Chapter I: Part 1

LUMBER
LEGAL OPINIONS

1910

PUBLISHED BY

NATIONAL WHOLESALE LUMBER DEALERS ASSOCIATION

66 BROADWAY, - NEW YORK

OFFICERS 1910–1911

President ROBERT W. HIGBIE
First Vice-President FRED R. BABCOCZ
Second Vice-President FRANKLIN E. PARKER
Treasurer FRED’K W. COLE
Secretary E. F. PERRY

BOARD OF TRUSTEES

Terms expire in 1911

LEWIS DILL Baltimore, Md.
C. H. PRESCOTT, Jr. Cleveland, O.
G. F. CRAIG Philadelphia, Pa.
A. L. STONE Cleveland, O.
W. W. KNIGHT Indianapolis, Ind.
W. E. LITCHFIELD Boston, Mass.
W. W. REILLEY Buffalo, N. Y.

Terms expire in 1912

R. D. BAKER Pittsburg, Pa.
G. C. EDWARDS Ottawa, Ont.
F. W. COLE New York City
R. H. DOWNMAN New Orleans, La.
F. E. PARKER Saginaw, Mich.
R. W. HIGBIE New York City
HORTON CORWIN, Jr. Edenton, N. C.

Terms expire in 1913

F. R. BABCOCK Pittsburg, Pa.
N. H. WALCOTT Providence, R. I.
T. J. MOFFETT Cincinnati, O.
F. S. UNDERHILL Philadelphia, Pa.
L. L. BARTH Chicago, Ill.
J. V. STIMSON Huntingburg, Ind.
W. A. GILCHRIST Memphis, Tenn.

PREFACE

In presenting “Lumber Legal Opinions” to our members and to some of our friends whom we particularly desire to become members of our Association, not only for the good their co-operation will do us, but for their own benefit as well, we desire to say that this compilation is based upon the practical working out of specific cases for our members during the past few years. An examination will, we think, prove the work to be practical and dependable, and generally to express good common sense, and consequently good law. You will, we hope, find it worth your careful study and guidance. In some instances the opinions may be affected by court decisions of the respective States; some of these decisions are specifically referred to, but, as a rule, it has been our aim to secure opinions covering a general situation.

This gives us an opportunity to remind you of the special work which this Association is constantly undertaking for its members and especially that it is worthy of your earnest co-operation and special effort to bring in new members, so that the influence of the organization may be enlarged and made in every way worthy of its name.

* * * * *

[Sidenote: Purpose of the Association]

The Charter defines the Purpose of the Association to be “to protect the members against unbusinesslike methods in the wholesale and retail trade; to foster such trade and commerce; to reform abuses in such trade or business; to secure freedom from unjust or unlawful exactions; to diffuse accurate information among its members as to the standing of merchants and others by and with whom said trade or business is conducted, and as to other matters to produce uniformity and certainty in the customs and usages of said trade and of those engaged therein; to settle differences between its members, and to promote a more large and friendly intercourse between them.”

[Sidenote: Bureau of Information or Credit Department]

The Charter and By-Laws of the Association defines the duty of this Bureau to be as follows: “To diffuse accurate information as to the standing of merchants.” There are in the records of this Bureau at the present time 28,000 reports showing the financial condition of an equal number of buyers of lumber. In addition to these financial statements all of these buyers of lumber are rated by the Bureau as to their credit standing as well. It is the unanimous opinion of our members who use this Bureau that the reports are superior to those of any other mercantile agency or other source of information. The Bureau makes a specialty of securing reports only on lumber buyers or users, and it therefore furnishes more complete and reliable reports as to moral and financial standing and business methods than any other agency. A system is also a part of the Bureau whereby important information is sent to each subscriber without the subscriber making special request therefor; in other words, it is the aim of the Bureau to keep its subscribers fully and promptly advised of all important business changes.

[Sidenote: Legal and Collection Department]

In connection with and as a part of the Bureau of Information there has been established a legal and collection department. This department handles commercial claims, past due accounts, etc., sent to it with promptness and at a minimum cost when compared with the usual methods employed by attorneys and the courts; also has on file much information, including legal opinions and court decisions which are furnished upon request without charge.

[Sidenote: Railroad and Transportation Bureau]

The Railroad and Transportation Committee through its Bureau is in a position to be of the greatest service to our members, because of the intimate knowledge which our Traffic Manager has of all matters that have to do with our relations with the railroads.

Information and assistance covering a wide range of transportation subjects is being constantly rendered. There are also on file complete lumber tariffs which are kept up to date, and this enables our members to obtain correct information as to rates, routing, etc. Upon request, shipments are traced and prompt deliveries effected. The above services are furnished to our members entirely free of charge.

This Bureau also investigates and collects claims for loss or damage in transit, overcharges in rates, weight, mis-routing, etc. For these services a nominal charge is made based on the actual amount collected. The manager of this Bureau has had years of experience and possesses intimate knowledge of the methods pursued by the various claim departments of the railroads and he is therefore in a position promptly to collect any just claims and frequently has been able to collect claims which our members have been unable to collect themselves. In this connection it may be well to state that all shippers of lumber are entitled to free allowances in weight of five hundred pounds for car stakes used on flat and gondola cars, and this Bureau has secured many refunds on past shipments for members who have not been allowed this free weight. The Bureau is also in a position to compel the railroads not now making the allowances, to do so.

[Sidenote: Arbitration]

The By-Laws define the duties of the Arbitration Committee to be “to settle differences between our members.” The services of this committee are at the disposal of our members at the actual cost of the expenses of three selected men from among the members of this committee who thoroughly understand the customs of the lumber trade. Any member who avails himself of the services of this committee consequently obtains at an actual cost the services of a jury of experts, with the result that differences are settled fairly, equitably and promptly and without any annoyances and undue expenses.

[Sidenote: Legislation Committee]

“To reform abuses” and “to secure freedom from unjust or unlawful exactions” is jointly the work of several Committees. For freedom from unjust and burdensome laws and for laws granting us security and reasonable opportunity in the conduct of our business, we look to the Legislation Committee, whose duty it is to scrutinize acts affecting the trade, to oppose those which oppress, and to favor and forward those which assist.

[Sidenote: Forestry and Conservation]

“To foster such trade and commerce” by perpetuating the raw material which forms the basis of all lumber business, we have our Forestry Committee. The people of this country, with its tremendous sources of timber supply, must be educated to grasp the possibility of a future famine, and needful legislation must be enacted to reduce the problem of reforestation to a practical business proposition before the scarcity of timber shall enhance the values of stumpage to the point of placing trees as a crop in the same class with grain and cotton. The Advisory Forestry Committee links our Association with the country at large in this movement.

[Sidenote: Fire and Marine Insurance]

The services performed by the members of these committees in past years have most fully justified their existence in the reduction which has been obtained not only for our members, but for all lumbermen both in fire insuring companies as well as in marine insuring companies. These savings amount annually to a sum which is estimated at more than one million dollars in premiums.

[Sidenote: Hardwood Inspection]

Our Association stands for not only a national but an international set of rules to govern the grading and inspection of hardwood lumber. In all lines of business nothing is more desirable and necessary than uniformity. It is the aim of the Hardwood Inspection Committee to secure the adoption of a reasonable and universal set of rules for the inspection of hardwood lumber.

[Sidenote: Management]

The Active Management of the Association is in the hands of a board of twenty-one trustees, operating with the Officers and the Executive Committee, through the Secretary and his assistants.

[Sidenote: Headquarters]

The offices of the Association are at 66 Broadway, New York, centrally located in the business section of the city. Members have the unrestricted privilege of using these offices as the headquarters for receiving mail and telegrams, and for business conferences.

[Sidenote: Membership]

The four hundred Lumbermen who are members are ready and willing to testify to the advantages to be derived from connection with this Association. Coming from 28 States and Canada, they are qualified by numbers and ability to cope with all questions affecting the manufacture and wholesale distribution of lumber.

Membership in our Association is restricted to legitimate manufacturers of lumber and wholesale dealers in lumber who are in good standing in the trade.

There is no initiation fee. The annual dues are $50.00, with a charge of $50.00 additional to those who desire the benefits of the Bureau of Information. The Collection Department and Transportation Bureau are open to all members without charge other than the very moderate fees scheduled for actual work performed.

These opinions and abstracts were compiled, and arranged under the supervision of the LEGAL DEPARTMENT, BUREAU OF INFORMATION, W. W. Schupner, Department Manager.

INDEX

The cross index is arranged so as to bring out the several points in each opinion or extract. The number at the left, following each opinion or extract, indicates the number of such opinion or extract referred to in the index. The first number after the subject gives the number of the opinion and the second the page number, for example: after “acceptance of checks sent in full settlement” appear 18–21, denoting that the information can be obtained from opinion 18 on page 21. The other figures after the same subject indicate the other opinions and pages where similar information is given.

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=First number gives number of opinion; second number gives page number.=

_Agent._
Authority of salesman to bind principal, 35–36
Carrier as agent—see common carriers
License in New York City, 3–17
May receive notice for principal, 88–74
See also certificate to do business.

_Acceptance of_
checks sent in full settlement, 18–21, 20–28, 51–49, 66–60, 80–68,
95–77
delayed shipments avoids claim for delay, 87–73
draft does not avoid claim for inferior lumber, 92–76
less than invoice price, 109–89
offer constitutes valid contract, 72–65, 96–79
order through salesman, when it is complete, 96–78
shipment affected by statute (New Jersey), 81–69
shipment affected by warranty, 62–57, 102–83, 108–89
shipment unless promptly rejected, 62–57
shipment validates verbal contract, 65–59, 86–72
shipment when it is all or partially used, 34–36, 90–75, 102–83
shipment when it is retained, 6–17, 31–48
shipment when it is used may depend on a private custom, 90–75

Acceptance necessary to make valid contract, 72–65, 96–79

Accord and satisfaction, 18–21, 20–28, 51–49, 66–60, 80–68, 95–78

Accounting by executor, 23–26

Accounts stated—what does it consist of and what advantage, 101–82

Assignment for creditors voided by bankruptcy, 14–22

Assignment of account by foreign corporation (New York), 63–58

_Banking._
Certification of check releases maker, 45–43, 104–85
Liability of bank for failure to give notice of protest to endorser
of note, 99–81
Protest not always necessary, 52–50

_Bankruptcy._
Avoids assignment of creditors, 14–22
Discharge not prevented by giving bad check, 41–39
Discharge, what will prevent it, 97–79

_Bill of Lading._
in name of buyer may not release seller, 53–51
may be required for surrender of shipment, 29–34
stipulation as to delivery, 11–20
stipulation as to notice of arrival, 25–31
to order retains title, 70–62

Breach of contract—see contracts.

Buyer’s position when lumber offered is not as per contract, 37–33

Cancelling contract when one party guilty of breach, 5–14, 47–44,
67–61, 71–64

Cancelling order by purchaser before accepted by seller’s home office,
96–79

Cancelling order for non-delivery or delay, 43–41, 84–71

Carload of lumber must all be in accordance with order to fulfill
contract, 76–66

Certification of check binds bank and releases maker, 45–43, 104–85

Certificate for individual to do business in New Jersey or New York,
10–22

_Certificate to do Business._
Indiana, 106–86
Kentucky, 106–87
Maryland, 55–52
Michigan, 106–88
Mississippi, 106–87
New Jersey, 17–18, 64–58
New York, 17–19, 26–32, 63–57, 106–88
Ohio, 106–87
Pennsylvania, 19–24
Tennessee, 106–87
West Virginia, 106–86

Change in original order no excuse for refusing shipment, 1–13

Checks sent in full settlement, etc., 18–21, 20–28, 51–49, 66–60,
80–68, 95–77

_Common Carriers._
Agent for buyer, 33–77, 53–51, 70–62, 88–74
Agent for seller, 22–28, 37–33, 70–62, 88–74
Can insist upon acceptance of delayed delivery, 13–47, 56–53
Claim for loss or damage, 13–47, 46–42, 56–53, 59–54, 73–65
Liability as warehouseman, 8–16, 48–44
Liability for delay, 13–47
Liability for delivery without surrender of Bill of Lading, 29–34,
58–54
May return rejected shipment to consignor, 58–54
Must deliver shipment as directed, 11–20, 61–56
Not always compelled to notify consignor that shipment is rejected by
consignee, 61–56
Not bound to act as intermediary, 58–54, 61–56
Notice to, when loading complete, 8–15
Obligation to send notice of arrival, 8–16, 25–31, 28–33, 48–44
Should pay value at destination for lumber lost, 59–55, 73–65
Stopping shipments in transit, 27–29, 79–68, 105–85
When can charge demurrage, 25–31
When liability begins and ends, 8–16, 48–44

Conditional clauses on letter-heads, orders, etc., 24–27, 110–48,
50–46, 82–70

Confirmation of order by home office, 65–59, 96–78

Confirmation as to time of shipment, 36–35

_Contract._
Acceptance of offer constitutes valid contract, 72–65, 96–79
Against liability for delay in shipping, 24–26
Breach for failure to make good delivery, 6–18, 37–33
Breach for non-delivery, 22–28, 30–30, 39–38, 43–41, 84–71
Conditions must all be part of contract, 24–27, 50–46, 110–48, 82–70
Incomplete when only part of car as per order, 76–66
May be cancelled when one party guilty of breach, 5–14, 47–44, 67–61,
71–64
May be void if a mistake in it is obvious, 72–65
Should be in writing and signed, 65–59
Valid by acceptance of offer, 72–65, 96–79

Conveyance in F. O. B. shipment, 42–40

Corporations (foreign) see certificate to do business.

Credit cannot be demanded when business transferred, 40–39

Credit must be kept good, 30–30, 39–38, 47–44, 67–60, 71–64, 79–68,
91–75

Custom—private and general—as to using a shipment, 90–74

Damage claim against carrier, amount of claim, 13–47, 46–42, 56–53,
59–54, 73–65

Damage in transit, who responsible, 8–15, 54–51

Delay beyond shipper’s control, 50–46, 84–71

Delay by carrier, liability for, 13–47

Delay in shipment, liability for, 24–27, 50–46, 84–71

Delayed delivery, acceptance of, avoids claims for damages, 87–73

Delayed delivery by carrier should be accepted, 13–47, 56–53

Delayed delivery need not be accepted as fulfilling contract, 84–71,
87–73

_Delivery._
Delayed, liability for, 24–27, 50–46, 84–71
In installments, 5–14, 43–41, 44–41, 47–44, 86–72, 102–83
Liability for non-delivery, 22–28, 30–30, 39–38, 43–41, 49–45, 91–75
May be stopped when buyer becomes insolvent, 27–29, 71–64, 79–68
May not affect original purchaser, 38–35
Delivery must be complete, 31–48, 76–66
Delivery must be made by carriers as directed, 11–20, 61–56
Not in accordance with contract, 37–33
On consignee’s side-track, 48–45
What constitutes, on F. O. B. sales, 8–15, 37–33, 42–40, 53–50, 70–62

Demand that shipment be returned cannot be enforced, 6–18

Demurrage—see common carriers.

Discount must be in accordance with terms, 18–21, 57–53, 69–61

Draft (accepted) with Bill of Lading does not avoid claim for inferior
lumber, 92–76

Draft with Bill of Lading to order, 70–62

Due notice, what does it mean, etc., 83–71

Endorser on note entitled to notice of protest, 99–81

Executor, time for accounting, 23–26

False statement may prevent discharge in bankruptcy, 97–79

Fire delaying shipment, seller’s liability, 50–46

F. O. B.—what constitutes delivery, 8–15, 37–33, 42–40, 31–48, 53–50,
70–62

Foreign corporations—see certificates to do business.

Freight as a consideration for passing title, 9–23, 53–50, 54–51

Freight rate advance, 110–48

Fraud, statute of, 65–59

Indefinite quantity, order for, 98–80, 103–84

Indiana—necessity of foreign corporations filing certificates, 106–86

Insolvents, shipments to, can be stopped, 27–29, 71–64, 79–68

Insolvency, cause for declining further shipments, 67–61, 71–63, 91–75

Inspection on arrival—privilege of, 62–57, 92–76, 102–83

_Installment Shipments._
Acceptance of one installment validates verbal contract, 86–72
Contract for delivery, not separable, 5–14, 93–77, 102–83,
(see Minnesota case), 107–88
Cancelling for non-payment, 47–44, 71–64
Cancelling order for non-delivery, 43–41
Delay in shipment, 44–41
Using one installment may constitute waiver of objection to
subsequent installments, 102–83

Invoice terms not effective unless part of contract, 82–70

Judgment in one state ground for suit in another, 60–55

Kentucky, necessity of foreign corporations filing certificate, 106–87

Loss for non-delivery of lumber, 49–45

Loss for reselling shipment refused on arrival—method of recovery,
1–13, 5–14, 78–67, 94–77

Lost shipment, amount of claim against carrier, 59–55, 73–65

Maryland, necessity of foreign corporations filing certificate, 55–52

Maximum and minimum amounts in contract of sale, 98–80, 103–84

Measure of claim against carrier, 13–47, 46–42, 56–53, 59–54, 73–65

Michigan, necessity of foreign corporations filing certificate, 106–88

Mississippi, necessity of foreign corporations filing certificate,
106–87

Mistake must be obvious to avoid contract, 72–65

New Jersey—certificate for individual dealing under assumed name, 10–22

New Jersey lien law, 21–32

New Jersey—necessity of foreign corporations filing certificate, 17–18,
64–58

New Jersey statute affects acceptance, 81–69

New York City license for agent, 3–17

New York State certificate for individual dealing under assumed name,
10–22

New York—necessity of foreign corporations filing certificate, 17–19,
26–32, 63–57, 106–88

Non-suit for foreign corporations—see certificates to do business.

_Notice._
As to non-delivery, 49–45
Of arrival by carrier, 8–16, 25–31, 28–33, 48–44
To agent is notice to principal, 88–74
To carrier when loading complete, 8–15
To carrier as to measure of damages, 46–43
What constitutes reasonable notice, 83–71

Offer accepted constitutes valid contract, 72–65, 96–79

Offer may be withdrawn until accepted, 96–79

Ohio—necessity of foreign corporations filing certificate, 106–87

Order, confirmation by home office, 65–59, 96–78

Partial payment validates verbal contract, 65–59, 86–72

Partial shipments—see installment shipments.

Pennsylvania—necessity of foreign corporations filing certificate,
19–24

Postscripts on letters or contracts should be signed, 82–70

Principal bound by notice to agent, 88–74

Principal not always bound by salesman’s act, 35–36

Prompt rejection of shipment necessary to avoid acceptance, 62–57

Protest not always necessary, 52–50

Quantity, order for indefinite quantity, 98–80, 103–84

Railroads—see common carriers.

Reasonable time for shipment, unless otherwise agreed, 36–35

Reasonable time, what does it mean, 13–47, 62–57, 83–71

Refusal of seller to make deliveries, 49–45

Refusing shipment on arrival, 1–13, 5–14, 56–52, 78–67, 94–77

Refusing to send shipping instructions for lumber ordered, 12–20

Rejection of shipment by notice to railroad, 88–74

Rejected shipment may be returned to consignor by carrier, 58–54

Rejection of shipment, carrier not always compelled to notify
consignor, 61–56

Rejection of shipment must be prompt, 62–57

Reselling lumber refused on arrival, 1–13, 5–14, 78–67, 94–77

Retaining lumber shipped constitutes acceptance, 6–17, 34–36

Sales in installments—see installment shipments.

Sales on credit, 30–30, 39–38, 40–39, 47–44, 67–60, 71–64, 79–68, 91–75

Sales of indefinite quantity, 98–80, 103–84

Salesman’s order, when accepted, 96–79

Salesman’s power to bind principal, 35–36

Selling lumber refused on arrival, 1–13, 5–14, 78–67, 94–77

Shipping instructions for lumber ordered, refusal to send, 12–20

Stated accounts, advantage of, 101–82

Statement of assets, etc., if false, may prevent discharge in
bankruptcy, 97–79

Statute of fraud, 65–59

Stopping shipment in transit, 27–29, 71–64, 79–68, 105–85

Storing lumber refused on arrival, 1–13, 5–14, 78–67

Strike delaying shipment, seller’s liability, 50–46

Suit can be instituted in one state on judgment obtained in another
state, 60–55

Suit by foreign corporation may not be maintained because of failure to
file certificate—see certificate to do business.

Taxes of foreign corporations, 89–74.
See also certificate to do business.

Tender in fulfillment of contract should be accepted or rejected as a
whole, 31–48

Tennessee—necessity of foreign corporations filing certificate, 106–87

Terms of sale must be part of contract, 82–70.
See also conditional clauses on letter-heads, etc.

Terms of sale should stipulate discount, 18–21, 57–53, 69–61

Time of shipment, confirmation of, 36–35

Time of shipment, reasonable unless otherwise agreed upon, 36–35

Title, during transit (carrier’s assumption), 61–56

Title, not affected by freight payment, 9–23, 53–50, 54–51

Title, when it passes, 8–16, 22–28, 31–48, 48–45, 53–50, 54–51, 70–62

Title, transfer after purchase holds original buyer, 38–35

Using lumber shipped constitutes acceptance, 34–36, 90–75, 102–83

Verbal contract, when valid, 65–59, 86–72

Warehouseman, carriers’ liability as, 8–16, 48–44

Warranty may survive acceptance, 62–57, 102–83, 108–89

West Virginia—necessity of foreign corporations filing certificate,
106–86

CHOICE OF REMEDIES WHEN LUMBER IS REFUSED ON ARRIVAL.

Recently a member took an order from a dealer in Pennsylvania for a car of lumber, and after order had been forwarded to the mill, the buyer requested that a change be made in a certain size included in the order, which our member advised would be made if shipment had not already gone forward from the mill. It developed, however, that shipment had been made and that it was too late to alter any part of the original order. Upon arrival the buyer refused to accept the lumber on the ground that it was not as ordered.

In connection with this case we have the following opinion from an experienced attorney:

Seller has the choice of one of three things, viz.: First, he
may store or retain the property for the vendee and sue him for
the entire price. Second, he may sell the property, acting as
the agent for this purpose of the vendee, and recover the
difference between the contract price and the price of resale.
Third, he may keep the property as his own and recover the
difference between the market price at the time and place of
delivery and the contract price. Usually, the best course to
pursue would be to elect the second remedy, to wit: that of
acting as agent for buyer and dispose of the carload of lumber
and recover the difference between the contract price and the
price of resale. By proceeding in this manner, they may have the
use of the price realized from the sale, and they have done all
that good faith required to the end that any loss sustained be
reduced to a minimum. Of course, the seller on the resale must
dispose of the goods in good faith and the best mode calculated
to produce their value, whether it be public auction or by
broker, or any other mode that can or could be easily adopted.

=Opinion No. 1.=

A metropolitan dealer writes:

We took an order in writing from a party for 25,000 feet of lumber, 5,000 feet to be delivered the latter part of May, June, July, August, and until all should be taken. Buyer accepted the delivery of the shipments until June, when he refused the shipment, writing us a letter, as trade was dull, to please not ship any more goods on account of order until he notified us. We immediately wrote him that we should insist on his living up to the terms of the contract. We had our truckman make note of the fact that he tendered the goods at their factory and that they refused to receive them. Now, can we sue and collect for these goods, and in the future if they refuse to receive them after tendering them can we sue? If we should instruct our truckman to leave these goods on the sidewalk in front of their place of business, could we sue, claiming this was a proper delivery and collect for same?

Reply: When goods are to be delivered in a number of
instalments, as in this case, the buyer’s refusal to accept
delivery of any one instalment is a breach of the whole
contract; the seller may declare the contract at an end, from
that moment, and may sue and recover any damage that the breach
of contract may have caused him. The seller has the choice of
three remedies. He may keep the goods as his own and sue for the
damages; he may hold the goods as agent of the buyer, informing
the buyer that they will be delivered to him upon his demand,
and sue for the contract price of the goods; or he may sell the
goods, for account of the buyer, giving the latter prior notice
of the time and place of sale and then hold the buyer for any
deficiency. A delivery of the goods upon the sidewalk in front
of the buyer’s place of business would be of no advantage to the
seller and it might make him liable for that part of the goods
if the buyer neglected to take charge of them. The seller cannot
sue for the price of each instalment, when it has been tendered
and refused. This would be to put the buyer to the expense of
defending a number of suits, all arising out of one contract,
and this the law does not sanction. Though it calls for delivery
at different times, the contract is one and not several, and it
may be made the basis of only one action. Suit may be brought as
soon as there is a breach of it, it is true, but that suit must
be for all the loss arising by reason of the buyer’s
unjustifiable act, not simply for the value of the single
instalment tendered and refused. When any suit is brought the
court will assume that it is for all the loss arising out of the
contract and further suits upon the same cause of action will be
barred.

=Opinion No. 5.=

INTERPRETATION OF “F. O. B.” SHIPPING POINT OR DESTINATION.

As there seem to be many opinions on the question of “ownership in transit,” or delivery of lumber F. O. B., and as the association has received numerous inquiries from members covering various phases of the subject, the question has been submitted by the association to Mr. Walter W. Ross, General Counsel to the Car Stake and Equipment Complaint Executive Committee, and an experienced railroad attorney, for opinion. While it must be conceded that such an opinion can cover only a specific case, it will probably be of value to many of our members when the question of ownership in transit arises, and if followed, if adopted as a practical solution, will help to bring about a better understanding between shipper and buyer, always keeping in mind however, that the laws differ in various States.

His opinion is as follows:

If A sells lumber to B and the contract of sale provides that A
shall deliver the lumber free on board (F. O. B.) cars at a
certain point, the title to the lumber remains vested in A, the
seller, until he has delivered the lumber at the point agreed
upon to the buyer or his agent the carrier.

If the lumber is damaged while in the possession of the carrier
in transit to the point of agreed delivery, the question of the
loss is between the seller A and the carrier. If the lumber is
damaged after delivery at the point agreed upon, but while in
possession of the carrier the question of loss is between the
buyer and the carrier.

The question arises what constitutes delivery f. o. b. In the
case of shipment of lumber by rail it is customary for the
shipper to load the lumber properly on the car. It has been held
by some of the courts that it is not necessary for the shipper
having completed the loading to give formal notice of delivery
to the carrier in order to place the consignment in the
possession of the carrier—(but it is safer to notify the carrier
of such fact thereby eliminating a possible controversy). If the
sale is f. o. b. point of shipment the delivery by the seller to
the carrier is delivery to the buyer and from that time the
carrier until it has performed its contract of transportation is
the agent of the buyer. This principle of law is subject to the
exceptions arising under the law of stoppage in transit, as for
instance if the buyer becomes insolvent after the shipment has
been made—but before arrival at destination.

It has been held that the liability of the carrier begins as
soon as the consignment has been placed in its possession, even
though the bill of lading has not been issued.

The question also arises when does the liability of carrier as
such terminate by delivery to the consignee.

The general rule is that when the carrier has placed the car of
lumber on the track which is the usual and customary place for
the consignee to unload and consignee has had reasonable
opportunity to unload, then its liability as carrier terminates
and it is liable only as a warehouseman while the consignment
remains on such track, which means that the carrier is required
to exercise only the degree of care which an ordinarily prudent
person would exercise to protect his property from loss or
destruction. In some states the statutes provide, or the courts
hold, that the carrier having placed the car in such position
for unloading by the consignee, it is then the duty of the
carrier to send due notice of that fact to the consignee; and
until such notice and reasonable opportunity has been given, the
carrier’s liability as such continues. In other states the
carriers are not required either by statute or rule of the
courts to give such notice of arrival of consignments, it being
held to be the duty of the consignee to keep himself informed as
to the time of arrival of his freight. This rule is gradually
being superseded in most states by the more reasonable rule that
it is the duty of the carrier to send due notice to consignee of
arrival of freight.

=Opinion No. 8.=

BUYING AND SELLING AGENT NEEDS NO LICENSE IN NEW YORK CITY.

Very often out of town members who contemplate opening an office in New York City, inquire as to whether it is necessary to obtain a license in order that their agent may legally represent them. The following appears to cover the ground:

Question from Baltimore, Md.—I am acting here as a buying and selling agent for a lumber company outside of the State, they supplying me with the money with which to buy the lumber to ship to them on their orders, and I crediting them with the proceeds of the sales of lumber shipped to me to sell for their account, my compensation being a commission on the sales and purchases. Under these conditions I do not pay a license here in Baltimore, but as I expect shortly to move the office to New York, I will thank you to let me know if I would require a license to conduct this business in that city, and if so, where should I apply for same?

Reply: No license is required in New York City in order to carry
on such a business as our correspondent describes. One who
simply buys and sells here, as agent, need not make a report or
pay a fee to any public officer. But if at any time he carries
on a general mercantile business, as agent, he must register and
pay a fee. The statute is as follows: “Any person now carrying
on or conducting a general mercantile or manufacturing business
within this State, or hereafter commencing such business at or
in a fixed location as agent or manager for another or others,
shall—at the commencement of such business, file a sworn
statement, verified by such agent and principal or principals,
in the county clerk’s office of the county within which said
business is carried on, stating the nature of the business and
the full name and residence of such principal or principals.”
The fee is $1.00, and failure to file the statement is a
misdemeanor.

=Opinion No. 3.=

RETAINING LUMBER SHIPPED CONSTITUTES ACCEPTANCE.

The acceptance of lumber, where the grade is disputed, is the subject of the following correspondence:

Question.—We recently shipped a car of lumber to a dealer, who claims that same is not up to the grade bought. We have asked him to return shipment and guaranteed to replace same with material that was absolutely right. He refuses to do so, and states that he will not return it until he receives lumber to replace the lot he refused to accept. We have sold this car to another party, who asks for delivery. We believe that the original purchaser is making an unjust claim. Can we demand that the lumber be shipped back to us, as the party has refused to accept same and has not paid for it? In case he refuses to return it are we under any obligation to make a second delivery?

Reply: The purchaser in a case of this kind has no right to any
material that previously belonged to the seller except under the
contract which he has with the seller. When the seller sends the
purchaser any lumber and the purchaser keeps it, he keeps it
either wrongfully or else as being in compliance with his
contract. But the courts will not allow any man to claim, for
his own advantage, that he is a wrong-doer when there is a
possible and reasonable explanation of his act which makes it
lawful. For this reason, among others, a buyer of lumber when
there has been no warranty of quality, who retains the lumber
sent to him, and refuses to return it, is always held to retain
it as being perfectly satisfactory and in compliance with the
contract. Any complaint he may make about the delivery is of no
importance; it is his act that counts. The courts will insist
upon taking the most charitable view of his conduct, whatever he
may say, and the most charitable view is that he is doing right,
and not wrong, and is keeping the lumber because it is a good
delivery under the contract. Our correspondents can demand that
the lumber be returned if they choose to do so, but they cannot
enforce the demand. If the buyer does return the lumber, in
answer to such a demand, he will have a claim against the
sellers for another delivery, and a valid one under the
contract, or for a breach of the contract in failing to make a
good delivery in the first place. If no such demand is made, or
if it is made and not complied with, the buyer can be compelled
to pay the contract price of the goods on the theory that his
holding them is an acceptance under the contract. It is idle for
him to say that he does not accept them; keeping them is
acceptance. No second delivery need be made unless the first
delivery is promptly and properly refused and returned.

=Opinion No. 6.=

OBTAINING CERTIFICATES PERMITTING FOREIGN CORPORATIONS TO DO BUSINESS
AND MAINTAIN AN ACTION IN NEW YORK OR NEW JERSEY.

Almost every State in the Union, and especially the States of New York, New Jersey, Pennsylvania, Massachusetts, Connecticut, etc., require foreign corporations, that is, corporations formed under the laws of other States, to procure a license or certificate to do business within such State, and in default thereof penalties or fines are imposed.

In considering the necessity of such license the first question is to ascertain whether the corporation is transacting its business in a manner which could be interpreted as “doing business” in its legal sense, and this means generally filling all orders obtained in that State when more than two or three incidental orders have been obtained or the maintaining of a place of business in such State. The difficulties in obtaining the certificates are not great but the details are technical and the expense ranges from $10 upwards, depending upon the laws under which the company is incorporated, there being retaliatory laws in some States. The average expense is about $25, and the certificates are generally good for an indefinite period; the only annual requirements being a formal report which does not involve the giving of the details of the corporation’s business and there is no annual taxation unless the corporation has both property and is doing business within such State.

In many cases where valid claims exist in favor of a corporation of another State against a New York debtor, a serious obstacle arises where the foreign corporation has not obtained a certificate to do business in this State, and, therefore, cannot maintain the action. By the statutes as last amended this prohibition covers also any one to whom such foreign corporation has assigned the claim for collection. The provisions of the New York corporation law in this matter are easily complied with. There has to be a sworn copy of the charter of such foreign corporation and the designation of some person on whom process can be served.

The objection to complying with the statute in this respect is the possible liability to taxation after the corporation gets its name on the State Register. All that is taxable in New York State is the amount of capital used in the State, and this would be so small as to be unimportant provided, of course, that the proper returns to the tax departments at Albany and New York are made out each year. This, we understand can be done in ordinary cases, at a charge of $10, for the two reports, one to Albany and one to New York, and this sum is a very small tax to pay for what must be the advantages of selling lumber and maintaining the legal rights connected with such sales in New York State.

=Opinion No. 17.=

A CARRIER IS BOUND TO DELIVER LUMBER AS DIRECTED.

Question.—My shipper consigns me a car of lumber and marks the bill of lading “via P. R. R. delivery.” If this car arrives by the C. R. R. of N. J., can I be compelled to accept same from them, or does my original contract entitle me to insist on P. R. R. delivery?

Reply: One of the important and imperative duties of a carrier
is to deliver the lumber as he is directed to deliver it. A
direction to deliver it to a specified connecting carrier or
delivery concern cannot be fulfilled by delivering it to
another, any more than a direction to deliver it to a certain
consignee can be carried out by delivery to another individual.
If the carrier makes a wrong delivery, as here described, he is
guilty of conversion. The consignee is not bound to accept the
lumber from the connecting carrier to whom it has been wrongly
delivered. He may sue the original carrier for the value of the
lumber as soon as he learns that a different delivery from that
directed by the bill of lading has been made.

=Opinion No. 11.=

IF A BUYER REFUSES TO TAKE LUMBER ORDERED THE SELLER HAS A CHOICE OF
REMEDIES.

Question.—Some time in March last we received an order for two cars of 32–inch lath. A few days after the order came to hand we received a letter from our customer requesting us to defer shipment on account of the threatened strike in the coal regions, which request was complied with. The difficulties between the miners and operators have of course been adjusted and operations were resumed some time ago, but our customer has so far failed to furnish shipping directions for the lath, which we had cut especially for his order and piled on our docks ready for shipment at the time his request was received to hold the order. Would we not be justified in loading this stock up and putting cars in transit in accordance with the original order and insisting upon acceptance of same upon arrival?

Reply: This buyer has not, in our opinion, lost his right to
select the route by which the goods shall be shipped to him.
There is no question that his delay in giving such instructions
has been unusually great, but the sellers on their part have
given no indication of an objection to such delay. It is clearly
their right now to demand that he send shipping instructions
immediately and to inform him that they will send the goods by a
route of their own selection if he does not name a route by
return mail; then, if the buyer does not reply, or if he refuses
to issue shipping instructions, or undertakes to repudiate the
contract, the sellers will have a choice of three remedies: They
may ship the goods to him by any suitable carrier and compel him
to pay for them; they may inform him that the goods are held
subject to his order, to be shipped in whatever manner and at
whatever time he may select, and then compel him to pay for
them, or they may name a time and place at which the goods will
be sold at auction for his account, giving him sufficient
opportunity to be present at the sale, and may then sell them at
such time and place, holding him liable for the necessary
expenses of advertisement and sale and for any amount, by which
the selling price may be less than the contract price.

=Opinion No. 12.=

UNDER CERTAIN CONDITIONS THE ACCEPTANCE OF PART OF A DEBT DOES NOT
RELEASE THE REMAINDER.

Question.—One of our customers recently sent us a check for less than the amount of his bill, saying in his letter that he was remitting the full amount due us. If he had taken advantage of the regular discount on his last purchase (which he did not do) the amount now due us would have been within a few dollars of the size of the check, but even then the check would not represent the exact amount due to us. He does not say in so many words that he is claiming a discount, just sends the check and writes, “enclosed please find amount of my bill to date.” Something of this kind happens rather frequently, and we would like you to advise us whether we must forego using that check until we can write and straighten out the matter with him. More is due to us than he has paid us, and it seems a hardship that we should be kept out of even this part of our claim during the week or month which it may take to have a full understanding with our customer.

Reply: The creditor, in a case of this kind, is justified in
cashing the check and still demanding the amount yet due; this
amount he can recover by suit if it is not paid voluntarily. The
buyer, it seems, was not entitled to a discount, and he has not
made a specific claim to any. Being indebted to a certain amount
he simply sends a check for part of that amount. He does not say
that he claims a discount. If this check for less than the full
amount due had been accompanied by a demand that it be either
accepted as payment in full, or else returned, a different
question might have arisen; but even then the check might safely
have been cashed under the facts of this case. This case is
simply that of a man who owes $100 and who sends his creditor a
smaller amount. The proper course for the creditor is to accept
what is sent as a payment upon account and still maintain his
claim for what is yet due.

=Opinion No. 18.=

BANKRUPTCY AVOIDS AN ASSIGNMENT FOR CREDITORS.

Question.—We made a sale to a firm who became embarrassed and offered a compromise to their creditors. We accepted the settlement offered, 25 per cent. cash and 25 per cent. by note at one year. The note given us was not paid and after some delay the concern now goes into bankruptcy. Please inform us whether our claim in the bankruptcy proceedings would be the note only or the full amount due under the original sale?

Reply: The compromise in this case, in so far as it has not been
carried out, will probably be set aside and all the bankrupt’s
estate be held liable to his creditors under the bankruptcy
proceedings. It has been held that “an adjudication of
bankruptcy at the instance of the bankrupt’s creditors on the
ground of a general assignment, avoids such assignment and
subjects the property assigned to the jurisdiction of the
bankruptcy court to be administered under the Bankruptcy Act
which the creditors have invoked.”

Opinion No 14.

AN INDIVIDUAL MAY TRANSACT BUSINESS UNDER A CORPORATE TITLE IN NEW
JERSEY.

Frequently the question arises regarding a person’s legal right to start business under a corporate title; for instance, as “Can John Smith conduct business as the Pine Lumber Company,” etc.

Question from New Jersey.—A person wishes to start a lumber business in New Jersey. Can he adopt a style such as “The Crescent Lumber Company” without being incorporated, the manager being the sole proprietor? Is there anything necessary to be done in such a case beyond hanging out his sign at his place of business?

Reply: In New York no person is now allowed to establish a
business under any name, corporate or individual, except his own
name, until he has first placed on record in the county clerk’s
office, in the county in which the business is to be carried on,
a statement of the facts. So far as we can find, however, there
is no similar statute in New Jersey. It is a comparatively
recent law in this State and there are not many other States
that have adopted it. The public cannot be misled to its
detriment by such a method of doing business as our
correspondent proposes, and there is no common law rule against
it. If any creditor supposes that the business is being carried
on by a corporation he will not be harmed by the mistake,
because the liability of an individual owner, or of a firm, is
greater than that of the stockholders of a corporation. A
creditor who learns that his business belongs to an individual,
instead of a corporation, will be benefited by the knowledge,
not damaged. If there should be a statute just enacted requiring
registration, the county clerk will know of it.

=Opinion No. 10.=

WHETHER FREIGHT IS PREPAID OR ALLOWED DOES NOT AFFECT TITLE TO LUMBER.

Question.—A dealer in Buffalo sells a car of lumber to a dealer in Baltimore with the understanding that freight is to be allowed from Buffalo to Baltimore. Please state whether there is any distinction as to the ownership of the lumber in transit, whether the Buffalo dealer prepays the freight in Buffalo or allows the Baltimore dealer to deduct the amount of freight in settlement. If the freight is prepaid in Buffalo at the time of shipment, and the lumber be lost in transit prior to delivery, is the ownership of the lumber vested with the Buffalo or the Baltimore dealer?

Reply: If lumber is sold with an understanding that the seller
is to pay the freight, it makes no difference at all, as to
ownership during transit, whether freight is prepaid and
included in the price, or whether it is deducted from the price
and left for the buyer to pay. A seller is not bound to carry
the lumber to its destination and deliver it there unless he has
expressly agreed to do so. This is true whether the seller pays
the freight or not; in either case a valid delivery,
transferring risk and title, may be made, if the seller so
chooses, at the beginning of the transportation unless the
seller has agreed to deliver the goods elsewhere.

=Opinion No. 9.=

OBTAINING CERTIFICATES PERMITTING FOREIGN CORPORATIONS TO DO BUSINESS IN
PENNSYLVANIA.

A recent attorney’s opinion contained some valuable information regarding the filing of certificates in New York State, permitting foreign corporations to transact business in that State and maintain an action. We have been asked for information regarding the requirements of the Commonwealth of Pennsylvania in this matter and our attorney at Philadelphia, William S. Furst, Stephen Girard Building, has forwarded the following opinion.

Herewith follows an opinion embodying the essential points in re foreign corporations doing business in the State of Pennsylvania.

The Act of Assembly approved April 22, 1874, provides that no foreign corporation (this includes corporations created by other States) shall do any business in this Commonwealth until such corporation shall have established an office and appointed an agent for the transaction of its business therein, and it shall not be lawful for any such corporation to do any business in this Commonwealth until it shall have filed in the office of the Secretary of the Commonwealth a statement under seal of such corporation, and signed by the President or Secretary thereof, showing the title and object of said corporation and the name of its authorized agent, with a penalty attached thereto for violation, that a person shall be guilty of a misdemeanor, etc.

The words “doing business” do not include a sale in a foreign State, although the goods are delivered in this State, or taking orders, or making sales by salesmen through agents going into Pennsylvania from another for that purpose.

In short, a foreign corporation engaged in strictly interstate commerce, may advertise its goods, send agents to solicit orders, take orders, make contracts of sale respecting the same, and ship them to customers in Pennsylvania, without violating the act, and may sue to recover the price of any merchandise without filing the statement required by the act, although the foreign corporation in question has no office or place of business in Pennsylvania and no part of its capital invested here.

A foreign corporation, which has not complied with the Act above stated, but has an office or place of business in Pennsylvania, or any of its capital invested within the State, cannot enforce contract rights in the courts of Pennsylvania.

It has been recently decided by the Supreme Court of the State of Pennsylvania (the court of last resort) that a foreign corporation which invests most of its capital in the State of Pennsylvania for a period of six months while constructing a railway, employs large numbers of men, but does not file a statement in the office of the Secretary of the Commonwealth, as required by the provisions of the Act until two months after completion of the work, cannot recover for labor and materials furnished in doing such work.

With respect to the taxes imposed upon foreign corporations doing business in the State of Pennsylvania, the Act of May 8th, 1901, provides that all foreign corporations shall pay to the State Treasurer for the use of the Commonwealth a bonus of one-third of one per centum upon the amount of their capital actually employed or to be employed wholly within the State, and a like bonus upon each subsequent increase of capital so employed. This is not an annual tax. It has been defined to be the price paid the Commonwealth for the privilege conferred on such corporation by its charter. It is therefore in no sense a tax, and the payment thereof does not relieve any corporation from any tax to which it is otherwise subject.

Respecting the taxation of foreign corporations, they are taxable like domestic corporations on so much of their capital stock as is invested within the Commonwealth under the provisions of the Act of Assembly approved June 8th, 1898. The tax is imposed annually at the rate of five mills upon each dollar of the actual value of the whole capital stock of all kinds invested or represented by capital invested within the State.

The tax is settled by the accounting officers upon the basis of a report required to be made by all companies subject to the tax, and particularly upon the appraisement of the value of the stock contained in such report. The report is filed between the first and fifteenth of November in each year.

Foreign corporations are also obliged to file a bonus report annually, from which should appear whether there has been any increase in the amount of the capital actually invested within the State, so that the proper bonus charges may be made upon any such increase as above stated.

=Opinion No. 19.=

PAYMENT OF CLAIMS BY AN EXECUTOR—TIME FOR FINAL ACCOUNTING.

Occasionally the question arises as to what length of time an executor has to close an estate, and the following, particularly the second section, may be helpful:

Question—Can an executor pay a bill of $10 or less, or what is the largest amount he can pay, without having the claim verified before a notary, according to law?

2.—Within what time do the laws require that an executor’s accounts shall be made up and ready for final settlement?