Part 3
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?
Reply: 1. The law makes no distinction as to the amount of the claim against the estate for which an executor should require vouchers and an affidavit. The statutory provision is as follows: “The executor or administrator may require satisfactory vouchers in support of any claim presented, and the affidavit of the claimant that the claim is justly due, that no payments have been made thereon, and that there are no offsets against the same to the knowledge of the claimant,” see Code of Civil Procedure, Section 2718. If an executor should pay a claim of any considerable size, without this precaution, and the claim should afterwards turn out to be unjust, he could be, or probably would be, required to repay the amount to the estate.
2. The laws of this State do not fix any definite time as the limit within which an executor must make his final accounting. Whenever a year has expired since the grant of his letters, the surrogate may compel the executor to make an accounting of all that has been done up to that time. If the estate is then in a condition to be definitely settled this may be done. If there has been any remissness on the part of the executor this may properly be dealt with by the surrogate. If the executor has used due diligence, and still is not ready to make a final accounting, he may have further time, always, of course, under the supervision of the court.
=Opinion No. 23.=
A SELLER MAY CONTRACT AGAINST LIABILITY FOR DELAY IN SHIPPING.
Question—A company in Boston sells to A in New York 800,000 feet of lumber and on the sales slip are the words, “for delivery, one cargo in June, and one in July.” The lumber was shipped in four cargoes, about 200,000 feet in each. The first two were shipped in July; the third cargo on the 18th of August, and the fourth on the 21st of August. The first two cargoes were accepted at the contract price, $27, but the customer refuses the third and fourth cargoes, claiming that we were late on the deliveries. It is a well known fact that all through this year vessels have been very hard to obtain. Has the New York dealer a right to refuse to accept the third and fourth cargoes at the contract price? The price has dropped from the spring to the present time from $27 to say $24. The customer claims the last two cargoes at the going market price prevailing at the time they arrived. Inasmuch as the cargoes cannot be sold over again, except at a less price than the New York customer offered, we were obliged to let him unload the last two cargoes. We claim that the customer has no right to deduct anything, owing to the lateness of delivery, because our orders read, “subject to delays caused by fires, strikes or other causes beyond our control.”
Reply: We suppose the clause quoted by our correspondent, “subject to delays,” etc., is incorporated in the contract or is so prominently printed on the order blank that the buyer cannot fail to understand that the sale is made subject to it. If that is true, and if it is also true that the delay in this case actually arose from a cause beyond the control of the sellers, then the buyer’s position was not tenable at the beginning. It is possible, however, that the buyer can maintain his position now by reason of the acquiescence of the sellers. The buyer had a right to ask that a deduction in the price be made by reason of the delay. If the sellers had refused this request and demanded expressly that the cargo be accepted at the contract price, or not accepted at all, they could have enforced their demand. It does not appear very clearly what answer the sellers made to the buyer’s request for a lower price. Our correspondent says: “Inasmuch as the cargoes cannot be sold over again, except at a less price than the New York customer offered, we were obliged to let him unload the last two cargoes.” There was plainly a dispute as to whether the delay was one which was excusable under the terms of the contract, and, if the act of the sellers, or their answer to the request of the buyer for a lower price, can be construed into an acquiescence in that request, the sellers are now bound by such acquiescence. If the sellers have always insisted that the contract price must be paid, that the goods must be accepted in strict accordance with the contract, or rejected, then they are in position to collect the full contract price for all the lumber.
=Opinion No. 24.=
WHEN LUMBER IS SOLD FOR DELIVERY THERE IS A BREACH OF CONTRACT IF NOT DELIVERED.
Question from Buffalo, N. Y.—A sells B a carload of lumber at a given price delivered, Boston rate of freight for shipment from the West. B gives directions which are accepted by A for shipment of car to a point taking a Boston rate of freight. The lumber is shipped as per contract, and the consignee pays a sight draft with bill of lading attached according to terms. While in transit the lumber is destroyed. Is the shipper not responsible to the consignee for the lumber, as it was not delivered, as the contract called for; and after the lumber is destroyed does the consignee have an option of insisting on having the shipment replaced or canceling the order?
Reply: Our correspondent calls attention to the fact that the contract in this case called for a delivery of the lumber at the end of transportation. This being so, the seller was bound to carry and deliver the lumber, as well as to furnish it. The carrier was an agent of the seller and if the lumber is not delivered the seller is to look to the carrier for damages, while the buyer looks to the seller. What the seller undertook to do in this case was to supply the lumber, to carry it, and then to deliver it. If he fails in either point he is guilty of a breach of contract. He has failed to deliver the lumber; the buyer may regard this as a breach of contract, which it is, and sue for such damages as may have come upon him as a result of the breach. The buyer cannot compel the seller to replace this lumber with other; but if the seller would rather do that than pay damages, and if the buyer is willing to have it done, then, of course, it may be done.
=Opinion No. 22.=
A LIQUIDATED DEMAND CANNOT BE SETTLED EXCEPT BY PAYMENT OF THE WHOLE AMOUNT.
Question—An individual in Providence, R. I., who was indebted to me, forwarded a check for less than the amount of his entire indebtedness. He stated on the face of it “settlement in full.” This in nowise discharged his obligation to me and I wrote him that I would credit his check on account and requested a remittance of the balance. He takes the position that under the Rhode Island law he has discharged his indebtedness. Please advise what rights I hold in the premises.
Reply: We do not find any statute or decision in Rhode Island to the effect that a payment of this kind constitutes payment in full. All the reported decisions by the courts of that State we have been able to find lay down practically the same rules upon the subject that are enforced by the courts of New York. This payment was made in New York, and the laws of this State govern it in any event. The law upon the subject here (and, so far as we can learn, in Rhode Island, too), is briefly this: If there is no doubt, and no dispute, as to the amount due, then payment of less than that amount will not discharge the debt, even though the creditor agree to accept it as a discharge, if there is no release under seal and no new consideration given. If the debt is unliquidated, if there is a doubt or dispute as to the amount of it, then the debtor’s offer of so much as payment in full constitutes his estimate of the amount really due. The creditor cannot accept the money without accepting the estimate. The debtor has a right to go into court to have the dispute settled, and if the creditor is unwilling to accept the condition under which the money is sent he is bound to return the remittance and allow the whole matter to be determined in some authoritative way. For decisions to the effect that part payment of a debt that is liquidated and certain is not payment in full, even when the creditor accepts the money and uses it, see 23 N. Y., 684; 108 N. Y., 470; 1 R. I., 496; and 8 R. I., 381.
=Opinion No. 20.=
PRIVILEGE OF STOPPING LUMBER IN TRANSIT WHEN BUYERS BECOME INSOLVENT.
Question—When lumber has been sold and shipped, and the seller afterwards directs the carrier not to deliver it to the buyer but to return it to him, is the carrier under any obligation to return it, or must he go ahead and deliver it to the buyer, or may he exercise his own will in matter? What are the legal rights of all parties in such a case?
Reply: If one who has sold lumber on credit learns, after it has been delivered to the carrier, that the buyer is insolvent it is his right to demand that the lumber be not delivered to the buyer, but be returned to him. This is known as the right of stoppage in transit, and it is founded upon the theory that one who buys on credit is bound by an implied contract to keep his credit good until the date of payment arrives. In order that the seller may be entitled to exercise this right the buyer must be actually insolvent, that is, unable to meet his just obligations as they fall due; the lumber must be still in the hands of the carrier, and not yet delivered into the actual or constructive possession of the buyer. If the lumber is represented by a bill of lading making it deliverable to the buyer or his order that must be still under the buyer’s control; if he has transferred it to a third person, who has taken it for value and in good faith, the seller’s right of stoppage is gone. If a seller who has a right to stop the lumber attempts to exercise the right by directing the carrier not to deliver it the carrier is bound to obey the direction. The carrier, however, acts at his peril in any case. If he obeys the instruction and refuses to deliver the lumber to the buyer, and the buyer is solvent, he may bring an action of trover against the carrier immediately. On the other hand, if the carrier disobeys the instruction, and delivers up the lumber, he makes himself liable to the seller, at least to the extent of the buyer’s indebtedness for the lumber, if it is a case in which the seller is justified in exercising his right of stoppage in transit. Because of these difficulties of his situation, the carrier is entitled to a reasonable time in which to investigate the financial condition of the buyer; but if he finally delivers the lumber to the buyer in any case in which the seller had a right to countermand the order for their delivery, and had done so, the carrier must answer for it.
=Opinion No. 27.=
SALES FOR FUTURE DELIVERY.
Frequently the question of credit arises after a contract for future delivery has been made, and the following may be helpful:
Question—Will you kindly give us your opinion in the following matter: A makes a sale to B of a certain quantity of lumber for future delivery, payments to be made on a credit of sixty days’ time. Before the delivery of lumber begins, A has reason to believe that the responsibility of B is not satisfactory to him and refuses to ship the lumber except for cash with discount for the difference in time. What redress has B in this matter, if he is not in a position to pay cash?
Reply: The refusal of A to ship the lumber to B under these circumstances constitutes a breach of contract, for B has an action against A for damages. Something more than dissatisfaction with B’s financial responsibility is necessary to furnish A with a valid excuse for his refusal to ship except for cash.
=Opinion No. 30.=
IN MOST STATES A CONSIGNEE MUST BE NOTIFIED OF THE ARRIVAL OF HIS LUMBER.
Question—Is a railroad company obliged to notify the consignee of the arrival of lumber when it is billed and the bill of lading reads: “Order of shipper, notify consignee,” and if the carriers fail to notify the consignee, have they the right to charge demurrage or storage for the lumber so held? Would it make any difference if the lumber were billed direct to the consignee and were not an “Order notify shipment?” Have the courts made any rulings of this matter, and where can we find them?
Reply: A railroad company is, of course, bound to comply with the undertaking set forth in its own bill of lading. If it accepts goods to be carried and delivered under a bill which expressly directs it to “notify the consignee” there is no ground upon which it can escape its obligation actually to notify the consignee except the impossibility of finding him by the ordinary means. If the consignee can readily be found the carrier has not fulfilled the task which it has expressly and in definite terms undertaken to fulfill until it has found him and notified him. It has no right to charge demurrage or storage until such notification has been duly given. If the consignee cannot be found by the exercise of reasonable diligence then the attempt to find him will serve the carrier as well as an actual notification. If the bill of lading does not, in express terms, direct the carrier to notify the consignee this duty still rests upon the carrier by common law as it is interpreted in this State. In some States (Massachusetts, for example) the carrier is not bound to notify the consignee of the arrival of his goods unless the contract of carriage expressly so directs. But in New York the courts hold that this is one of the carrier’s duties, as carrier, without any special stipulation regarding it. This is the rule, as the courts of New York have announced it. “The rules as to the delivery of goods at their place of destination by a carrier that prevail in this State are as follows: If the consignee be present upon the arrival of the goods, he must take them without unreasonable delay. If he be not present, but live at or in the vicinity of the place of delivery, the carrier must notify him of the arrival of the goods, and then he has a reasonable time to remove them. If he be absent, unknown, or cannot be found, then the carrier can place the goods in its freight house, and if the consignee does not call for them in a reasonable time, its liability as a common carrier ceases.”
=Opinion No. 25.=
OBTAINING CERTIFICATES PERMITTING FOREIGN CORPORATIONS TO DO BUSINESS IN NEW YORK.
A previous opinion contained some information regarding foreign corporations obtaining certificates to do business in New York. The following additional information, from our attorney in New York, Mr. Eustace Conway, 15 William Street, regarding amendments effective November 1st, will be interesting: