Chapter III: Part 3

Reply: Any provision that is intending to form part of a
contract ought to be introduced into it in express terms or else
referred to so that there can be no mistake regarding it. In the
particular case under consideration the clause should be
incorporated in the contract or acceptance, or the contract
should state that the sale is made subject to the terms and
conditions printed across the top of the paper. Either one of
these would be a simple, easy procedure and would remove all
doubt. A contract usually begins with the name of the place and
a date, or with the names of the parties; and it ends with one
or more signatures. Both parties are bound by all that lies
within these limits and by everything beyond that is referred to
as forming part of the agreement; but neither party is, as a
rule, expected to look anywhere else—even around the margins of
the same paper—to ascertain his rights and liabilities. It may
be possible, in some cases, to make a provision printed on the
margin of the paper containing the contract part of the contract
itself, but there is always more or less doubt upon this point,
and no doubt should be left where it is so easy to make the
meaning plain. If the marginal printing is to be useful at all
it will be mainly in connection with a statement that the
contract was made subject to a certain usage of the business, or
a certain custom of that particular house, and that this custom
was well known to the buyer; as proof of this fact the words
across the top of the paper would be useful.

=Opinion No. 50.=

A CARRIER IS LIABLE FOR ANY LOSS CAUSED BY HIS DELAY IN DELIVERING
GOODS.

Question.—Inform us what recourse we would have against a railroad for a shipment of lumber from Buffalo to New York, which has already been on the road eighteen days, as shown by the shipping documents, and has not arrived yet. In the meantime the market dropped some 10 per cent. in price. This lumber was bought f. o. b. Buffalo.

Reply: A carrier is bound, not only to deliver the lumber
entrusted to him for carriage, but to deliver it with reasonable
promptness. The courts recognize the fact that promptness of
delivery has an importance second only to the fact of delivery
itself. What is to be held as constituting reasonably prompt
delivery is to be decided in accordance with nature of the goods
and all the circumstances of the particular case; it is such
delivery as carriers of the kind in question, carriers by rail
or vessel, as the case may be, ordinarily make in handling goods
of the same kind as those in question. When the time arrives for
delivery to be made, under this rule, and the goods are not
delivered the consignee is entitled to sue for their value at
destination on the day on which delivery ought to have been
made. If the carrier is able to deliver the goods, and offers to
do so, at any time before he has been required to pay for them
as goods lost, the consignee cannot refuse to accept them and
still recover their full value. He is bound to accept the goods
whenever they are tendered, no matter how great the delay may
have been; but in such a case he still has a valid claim for any
loss he may have sustained as a result of the delay. His damages
are at least as great as that amount by which the market value
of the goods on the day of delivery is below their market value
on the day on which delivery ought to have been made; to this is
to be added any other loss or expense brought upon him as a
direct result of the carrier’s delay.

=Opinion No. 13.=

THERE IS NO REMEDY AFTER ACCEPTING LUMBER.

Question.—I purchased some lumber from a party in New York State at a given figure f. o. b. shipping point, and had it forwarded by the railroad company according to my instructions. Upon arrival my customer reported to me a shortage of several hundred feet, of which I in turn notified the party from whom I bought. He stated that he hardly thought such a shortage was possible and asked me to retally the lumber. I communicated with my customer, who told me that the shortage reported was correct, and that he had used up the lumber as he was in need of the lumber, although I requested him to hold it intact. My customer in settling with me deducted for the full amount of the shortage, whereas the party who sold to me refuses to accept settlement on this basis, offering me an affidavit from his shipper that the quantity alleged to have been shipped by him was correct. Am I compelled according to the New York court rulings to remunerate the party who sold to me as per his invoice? He claims that the lumber ceased to belong to him when he placed it at the railway company’s depot subject to my instructions. For this reason he demands full payment. I am in a position to furnish an affidavit from the party to whom I sold the lumber to the effect that the shortage actually occurred at destination, although the lumber was received in good condition.

Reply: This lumber was sold f. o. b. shipping point and it is
true, as the seller says, that title passed to the buyer at that
point. This fact, however, does not excuse the seller for
delivering short count or tally, if he made such delivery. He
undertook to deliver a certain quantity of goods at the shipping
point, and his contract obligation was not fulfilled unless he
delivered that quantity. It does not appear, however, that the
contract was such as to allow the buyer to accept less than the
quantity sold at a pro rata price. As the contract is described
to us, it was a sale of a definite quantity for a stipulated
price, with no other provision. That being the case, the buyer,
when tender was made to him had no choice other than to accept
the tender as satisfactory, or else to reject it and claim
damages for breach of contract. He did accept the goods and he
used them. It is too late now for him to say that the tender was
in any respect unsatisfactory. The buyer might have rejected the
goods on account of short tally, and then he could either have
claimed damages for breach of contract, as we have suggested, or
he could have communicated with the seller, offering to take the
shipment at less than the contract price—could have made a new
contract, in short. He did neither. He accepted the goods. He
will not be heard now to say that they were, in any respect, not
such goods as the contract called for. Our correspondent can be
compelled to pay for these goods the full contract price, and
the person to whom he sold them can be compelled to do the same.

=Opinion No. 31.=

PROPOSED FREIGHT RATE ADVANCE.

In view of the agitation regarding the proposed advance in freight rates it is suggested that our members protect themselves as fully as possible in making quotations. It is believed advisable to use a clause either printed or stamped on the letter-head or quotation stating substantially the following:

“All quotations made and orders accepted are based on present
freight rates.”

Where this clause is used it should be printed or stamped in such a way that it becomes a part of the quotation or correspondence. Stamping the clause on the margin of a letter-head is considered inadvisable.

=Opinion No. 110.=

ACCEPTANCE OF AN AMOUNT OFFERED AS “PAYMENT IN FULL” MAY OR MAY NOT
CANCEL THE DEBT.

Question—A customer sends me a check for a certain amount and inserts the following on the face of his check: “In full to June 1.” Does my indorsement give my receipt in full to this date or not? Can I indorse his check and write him a letter advising him that I am using the check only to apply on the account?

Reply: Suppose A owes B a certain sum of money and there is no
doubt or dispute as to the amount actually due. Then if A pays
to B less than the amount, in cash or by check, saying at the
time, “this I tender as payment in full,” B may keep the money
or cash the check without losing the right he previously had to
demand what was still due and unpaid. No man, without the
consent of his creditor, can discharge the whole of his debt by
paying part of it, if the amount is liquidated and certain.
Suppose, however, that there has been no agreement as to the
amount due or that there is an honest and well-founded dispute
concerning the matter. Then when the debtor sends any reasonable
amount, with a statement that it is tendered and is to be
accepted, if at all, as payment in full, that is his estimate of
the sum due. The creditor cannot accept the tender without
accepting the estimate; if he does accept the tender the amount
due is thereby agreed upon and fully paid. If the creditor is
not willing to accept the tender as payment in full he must
return it. Then an agreement may be reached as to the amount
actually due, or if the two cannot agree the matter may be left
to the courts. The debtor has this privilege, in a case of this
kind, because it would be unfair to him to allow the creditor to
keep what the debtor honestly believed to be the whole sum due,
and still allow him to sue for more, when, if he had brought his
suit in the first place it is possible he might not have been
able to recover even as much as the debtor has already paid him.

=Opinion No. 51.=

PROTEST IS NOT NECESSARY TO HOLD PARTIES PRIMARILY LIABLE.

Question—Is it necessary, or is it in any way helpful to have a note or an accepted draft protested, regard being had only to the maker of the note or the acceptor of the draft?

Reply: The object of a protest is to inform a person who is
secondarily liable upon a bill or note that the person primarily
liable has been properly called upon and has refused to pay the
amount. There could be no object in conveying formal information
of this kind to the parties primarily liable, because they know
what the facts are, they know, that is, that demand has been
duly made of them and that they have failed to comply with it.
Accordingly it is held that protest and notice are not necessary
to charge the maker of a promissory note or the acceptor of a
bill of exchange. We believe this to be the sound rule in all
cases.

=Opinion No. 52.=

F. O. B. SHIPMENTS.

Question.—Please advise us, what the position of a shipper is who takes an order for a full carload of material at a price including freight to destination, but where the shipper takes out a bill of lading in the name of the buyer. The shipper claims he simply guarantees freight to destination, and having the bill of lading issued in the name of the buyer places the risk of loss or damage in transit on the buyer.

Reply: A buyer of goods takes title to them wherever they may be
at the time of the sale unless the contract provides otherwise
or unless the seller by some act of his own reserves the title
to himself during transportation. A mere agreement on the part
of the seller to pay the freight is not sufficient to rebut the
presumption that title was to pass on delivery to the carrier.
When goods are sold f. o. b. destination the seller undertakes
to carry them to their destination and there deliver them. They
are his goods, and the risk is his, until he has tendered
delivery at that place; this is true because the buyer cannot be
compelled to accept a tender made at any other place; but a mere
agreement that, for a given price, the seller will furnish the
goods and pay freight upon to a given place, does not make him
liable for their delivery in that place. If he was bound to
deliver them at destination the contract would say nothing about
freight; an obligation on the seller’s part to deliver the goods
at destination is, in itself, an obligation to pay freight upon
them or to carry them himself, and it is not for the buyer to
choose which he shall do. If the agreement to pay freight did
place the risk on the seller during transportation he could not
escape that obligation by his own act in taking out a bill of
lading in a particular form. If he was at liberty, under the
contract, to deliver the goods at the shipping point, however,
he could increase his obligation by his own act, and taking the
bill of lading to his own order would, if not otherwise
explained be sufficient for this purpose. In this case the bill
of lading was taken in the name of the buyer, and that is
consistent with the seller’s claim that a valid delivery could
be and was made at the shipping point and the carrier was an
agent of the buyer.

=Opinion No. 53.=

PAYMENT OF FREIGHT NOT ALWAYS TRANSFER OF TITLE.

Question.—Please advise us if in selling lumber freight paid to destination we are liable for damage in transit. As we understand it, when we sell lumber delivered at destination we are liable, but when we sell it freight paid the buyer is liable.

Reply: The person who owns goods while they are in transit must
bear the expense of damage or loss if they are not insured. If
the goods have been sold the title during transit may be either
in the seller or the buyer. It is sometimes perfectly clear that
title is in one or the other, while in some cases it is a very
difficult question. Payment of freight is one item to be taken
into consideration, but it is generally not alone absolutely
conclusive of the question one way or the other. Our
correspondent is correct in saying: “When we sell goods
delivered at destination we are liable.” It is equally correct
to say: “When we sell them, otherwise than for delivery at
destination the buyer is liable.” It is not always true,
however, that the buyer is liable when the seller pays the
freight. Goods that had not been ordered, for example, or goods
slightly different from those ordered might be sent in the
expectation that the buyer would accept them. In such a case the
seller would probably prepay the freight but title would remain
in him, and the risk would be his, until the buyer had received
the goods and accepted them. If the contract requires the seller
to pay freight that is good evidence, if there is nothing on the
other side to offset it, that title and risk are to be in the
buyer during transit; this is so because if the seller was bound
to deliver the goods at the buyer’s end of the route he would be
bound to pay the freight, as a part of this obligation, and
would not separately agree to pay the freight. If the contract
is silent on that subject the mere fact that the seller pays the
freight is not sufficient to show that he reserves title. All
the facts of the case are to be taken into consideration, the
presumption being that title passes when the goods are
delivered, properly directed, to the carrier. If the buyer
claims that title did not pass to him at that instant the burden
of proof is on him, and the mere fact that the seller paid the
freight is not alone sufficient to overcome the presumption.

=Opinion No. 54.=

FILING CERTIFICATES IN MARYLAND.

Some of our members have recently received communications from the Secretary of State of Maryland calling their attention to a law which went into effect in Maryland June 1st, 1908, regarding filing certificates permitting foreign corporations to transact business. The Secretary of State’s letter reads in part as follows:

“The name of your company appears on the records of this office as a Foreign Corporation doing business in Maryland. As the recently enacted Act of the Legislature repeals the law under which you are authorized to transact business in this State, it will be necessary for you to comply with the provisions of the new law, a copy of which I enclose herewith, together with a blank form, convenient for use in connection therewith.”

Our attorney at Baltimore writes as follows regarding the necessity of complying with the provisions of the law above referred to:

“It is not necessary for a foreign corporation who maintains no office or agency, or has no assets in this State, to file a certified copy of its charter, the required certificate under the act and the franchise tax. A foreign corporation under the facts above stated may send any number of salesmen for the purpose of making sales in this jurisdiction without having to comply with the foreign corporation law.”

=Opinion No. 55.=

RAILROADS CAN INSIST ON ACCEPTANCE OF DELAYED SHIPMENTS.

Question.—I shipped a carload of lumber to a customer consigned to myself and it was apparently lost in transit. The delay caused my customer to cancel this order with me, whereupon I notified the railroad that I would not accept delivery and would hold it responsible for not only the value of the car, but any damages resulting to me. The car has just turned up and the railroad insists that I must take it and put in claim for loss. Am I compelled to accept the car?

Reply: If the road offers to deliver the lumber now the
consignee should accept it. A carrier is not a dealer, and goods
tendered by it cannot be refused, however late the tender may
be, or however seriously the goods may be damaged, provided they
are recognizable as the goods actually shipped and have any
value at all. The consignee cannot leave them in the hands of
the carrier and demand full value for them. He must accept them
and do the best he can with them. His acceptance of them does
not relieve the carrier of its liability, and the consignee is
entitled to recover all loss caused by delay, or by damage to
the goods, as soon as the loss has been ascertained. If the
market price has declined since the day on which delivery should
have been made that difference in value is to be included in the
damages; usually that is the principal part of the loss, and
frequently it is the whole of it.

=Opinion No. 56.=

QUESTION OF DISCOUNT.

Question.—I take an order from my customer, the terms of payment being stated 2 per cent. 10 days. The buyer makes settlement in 20 days and claims that he is entitled to the discount by paying interest for the extra time which he has taken over and above the ten days. On the other hand, I claim that the bill not having been paid within the discount period becomes net, and that face amount of the bill therefore becomes due on the eleventh day Which is right?

Reply: If a contract of sale gives the buyer no right to a
discount he has no such right. If the contract does give him a
right to a discount, upon certain terms, he must comply
absolutely with those terms in order to entitle himself to the
discount. The situation is just this: A seller who is entitled
to demand the full face of his bill, says to the buyer, “I will
deduct part of the amount if you will do a certain thing at a
certain time in a certain way.” The buyer cannot fail to do the
thing so specified at the time and in the manner named, and
still claim a discount as if he had done it. The buyer is
entitled to no discount at all in the case here put.

=Opinion No. 57.=

LUMBER MAY BE RETURNED TO THE CONSIGNOR IF THE CONSIGNEE WILL NOT ACCEPT
IT.

Question.—We ordered a carload of lumber from a shipper in the South and advanced $200 on account before the shipment arrived at its destination. This shipper received from the railroad company a bill of lading in his name marked “non-negotiable,” which he indorses to us and mails to us and notifies the railroad by letter that the shipment is for us. On arrival we find that the lumber is not in accordance with our order and we refuse to accept it, whereupon the railroad stores it for account of the owner. We notified the railroad that we would release the car to the shipper upon the latter paying to us the $200 advanced. The railroad has since delivered the car back to the shipper on the latter’s instructions by their giving the railroad the usual bond, which the railroad insisted upon having, and we still retain the original bill of lading indorsed to our order. We put in a claim against the railroad company for the $200 advanced, taking the position that they had no right to deliver the car to the shipper without the bill of lading or an order from us. The railroad refuses to pay our claim, saying that the bill of lading was a non-negotiable one, and inasmuch as the shipper took it out in his own name he had a right to regain possession of the car, and that we waived our rights, although retaining the bill of lading, by refusing to accept the lumber on arrival. We did not pay the freight. What course can we pursue to recover the $200 advanced?

Reply: If a consignee refuses to accept goods shipped under a
non-negotiable bill of lading they may be returned to the
consignor. The carrier is not bound to act as agent or
intermediary for the settlement of any differences between the
two. Here our correspondents have simply extended a credit of
$200 to the shipper. If he does not voluntarily meet the
obligation the amount may be recovered by suit.

=Opinion No. 58.=

RAILROADS MUST PAY VALUE AT DESTINATION FOR DAMAGES ON LOST LUMBER.

Question.—Should the railroad in settling claims for shortage of lumber 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?

Reply: When a seller puts a price on his goods and the buyer
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.