B claims that he was not
compelled to do so and that the fact that the railroad did not notify A
until a month after was no concern of his. Is he right?
Reply: There is no rule of law known to us which would have
required the buyer to notify the seller of his determination not
to accept the goods in this case. If the buyer had taken the
goods from the carrier he would have been bound to notify the
seller of this subsequent rejection. If delivery had been made
at the shipping point instead of f. o. b. destination, so that
the carrier should have been agent of the buyer and not of the
seller, the buyer’s duty to give notice would have been the
same. As the case actually stands it is this: The seller himself
or his agent, which amounts to the same thing, tenders the goods
to the buyer and the buyer rejects them without having taken
them into his custody. The seller or his agent immediately knows
that they are rejected. How could notice add anything to that
knowledge? If it is the seller’s agent who knows, and if the
seller himself does not know, that is because the seller has not
given proper instructions to his agent or because the agent has
failed to follow them if they were given. In neither case is the
buyer to blame. He has notified the seller’s agent that the
goods are refused; that is all he can be required to do. If the
refusal is not justified the seller has his remedy, of course.
If it was justified the seller has sufficient notice of it. Our
correspondent says the seller complains because the buyer did
not notify him “immediately by mail or telegram that the
material was not what he ordered.” That is absurd in any case.
The seller knew as well as the buyer, and knew before the buyer
did whether the goods sent were such as the buyer had ordered or
not. Why should he be notified of a fact that he knew already.
=Opinion No. 88.=
ASSESSMENT OF FOREIGN CORPORATIONS.
Inquiries are frequently made at this office as to the amount of tax
which a foreign corporation must pay in States where a certificate is
issued to such foreign corporations, authorizing them to do business
under the State statutes. In computing the assessment or tax the State
auditor gets his information from the reports which ought to be filed
annually. The amount of tax assessed is predicated upon the amount of
capital actually employed within the State, and if no capital is
employed, no tax can be legally levied.
=Opinion No. 89.=
A PRIVATE CUSTOM MAY BE ESTABLISHED TO SUPERSEDE A GENERAL CUSTOM.
It seems to be a generally accepted custom in the lumber trade that
using a shipment of lumber, even though there be a dispute regarding
the grade, constitutes an acceptance of the shipment as invoiced unless
the shipper has authorized the purchaser to use a part or all of the
lumber in dispute. Our Legal Department has received some claims for
members on disputed shipments where, from an examination of the
correspondence, it appeared the member had a valid claim for the full
amount of the invoice. After negotiations with the buyers it developed
that in past transactions allowances were made on several shipments
where the grade was in dispute, after the lumber had been used. We have
had occasion to go into such matters with our attorneys and the latter
are of the opinion that where a sufficient number of adjustments have
been made on such a basis, practically acquiescing in the buyers using
a part of the lumber, would prejudice a claim on a subsequent shipment
where the shipper attempted to take advantage of his right of recovery.
Frequently disputed claims of this character are small and have to be
tried before a local jury and our attorneys have stated that the custom
of having made allowances in the past after lumber was used would have
some bearing with a jury on a subsequent deal, and possibly be
construed by the court as a private custom apart from the general trade
custom.
=Opinion No. 90.=
AN ORDER MAY BE CANCELED ONLY WHEN BUYER BECOMES INSOLVENT.