Lumber Legal Opinions

by Unknown

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.