Part 5

Reply: There seems to have been no clause in this contract releasing the mill in case of such a delay as has occurred. In the absence of such a clause the buyer was justified in refusing to accept the goods when all of them were shipped in February. He is entitled to hold the goods subject to the seller’s order, or to return them. He cannot, however, force another contract upon the seller than that which was actually made. The mill may take back its goods or allow the buyer to accept them upon such new terms as may be agreed upon. The buyer is justified in receiving the original contract. This is upon the supposition that the buyer has not during the past four months said or done anything to lead the seller to suppose that he was satisfied with the delay, that he would accept all of the goods as readily in February as if shipment had been made in strict accordance with the terms of sale. If he has done that he is estopped now from making any objection to the tender.

=Opinion No. 44.=

AMOUNT OF CLAIM FOR DAMAGE AGAINST CARRIER.

Question—We made a shipment via two connecting railroads. When it reached a junction prior to delivery at destination, i. e., a point on the second road, was badly or entirely damaged in a wreck, and our customer asked that we immediately replace the shipment, which we did, and made another shipment of the same kind of lumber four days later, but in the interim between the time of the first shipment and the time we received the replacing order from the customer, the price advanced, and in our second invoice we naturally charged the customer for the advance. The claim department of the railroad now offers to settle with us at the original invoice price of the first shipment and declines to entertain a settlement at the advanced price. We claim that our position is entirely legal in the matter, and that we are entitled to the advanced price for the shipment that was lost, the same representing the value of the goods at the time the goods were destroyed.

Reply: Usually the measure of damages in a case of this kind is based upon the value of the goods at the time and place and in the condition in which they ought to have been delivered; the freight is to be deducted from this, if it has not been prepaid, and then interest is to be added from the day on which delivery ought to have been made to the day of payment; there is to be added also any expense to which the owner of the goods has been put as a necessary and natural result of the loss. What the carrier is bound to do is to put the owner of the goods as nearly as possible in the same position he would have occupied if the carrier had done his full duty in the first place. If the carrier had done his duty the owner could have sold the goods at the market price on the day of delivery at the place of delivery, he would have had the interest on the money thereafter, he would have escaped all incidental expenses arising out of the loss, and he would have been called upon to pay freight to the carrier, if it had not been paid in advance. There is only one exception to the rule that is at all common. If the goods have already been sold for delivery at destination, at a price less than that which chances to prevail when the day of delivery arrives, and if the carrier, at the time of shipment, had actual or constructive knowledge of this fact, then the owner can demand only the selling price with interest. In that case, if the carrier had done his duty, the owner would have obtained for his goods, not the market price, but only the contract price. Whether the carrier had or had not notice of the sale makes a difference in this respect; that a carrier is not to be held for a larger loss than he had in contemplation when the freight rate was fixed and the degree of care demanded of him was settled. If he had no knowledge of the sale, actual or constructive, he is bound for damages based upon the market price, as in the other case. The fact that other goods at a different price were sent to replace the lost shipment does not enter into the matter.

=Opinion No. 46.=

RISK IN SENDING CHECK TO DRAWER’S BANK FOR CERTIFICATION.

Question—We received a check from one of our customers and sent it to the customer’s bank for certification. The bank failed before the end of the next day and our check was not paid. Can we not return it to the maker and demand the face of it from him?

Reply: If the drawer of the check in this case had sufficient money on deposit to meet it our correspondents have no other recourse except against the assets of the insolvent bank; the depositor is discharged. The usual rule is that when a check is delivered that is drawn upon a bank in the same place in which the payee resides the drawer guarantees the solvency of the bank during the remainder of the day on which the check was delivered and the whole of the next day. The holder has this much time in which to present the check and draw the money; if the bank fails meanwhile the loss is upon the drawer of the check and the holder takes the risk of failure after the second day. But this rule does not apply when the holder of the check takes it to the bank and has it certified before the end of the next day after he receives it. Certification binds the bank and releases the drawer. So far as the drawer and holder are concerned, the effect is precisely the same as if the holder had drawn the money and had then deposited it to his own credit in the same bank.

=Opinion No. 45.=

A CONTRACT MAY BE CANCELLED WHEN ONE PARTY IS GUILTY OF BREACH.

Question—Lumber has been sold for delivery in installments running through a considerable period. Payments are to be made in installments also. The buyer has been very lax in this regard, however; he has not made a single payment strictly on time, and in some cases has delayed until the seller has been compelled to threaten suit. Is the seller bound to go on making deliveries to the end of the time named in the contract, getting his money whenever and however the tardy buyer sees fit to pay it?

Reply: If a seller agrees to deliver the goods at certain times, and the buyer agrees to pay for them in installments at given dates, each promise is a consideration for the other. If either the buyer or the seller fails to do his full duty under the contract he is in no position to demand that the other shall do what he has agreed to do. In other words, as soon as either is guilty of any breach of the contract the other may declare the whole agreement at an end; he may refuse to do anything further under the contract himself, and may demand damages of the person who was guilty of the breach. If a buyer fails to meet any payment promptly when it is due, the seller, if he chooses to do so, may immediately rescind the contract and bring suit for the unpaid installments and for damages. If he had not this privilege he might be compelled to go on for months delivering his goods to one who had already shown his unwillingness or inability to make good his promise of payment.

=Opinion No. 47.=

LUMBER ON A CONSIGNEE’S SIDE-TRACK IS IN CUSTODY AND AT THE RISK OF THE CONSIGNEE.

Question—When does the railway’s liability end and the consignee’s begin on lumber delivered in cars on the consignee’s side-tracks; i. e., if a carload was burned in forty-eight hours after being placed for the consignee, would the loss fall on the transportation company or the consignee?

Reply: When a carload of merchandise is delivered upon the consignee’s own side-track and the consignee has notice, express or implied, of that fact, then all liability of the railroad company for the safety of the merchandise ceases at once. The goods are still in the company’s cars, but that is not sufficient to make the company liable, for the cars themselves are in the custody of the consignee and upon his premises. The goods have been delivered to the consignee, and that is the last of the duties the carrier undertook to perform. A railroad company cannot be expected, and in some cases would not be allowed, to place its watchmen in private freight yards and to extend over and through those yards its system of protection against fire. When cars containing goods have been delivered upon the consignee’s premises the goods themselves have been delivered there. The carrier is no longer liable, either as carrier or as warehouseman and the courts have so decided.

=Opinion No. 48.=

WHERE A SELLER REFUSES TO MAKE DELIVERIES, BUYER CAN PROTECT HIMSELF.

Question—A places a contract with B for future delivery of lumber beginning in October; B, for certain reasons, does not care to deliver this contract. A has the opportunity to buy the identical goods for the same delivery from competitors at the same price, after being notified by B that he does not care to deliver this contract. Does the fact that A has the opportunity to cover himself on the same conditions release B of damages arising from non-delivery of the contract, or can A wait until the time of delivery before buying goods in the open market against the contract of B which the latter refuses to deliver?

Reply: If B is under contract to deliver goods to A in October, and if, before October, he notifies A that he does not intend to fulfill his contract obligation, A may accept that statement as final and protect himself at once. He may make other arrangements for an October delivery and compel B to pay the loss, if any, or he may sue at once for breach of contract. The buyer is not bound to pursue this course, however. He may act upon the supposition that, upon further consideration of the matter, the seller will conclude to do his duty after all; and so the buyer, A in this case, may wait till the time arrives for the October delivery, and may then buy goods to replace those that the seller ought to have delivered, holding the seller liable for the loss, if any, or he may then sue for breach of the contract. If this costs the seller more than the other plan might have cost him, the fault is his own. He will not be heard to complain because the buyer has taken it for granted that he really would perform his contract obligation when the time arrived, in spite of his previous statement that he did not intend to do so.

=Opinion No. 49.=

ALL CONDITIONS OF A CONTRACT MUST ACTUALLY BE EMBODIED IN THE CONTRACT.

Question.—The following is a general form that is frequently printed across the top of the letter heads of manufacturers: “All agreements are contingent upon fires, strikes, delays of carriers, accident and other contingencies beyond our control.” What effect does this have on a contract when such letter heads are used when quoting prices and when accepting the order?

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.