Lumber Legal Opinions

by Unknown

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.

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.