Part 8

It seems again necessary to call the attention of our members to the custom of printing a clause on the top of letter-heads used for quotation to the effect that agreements or contracts are contingent upon strikes, accident, other causes, etc. It frequently happens that this clause is so printed on the letter-head or quotation form as not to make it a part of the contract, and the following attorney’s opinion is pertinent:

When a man has a proposal to make to another in writing he begins, usually and naturally, with the name of the place from which he writes and the date. Then he makes his proposal and closes by signing his name. The paper upon which he writes may have printed at the top or somewhere in the margin the name and address of the firm; the telephone number and the number of the firm’s post office box; the cable address; a list of five or six cable codes used by the concern; names of the various articles in which it deals; facsimiles of some of its trade-marks; pictures of certain gold medals that have been awarded to its goods at fairs of one sort or another. Frequently there is much other matter. There may also be something to the effect that agreements are contingent upon strikes. Of course, the person to whom the proposition is addressed is not concerned with any of these things. What he has to read and consider is the matter found between the address and the signature, and nothing more. That is the reasonable interpretation of the matter, and, is, very naturally, the view that the courts have taken of it. In 153 Ill., 102, to quote only one case, the Supreme Court of Illinois decided that “the words ‘all sales subject to strikes and accidents,’ printed as part of the letter-head of a reply, do not form any part of the contract.” No court could very well reach any other conclusion, so far as we can ascertain, and no court has done so.

In the same manner a postscript on a letter or quotation blank is not an actual part of the contract unless it is signed.

Other members have also attempted to enforce terms printed on their invoices where such terms were not referred to in the original order or contract of sale. The following opinion will be helpful in such matters:

The question of the invoice may be settled with little difficulty. Nothing upon the invoice is binding upon the buyer, whether it is written or printed and whether it stands in the body of the document or in the margin. A contract is made by two persons, and it is binding only in so far as both have agreed to be bound by it. An invoice is made, after all the terms of the contract have been irrevocably fixed, and it is made by only one person. The seller would have things very much his own way if he could go off alone, after a contract had been made, and alter or amend or limit or explain it by his own act. He has no such power, of course, and he cannot put anything upon his invoice in writing or in print, that will bind the buyer.

=Opinion No. 82.=

INTERPRETATION OF “REASONABLE TIME,” “DUE NOTICE,” ETC.

Frequently our members ask what constitutes shipment within a reasonable time, or what is the meaning of “due notice,” etc.

The courts are always careful not to give any general definition of such words as “due,” “reasonable” and the like. What is due or reasonable notice in one case might not be so in another; and each case is made to stand on its own facts. “Due notice,” in one case or in any other, is such notice as, all of the circumstances and conditions being duly considered, would permit the person receiving the notice to do that which was required of him. Evidence is to be presented, on the one side, and on the other, to show whether due notice, within this definition, was or was not given. Due notice is sufficient notice, and that which is sufficient in one case may be too much or too little in another.

=Opinion No. 83.=

IF SHIPMENTS ARE NOT TENDERED IN TIME THE BUYER NEED NOT TAKE THEM.

Question.—In December, 1909, we placed an order for nine cars of lumber to be delivered in March, 1910. Part of the shipment was made in February and March, leaving about a third unshipped on the first of April. We wrote the sellers to cancel the order. They object to this cancellation, saying that the delay was caused by a breakdown of their mill which was unavoidable and say for this reason the order is in force, as they are ready to make delivery of the balance of the goods to-day, April 7th, one week after the contract date expired. Have we a legal right to cancel under these conditions?

Reply: The man who runs a mill is entitled to all the profit he can make from it; but if there is an interruption of the running it is he who must stand the loss. He cannot ask a customer to wait for goods, at his own expense and inconvenience, until it may be found practicable and advisable to start up the works again. The buyers may refuse to accept the belated delivery, in the case our correspondent puts, and may demand damages for the sellers’ breach of contract. If a breakdown of the mill is to excuse the seller the contract of the sale must contain an explicit stipulation to that effect.

=Opinion No. 84.=

WHEN A BUYER ACCEPTS A SHIPMENT, A WRITTEN CONTRACT IS NOT NECESSARY.

Question.—A customer called at our yards and arranged to buy six cars of lumber, asking that one car be shipped at once. He took this car, but refuses to order the balance out as per agreement. He offers to pay for what he has already had, but he says we cannot hold him for any more because the contract was not in writing. Is he right?

Reply: This buyer can be held for the value of the six cars. A written contract or memorandum is not necessary where part of the goods have been delivered and accepted. There are three ways in which a sale of goods for $50 or more may be made valid and binding: (1) By a written contract or memorandum; (2) by delivery and acceptance of part of the goods; (3) by payment of part of the purchase price. Thus a buyer sometimes pays a small part of the price at the time of the agreement, “to bind the bargain,” as he says, and it has that effect.

=Opinion No. 86.=

IT IS TOO LATE TO CLAIM DAMAGE FOR DELAY IN SHIPMENT WHEN LUMBER IS ACCEPTED.

Question.—We took an order from a customer for ten cars of lumber to be shipped one car every two weeks. The first three cars were shipped on time, but there was a lapse of four weeks before the fourth car got out and weather at the mill delayed our getting the balance out as per agreement, although we finally got off all the cars. When the delayed shipments began to arrive our customer complained of the delay, and said he would charge us back with any cost he had to allow his customer. We objected, but our customer said we agreed to time deliveries, and would hold us to same. He took in all the shipments, but now wants to charge us with a loss he claimed he allowed his customer.

Reply: If the lumber was offered to the buyer at a time later than any date agreed upon at time of sale, the buyer could have refused to accept it, and would have had a claim against the seller for damages occasioned by the delay. On the other hand, the buyer might accept the goods, notwithstanding the delay, if he chose to do so. He had no option except one of these two, accept the goods and pay for them, or reject them as not having been sent in time to constitute a fulfillment of his order. He could not accept the goods at any other than the contract price. This is the situation in which the case would have stood if there had been no correspondence between the ordering of the goods and their shipment. It is barely possible that the correspondence may contain some modification of the original contract, introduced into it by mutual consent, which would give the buyer the right he now claims. If the original contract was allowed to stand as made then the buyer has mistaken his remedy if he had any remedy at all. The goods were offered in fulfillment of the contract. He could accept them as such, or reject them. Having rejected them, it is possible that he would have had a claim against the seller for failure to deliver the goods in time. This much, however, is perfectly well settled. The buyer had no right to the goods at all except in fulfillment of his contract. If he accepts them, the contract is fulfilled and he cannot turn about and demand damages because it is not so. If he thinks the delivery is not a good one, because of delay, let him refuse it and then say that the contract has not been carried out. It has been or it has not been, and his acceptance of the goods shows that it has been.

=Opinion No. 87.=

NOTICE TO AN AGENT IS NOTICE TO THE PRINCIPAL

Question.—A, a shipper in the South, ships to B, in New York, a carload of lumber at a price based on delivery f. o. b. New York City. The material is offered to B on a lighter at the agreed upon point of destination, and B, on inspecting it, comes to the conclusion that it is not what he ordered, and refuses to accept it, simply telling the railroad that the material is not what he ordered, and refuses to unload. B does not notify the shipper, A, and the latter knows nothing of B’s rejection or refusal to accept until about a month later, when he receives a notice from the railroad that B has rejected the material. A claims that B should have notified him immediately by mail or telegram that the material was not what he ordered, but B claims that he was not compelled to do so and that the fact that the railroad did not notify A until a month after was no concern of his. Is he right?

Reply: There is no rule of law known to us which would have required the buyer to notify the seller of his determination not to accept the goods in this case. If the buyer had taken the goods from the carrier he would have been bound to notify the seller of this subsequent rejection. If delivery had been made at the shipping point instead of f. o. b. destination, so that the carrier should have been agent of the buyer and not of the seller, the buyer’s duty to give notice would have been the same. As the case actually stands it is this: The seller himself or his agent, which amounts to the same thing, tenders the goods to the buyer and the buyer rejects them without having taken them into his custody. The seller or his agent immediately knows that they are rejected. How could notice add anything to that knowledge? If it is the seller’s agent who knows, and if the seller himself does not know, that is because the seller has not given proper instructions to his agent or because the agent has failed to follow them if they were given. In neither case is the buyer to blame. He has notified the seller’s agent that the goods are refused; that is all he can be required to do. If the refusal is not justified the seller has his remedy, of course. If it was justified the seller has sufficient notice of it. Our correspondent says the seller complains because the buyer did not notify him “immediately by mail or telegram that the material was not what he ordered.” That is absurd in any case. The seller knew as well as the buyer, and knew before the buyer did whether the goods sent were such as the buyer had ordered or not. Why should he be notified of a fact that he knew already.

=Opinion No. 88.=

ASSESSMENT OF FOREIGN CORPORATIONS.

Inquiries are frequently made at this office as to the amount of tax which a foreign corporation must pay in States where a certificate is issued to such foreign corporations, authorizing them to do business under the State statutes. In computing the assessment or tax the State auditor gets his information from the reports which ought to be filed annually. The amount of tax assessed is predicated upon the amount of capital actually employed within the State, and if no capital is employed, no tax can be legally levied.

=Opinion No. 89.=

A PRIVATE CUSTOM MAY BE ESTABLISHED TO SUPERSEDE A GENERAL CUSTOM.

It seems to be a generally accepted custom in the lumber trade that using a shipment of lumber, even though there be a dispute regarding the grade, constitutes an acceptance of the shipment as invoiced unless the shipper has authorized the purchaser to use a part or all of the lumber in dispute. Our Legal Department has received some claims for members on disputed shipments where, from an examination of the correspondence, it appeared the member had a valid claim for the full amount of the invoice. After negotiations with the buyers it developed that in past transactions allowances were made on several shipments where the grade was in dispute, after the lumber had been used. We have had occasion to go into such matters with our attorneys and the latter are of the opinion that where a sufficient number of adjustments have been made on such a basis, practically acquiescing in the buyers using a part of the lumber, would prejudice a claim on a subsequent shipment where the shipper attempted to take advantage of his right of recovery. Frequently disputed claims of this character are small and have to be tried before a local jury and our attorneys have stated that the custom of having made allowances in the past after lumber was used would have some bearing with a jury on a subsequent deal, and possibly be construed by the court as a private custom apart from the general trade custom.

=Opinion No. 90.=

AN ORDER MAY BE CANCELED ONLY WHEN BUYER BECOMES INSOLVENT.

Question.—A buyer places an order with a mill for five cars of lumber, deliveries to be one car a month. At the time of the purchase the buyer is in good financial standing and signed copies of the contract are exchanged between the buyer and seller. After three deliveries have been made information reaches the seller that the financial standing of the buyer has changed for the worse; that is, he has committed no act of bankruptcy, but a commercial agency has reduced his capital and credit rating. The seller requests the buyer to anticipate the payment of some of the previous shipments before he will agree to make further shipments. The buyer refuses to comply with this request and asks for the delivery of the balance. The seller thereupon makes no further deliveries, but when the bills for the goods delivered become due, demands payment. The buyer refuses on the ground that the seller has not carried out his part of the contract. On these facts please tell us what the law in this case would be.

Reply: One who has sold goods on credit is not justified in refusing delivery simply because the buyer’s financial standing changes for the worse between the time of sale and the time of delivery. In the case here put, for example, there is nothing to show that the buyer is not now amply able to pay for the goods, or that the contract would have been declined by the seller if the buyer’s rating at the time had been what it is now. The seller is entitled to refuse delivery only if the buyer, before delivery is made, commits any act of insolvency. He need not become a bankrupt or make an assignment for creditors. He is insolvent, within the meaning of this rule, if he fails to pay any just and admittedly proper debt promptly upon its due date. As long as he is paying his bills whenever they fall due the seller has no ground upon which to declare that he is not “keeping his credit good,” if the buyer in this case is not solvent, as the word is here defined, the seller need not continue the deliveries. If the buyer is solvent the seller is not justified in his position. In that case the buyer need not pay for the goods already delivered until the time named in the contract for payment arrives, and he has a valid claim for damages arising out of the seller’s failure to make the other deliveries in strict accordance with the contract.

=Opinion No. 91.=

A BUYER HAS A CLAIM WHEN HE ACCEPTS A DRAFT ON INFERIOR LUMBER.

Question.—We bought a car of lumber through a broker. Terms were: Sight draft with bill of lading attached for three-fourths of the amount of the invoice, the balance to be paid on arrival and inspection. We accepted the draft on presentation and when the car arrived we instructed our truckmen to draw the lumber in. Upon examination we found that it was all more or less below grade. We wired shippers accordingly and asked for instructions. We also wrote them a letter to the above effect and told them that we could not use the lumber and that we would hold it for their instructions. Do we need to keep the shipment? Can we compel sellers to return us the amount of the draft and freight charges?

Reply: The buyers are not bound to accept any lumber not in accordance with the order. They have a valid claim against the sellers for the amount already paid towards the purchase of the goods, for the amount expended for freight and for any other useless expense to which the buyers were put as a result of the sellers’ failure to do their contract duty. The buyers also have a claim for damages, if any, caused by the breach of contract on the part of the sellers. The latter were bound to supply lumber regularly sold and accepted by the trade under the terms covering the grade in question, and their failure so to do was an actionable breach of contract.

=Opinion No. 92.=

CONTRACT OF SALE.

Delivery by Installments—Successive Recoveries by the Vendee Not Permissible.

When a party contracts to deliver goods by installments, for example—Several carloads of lumber to be shipped at different intervals but fails to deliver one or more of such installments, the vendee may repudiate the contract and sue for damages. If he brings the action prior to the time for the delivery of the last installments, he can only recover for such installments as are past due and such recovery bars him from afterwards bringing an action and recovering thereon for the remaining installments or deliveries.

=Opinion No. 93.=

DUTY OF VENDOR TO MINIMIZE LOSS WHEN VENDEE REFUSES TO ACCEPT GOODS.

It occasionally happens that a purchaser of a car of lumber refuses to accept same and leaves it at the mercy of the railroad company or common carrier. In this way demurrage piles up and other loss may arise and the shipper hesitating, for fear of compromising himself, refuses to do anything with the lumber on his part. This is generally a mistake because it is the duty of the shipper to make the loss, if any, as small as possible and it is always safe to first notify the vendee, who has refused to receive the goods that he, the shipper, will endeavor to dispose of them in the best possible manner and hold the vendee responsible for any loss or damage thereby. In this case he may have to have the goods sold elsewhere or returned to him, and it is always advisable to endeavor to have them inspected by two or three competent parties in order to establish the market value and to ascertain that the defects, if any, claimed by the vendee, do not exist.

=Opinion No. 94.=

ACCORD AND SATISFACTION.

If a buyer of lumber, disputing the quantity or quality, sends a check for an amount less than the invoice to the seller, does the seller in accepting the same preclude himself from recovering the balance of the account? This situation occurs, we believe, often in lumber circles and very frequently the remittance is accompanied by a letter or some notice written on the check to the effect that it is sent as a settlement in full and some go so far as to add that if accepted by the creditor it must be at his peril so far as the remainder of the invoice or account is concerned. The law on this point is generally similar to that of the State of New York wherein it is well settled that the acceptance or use of such a remittance does not stop or prevent the creditor from recovering the balance of the debt from its debtor unless there has been an honest dispute as to the amount of indebtedness or the existence of any indebtedness at all. This is what is termed an unliquidated account or claim and in such a case, when one tenders an amount to be accepted in full or rejected and the other accepts the remittance, it is a complete accord and satisfaction. The rule is different when the amount or debt is certain and there is only a dispute between the parties concerning questions of shortage, quality, etc. This is what is termed a liquidated claim and the acceptance of a remittance to be a full settlement does not preclude the creditor from using the remittance, crediting the same to the account of the debtor and suing for the balance.

=Opinion No. 95.=

CANCELLING AN ORDER BEFORE SHIPMENT—EFFECT OF SAME.

Many lumbermen take orders from their customers through traveling men or other representatives. Usually the orders are written down in a manifold book and often are signed by the buyer. The order is usually taken subject to confirmation by the house or home office. This acceptance or confirmation is customarily made by acknowledgement of the order in writing to the purchaser. The question in point is whether or not, if an agent has taken an order as above, can the purchaser cancel the order and his obligation to accept the lumber? In a case in this State a purchaser of merchandise placed the order with the traveling man and later wrote to the house cancelling the same, as he found he could buy similar goods for less money. The purchaser wrote before the seller had communicated any acceptance or intention to fill the order which had been given to the seller’s representative. Some correspondence ensued in which the seller refused to cancel the order and later shipped the goods to the purchaser, who refused to receive them. The action resulted in a judgment in favor of the seller, which was reversed on appeal, in which numerous authorities were cited by the Appellate Court holding substantially as follows—“An order or request in writing, addressed to a dealer or his agent to ship to the writer on or before a date named, goods of a kind specified, for which the writer agreed to pay a price named, does not constitute a contract until accepted or acted upon by the vendor and may be withdrawn at any time before acceptance.”

It is obvious that the result would be different were the vendor to have signified his acceptance of the order prior to the cancelling or withdrawal of same by the purchaser, as we would then have a valid contract, which could not be cancelled without mutual agreement.

In this connection it might be well to add that in business transacted by mail, the general rule is that the time of the mailing or depositing in the mail of a letter is the presumptive time of the communicating of the facts therein to the party to whom the letter is addressed, hence when an order is sent by mail, another letter withdrawing the order, if mailed prior to the mailing of the acceptance by the other party, is a complete cancellation of the order in the first letter. In other words, the law does not take into account the periods elapsing by reason of the means of communication but only the acts of the parties in so far as the time of such acts is considered to have taken place.

=Opinion No. 96.=

DISCHARGE IN BANKRUPTCY—WHAT WILL PREVENT.