Part 6

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: