Part 4
There went into effect on November 1st, 1906, various important amendments to the corporation Tax Law. The annual franchise tax is placed on a different basis from what it has been heretofore for foreign corporations, and the license tax which foreign corporations have to pay for doing business in this State is also changed as to its method of determination. Under the new law the measure of amount of capital stock employed in this State (on which the tax of ⅛ of 1 per cent. is to be paid for this corporation license to do business here) is to be such a proportion of the issued capital stock as the gross assets employed in any business within this State bear to the gross assets wherever employed in business. As no action shall be maintained in any of the courts of this State by such foreign corporation without obtaining a receipt for this license fee, it is important to foreign corporations expecting to do business here to comply with the statute and take out the certificate. This tax, of course, is only to be paid once for the license, unless later an increased amount of capital stock is employed in the State, but this is not likely to occur. The annual franchise tax is, of course, a different tax, but it is based on the same proportion, except that the amount of dividends is also to be considered.
=Opinion No. 26.=
THE NEW JERSEY LIEN LAW PROTECTS MATERIAL MEN.
Question—Please state whether or not, under the laws of the State of New Jersey, a seller of building materials comes in under the mechanics’ lien law the same as the man selling his labor.
Reply: Persons furnishing materials for the erection of a building are called “material men” in the Mechanics’ Lien Law of New Jersey, and they have a lien which is protected like that of a laborer. The first section of the law provides that “every building hereafter erected or built within this State shall be liable for the payment of any debt contracted and owing to any person for labor performed or materials furnished for the erection and construction thereof, which debt shall be a lien on such building, and on the land whereon it stands.” It is further provided, in a later section, that “whenever any master-workman or contractor shall, upon demand, refuse to pay any person who may have furnished materials used in the erection of any such house or other building—it shall be the duty of such—material man to give notice in writing,” etc. As a result of this notice his lien attaches and his claim is protected.
=Opinion No. 21.=
OBLIGATION OF CARRIERS AS TO NOTICE OF ARRIVAL TO CONSIGNEE.
Question—Is a railroad company, which has accepted lumber for transportation to a certain point, legally obligated to notify the consignee at the respective point of the arrival of lumber?
Reply: The law relating to the obligation of a railroad company to notify the consignee of the arrival of the lumber at the point of destination is not uniform in all the States. The rule adopted in New York and in most of the States is that the carrier must give notice of arrival to the consignee, and that until notice is given, or a reasonable effort to give notice is made, the carrier’s liability as carrier continues in force.
=Opinion No. 28.=
BUYERS’ POSITION WHERE, ON ARRIVAL, LUMBER IS NOT IN ACCORDANCE WITH CONTRACT.
Question—A has sold to B a carload of lumber to be delivered on or before November 24, payment cash promptly after arrival and examination. The lumber arrives on the 24th, and A gives on that day to B an examination order for the lumber, which examination order B accepts. B uses proper diligence in trying to examine, but, owing to congestion of cars at the depot the lumber is not unloaded for several days, and he can only examine it on the 28th. He finds it to be of a quality inferior to the grade contracted for and rejects it, and his rejection is sustained by arbitration. B claims the right to go into the market on the 28th, buy a carload of lumber of the grade contracted for and demand from A the difference between the contract price and the price paid by him on the 28th. A maintains that he can only be held responsible for the difference between the contract price and the ruling market value on November 24, the last date stipulated in the contract. Who is right?
Reply: This lumber was sold for delivery at the buyer’s end of the route, the purchase price was to be paid only after arrival and examination. The carrier was an agent of the seller, and he did not give the buyer an opportunity to make examination until November 28. No valid delivery was made, or could have been made, before November 28, inasmuch as an examination by the buyer was to precede such delivery. When delivery was tendered on November 28 the lumber was found to be such as the buyer was at liberty to reject. He was, accordingly, authorized to go into the market on that day and buy at the price then prevailing in order to place himself in as good a position as he would have been in if the seller had done his duty and had not been guilty of a breach of contract. The buyer has a right to demand that the seller shall place him in this position.
=Opinion No. 37.=
LIABILITY OF TRANSPORTATION COMPANY IN DELIVERING WITHOUT SURRENDER OF BILL OF LADING.
Question—Can a transportation company be held responsible for delivering a shipment of lumber to a consignee without surrender on the part of the consignee of signed bill of lading, originally issued when shipment was made?
Reply: Until lumber shipped has been completely delivered to the person entitled to receive it, the bill of lading represents the lumber, but no longer. The transfer of a bill of lading passes the title of the transferor to the transferee. If, therefore, a transportation company delivers the shipment to consignee without a surrender of the bill of lading it is liable to a person who has obtained a valid title to the shipment by transfer of the bill of lading from the consignee.
=Opinion No. 29.=
IF NO SPECIFIC TIME OF SHIPMENT IS NAMED A REASONABLE TIME IS UNDERSTOOD.
Question—On October 25th we bought of a manufacturer a carload of lumber through their agent. On the 30th we received confirmation of the order. Nothing was said about the time of shipment, except that in sending the sizes on October 26th, we told them to “ship at once.” On November 1st they wrote that they would ship it “the coming week.” No part of it has been shipped yet. We could have disposed of the carload during this time at a very good profit. During all this time we have been completely out of this kind of lumber. Have we a just claim for damages?
Reply: It does not appear whether the confirmation received by the buyers on October 30 was sent by the sellers before or after their receipt of the instruction to “ship at once.” The only importance of this point is this: If the sellers confirmed the order after receiving the instruction to “ship at once,” they were bound to ship at once. If they confirmed the order before receiving this instruction, then the instruction formed no part of the contract, and is not to be taken into account; in that case the sellers were bound simply to ship the lumber within a reasonable time—within the time within which these sizes commonly are shipped. If they have not done so, they are guilty of a breach of contract and the buyers may recover any damages the breach has caused them. They are entitled to be placed by the sellers in as good a position as they would be in if the sellers had carried out their contract according to its terms. The letter of the sellers of November 1, saying they would ship the goods “the coming week,” forms no part of the contract. The agreement was made before that letter was written, and it is binding as originally made. The letter is of importance, however, as showing an estimate of the sellers themselves as to what was a reasonable date of shipment. The letter is not binding upon the buyers, if they can prove that an earlier date would have been reasonable; but it is binding upon the sellers, who wrote it.
=Opinion No. 36.=
ONE WHO BUYS LUMBER IS LIABLE THOUGH HE TRANSFERS IT BEFORE DELIVERY.
Question—An individual buys a carload of lumber for future delivery and before it is delivered he forms a partnership with two other persons and turns the order over to the firm. Delivery of the lumber is made to this firm. Please say whether the individual is liable, or only the partnership. It is a limited partnership and the buyer has only a certain definite amount at stake with it.
Reply: This is simply the case of an individual who has purchased goods and then has sold or transferred them before they have come into his actual possession. Such cases, that is, of a second sale before delivery to the first purchaser, are very common, and the original purchaser remains liable precisely as if delivery has been made to him and he had afterward disposed of the goods as he saw fit. In the case our correspondent puts the seller may look to the first buyer unless he has agreed to release him and look to the firm.
=Opinion No. 38.=
A LUMBER SALESMAN GENERALLY HAS NO POWER TO BIND HIS PRINCIPAL.
Question—One of our traveling salesmen has just sent in a larger order than we feel safe in filling for that particular customer on the liberal terms of credit allowed him in the same contract. Are we compelled to fill the order, or may we reject it without incurring any legal liability?
Reply: Ordinarily a traveling salesman is authorized merely to take orders and submit them to his principal for acceptance or rejection. He has no power to bind his employer irrevocably by a contract of sale. Our correspondents are justified in refusing to fill an order sent in by their salesman unless the latter was expressly authorized to make a valid and binding sale upon his employers’ behalf, or unless traveling salesmen are usually clothed with this power. In the latter case each salesman will be presumed to have the powers usually possessed by men of this class, unless the buyer had notice of a limitation upon this general and usual power in the case of the salesman with whom he was dealing.
=Opinion No. 35.=
USING LUMBER WITHOUT CONSENT OF SHIPPER WHERE QUALITY IS DISPUTED.
Question—We shipped a carload of lumber to a party and they complained of the quality and refused to settle in full. We insisted upon a settlement in accordance with invoice, or re-inspection of the entire carload by an inspector that would be satisfactory to both parties. We sent a man to look at the lumber and found that it was put in a dry kiln without our consent, and this, of course, prevented an inspection of the lumber in its original condition. Are we correct now in insisting upon a settlement in full as invoiced, and can we maintain our action in a lawsuit?
Reply: If your lumber was received by the company and, without authorization from you they put it in the dry kiln, so as to prevent your examining it or taking it back, they would be liable to you for the invoice price. They cannot accept the lumber, use it and then refuse to pay. By their acceptance they waive any defects in quality or quantity, which can be ascertained upon an inspection of the lumber upon arrival. They do not waive any defects that are what we call “latent,” that is, that are not readily ascertainable upon an examination of the lumber on arrival, but only show after the lumber may be put in use. As we take it, such complaints as have been made relate to alleged defects which they ascertained as soon as they received the lumber. In that case they had no legal right to use it, and if they used it, they are liable for the invoice price.
=Opinion No. 34.=
IN AN F. O. B. SALE, SHIPPING POINT, THE CARRIER IS THE BUYER’S AGENT.
Question—If I buy goods f. o. b. point of shipment and part of the goods invoiced are lost in transit can the consignor enforce payment for the goods not received?
Reply: When goods are bought f. o. b. place of shipment they are delivered to the buyer at the place of shipment. Title to the goods passes to the buyer as soon as delivery is made to the carrier and the carrier is an agent of the buyer to bring his goods to him. If the goods are lost on the way the buyer must pay for them, just as if they had reached him; they have reached his agent and have been delivered to him, and that is all the buyer can ask. When goods are sold the presumption always is that the buyer is to take charge of them in the place in which they are at the time of the sale. There is no presumption that the seller is to carry the goods to any place the buyer may select and deliver them to the buyer there. The seller may do this, of course, and he frequently does do it; but he is never bound to do it unless he has expressly so agreed. If the buyer, in any case, declared that the goods were to be brought to him by the seller he must show some clause in the contract that has this meaning; in the absence of such a clause the buyer, either in person or through an agent, is to take possession of the goods in the place they occupy at the time of the sale. The words, “free on board,” are sufficient to prevent the seller from making a good delivery while the goods are in his own warehouse, as he otherwise might do. These words place upon him the duty of taking the goods to the boat or cars and meeting the expenses necessary actually to start them on their way; but when this much is done the seller’s whole duty is done. The goods then belong to the buyer and have been delivered to him; that is all that is necessary to raise an obligation on his part to pay for them.
=Opinion No. 33.=
BUYERS CAN INSIST THAT LUMBER, PURCHASED ON CREDIT, BE DELIVERED.
A retailer says: “Lumber was sold to us by a special written contract on a six months’ credit, the lumber to be ordered out as fast as we saw fit. We have taken a little more than half and only about two of the six months have expired. We order another small shipment to be made. The seller replies that he will send this car, but that he can make no more deliveries unless we are ready to discount part, at least, of our bill. He says that he has already extended credit to us as far as he feels justified in doing. He seems to pay no attention to the contract, under which we were entitled to order out all of the lumber at once, or in such shipments as suited us, and were to have a credit upon the whole bill of six months. Will he be sustained in the stand he has taken? If we have a remedy please say what it is?”
Reply: When lumber has been sold and part of it delivered, it is too late for either the buyer or the seller to alter the contract without the consent of the other. If the sale is upon credit, as in this case, the terms of credit are such as have been agreed upon in the beginning. Either the buyer or the seller may ask, of course, to have the terms changed before all of the deliveries have been made, but if the other does not agree to the change the contract must be performed as it was made. It would be as reasonable for the buyer to refuse to accept the remainder of the lumber unless the terms of credit were made more favorable to him, as for the seller to refuse to continue his deliveries as agreed unless his new proposal as to credits were accepted. If the seller, in the case our correspondents put, refuses to go on with the contract in its original form, the buyers will have the same remedy they would have had if no deliveries at all had been made. They may go into the open market, when the time for delivery arrives, buy lumber enough to finish out the contract, and then hold the seller for such amount as they are compelled to pay over and above that named in the contract. Or, if they do not choose to do that, they may establish the amount of the loss arising from the seller’s breach of contract in any way in which it can be shown to the satisfaction of a jury and collect the damages so established. Or the buyers may cancel the remainder of the contract if they prefer that course. There is only one exception to this rule. Any one who has bought goods on credit is bound by an implied agreement to keep his credit good, and if he fails to do so he cannot require the seller to deliver the goods. Accordingly, if a buyer, before all of the lumber is delivered, shows an inability to pay any just claim in the ordinary course of business, when it falls due, those who have sold him on credit may lawfully refuse to go on with the deliveries and the buyer will have no remedy.
=Opinion No. 39.=
ONE CUSTOMER CANNOT DEMAND THAT CREDIT BE EXTENDED TO ANOTHER.
Question—Lumber corporation No. 1 bought from lumber corporation No. 2 several carloads of lumber for future delivery. Corporation No. 1, before the agreed time of delivery, commenced proceedings of dissolution. Out of corporation No. 1, however, a new corporation, No. 3, was formed. Corporation No. 3 now demands of corporation No. 2 that they deliver this lumber. No. 2 declines on the ground that the personal, as well as the financial, standing of the new corporation is entirely changed. Do you think that corporation No. 2 has a legal right to do this? Where the word corporation is used we mean that one company is incorporated under the laws of one State, while the other two companies are existing under charters from different States.
Reply: If any person or corporation has been willing to extend credit to corporation No. 1 that same person or corporation cannot for this reason be compelled to extend credit to corporation No. 3, or to any other person or corporation. If a corporation has bought goods and paid for them it may assign its right under that contract, which is simply a right to demand delivery of the goods to another corporation; but if it has bought goods on credit, and has then gone into dissolution, it cannot demand that the credit of any other corporation be substituted for its own.
=Opinion No. 40.=
GIVING A BAD CHECK DOES NOT PREVENT DISCHARGE IN BANKRUPTCY.
Giving a worthless check for goods and disposing of them immediately is not a ground for refusing a discharge from bankruptcy. Judge Hough of the United States District Court has recently granted a discharge to a party who filed a petition in bankruptcy on October 24, 1906, with liabilities of $11,577 and no assets. His discharge was opposed by a creditor, who said that on June 6, 1892, the debtor bought $1,964 worth of goods, giving a check in payment, which was deposited in bank and came back marked “no funds.” The creditor went at once to debtor’s place of business and found that he had sold out and left the city. When debtor’s application for a discharge came up for a hearing he excepted to the specifications of objections, and Judge Hough sustained the exception on the ground that the objections are not within the statutory list.
=Opinion No. 41.=
WHAT IS CONVEYANCE ON F. O. B. SHIPMENT?
Question—What is the meaning of f. o. b. Philadelphia, Pa.? What is the meaning of f. o. b. cars Philadelphia, Pa.? Is there any difference between the two above? If so, what is it?
2.—In selling goods f. o. b. New Orleans, and same are delivered alongside of steamer, does the shipper or consignee have to pay cost of handling charges in transferring from cars to steamer; that is, on goods shipped from New York to New Orleans.
Reply: (1) When goods are sold f. o. b. place of shipment the meaning is that the seller, for the amount named in the contract, will supply the goods and will bear the expense of delivering them on board that conveyance which is to carry them to their destination. The only difference between the two phrases set down above is that the latter binds the seller to deliver the goods on the cars at Philadelphia without any expense to the buyer; while the former binds him to deliver them at his own expense on some conveyance not yet specified, which will carry them to the buyer.
(2) If goods are sold f. o. b. New Orleans, and they are to be carried to the buyer at some other place in a steamer, all expenses necessary to deliver them aboard the steamer are to be borne by the seller. The conveyance on board which the goods are to be delivered is that which is to take them to their destination. If goods are to be carried to a buyer on a steamer there is no reason why he should bind the seller to load them on freight cars and make a tender of them there.
=Opinion No. 42.=
FAILURE TO DELIVER ONE INSTALLMENT CAUSE FOR CANCELLING ORDER.
Question—We purchased a quantity of lumber to be shipped in February, March and April in equal monthly shipments. The first shipment has not been made in February and we would like to know whether this entitles us legally to cancel the entire contract or only the February lot. In other words, does the breaking of a contract in one instance cancel the entire contract?
Reply: When goods are to be delivered in instalments the courts of this State hold that the seller’s failure to deliver one instalment justified the buyer in refusing to accept that tender and also in rescinding so much of the contract as is yet unfulfilled. It is one contract, not several, and the seller cannot insist on a right to deliver only such instalments as he finds it convenient to deliver and to have them accepted. The buyer has not agreed to pay anything at all for part of the goods. His contract is that he will pay a certain amount for all of them. If he is not to have all of them, it is quite conceivable, and is often a fact that any part less than all is of very much less than proportionate value to him; it may have practically no value to him at all. In any event, the seller has agreed to do a certain service and the buyer has agreed to pay a certain sum of money. The court will not infer from that an obligation to pay half the money for half the service or to accept half the service on any condition, if the other half is to be, or has been, withheld.
=Opinion No. 43.=
Question—A customer places an order with the mill for November, December, January and February, proportionate shipments. The mills are unavoidably delayed in executing the order, but are finally able to make shipment of practically the whole order in February. The customer refuses to pay invoices for all the goods shipped in February, but claims dating on proportionate amounts in April, May and June. Is he justly or legally entitled to the dating and could he hold the goods subject to sellers’ order?