questions and answers 0. on agency, bailments and sales · pdf fileagency is founded upon...

Qu estions and Answ ers e

Agency , Bailm ents

and Sales

Prepared w ith Reference to Huffcut , Mech em ,

Re inh ard and S tory on Ag ency ; Hale and

S ch ouler on B ai lments ; Benjam in, Bur

d ick and ! iffany on Sales . W ith

S e lected Cases

E. R ICHARD ! HIPP, LL. M

Of fice Dtstrz'

ct of Columbz'

a Bar.

WASHI! ! ! O!,D. 0

!OH ! BY R ! E CO . ,

PUBLISHERS OF LAW Booxs.

1904 .

QUES! IO! S A! D A! SW ERS

A! E! CY.

I . W hat is agency ?

Agency is founded upon contract either express or implied , by which one of the partiesconfides to the other the management of somebusiness to be transacted in h is name or on h isaccount , and by which the other assumes to dothe business and render an account of it . (K entCom . , v . ii, Agency is a legal relation,founded upon the express or implied contract ofthe parties , or created by law, by virtue of whichone party is employed and authorized to repre

sent and act for the other in business dealingsw ith third persons. (Mechem ,

2 . Who is an agent ?

An agent is a person duly authorized to act onthe behalf of another, or one whose unauthorizedact has been duly ratified . (Ewell

’s Evans’,An agent is one who acts for and in the stead of

6

another, termed the principal , either generally orin some particular business or th ing, and eitherafter his own discretion in full or in part

,or

under a specific command . (Bishop, Cont ,sec .

1 027 ; Huffcut,

3 . Into what two main heads may agency bedividedThe law of principal and agent, and the law of

master and servant . (Huffcut,

4. What is the lead ing distinction betweenprincipal and agent and master and servan t ?

The true distinction is found in the nature ofthe undertaking, and the time and manner of itsperformance . Agency properly relates to transactions of business with third persons, and implies more or less of discretion in the agent as tothe time and manner of his performance . Service has reference to actions upon or aboutthings

,and deals chiefly with matters of mere

manual or mechanical execution in which the servant acts under the direction and control of themaster . (Mechem , 3 ; Huffcut,

5 . W hat is the meaning of the word servan t ?In legal nomenclature it has a broad signifi

cance and embraces all persons of whatever rank

or position who are in the employ and subject tothe direction or control of another in any department of labor or business . (W ood , Mast .

sec .

6 . What names may be used to indicate

principal and agen t ?

The principal is sometimes designated as anemployer, constituent , or chief ; while the agentis called at times an attorney, proxy, delegate , orrepresentative . (Mechem , 5 ; Story 3 , Evans

’

,

7. What is an actual agency ?

An agency is actual when there exists a contract between the principal and the agent wherebythere is a real employment by the former of thelatter in some business of the latter to be transacted with a third person . (Mechem ,

8 . What is an ostensible agency ?

W herever the principal intentionally, or bywant of ordinary care (holding out) causes athird person to believe another to be his agentwho is in reality not his agent, there exists inlaw an ostensible agency.

9. What is the general classification of agentsbased upon the extent of thei r authority ?

1 , Universal ; 2 , general ; 3 , special or particular.

8

IO . What are the classifications based uponthe nature of the agency ?

There aremercantile and non-mercantile agents,or with regard to their obligations in selling delcredere agents and agents not del credere, and inregard to the degree of skill required of themgratuitous and paid agents and professional andnon- professional agents . (Mechem ,

I I . Who is an un iversal agen t ?

One who is authorized to transact all of thebusiness of h is principal of every kind .

1 2 . Who is a general agent ?

One who is authorized and empowered totransact all of the business of h is principal of aparticular kind or in a particular place . (Huffcut,

1 3 . Who is a special agen t ?

One authoriz ed to act for h is principal in onlya single, specific transaction, such act or transaction not being in the ordinary course of a tradeor profession which he is following. (Huffcut,19 ; Mechem ,

14. What are the threefold consequences inlaw of creating an agency ?

I,It establishesnew legal relations between the

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constituent (principal ) and representative (agent) ;2 , it establishes new legal relations between the

constituent (principal) and third persons, that is,it imposes voluntary primary ( recusable ) obligations upon the principal in favor of third persons,or gives him a correlative right against third person; 3 , or it creates new legal relations betweenthe representative (agent ) and third persons, ord isturbs existing legal relations between them .

(Hufl'

cut,

1 5 . What is the particular difference betweenagency and trusts ?

In agency the legal title and use of the propet ty concerned are in the principal and not theagent, while in trust the legal title is in thetrustee and the use in the cestuz

'

. Agency is atopic of the common law ; trusts are a topic ofequity . For some purposes , however , an agentis treated as a quasi trustee and required to account in equity . (Huffcut,

1 6 . W hat is the difference between agencyand partnership ?

The relation of principal and agent exists in allpartnerships, but to constitute a partnership theremust be more than the mere relation of principaland agent . The United States Supreme Court,

IO

in the case of Meehan as. V alentine , 145 U . S. ,

4 1 1 , lays down the rule that to constitute a partnersh ip there must be a joint business (agency) ,a community of interest and a sharing of profit .The agency in partnership is of a peculiar character, each partner being a principal as to the

others , and also each being the agent of each ofthe others . (Burdick on Part . ,

1 7. W hat is the distinction between agencyand sale ?

The question as to whether the relation between the parties is that of principal and agent ,or vendor and vendee, depends upon the construction of the contract ; if it appears that oneis to act for the other, that other retaining titleto the property , then it is agency, but if it appearsthat the title has passed between the parties it isa sale ; it is d iffi cult to determine in some caseswhether there is a sale or a a’el credere agency ;the intention of the parties , as it appears fromtheir contract or their actions, must determinethe question . (Huffcut,

1 8 . W hat is the test by which to determ inewhether one is a servant or an independentcontractor ?

In general if the employer retains any control,

I I

or right of control , over the means or methodsby which the work is to be accomplished

,the

employee is a servant ; if the employer does notretain such control, or right of control , then theemployee is in no sense a servant , but an independent contractor , responsible to his contracteefor results only. (Huffcut,

19 . What are some of the principal classesof agents ?

Attorneys at law , auctioneers, brokers, factors,commission merchants , ship masters, bank officersand the l ike. (Mechem ,

20 . Who is an attorney-at- law ?

One whose profession is to give advice andassistance in legal matters, and prosecute anddefend in the courts the causes of those who mayemploy him for that purpose. Often one actingas an agent of this sort is termed an attorney infact .

2 1 . W ho is an auctioneer ?

One who , dealing with assembled persons competing , sells property to those who make or accept the offers most favorable to the owner .

(Bishop , Con . sec. He is a person employed to sell at public sale, after public notice,

1 2

property to thehighest bidder . (W harton,agency

,

sec.

2 2 . Who is a broker ?

One whose occupation it is to bring partiestogether to bargain , or to bargain for them , inmatters of trade, commerce or navigation . (Mechem, 8 ; Huffcut, 1 5 1 ; Evans, A broker isa special ist employed as a middleman to negotiatebetween the parties a sale or other business contract . (W harton , sec . He is essentially a

go-between , has no special property in the goods,

and must sell them in the name of the principal .

23 . Who is a factor or commission merchant ?

One whose business it is to receive and sellgoods for a commission ; he differs from a brokerin that he is entrusted with the possession of thegoods to be sold , and usually sells in his ownname

,and is invested by law with a special prop

erty in the goods and a general lien upon themfor h is advances.

24. What is a a’el credere comm ission

One under which the agent, in consideration ofan increased commission , engages to insure tohis principal not only the solvency of the debtor,

I3

but the punctual discharge of the debt ; and he isl iable, in the first instance , without any demandfrom the debtor

,but the principal Cannot sue the

dc! credere factor until the debtor has refused orneglected to pay . (Mechem , 10 ; Huffcut,He is virtually a surety, and is distinguished fromother agents by the fact that he guarantees thatthose persons to whom he sells shall perform thecontracts which he makes with them .

2 5 . Who is a supercargo ?

A person employed by a commercial companyor private merchant to take charge of the cargoesthey export to foreign countries , to sell themthere to the best advantage , and to purchaseproper commodities to relade the ships on theirreturn home . (Parsons , Maritime Law ; Abbott,Shipping . )

26 . For what purposes may an agency becreated ?

As a general rule an agency may exist for thetransaction of any lawful business ; and whatevera person may lawfully do, if acting in h is ownright and in his own behalf

,he may lawfully dele

gate to an agent . (Story, sec. 6 ; Mechem ,1 1 ;

Huffcut,

https://www.forgottenbooks.com/join

IS

only that the agent should have sufficient understanding to follow instructions . (Mechem , 48 ;

Hufi cut,

3 1 . How may the contract of agency be

made ?By oral communication , by writing , or by an

instrument under seal ; as a general rule thecontract of agency may be oral , but where bythe terms of the contract it is not to be performed within a year , it is required by the 4thsection of the statute of frauds to be in writing ,but if it be such a contract as may be performedor terminated within a year it need not be inwriting .

3 2 . Must the agent’s authority to sign a contract under the statute of frauds be inwriting ?

Unless the statute of the particular jurisdictionrequires it to be in writing the appointment maybe oral , although the contract must be executedin writing . In many cases an auctioneer orb roker may act for both parties in signing thememorandum , but one party cannot act for theother .

33 . How must the au thority of an agent toexecute an instrument under seal be given?

W here the contract between the principal and

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the third party is required to be under seal,the

authority of the agent to execute the instrumentmust itself be under seal . A contract for the saleof lands need not be under seal, although it mustunder the statute of frauds be in writing ; but theconveyance of the lands must be under seal , andthe authority of the agent to execute the conveyance must be under seal . (Huffcut,

34. What are the apparen t exceptions to therule that the agent's authority to execute a

sealed instrument must be under seal ?

1, If the specialty be executed by the agent in

the presence of the principal, the agent’

s authorityneed not be under seal ; 2 , if the seal is superfluons in the sense that the instrument

,though

actually sealed , need not be sealed in order to bevalid , the seal may be disregarded and a parolauthority will be sufficient ; 3 , if a corporationexecutes a specialty, the agent

’s authority to exe

cute it and affix the corporate seal need not itselfbe under seal ; it is sufficient that the authoritywas conferred by a vote of the directors ; 4, inmany jurisdictions it is held that one partner maybe authorized by parol to execute specialties inthe partnership name . (Hufl

'

cut,

I7

35 . Can an agent’s authority be establishedby h is own statement or admissions ?

The agent certainly cannot confer authorityupon himself . Evidence of his own statementsor admissions therefore, is inadmissible againsth is principal for the purpose of establishing , enlarg ing , or renewing h is authority ; nor can h isauthority be established by showing that heacted as agent or that he claimed to have thepower which he assumes to exercise . His actsand statements cannot be made use of against theprincipal until the fact of the agency has beenshown by other evidence. (Mechem ,

36 . What is mean t by ratification ?

An agreement by one to adopt an act performed by another for him , and it may be ex

pressed , which is indirect terms, or implied fromthe acts of the principal ; by ratifying a contracta man adopts the agency altogether

, as well whatis detrimental as what is for his benefit .

37. What is the effect of the ratification of alawful contract ?

It has a retrospective effect and binds theprincipal from its date and not only from theratification , for the ratification is equivalent to anoriginal authority . Such ratification will, in gen

18

eral, relieve the agent from all responsibility on

the contract, when he would otherwise have beenliable.

38 . What are essential elements of ratifica

non?1 , An act performed by an agent in behalf of an

existing principal ; 2 , the subsequent real assentof the principal to the act so performed in hisbehalf ; 3 , the competency of the principal togive a binding assent ; 4, in some cases an assentin a particular form ; 5 , the legality of the act

ratified . (Huffcut,

39 . What is an estoppel ?

The preclusion of a person from asserting afact by previous conduct inconsistent therewith,on his own part or the part of those under whomhe claims, or by an adjudication upon h is rightswhich he cannot be al lowed to call in question .

A preclusion in law which prevents a man fromalleging or denying a fact in consequence of h isown previous act, allegation, or denial of a contrary tenor . (Steph . Pl. ,

40 . W hat are the different classes of estop

pel?

1 , Estoppel by deed, which is by some matter

I 9

contained in a valid sealed instrument ; 2 , estop

pel by record, by the adjudication of a competentcourt of record ; 3 , estoppel in pais or equitableestoppel, which is one by virtue of some act oraction not under seal nor of record in a court .

41 . What are the elements involved in estop

pel by conduct ?

A misrepresentation or a ‘ concealment of amaterial fact, made with knowledge of the fact , toone who is ignorant of the truth ; made with theintention that he should act upon it , and leadinghim to act upon it . ! he representation must becredited as true, and the thing of value be partedwith, the credit be given, or the liability be incurred , in consequence thereof . (And . Law Die. )

42 . In what three ways may the authority ofa wife to pledge her husband’s credit arise ?

Actual authority, which is simply the usualagreement of agency ; ostensible authority, whicharises where a husband and wife l ive togetherand is the presumption that she is authorized topledge h is credit for the ordinary and usualhousehold purchases, outside of these other factsmust be shown to indicate authority ; authorityby necessity which is that created by the law as aresult of a marital relation by virtue of which the

20

wife has power to pledge her husband’s credit toobtain necessaries which he has neglected or tefused to provide. (Huffcut,

43 . How may the relationship of princ ipaland agent be determ ined ?

1 , By the original agreement , which would bethe passage of the time for which the agency wascreated or by the accomplishment of the object ;2 , by act of the parties, which would be a revocation by the principal or a renunciation by theagent ; 3 , by operation of law, which would be bydeath of one of the parties, by insanity of one ofthe parties, by bankruptcy of one of the parties,by marriage, by war and by termination of theprincipal’s authority. (Mechem , 127,

44. When may the principal revoke the

agency ?

As between principal and agent , authority isrevocable at any time if not coupled with aninterest, as the right of the agent to represent theprincipal depends upon the will and license of thelatter, whose act it is which creates the authorityand for whose benefit and purposes it is calledinto being .

45 . What is an agency coupled with an interest ?

21

W here the agent at the time of his appointment acquires also an interest in the subjectmatter so that while acting in the interest of theprinc ipal in relation thereto he is also acting inhis own behalf . (Hunt 713 . Rousmainer, 8

W heaton [U .

46 . What interest is sufficient to render theauthority irrevocable ?

It must be an interest or an estate in a thingitself or in the property which is the subject ofthe power ; the power and the estate must beunited and co-existent, and generally of such anature that the power would survive the principaland be capable of execution in the agent’s name.

(Mechem , 134 ; Hufi’

cutt,

47. What is the ru le as to revocation of the

authority of a general agen t ?

The general rule of law is that.

the acts of aformer general agent within the scope of h isoriginal authority will, notwithstanding its revocation, continue to bind the former principal tothose partieswho have been , and still are, dealingwith him in good faith , in reliance upon h is former authority

,until they have had notice of its

revocation . But this rule has no applicationwhere the act done is beyond the scope of the

agent’

s former authority. (Mechem,

23

50 . What notice must be given to a sub

agent ?

W here the sub-agent derives h is authoritysolely from the agent no notice is required to begiven him by the principal, but where he wasappointed by and with the authority of the principal he is in reality the agent of the principal ,and is entitled to notice.

5 1 . What is the rule as to notice to thirdpersons and the public on revocation ?

To all persons who have had actual dealingswith the agent actual notice must be given , or suchknowledge of the fact must be brought home tothem as would be sufficient to put an ordinarilyprudent man upon inquiry . To personswho havehad no actual dealings, notice may be given bypublication in some newspaper of general circulation . Notice by publication is sufficient, evento those who have had dealings with the agent,if it can be shown that they saw it . (Mechem,

5 2 . What is the ru le as to revocation of a

public agency ?

W here a statute requires the creation and maintenance of an agency to subserve some purpose

24

in which the citiz ens of a State may have an interest, the authority of an agent appointed inpursuance thereof cannot be revoked at the merewill of the principal unless for the appointment ofanother . (Mechem ,

53 . When may an agent renounce his agency?

In general the renunciation may be made atany time. His power to do this is co-extensivewith the principal’s power to revoke , but h isright to do so is like the principal’s right to re

voke, limited by his contracts in the premises.

54. What is the l iability of an agent to hisprincipal on revocation ?

W here the agency is indefinite in duration theagent may, upon giving reasonable notice, severthe relation at any time without liability to theprincipal, and will be entitled to compensationfor services up to that time, but where the agencyis for a definite period , or was undertaken for avaluable consideration, the agent would be liableto the principal for any damages he might sufferby the renunciation . (Mechem ,

5 5 . What notice is necessary to third persons on renunciation by the agent ?

! he agent need only give notice to his princi

25

pal , and the renunciation becomes operative fromthe time such notice is given . The principalmust, for h is own protection , give notice to thirdpersons in the same manner as where there is arevocation .

56 . W hat effect does death have upon the

agency ?

The death of either the principal or the agentimmediately determines the agency, unless it bean agency coupled with an interest, when a subsequent execution of it will be good . (Huffcut ,

57. What is the effect of insanity on the contract of agency ?

! he after-occurring insanity of the principal oragent terminates the agency, and if the insan ityhas been judicially declared , the decree of thecourt will be regarded as notice and the revocation will operate upon all persons, whether or notthey have actual knowledge of the insanity. Butwhen the principal has not been formally adjudgedinsane, persons dealing with the agent in ignorance of the insanity will be protected . An agencycoupled with an interest is not terminated by insanity . (Huffcut,

26

58 . What effect does illness have on the

agency ?

The illness of the principal would have noeff ect on the agency . But the illness of theagent, which incapacitated him from performingthe duties of the agency, would warrant him inrenouncing the contract, and perhaps the principal might revoke . (Huffcut,

59 . What effect does marriage have uponthe agency ?

As a general rule it does not operate as atermination of the agency. It may, however,revoke an authority, the exercise of which wouldimpair rights growing out of marriage, and underthe old law the marriage of a femme sole principal terminated the agency ; under the modernmarried woman’s acts this is generally not true.

60 . What effect does arrest and imprisonment have ?

Of an agent it terminates the agency becausethe constraint renders it impossible for him tocontinue the relation . And if a corporation bedissolved by judicial proceedings the agency isterminated , as likewise it is by the dissolution ofa partnership, whether voluntary or involuntary,

27

if the firm was either principal or agent . (Huffcut,6 1 . What effect does bankruptcy of the prin

cipal have ?

The general rule is that the legal bankruptcy ofthe principal or his assignment for the benefit ofcreditors of the subject-matter of the agency, t evokes the authority of the agent . Mere insolvency does not have this effect, as it only resultsfrom the operation of the law , when voluntarily orinvoluntarily, the principal surrenders and the lawassumes control of his affairs. (Mechem ,

6 2 . What effect does bankruptcy of the

agent have ?

It revokes h is authority to deal with the principal’s property rights, although he might still perform a purely formal act, as the carrying out ofan existing trust which is incumbent upon him .

(Huffcut,

63 . Wha t is the effect of war upon an agency?

! hegeneral rule is that all trading or commercialintercourse between two countries at war is prohibited applies to cases of agency where the waris between the country of the principal and thatof the agent, with the result that the agency isdissolved . (Mechem ,

28

64. What are the two exceptions to the rulethat an agency may be revoked by a principal ?1 , W here the agent has a power coupled withan interest ; 2 , when the agent has a powercoupled with an obligation . (Huffcut,

65 . What is a power coupled with an interest ?

The American rule is that an interest in thesubject-matter of the agency by way of securityor indemnity, coupled with the power to sell orotherwise dispose of the property, renders thepower irrevocable ; but an interest by way ofcompensation in the proceeds of such sale is notsuch an interest as will render the power irrevocable . (Huf

'

fcut,

66 . What is a power coupled with an obligation

A power in the execution of which an agenthas come under some obligation to a third person. W here the revocation would involve theagent in liability to a third person the principalcannot revoke, nor will the law revoke, the agency .

(Huffcut,

67. What are the sources of the obligationsof the princ ipal and agent to each other ?

29

The obligations of each are fixed either by theterms of their contract or by the terms annexedby law or custom , or by the terms reasonably inferred from the circumstances of the case.

68 . What are the obligations of the principalto his agent ?

1 , A duty to compensate the agent ; 2 , a dutyto reimburse the agent ; 3 , a duty to indemnifythe agent . (Huffcut,

69 . As to the payment of compensation whatis the rule ?

An express agreement as to compensation willfix definitely the right and amount of recoveryfor agent’s services. In such cases terms fixedby the parties are conclusive of the reciprocalrights and obligations, but where there is no express agreement an implied agreement to paywhatever the services are reasonably worth arisesunder all circumstances where a reasonable manwould infer that the services were not intendedto be gratuitous . (Huffcut, 93 ; Mechem ,

70 . What are the three cases determ iningthe intention as to whether the services were tobe gratu itous?

1 , If the services were rendered on request

3 1

in respect of which debts or obligations wereincurred .

74. ! o what class of l iens does that of anagent belong ?

Aside from special classes of agents , as factors,bankers and attorneys , the lien is special or particular, and extends only to the amount claimedfor services or expenditures performed or incurredin behalf of the very property upon which the l ienexists ; it extends to property or funds which arethe produce or fruit of the agency, but is lost ifthe possession is parted with .

75 . If an agent perform services which wereunauthoriz ed, can he recover compensationtherefor ?

If there has been a subsequent ratification , orthe benefits have been accepted by the principal,he can recover for the services in the same wayand to the same extent as if the service had beenoriginally authoriz ed . (Huf

’fcut,

76 . Where there is a wrongful revocation inbreach of a contract by the princ ipal, what arethe agent’s rights?

1 , He may treat the contract as still in existence and sue for the stipulated compensation as

32

it falls due ; 2 , he may treat the express contractas rescinded and sue in quantum men u? for thevalue of services performed as upon an impliedcontract ; 3 , he may treat the contract as brokenand sue in damages for its breach . (Huffcut,

77. What is the effect on the l iabil ity of theparties where the revocation of the agency wasby the law ?

It operates as a discharge of the contract as toboth parties , but does not rel ieve or dischargethe principal for liability on services already rendered unless there is an express stipulation thatsuch compensation shall not be paid on the termination of the agency by the law or by death orincapacity . (Huffcut,

78 . Can an agent who renounces in breachof a con tract recover compensation for servicesrendered ?

It is generally held that he cannot , as it is ofhis own wrong , but in some jurisdictions he hasbeen allowed to do so if the value of the servicesexceeded the damages caused by the breach . Thisapplies to indivisible contracts, or to one partlyperformed divis ion of a divisible contract . (Huffcut,

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79 . Where an agent acts for both partieswhat are his rights as to compensation ?

His right to receive compensation from bothdepends on the knowledge or want of knowledgeby the principal that h is agent was acting forboth parties. If ! acts as agent for Y and ! ina transaction between the two , he may recoverfrom both if each knew that he was acting for theother, but cannot recover from either if neitherknew of the double agency ; and if the money hasbeen paid the agent in ignorance of this fact, themoney may be recovered back by the principal .

(Huffcut,

80 . What is the agent’s right to reimbursement?

He is entitled to be reimbursed for all sumswhich he has paid out, or become individuallyand solely liable for, in the due course of theagency and for the principal’s benefit . The expenses or outlays must have been reasonablynecessary in due course , and not unreasonable inamount , or occasioned by the default or negligence of the agent himself.

8 1 . What is the agen t’

s right to indemnity ?

He is entitled to indemnity against the conse

34

quences of all acts performed by him in the dueexecution of his authority which are not illegal

'

or

due to h is own default .

8 2 . Can the obligations of the principal tohis agent be assigned ?

! he rule of law is strict that no one can assignh is obligations, and accordingly the principal cannot assign to a third person the obligationswhich by his contract he undertakes towards hisagent . (Huffcut,

83 . Can the principal assign his right to theservices of the agent ?

He cannot , as the agent is not bound to assume a fiduciary relationship toward the assigneeor consent to be governed by the latter . ! he

principal may, with the consent of the agent,transfer the services to another .84. What are the obligations of the agent to

the princ ipal ?

I , To obey the instructions of the principal ; 2 ,

to exercise the skill , judgment , and care necessary to the prudent discharge of the agency ; 3 ,to act with the highest good faith in the management of the principal’s interests ; 4, to accountfor all the proceeds and profits of the agency ; 5 ,

35

to act in person, except where authoriz ed'

by his

principal or by custom to act through sub -agents.

(Huffcut,

85 . What is the ru le as to liabil ity of the

principal on contracts made by his agent ?

W here the agent acts within the scope of hisactual authority the principal is l iable to thirdpersons upon all contracts made by the agent ;and upon all contracts made by h is agents withinthe scope of ostensible or apparent authority,unless the third person has notice that the agenthas exceeded h is authority. But the principal isnot liable upon contracts made by his agentsbeyond the scope of the actual or ostensibleauthority .

86 . What is holding out ?

W here one places another in such a position asto lead third persons acting prudently to believethat the agent has authority, it is holding outand the principal will be estopped to deny theagency or the authority that reasonably attachesto it . (Huffcut,

87. What is necessary on the part of the

third person to work an estoppel against the

principal based upon holding out ?

36

! he third person must have rel ied in goodfaith and prudently upon the appearance of authority based upon holding out , but if he isnegligent and it is h is own negligence, and notthe conduct of the principal, that is the approximate cause of his loss he cannot recover from theprincipal.

88 . What are the elementswhich combine tomake up what is called the apparent scope of

the agent’s authority ?

That appearance of authority upon which thepublic may rely arises from four elements : 1 ,

the powers actually conferred ; 2 , the powersnecessarily or reasonably incidental to thoseactually conferred ; 3 , the powers connected bycustom or usage to those actually conferred ; 4,

the powers which the principal has by h is conduct led third persons reasonably to believe thath is agent possesses. (Huffcut,

89 . What are the exceptions to the rule thatthe principal and not the agent is the properperson to sue for breach of a contract made byan agent ?

1 , W here an agent is contracted with by a deedin h is own name ; 2 , where the agent is named as

37

a party to a bill of exchange or other commercialpaper ; 3 , where the right to sue on a contract is,by the terms or circumstances of it, expresslyrestricted to the agent ; 4, where the contract ismade with the agent himself, z

'

. e. , where theagent is treated as the actual party with whomthe contract is made ; 5 , where the agent is theonly known or ostensible principal , or where theagent has made a contract not under seal in h isown name for an undisclosed principal ; 6 , wherean agent has made a contract, in the subjectmatter of which he has a special interest or property ; 7, where the agent has paid away money ofthe principal’s under circumstances which gave aright to recover it back . In numbers 1 , 2 and 3the agent only can sue, while in 4, 5 , 6 and 7,either the agent or principal may sue. (Perry ,Pl .

90 . What are the exceptions to the ru le thatthe princ ipal and not the agent is the properperson to be sued for the breach of a contractmade by an agent ?

1 , W here an agent contracts by deed in h isown name ; 2 , where an agent draws, endorses,or accepts a bill of exchange or promissory note ,in h is own name ; 3 , where credit is given ex

39

92 . If an agent without authority enter intoa contract on behalf of the princ ipal, can he besued on the contract ?

No action will lie on the contract against theagent , but he is otherwise liable, except in thosecases where hisauthority had expired without h isknowledge at the making of the contract .

93 . What is the apparent scope of authorityof an agent authoriz ed to sell ?

Impliedly or by custom he has the fo llowingauthority to receive payment : 1 , if he has possession of the goods , but not otherwise ; 2 , to fixthe term of the sale ; 3 , to warrant the quality ofthe goods sold with the usual and customarywarranty for such goods . But he has no impliedauthority to I , sell at auction ; 2 , exchange thegoods by way of barter ; 3 , sell on credit ; 4,pledge or mortgage the goods; 5 , or after a saleis made to rescind the contract or modify itsterms. (Huffcut,

94. For what three purposes may the admissions or declarations of an agent be sought tobe offered in evidence against the princ ipal ?

1 , To establ ish the fact of the agency ; 2 , toestablish the nature or extent of the authority ;

40

3 , to establish the existence or non-existence ofsome fact, other than the two named above,which is material to the issue in controversy between the parties.

95 . Upon what does the competency of theadm ission or declaration depend ?

In the first instance upon the purpose for whichit is offered ; and secondarily, upon the relationof the admission or declaration to the transactionin question and the general scope of the agency.

(Huffcut, 178 ; Mechem ,

96 . In order that the adm ission of the agen toffered in evidence may be binding upon the

principal , what elements must concur ?1, The fact of the agency must be established ;

2 , the admission or declaration must be in regardto some matter within the scope of the agent’sauthority ; 3 , the admission or declaration mustconstitute a part of the res g estz .

97. What is the res g estu ?

It consists of all those facts and circumstancessurrounding the main fact or transaction , andbeing so closely and intimately connected therewith as to serve to illustrate the character of thefact or transaction .

41

98 . What is the ru le as to notice to the

agent ?

W herever an agent in the course of h is employment receives notice of such a nature that itis h is duty to communicate it to his principal itis notice to the principal . In other words, theprincipal is chargeable with notice of all thematerial facts that come to the knowledge of h is agentin a transaction in which the agent is acting forthe principal .

99 . What is the rule as to notice acqu ired byan agent before the agency begins?

There are two views of this to be taken , thefirst being that the principal is never to be chargedwith notice of any fact learned by the agent before the agency begins. The second view is thatnotice acquired by an agent before the agencybegins is notice to the principal, provided thatthe fact is present in the mind of the agent at thetime of the transaction as to which the notice isinvoked , and provided that the agent is at libertyto disclose it . 1 1 W all . [U .

100 . Is notice to a sub-agent upon the samefooting as notice to an agen t ?

In Hoovervs. W ise, 91 U. S. , 308, it was de

42

cided that if the agent has power to appoint asub -agent , notice given to a sub -agent is noticeto the principal , but if the agent has not powerto appoint a sub -agent then notice to the sub

agent is not notice to the principal .

10 1 . What is the ru le as to the l iability of aprinc ipal for the torts of his agent ?

It is a well-established rule that the master isl iable for all torts committed by his servant in

the course of the employment and for the master’s benefit, and in some cases even when thetort was committed for the servant’s own purposes. In the case of an agent the principal isliable for torts committed by representation whenthe principal held the agent out as having au

thority to make the representation , and where athird person has been induced to act to h is prejudice thereby, relying reasonably upon the ostensible authority of the agent and the representations made by him . And an agent may have realor ostensible authority to make representations ;a servant may have real , but cannot have ostensible authority to commit torts.

10 2 . What is the natu re of a third person’sremedies when inj u red by a m isrepresentation ?

An action in tort for deceit where the misrep

43

resentationwasmadewith knowledge of its falsityor with a reckless disregard of its falsity, but noaction will lie in tort where it is innocently made ;it may, however, give a right to rescind a contract for work and estoppel, and there is also aright of restitution in equity which is similar tothe common law remedy in damages. (Huffcut,

103 . \Vhat implied powers has an attorneyof record as incidental to his authority to manage and control the cause of his cl ient ?

1, To make such affidavits as are required in

the progress of the cause, when the facts are

within his knowledge ; 2 , to waive a verification ;3 , to serve and accept service of al l necessary andproper papers , notices, etc. , during the progressof the cause ; 4, to waive formal notice of proceedings in the cause ; 5 , to waive or extend thetime fixed for any motion or proceeding ; 6 , toconsent to a reference of the cause ; 7, to submitthe cause to arbitrators 8 , to dismiss or discontinue the action ; 9, to consent to a non-suit ; 10 ,

to appeal the case ; 1 1 , to admit facts for the purposes of trial , either on the trial or before ; 1 2 ,

to stipulate as to the issues to be'

tried ; 13 , towaive informalities and techn icalities ; 14, to re

44

lease an attachment lien before judgment ; 15 , tostipulate that judgment in the cause be the sameas in another cause then pending involving thesame question ; 16 , to get necessary briefs printedat client’s expense ; 17, to bring a new action fornon-suit ; 18 , to agree that, upon judgment beingentered for h is client, he will suspend the issue ofexecution ; 19, to remit damages after a verdict .

104. What powers are not implied as incidental to the authority of an attorney of recordto manage and control the cause of his cl ient ?

1 , To admit or accept service of original process by which the court acquires jurisdiction forthe first time of the person of his client ; 2 , toconfess or consent to judgment against h is client ;3 , to enter a retraxit when it is final bar ; 4, tostipulate that the dismissal of an action shall baran action for malicious prosecution; 5 , to compromise the claim of h is client ; 6 , to release hisclient’s cause of action ; 7, to stipulate not to appeal or move for a new trial ; 8 , to release theproperty of the defendant from the l ien of a judgment or from the levy of an execution ; 9, torelease h is client’s security without payment ; 10 ,

to discharge or release a surety or endorser ; 1 1 ,

to discharge a defendant in custody on a ca. sa .

45

without the plaintiff’s consent or without satisfaction ; 12 , to agree to suspend proceedings ona judgment ; 13 , to release a garnishee from the

attachment of money or property in his hands;14, to release the interest of parties so as to makethem competent as witnesses: 15 , to give an ex

tension of time upon the demand ; 16 , to assignor transfer the demand or suit to a third person ;17, to consent to stay the execution if lien w ill belost ; 18 , to waive the right to an inquisition ; 19,

to give up the demand and take other security ;20 , to employ counsel at client

’

s expense ; 2 1 , tostipulate that case shall not be tried during cer

tain periods ; 22 , to undertake journeys on client’

s

behalf and at his expense.

10 5 . A appoints B ,an infant, as his agent to

sell certain goods. B sells the goods to C . Aafterwards seeks to disaffirm the sale, andbrings this action to recover back the goods onthe ground that B’

s act was void , as an infantcannot be an agent. !udgment for whom andwhy ?

Judgment for C . It is by no means necessary for a third person to be suz

’

j urz'

s, or capableof acting in his or her own right, in order toqualify himself or herself to act for others.

!

47

107. A gives B,his agent, power to sell real

estate. B knowing that A is short of fundsand is in need of cash

,obtains a mortgage on

the property and signs the same asA’

s agentunder the power to sell . He sends the moneythus obtained to A,

who dies intestate, havingretained the money . What are the rights of

the heirs as to the mortgage ?

The heirs hold subject to the mortgage. Byaccepting and retaining the money, which wasthe fruit of the agent’s act , without objection , theprincipal is presumed to have ratified that act .Having received the benefits of the contract, theheirs could not , as their intestate had signifiedhis acquiescence, invoke the aid of the courts torelieve them of the obligation .

108 . A makes a contract in writing with B .

A is in fact acting for C,an undisclosed prin

cipal. B sues C, and at the trial offers evidence to show that the contract was in factmade for C . Can he recover ?

Yes. A party who has entered into a writtencontract may maintain an action against the

principal upon parol proof that the contract wasin fact made for the principal where the agency

48

was not disclosed by the contract and was notknown to the plaintiff when it was made. Suchproof does not contradict the written contract .It superadds a liability against the principal tothat existing against the agent . That parol evidence may be introduced in such a case to chargethe principal , while it would be inadmissible tod ischarge the agent, is well settled by authority.

109 . A hired B as his agent, and in the contract of hiring, it was agreed that the authoritygiven the agent to sel l goods shou ld not berevoked for five years. After one year A, the

princ ipal,revokes the agency. ! he agent re

fuses to cease acting. What are the rights ofthe parties?

! he principal may revoke , but he must respondin damages for the breach of the contract . Thedistinction must be drawn between the power andthe right to revoke. As agency is a personal t elation, it depends for its existence upon the willof the principal who creates it ; and he may, therefore, recall the appointment of an agent of h isown selection at h is pleasure, unless the agencyis coupled with an interest. Although the powerto revoke may exist in a given case, yet it cannotbe exercised without rendering the principal lia

49

ble to damages , when he has ag reed that theagency shall not be revoked for a certain period .

(Hunt vs. R ousmanier, 8 W heat . [U .

1 10 . A is employed by the ! corporation to

go to Albany, and use h is utmost influence andexertion to procure the passage of a b ill, granting to the corporation a certain railroad franchise in the city of ! ew York . A goes toAlbany and argues before the leg islative com

mittee to the best of h is abil ity . He sues the

corporation for his serv ices. Can he recover ?

No . This contract is void as against publicpolicy . It is a contract leading to secret , improper , and corrupt tampering with legislativeaction . It is not necessary that the parties stipulated for corrupt action , or that they intendedthat secret and improper results should be had .

It is enough that the contract tends directly tothose results . It furnishes a temptation to theplaintiff to resort to corrupt means or improperdevices to influence leg islative action . It tendsto subject the legislature to influences destructiveof its character and fatal to public confidence inits action . The law avoids contracts and promises made with a view to place one under wronginfluences ; those which offer him a temptation

50

to do that which may effect injuriously the rightsand interests of third persons. It is a sufficientobjection to a contract , on the ground of publicpolicy, that it has a direct tendency to inducefraud and malpractice upon the rights of othersor the violation or neglect of high public duties.

The following rules are of value in determiningthe parties to an action where an agency exists.

CONTRACTS .

PLAI! ! IFFS.

A contract entered into with a principal throughan agent is in law made with the principal , and theprincipal, not the agent, is the proper person tosue for the breach of it .

Ex. 1 . W here an agent is contracted withby deed in h is own name.

Ex . 2 . W here the agent is named as a partyto commercial paper .

Ex. 3 . W here the right to sue on a contractis, by the terms or circumstances of it, expressly restricted to the agent .O

ny

agen

cansue

.

SI

Ex . 4 . W here the contract is made with theagent himself e. , where the agent istreated as the actual party with whom the

contract is made .Ex. 5 . W here the agent is the only knownor ostensible principal , or where the agenthas made a contract not under seal in hisown name for an undisclosed principal .

Ex . 6 . W here an agent has made a contract,

in the subject-matter of which he has aspecial interest or property.

Ex . 7. W here the agent has paid awaymoney of the principal’s under circumstances which gave a right to recover itback .

A person who enters into a contract in realityfor himself, but apparently as agent for anotherperson , whom he does not name, can sue on thecontract as principal .A person who contracts in reality for himself,but apparently as agent for another person , whosename he gives, cannot sue on the contract asprincipal .

a

or

a.

DEFE! DA! ! S .

A contract entered into by a principal , throughan agent, is in law made by the principal, and the

5 2

principal , not the agent , is the person to be suedfor the breach of it .

agent

can

be

sued

.

Ex. 1 . W here an agent contracts by deed inhis own name .

Ex . 2 . W here an agent draws , indorses , oraccepts a bill of exchange or promissorynote in his own name .

Ex . 3 . W here credit is given exclusively tothe agent .

Ex . 4 . W here an agent contracts for personsincapable of contracting .

Ex . 5 . W here the contract is made by theagent himself—i . e. , where the agent istreated as the actual party by whom thecontract is made , or, in other words ,where the agent, though acting as such ,incurs a personal responsibility .

Ex . 6 . W here the agent is the only knownor ostensible principal , or where a contract (not under seal ) has been made byan agent in his own name for an undisclosed principal .

Ex. 7. W here money received b y an agentfor h is principal has been paid under amistake of fact or obtained by means of atort .

Ex . 8 . W here an agent has signed certain

53

contracts on behalf of a limited companywithout using the word ! limited

,in

which case, probably, only the agent canbe sued .

An agent who , without having authority entersinto a contract on behalf of a principal, cannothimself be sued on the contract , but is otherwiseliable .

Ex. W here the authority of an agent haswithout his knowledge expired at thetime of his making the contract .

TORTS .

PLAI! ! IFFS.

A principal (or employer) can never sue orwhat is merely an injury to his agent (or servant ) ,nor an agent (or servant) for what is merely aninjury to his principal (or employer) .

DEFE! DA! ! S.

A principal is l iable to be sued for the torts ofan agent either committed by the command ofthe principal or subsequently assented to orratified by him .

An employer or master is liable to be sued forthe torts of his servant if committed in the courseof the servant’s employment and for his master

’

s

Qu estions and Answ ers

Bailm ents

Prepared w ith R eference to Hale and Sch ou ler

and Se lected Cases.

E. R ICHARD SHIPP. LL. M.

Of f/uDzstrz'

ct qf Columbia Bar.

WASHI! ! ! O! , D. C

!OH! BYR! E CO. ,

LAW BOOK SELLERS,

QUES! IONS A! DANSW ERS

BAILMEN! S .

1 . What is a bailment ?

A bailment is a transfer of the possession ofpersonal property

, without a transfer of ownership , for the accomplishment of a certain purpose,whereupon the property is to be redelivered , ordelivered over to a third person . (Hale, Adelivery of goods in trust upon a contract , eitherexpressed or implied , that the trust shall be faithfully executed on the part of the bailee . (Bl .Com . , A delivery of goods in trust upona contract, expressed or implied , that the trustshall be duly executed , and the goods restoredby the bailee as soon as the purposes of the bailment shall be answered . (2 K ent,

( 57 )

58

2 . What is the distinction between a bailmentand a sale ?

One established test between a bailment and asale , is that when the identical thing del ivered isto be returned , though , perhaps , in an alteredform , it is a bailment and the title is not changed ;but when there is no obligation to return the specific article received , and the receiver is at libertyto return another thing, either in the same orsome other form , or else to pay money, he becomes a purchaser ; the title is changed ; thetransaction is a sale, and the property is at thereceiver’s risk . (Benj . , Sales, sec. 1 ; Tiffany,Sales ,

3 . What is the mutuum of the Roman law ?

A delivery of goods not to be returned inspecie, but to be replaced by other goods of thesame kind . At common law, such a transactionis regarded as a sale, and not a bailment . (Hale,

4. What character of property only is the

subject of bailment?

By the civil law corporeal personalty only mightbe bailed as it alone admitted of actual delivery ;at common law incorporeal personalty, as evi

59

dences of title, debts, or choses in action, forwhich vouchers may be transferred , are the sub

ject of bailment . (Hale,

5 . Who are the parties to a bailment ?

The bailor and the bailee ; the bailor being theone who delivers the article or thing for use andthe bailee being the one who receives it .

6 . What marks the inception of a bailment ?

Delivery ; which may be either actual , wherethere is a transfer of the possession from the

bailor to the bailee ; or constructive, where thereis no actual transfer of possession but an intentionto transfer may be implied from the circumstancesof the case ; delivery may be made to the baileehimself or to a servant or agent for him .

7. What is necessary as to the competencyof the parties to a bailment ?

W herever the bailment is one which is createdby express contract, the ordinary rules as tocapacity to make a contract apply ; but where thebailment arises by operation of law , capacity ismaterial only in determining what is due care,which is the measure of the bailee’s l iability .

(Hale,

8 . What title is necessary in order to createa valid bailment?Wherever one has a special property in a thing,or the lawful possession of it, that will be suffi

cient ; the finder of an article , while not acquiringan absolute property, has such a property as willenable him to hold it against all the world exceptthe rightful owner ; and even though one holdsproperty wrongfully, a bailment by him to a thirdperson is valid against all persons other than thereal owner.

9 . W hen a bailment is made in whom is the

righ t of property ?

Right of property remains in the bailor , andhe may transfer it without the bailee’s consentsubject to the right of the latter ; notice of suchtransfer of title given to the bailee is a sufficientconstructive delivery so that the property rightmay be held by the bailee against attaching creditors of the bailor for one who is a bone: fia

'e pur

chaser .

10 . Can the bailee dispute the bailor’s title ?

He is estopped to deny the title of his bailor,

but may show that the title has expired or beenassigned to another to whom he, after notice ofthe assignment, must account.

6 1

1 1 . What care should be exerc ised by abailee ?

Commensurate care, or what , under the circumstances of the bailment , is due care , which isthe measure of the bailee’s obligation in the ahsence of an express contract regarding the careto be used , and this notwithstanding the purposeof the bailment .

1 2 . Where a bailment arises by spec ial contract what are the duties of the bailee ?

He must act with good faith and the necessarycare and diligence required by the contract toperform the purposes of the bailment , and will beliable for any willful wrong or fraud , and irrespective of negligence or fraud , for any breach ofthe bailment contract , or conversion of the bailedgoods

1 3 . When is negligence presumed in the caseof a bailment ?

Generally the burden of proof as to negl igencerests upon the plaintiff, ( it is always on the partywho has the affirmation of the issue ) and theburden of proof never shifts ; it is held , however,that when the plaintiff establishes the receipt ofthe thing bailed in good condition , a failure to

63

tuum ; 5 , pignori acceptum, or pawn ; 6 , locatum ,

or hiring , which is subdivided into locatio rei ,locatio operis faciendi, locatio operis mercium

vehendarum, and locatio custodiae .

1 7. What is depositum ?

A naked bailment of goods , to be kept for thebailor without reward, and to be returned whenhe shall require it . (Jones, Bailm. , 36 ; Hale,38 ; Story, Bailmn. , sec.

1 8 . What is mandatum?

A delivery of goods or chattels to somebodywho is to carry them or do some act about themgratis, without any reward for such work or carriage. (8 Ind . , A mandate is when oneundertakes without recompense to do some actfor another in respect to the thing bailed . (2K ent , Com . [ 12 th

19 . What is commodatum ?

A gratuitous loan of goods to be temporarilyused by the bailee and returned in specie . It isa loan for use. (Hale, Lending for use isa bailment of a thing for a certain time, to beused by the borrower without paying for it .(Jones, Bailm. ,

64

20 . What is pignori acceptum,or pignus?

It is a pledge or pawn , and consists of a dclivery of goods as security for some debt or engagement, and is accompanied by a power of sale incase of default .

2 1 . What is locatum ?

Locatum or locatio is generally defined to be acontract, by which the temporary use of a sub

ject, or the work or service of a person , is givenfor an ascertained hire . ( 1 Bell , Com . [4th

sec .

2 2 . What is locatio rei ?

The mere hiring of a chattel for use so that thebailee acquires the right of use for a specifiedtime on some consideration given or paid orpromised to be given or be paid by him .

2 3 . What is locatio Operis fac iendi ?

The hire of active labor and services such as ofa tailor to make clothes , or agents , factors, orcommission merchants and other persons actingfor compensation .

24. W hat is locatio custodian?

The hire of care and attention or services to bebestowed upon the thing delivered , as a ware

65

houseman , the distinction between this and thelocatio operis faciendi being that in the latterthere is a feasance, or active service, while in theformer it is mere custody.

2 5 . What is locatio operis mercium vehendarum?

This is merely the hiring of the transportationof goods either from a public or a private carrier ;the transportation of goods or persons by a common carrier for hire is an example .

2 6 . What is the usual classification of bailments at the present time with reference tobenefit ?

1, Those for the sole benefit of the bailor,

which include the depos itum and mandatum ; 2 ,those for the sole benefit of the bailee which include commodatum ; 3 , those for the mutualbenefit of the bailor and bailee which include thepignori acceptum and the locatio rei in its various forms.

2 7. How are bailments for the sole benefit ofthe bailor created ?

They may arise or be created by express contract , when the ordinary rules as to capacity ofthe contracting parties apply, or by operation of

66

law independent of any express contract , whenthey are called quasi or constructive bailments.

In all such the absence of intended compensationto the bailee is essential .

28 . Can one become a bailee of goods without his consent ?

No but the finder of goods lost , while underno obligation to take them into custody, will , ifhe voluntarily assumes the care of them , be burdened with the liabilities of a depository.

29 . \Vhat attaches l iabil ity to a quasi or constructive bailee?

! he bailment arising by operation of law , andnot by contract, the capacity of the parties isimmaterial except as it affects the question ofdue care, the liability of the bailee arising byoperation of law without regard to his capacityin any other respect .

30 . What is an involuntary deposit or bailment ?

It is one which arises by operation of lawwhenever the goods of one person have by unavoidable casuality or accident been lodged uponanother’s land . (2 H . El ,

67

3 1 . How is the question as to in tended com

pensation to be determined ?

As in all contracts the intention of the partiesis the important thing . This is a question offact to be determined from all the circumstances ,and the burden of proof is upon the bailor seeking to charge the bailee with negligence that hewas a bailee for compensation .

3 2 . What is the characteristic feature of abailmen t for the sole benefit of the bailor ?

The entire absence of compensation to thebailee which also fixes the standard of his liabilityat sl ight dil igence.

33 . What are the rights of the bailee in abailmen t for the benefit of the bailor ?

1 , The right to indemnity ; 2 , the right to contract for the preservation of the property ; 3 , theright to incidental use of the property ; 4, theright to maintain an action for the injury or conversion of the thing .

34. In whom is the right of property in the

thing bailed ?

Unless by the terms of the express contract itis otherwise the right of property remains in thebailor and the bailee has no more than a mere

68

possessory interest , but either the bailee or thebailor may sue for an injury to or conversion ofthe subject of the bailment .

35 . What is the distinction as to the l iabil ityof a gratuitous bailee for misfeasance or nonfeasance ?

W here one is a bailee without reward noliability attaches to a nonfeasance , for the failure.

to perform a gratuitous undertaking creates noliability ; but if one has actually entered upon theperformance of such a bailment contract he isliable for any failure to fulfil its termsby reason ofh is own fault .

36 . What constitutes m isfeasance ?

Misfeasance is the performance of an act whichmight lawfully be done in an improper manner bywhich another person receives an injury (Bouvier,L . gross negligence in the performance ofthe bailment contract is a misfeasance.

37. What right has the bailee to the use of

the property bailed ?

If it be a bailment for the sole benefit of thebailor

, he has none ; but where it is for the mutualbenefit of the bailor and bailee, or for the solebenefit of the bailee, then he has the right of use

69

to the extent of the bailment,and in some cases

where the bailment is for the sole benefit of thebailor but from the nature of the article baileduse is necessary to its proper care

,he will be

entitled to that use, but if a positive profit arisefrom such use it must be accounted for to thebailor .

38 . What degree of negligence renders the

bailee l iable on a bailment for his sole benefit ?

Gross negligence has been laid down since thetime of Coggs vs. Bernard , 2 Ld . Raym. , 909, asthe test of liabil ity for losses by the bailee in suchcases. It is otherwise stated as being due care,which requires only !

slight diligence,! and this

defined to be that degree of care or diligencewhich men habitually careless or of little prudencegenerally take in their own concerns. ( Story,Bailm. , sec.

39 . Where a bailment is of a character thatnecessarily involves an assumption of sk il l onthe part of the bailee,

what determines the question of l iabil ity ?

A failure to exercise such skill may, and usuallydoes, constitute gross negligence ; but the skillof the average member of the same profession or

71

ment contract , both as to person and to place ;and if he does so without notice of an adverseclaim he will be protected from liability, but if hehas notice of such adverse claim , the delivery willbe at his peril .

43 . What is essential to the creation of a

commodatum ,or bailment for the sole use of the

baflee ?

It must be created by contract, for only by theowner’s consent can one acquire the right to agratuitous use for his own benefit of the propertyof another ; it must be without intended compensation to the bailor and must be for the exclusiveuse of the bailee .

44. How may a bailment for the sole benefitof the bailee be term inated ?

1 , By the accomplishment of the purpose of thebailment ; 2 , by operation of law ; 3 , by mutualconsent ; 4, by the bailee

’s or borrower’s wrong

5 , by either party at h is option , except where it isfor a definite time, when the bailor cannot terminate the bailment until the time expires.

45 . What is pledge and to what class of bailments does it belong ?

Apledge, or pawn, is a deposit or delivery of

72

personal property as security for the payment ofa debt or the performance of the engagement,with an implied power of sale in case of default ;it belongs to that class of bailmentswhich are forthe mutual benefit of both parties .

46 . What is the distinction between a pledgeand a chattel mortgage ?

In a pledge the title remains in the pledgor,he having parted with possession , which he mayregain by the payment of his debt or performanceof his obligation ; while a mortgage is not only apledge , but something more , as

'

the title passes tothe mortgagee, subject to be defeated if the debtor obligation of the mortgagor is paid or fulfilled .

47. When does a pledgee acquire a bettertitle than the pledgor has ?

W hen he takes commercial paper before maturity, without notice, and for value in the usualcourse of business ; and when the true owner hasplaced the pledgor in a situation which wouldlead the pledgee to believe that the pledgor wasthe owner .

48 . What are the remedies of a pledgeeafter defau lt of the pledgor ?

He may sue on the debt without losing his

73

lien on the pledged property ; or he may sell itat common law after notice to the pledgor or inequity when his right is disputed or an accountis necessary ; or where there is a power of salegiven by statute or by the contract of pledge itself .

49 . How must a sale of a pledge be made atcommon law ?

Only after the debt which the pledge secureshas become due can a sale be made , and then itmust be after reasonable notice to the pledgor ofthe time and place of sale, and at public auction .

50 . W ho is an inn-keeper ?

One who holds himself out to furnish food andlodging

,or lodging only, to transients and who

is bound to receive as guests all reputable personswho come in proper condition and are willing andable to pay for their entertainment so long as hehas the accommodations for them .

5 1 . What l iabil ity has an inn-keeper for the

goods of a guest ?

At common law , an inn- keeper is liable as aninsurer of the goods of h is guest , except wherea loss is occasioned by the act of God or of apublic enemy, or by reason of the inherent natureof the goods, or by the negligence of the guest or

74

his servant or companion ; statutes in some statesalso exempt the inn-keeper from loss by accidentalfire .

5 2 . For what goods of a guest is an innkeeper not l iable ?

Generally the liability extends to all movablegoods and money placed within the inn , but thosewhich are for exhibition or sale or retained in theexclusive custody of the guest are exempted .

5 3 . How may the inn -keeper be rel ievedfrom l iability ?

By contract or custom he may limit or perhapsrelieve himself from liability entirely, and by statutes in some states his liability is limited to acertain amount and in others he is relieved of allliability on giving notice that the articles must bedelivered to him for safe keeping .

54. What is the nature of an inn-keeper’sl ien ?

Being compelled to afford entertainment to allwho may apply and because of h is liability forloss or injury to the goods of the guests the lawhas given him a lien upon all the property of h isguests, as security for unpaid charges, and thisextends to all goods brought upon the premises,

75

even though the guest be not the owner, unlessthe inn-keeper is aware that he is not the owner,when his lien attaches only to services renderedabout these goods.

5 5 . How is the inn-keeper’s l ien waived orlost ?

Like all liens a voluntary parting with possession extinguishes the right , as does also anagreement to give credit by the inn-keeper , butthe taking of security for the payment of a billis not a waiver unless there is an agreement expressed or implied that it will be ; a tender bythe guest will extinguish the lien , and where theguest has a set-off for an equal or greater amount,there is no lien .

56 . When is an inn -keeper to be treated asan ordinary bailee of property inhis charge ?

W here the goods of a guest are kept for showor sale, where they are held under his lien forcharges, and where they are the goods ofboarders, not guests, he has the l iability of anordinary bailee for hire ; but where they are leftan unreasonable time by a departing guest , ordeposited with him by one not a guest withoutcompensation , h is liability is one of a gratuitousbailee.

62

return it, or a return in an injured condition , hehas established a prima facie case, and the defendant must rebut the presumption of negligence .

(85 Pa . St , 39 1 ; 144 N . Y . ,

14. ! o whom must del ivery be made by thebailee on the expiration of the bailment ?

It is an absolute duty of the bailee to redeliverto the bailor, or some one authorized by him , ifit be within h is power, and if he makes a deliveryto a wrong person, even though upon a forgedorder , he will be liable to the bailor irrespectiveof the question of negligence.

1 5 . How is it determ ined to whom the baileemust del iver the things on the term inationof

the bailment ?

If the contract of bailment be an express one,it usually determines to whom the thing is to bedelivered , but if it does , not the contract wh ichthe law implies is that the bailee should redeliverthe thing to the bailor . (Hale ,

1 6 . What is the div ision of bailmen ts as givenby SirW il liam !ones and corresponding to theRoman classification (or c ivil law) ?

1 , Depositum , or deposit ; 2 , mandatum , orcommission ; 3 , commodatum , or loan ; 4, mu

63


or hiring , which is subdivided into locatio rei,

locatio operis faciendi, locatio operis mercium



A naked bailment of goods , to be kept for thebailor without reward , and to be returned whenhe shall require it . (Jones, Bailm. , 36 ; Hale,38 ; Story, Bailmn. , sec.


A delivery of goods or chattels to somebodywho is to carry them or do some act about themgratis , without any reward for such work or carriage. (8 Ind . , A mandate is when oneundertakes without recompense to do some actfor another in respect to the thing bailed . (2K ent , Com . [ 12 th



63


or hiring , which is subdivided into locatio rei,locatio operis faciendi, locatio operis mercium


17. What is depositum ?

A naked bailment of goods, to be kept for thebailor without reward , and to be returned whenhe shall require it . (Jones , Bailm. , 36 Hale ,38 ; Story, Bailmn. , sec.


A delivery of goods or chattels to somebodywho is to carry them or do some act about themgratis, without any reward for such work or carriage. (8 Ind . , A mandate is when one

undertakes without recompense to do some actfor another in respect to the thing bailed . (2K ent , Com . [ 12 th


A gratuitous loan of goods to be temporarilyused by the bailee and returned in specie . It isa loan for use . (Hale, Lending for use isa bailment of a thing for a certain time, to beused by the borrower without paying for it .(Jones, Bailm. ,

return it, or a return in an injured condition , hehas established a prima facie case, and the defendant must rebut the presumption of negligence.

(85 Pa . St. , 391 ; 144 N . Y . , I . )

14 . ! o whom must del ivery be made by thebailee on the expiration of the bailment ?

It is an absolute duty of the bailee to redeliverto the bailor, or some one authoriz ed by him , ifit be within h is power, and if he makes a deliveryto a wrong person, even though upon a forgedorder, he will be liable to the bailor irrespectiveof the question of negligence.

1 5 . How is it determined to whom the baileemust del iver the things on the term ination ofthe bailment ?

If the contract of bailment be an express one,it usually determines to whom the thing is to bedel ivered, but if it does, not the contract wh ichthe law implies is that the bailee should redeliverthe thing to the bailor . (Hale ,

1 6 . What is the div ision of bailmen tsas givenby SirW illiam !ones and corresponding to theRoman classification (or c ivil law) ?

1 , Depositum , or deposit ; 2 , mandatum, orcommission ; 3 , commodatum, or loan ; 4, mu

63

tuum ; 5 , pignori acceptum, or pawn ; 6 , locatum,

or hiring, which is subdivided into locatio rei ,locatio operis faciendi, locatio operis mercium



A naked bailment of goods, to be kept for thebailor without reward, and to be returned whenhe shall require it . (Jones, Bailm. , 36 ; Hale ,38 ; Story, Bailmn. , sec.

1 8 . What is mandatum ?

A delivery of goods or chattels to somebodywho is to carry them or do some act about themgratis, without any reward for such work or carriage. (8 Ind . , A mandate is when oneundertakes without recompense to do some actfor another in respect to the thing bailed . (2K ent , Com . [ 12 th



82

78 . What presumption arises by proof of

damage on behalf of the passenger ?

A presumption of actionable negligence on thepart of the carrier , which will entitle the passen

ger to recover if there be no evidence in rebuttal .

79 . How may this presumption be rebutted ?

By showing that the act which caused the injury was the act oi God , or of the public enemy,except where the carrier’s negligence has contributed to the injury ; or by showing that therewas no negligence on the part of the carrier, orif there was, that the negligence of the passengeralso contributed to the injury .

80 . Can a carrier of passengers l imit its liab ility by contract ?

In some States it is held that they may limittheir liability against ordinary negligence but notagainst gross negligence of their employees as togratuitous passengers, but generally as to passengers for a compensation they cannot .

8 1 . How may the l iabil ity of a carrier beterm inated ?

By ejectment from the vehicle for improperconduct or a refusal to comply with proper regulations by alighting at the station of destination

83

and by the delivery of the passenger to a connecting carrier.

8 2 . A takes 50 bushels of wheat to a m il lerto be made in to flour. Miller sells the wheat toB . What right has A in the matter ?

A can replevy the wheat from B, or sue eitherthe miller or B for conversion . An agreement todeliver wheat to be manufactured into flour, is abailment merely, and not a sale, and therefore Amay replevy the wheat . W here a contract ismade with the manufacturer to deliver to himraw material to be returned manufactured , thecontract is one of bailment and not of sale, andtitle to the articles when manufactured remainsin the original owner . The fundamental distinction between a bailment and a sale is, that in theformer the subject of the contract , although in analtered form , is to be restored to the owner ;whilst in the latter there is no obligation to re

turn the specific article ; the party receiving it isat liberty to return some other thing of equalvalue in place of it .

83 . A leaves a watch w ith a jeweler to be re

paired, the shop was burglariously en tered without fault of the jeweler and A’

s watch was

84

stolen . A brings action against the jeweler.Can he recover ? State the ru le.

Upon it appearing that the goods were lost bya burglary committed upon the defendant’s shop ,it was for the plaintiff to establish affirmatively,that such burglary was occasioned or was notprevented by reason of some negligence or omission of due care on the part of the j eweler, andthere was no fault or negligence on the part ofthe j eweler, A clearly could not recover . ! he

rule is that the bailee is only liable for loss ofgoods when he has been negligent .

84 . A del ivers to B , a book-binder,books to be bound at $ 1 each . 500 of the

books were bound and del ivered by the binderyto Aw ithout exacting payment. ! he remaining 500 books were bound by B , and then

pledged by h im to C,as secu rity for a loan of

C refused to del iver the books to Aon demand . A consults you . What is the

nature of the transaction and what are the re

spective rights ofA,B and C under the c ircum

stances ?

This is a bailment , and title to the books is inA

,subject , however, to B

’

s l ien for the work done

85

upon it . B having a l ien,could pledge the same .

C acquired all B’s rights to retain the books untilthe entire amount due upon them was paid by A .

85 . A brings a wagon to B for repairs. It is

worth $2 5 when taken . B repairs the wagon,

increasing the value to $ 100 . C has a judgment against B , and offersA$2 5 for h is interestln the wagon . A refuses to accept it. C thenlev ies on the wagon and sells it under itsjudgmen t against B . Ab rings anactionagainstC . Can he recover, and what is the exten t ofthe recovery ?

The owner of property, who delivers it to another for the purpose of having repairs donethereon , or other work which adds to its value,does not thereby lose his title to the property.

Therefore he may recover as damages from onewho has converted the property, the value at thetime of the conversion . Anything affixed to one’sproperty becomes a part of that property, andtitle to it passes to the owner . In both of thesecases

,therefore

,A can recover the value of the

property when taken .

86 . Adel ivered goods to B , a warehouseman .

C, the rightfu l owner of said goods brings ac

Qu estions and Answ ers

SALES

P repared w ith R eference to B enj am in, Burdick

and ! iffany , and Se lected Cases.

E. RICHARD SHIPP. LL. M .

DtSlf tCtof Columbia Bar.

WASHI! ! ! O! , D. C.

!OH! BYR! E CO. ,

Punusaans or LAW 1200118 .

1904.

QUES! IONS A! D ANSW ERS

O!

SALES OF PERSONAL PROPER! Y.

1 . What is a sale ?

A transmutation of property from one man toanother in consideration of some price or recompense in value . (2 Blk . , A transfer of theabsolute title to property for a certain agreedprice . It is a contract between two parties , oneof whom acquires thereby a property in the th ingsold , and the other parts with it for a valuableconsideration . (Story on Sales , sec . Atransfer of the absolute or general property in athing for a price in money . (Benj . Sales , Sec .

A sale is a present transfer , by mutualagreement , of the absolute or general title tocertain property for a certain price . (2 Schouler,Per . Prop . , sec . For other definitions,see (Bouv. Law Dic . ; Black

’

s Law Dic . ; Newmark , Sales) .

90

2 . How may a sale be effected ?

The property may be transferred immediatelyby the contract itself, or at a later period underand as a result of compliance with the terms ofthe contract . (Benj . , Sales ,

3 . In how many ways may a sale be made ?

Two . Absolute sale and a conditional sale;the difference being that on the absolute sale thetitle passes as against all parties , while in a conditional sale the title passes only as between theparties and not as to third persons without notice.

4. What is meant by property as generallyused in the text books?

The general ownership as distinguished fromthe special right of ownership (property) in abailee or agent . The general ownership (property) may be transferred to one person subjectto a special ownership (property) in another .

(Benj . , Sales,

5 . What is included under the term !

goods?!

Generally all corporal chattels personal exceptmoney, but it does not include mere rights whichhave no palpable and visible form ; promissory

91

notes are in some states treated as merchandise,and in others they are held not to be goods.

6 . How are growing crops regarded ?

For practically all purposes they are treated aschattels personal , being produced by the industryof man . They are known as fructus iua’ustriales.

(Benj . , Sales,

7. What is implied by the word price ?

It signifies the consideration and implies thatit is one of money , or at least one

‘ stated inmoney terms ; it may be paid in full or in part,or only promised to be paid .

8 . Where the consideration is somethingother than money what is the transaction called ?

W henever the consideration consists of othergoods and there is no statement in money terms,the transaction is merely an exchange or a barter,although just as effective in passing title to thegoods ; an allegation of a sale, however , will notbe supported by proof of an exchange or barter.

9 . If there be no consideration of any kindfor the transfer of the property, what is suchtransaction called ?

It is a gift, and as between the parties , will be

92

effectual if there has been delivery of the thingwith the intention to transfer the title , but incertain cases it will not be eff ectual as againstcreditors .

10 . How may a parol gift be effectuated ?

By subsequent delivery or authorized entry bythe donee ; no actual delivery is necessary wherethe donee is already in possession .

1 1 . What is the distinction between a saleand a bailment ?

In a sale there is no obligation to restore thespecific goods and the receiver becomes thedebtor of the deliverer , the property in the goodsbeing changed ; in a bailment the property is notchanged and the receiver is bound to return theidentical goods either in the same or an alteredform .

1 2 . W hat is included under the term !sale ?

A bargain and sale as well as a sale and delivery ; but the delivery of the goods is notessential to the transfer of the property therein .

1 3 . What is the difference between an agreement to sell and a sale ?

It is a contract in the narrower sense andcreates a right in personam, which may or may

93

not be followed by a right in rem. But it doesnot transfer the property in the goods. If thetitle passes it is a sale—ii it does not it is anagreement to sell .

14. Who are the parties to a contract of sale ?

The seller and the buyer ; and if the title passesto the buyer by the terms of the contract it isfrequently called executed ; and if it does not,executory.

1 5 . Shou ld a contract of sale be made inwriting ?

Independent of the Statute of Frauds any contract for the sale of personalty may be made byword of mouth and be perfectly valid , but by the17th Section of the Statute of Frauds, no contract for the sale of goods , wares and merchand isc for the sale of ten pounds sterling, or upwards, shall be allowed to be good , unless inwriting, or certain alternatives , provided therein ,are complied with ; also , as to sales of real property, the contract under the 4th Section of theStatute of Frauds must be in writing .

1 6 . What is the language of the original1 7th Section of the Statute of Frauds?

No contract for the sale of any goods, wares

95

made ; although the fish have an actual , potentialexistence , there is no present ownership that canbe the subject of sale .

19 . What is the nature of a con tract of salefor goods which the seller must afterwardsacqu ire by purchase ?

Future goods, or goods which the seller mustafterwards acquire by purchase after a contractfor their sale has been made , give the contractfor their sale the form and nature of a gamblingventure , and is illegal where the parties do notcontemplate any purchase and delivery of thegoods to fill the contract , and are merely riskingthe diff erence between the contract price , andthe market price of such goods at a future day,whereby one would win and the other lose thatdiff erence . ( Irwin us. W illiar, 1 10 U . S. , 499 ;

Embry as. Jemison , 13 1 U . S. ,

20 . When and under what c ircumstances is asale of ! futu res valid as to either party ?

W herever one of the parties to the contract ofsale acts in good faith , either the seller or buyer,with the intention and expectation of deliveringor receiving the things which are the subject ofsale , the transaction as to him will be valid ; this

96

means only that the person acting in good faithmay enforce the contract, or recover damages forits breach by the other party, while as to thatother party the contract is void . (Benj . Sales ,

2 1 . \Vhat is mean t by the things which are

the subject of sale hav ing a potential existence ?

The meaning is that where a thing belongsto , or is the property of, the seller, and therewould arise from that thing a natural increase , asthe owner of sheep may expect a natural increasefrom the growth of wool on those sheep, suchincrease for a definite and reasonable period oftime is said to have a potential existence , and ona contract of sale the property in such increasepasses to the buyer as soon as it comes intoactual existence within the time . (Benj . Sales,

2 2 . What is the effect of a con tract for the

sale of goods, the acqu isition of which by theseller depends upon a contingency which mayor may not happen?

W here there is a contract for the sale of a specified amount of a specified crop to be grownupon a specified piece of land which ordinarilyproduces the amount , but through no fault of theseller produces a less amount under this contract

,

97

the seller may deliver what is produced withoutliability for non-delivery of the remainder .

2 3 . What is the effect of a contract of sale of

goods ! to arrive ! by a particular vessel, or bya certain time ?

This does not import a stipulation on the partof the seller that the goods shall so arrive , butthe contract is deemed to be dependent upon thedouble contingency that the vessel shall arrive inthe ordinary course of navigation within the timel imited therefor, if any, with the goods contractedfor on board .

24. What is the effect of a con tract of salewhereby the seller purports to effect a presentsale of future goods ?

Such a contract operates merely as an agreement to sell the goods and not as a sale , the fundamental distinction being that in a sale theproperty in the goods passes to the buyer , whilein an agreement to sell the property remains inthe seller at the time of making of the contract .

2 5 . What is the effect of a contract to sel lgoods which have perished before the making

99

and reasonable under the circumstances of theparticular case .

28 . Where the contract of sale leaves the

price to be fixed by a third person who will not,cannot or does not fix such price, what; is the

resu lt

W here the valuation fails to be made'by thethird party because of his own default or neglect,and a delivery or part delivery has been made tothe buyer , he may be compelled to pay a reasonable price therefor

,but where the failure to fix

the valuation is by reason of the fault of either ofthe parties to the contract, the one who is not infault may maintain an action as for a breach ofthe implied contract or obligation, that neither ofthe contracting parties will do anyth ing

"

to prevent a th ird person from making a valuation .

29 . What is m istake ?

That result of ignorance of law or factzwh ichhas misled a person to commit that which , if hehad not been in error , he would not have done.

(Bouvier’s Law Dict . )

30 . What is the effect of.m istake of fact on a

contract of sale ?

W hen it has any operation at all , it renders the

IOO

contract void . (Tiffany on Sales , Chap.

W here there is a material mistake of fact, thereis no mutual assent ; therefore, no actual contract , but an apparent o ne.

3 1 . What are the rights of a party to suchan apparen t agreement ?

He may either wait until the other party seeksto enforce it , and then set up its nullity as a

defense ; or may come forward actively as plaintiff . In some cases , he may sue in equity to havethe transaction declared void , or to be relievedfrom any possible liability under it .

3 2 . What are his rights where the con tracthas been executed u nder a continuance of the

m istake

He may repudiate the contract upon discoveryof his mistake , and may then recover the moneypaid or the goods delivered by him under thecontract , unless he has done something to renderimpossible a restoration of the other party to h isformer position .

33 . In the case of m istake, what is the position of a third party who is a bona fide pu rchaser ?

Since mistake renders the contract void,and

10 1

not merely voidable, the first purchaser acquiresno title under it, and so can pass no title to abona fide purchaser from him .

34. What, in general , are the rights of the

purchaser who has paid all or part of the pricein case of failure of consideration on the part ofthe seller ?

He may rescind the contract and recover themoney he has paid .

3 5 . But in such case, what must be the ex

ten t of the failure of considera tion ?

The failure must be total to entitle the buyerto rescind . For, though he is not obliged toaccept a partial performance , and if such partialperformance is tendered , he may rescind the contract and recover back the price , yet if he hasaccepted a partial performance , he cannot , atleast unless he returns what he has received ,afterwards rescind , but in such case has his remedy in an action for breach of the contract .

36 . What are the essential features of fraud ?

A false representation of fact , made with a

knowledge of its falsehood , or in reckless disregard whether it be true or false ; an intentionthat such representation shall be acted upon by

103

and not an active attempt to deceive or misrepresent .

40 . In considering the characteristics of fraud,of what must the false representation consist ?

Of fact, as distinguished from mere opinion,intention or the law .

4 1 . May a person be l iable for a false repre

sentation, though his motive was innocen t ?

Yes , as where he makes the representationwith no reasonable ground of belief in its truthfulness.

42 . How material must the false representation be ?

It must constitute an inducement to the otherparty to enter into the contract . It need not bethe sole inducement, so that it is a material element in influencing his conduct .

43 . What election has the defrauded party ?

He may ( I ) affirm the contract , in which casehe may recover damages for the fraud in an actionof deceit , or, if sued for the price, set up thefraud in reduction of such price . (2 ) He mayrescind the contract within a reasonable timeafter discovery of the fraud, unless it has become

104

impossible to restore the other party to his former position , or unless a third person has bonafide and for value, acquired an interest in the

goods

44. Distinguish between the positions of

bona fide purchasers, in such case, and in caseof mistake.

Since mistake renders the contract void , thebona fide third person can acquire no title fromthe original purchaser, who himself acquired notitle under the void contract ; since fraud , if inthe inducement, renders the contract voidableat the option of the defrauded party, it is validuntil rescinded , and a third person buying ingood faith before rescission acquires an indefeasible title , and this upon the principle of convenience, that when one of two innocent partiesmust suffer from the fraud of a third

,the loss

should fall on the one who enabled such thirdparty to perpetrate the fraud .

45 . Where the defrauded party has onceaffirmed the contract, what is the effect of such

affirmance ?

Aflirmance, once made , completely determinesthe right of election . Upon afli rmance, his soleremedy is to recover damages in

-,m of de

5

ceit, or, if he is the buyer and is sued by theseller for the price , he may set up the fraud byway of counter-claim . The contract , if affi rmedat all , must be affirmed iu iota, and such afli rm

ance may be by conduct, that is , implied , as wellas express, or by words.

46 . How is the question of reasonable timewithin which to rescind, after discovery of the

fraud,dec ided ?

By the circumstances of the particular case .Thus the lapse of considerable time, during whichthe position of the other party has materiallyaltered to his disadvantage, or the rights of thirdparties have intervened , will defeat the right ofrescission .

47. What, in substance,are the prov isions of

the statute of 1 3 El izabeth, c . 5 , in regard to

sales in fraud of creditors ?

That all conveyances and sales of land or chattels made with intention of delaying , hindering ordefrauding creditors shall be void and of no effectagainst them . But the intent to defraud must becommon to seller and buyer , so that a bona fidepurchaser for value from the fraudulent debtoracquires a good title . Also the title acquired by

1 07

itors, and persons having claims sounding in tortas well as those with claims arising ex eontraetu,

also the claim of a wife for alimony.

5 1 . Are sales in fraud of creditors actuallyvoid ?

No ; though the statute declares such salesvoid, they are in fact voidable at the option ofthe defrauded creditors ; a subsequent bona fidepurchaser for value before avoidance acquires anindefeasible title , and such sale is likewise goodas between the parties , who cannot defeat thesale by alleging their own fraud .

5 2 . What is the rule as to the necessity ofdel ivery in order to effect a transfer ofproperty ?

The general rule is that delivery is not essential to effect such transfer . But in some statesthis is modified by the requirement that deliveryis a requisite to such transfer as against bona fidepurchasers and attaching creditorswithout notice .

5 3 . What constitutes del ivery ?

! he decisions are not entirely in harmony onthis po int . But it may be said that preferencewill often be given a bona fide buyer as againstan attaching creditor of the seller on very slightevidence. Thus the delivery of the keys of a

108

warehouse where the goods in question are storedis a good delivery of the goods ; again , where theseller has possession of the goods, an agreementby him to hold as bailee for the buyer will operate as a delivery .

54. Classify unlawful contracts of sale, and

state their effect.

Contracts of sale may be unlawful (a ) at common law, (b ) from public policy, (c) by statute .They are void .

5 5 . What sort of con tract of sale is illegal atcommonlawWhere the thing contracted to be sold is initself contrary to good morals or decency.

5 6 . May the sale of a thing innocent in itselfbe illegal ?

Yes , where it is intended to be used for anunlawful purpose . The prevailing rule in theUnited States regarding the seller’s position insuch case is, that his mere knowledge of thepurchaser’s unlawful purpose does not invalidatethe sale

,but that the sale is void if the seller does

any act to aid in the buyer’s unlawful purpose, orif the illegal purpose is made a part of the contract of sale .

109

5 7. ! ame some classes of sales which , undermodern decisions, are still proh ibited by publicpolicy

Sales of offices ; contracts of sale in unreasonable restraint oi trade ; sales of law suits .

58 . May an interest in property be pur

chased , subject to adverse claims,rendering

litigation necessary for the realiz ation of the in

terest so purchased ?

Yes, the sale of an interest to which the rightto sue is incidental is valid , and distinguishedfrom the sale of a mere right of action

,which is

invalid .

59 . ! ame four classes of sales prohibited bystatute.

The sale of an unlicensed business (prohibitedby implication , where the statute requires alicense) ; the sale of intoxicating liquors ; saleswagers.

60 . Is a contract necessarily proh ibited whereit is subjected to a statutory penalty ?

By the weight of authority, the imposition ofsuch penalty is only prima facie evidence of anintention to prohibit . In ascertaining such inten

I I I

directed against labor, work or business of aman’

s!

ordinary calling,!

sales made not in theexercise of such calling are valid .

63 . May a void sale made on Sunday besubsequently ratified ?

On this point the cases in this country are indirect conflict . I t may be stated , however, thatwhere goods , the sale of which is contracted foron Sunday, are not delivered until a week-day,the buyer is liable , not on the original contract,but upon a subsequent implied promise to payfor the goods received .

64. Is an executory contract for the sale of

goods where the seller has not the goods, norany means of obtaining them, except by himselfbuying them in the market, necessarily a wagering or gam ing con tract, and hence illegal underthe various modern statutes prohibiting suchcontracts

No . Such a contract, where an actual deliveryof the goods is contemplated by the parties,either absolutely or in case either party demandsit, is valid . Not so, however, where no actualsale and delivery is contemplated , but merely aspeculation in the rise and fall of prices , and a

tion Of the leg islature, which

, once asalways governs, the Courts will considother

Pomts, whether the object of thePubli c Protection as well as revenue

,Case It amounts to a prohibition ; a!Penalty is recurrent upon every breStatutory pI'

Ovisions, the inference i sPenalty was intended as a prohibition.

6 1 . What is the character of a cS

flle

o

m violation of a statute condit ,b’dding the Sale of intoxicating liq .requmng a license of those selling tl

kinflu

hl

e

l

'

Sale is held to be vo id ,stat i

mg ConSl-‘rued as intend ed toeVfls Of "Item er no t mer! Venue.

P ance ,and

6 2 . Are Contracts o f sale made

common law y e s . Undering ert

Passed in djéfe r e nt jurisdictic

s r

all.

! acts On 5 1 1 n d ay ,thequest

the ter

e Included it) t h e proh lbltlon

be Stat

ms of thepar t i c u la r act. F0

’b0rUtory 0 ih

'

i o n i s dn‘

ectedSales are not !

It

r b i d d en; aganC 7

upon his right ofbut not paid for ?

cs are in conflict . I tf a Sunday sale thatcircumstances , main

»

en intimated that heversion .

part of a contract of

>1e it will not , other"1 number of articlesfor each article, the

1 it was lawful to sellso where all the arti'

ump sum .

1 of the legality of al in case of conflict

the law of the StateThus a sale valid

1rced through comity

1 1 5

ment . The latter are known as suspensive orsuspensory conditions.

74. How is it determ ined whether stipulations as to time are conditions preceden t ?

By discovering , upon a fair consideration of thecircumstances of the case and of the language ofthe parties , whether they intended time to be ofthe essence of the contract .

75 . What implied condition accompanies a

contract for the sale of goods by description ?

That the goods shall correspond with the description . This is sometimes called a warranty,but it is , properly speaking, a condition precedentto the seller’s right of action on the contract .

76 . When will impossibility of performance,arising after the formation of a contract, excuseperformance

W hen such impossibility arises ( 1 ) from thedestruction of the specific goods constituting thesubject of sale ; (2 ) from a change in the law .

77. ! ive an example of waiver of a conditionprecedent.

W here the injured party elects to treat nonperformance of a condition in his favor as a mere

breach of warranty, instead of as ground for re

scinding the contract . In case of such electionhemay still seek his remedy in a suit for damages.

78 . W here the seller agrees to sell a specifiedarticle, and del iver same at a time certain , andthen puts performance out of his own power bydestruction or other disposition of the article

,

what is the position of the buyer ?

This is a case where performance of a condition precedent ( tender of payment ) by one party( the buyer) is excused by what amounts to re

nunciation of the contract by the other party , sothat

,in the case given , the buyer may bring suit

for the breach without performing the conditionprecedent of tendering the price.

79 . May a person be held on a warrantygiven after a contract of sale is completed ?

Yes ; provided it is supported by a new and

distinct consideration .

80 . How is it determ ined whether a giventerm in a con tract amounts to a wa rranty or not ?

By the intention of the parties as gathered fromthe facts and circumstances of the case . A representation of fact made by the seller as an inducement to the purchaser to buy, and on which

1 1 7

the purchaser relies, will be construed as a warranty ; a mere commendatory expression or statement of opinion will not be so construed .

8 1 . Is the question whether a particular representation is one of fact, or a mere expressionof opinion or commendatory expression, 3.

question for the court or for the jury ?

If the language of the representation is not unmistakable , it is for the jury ; however, if thewarranty be contained in a written contract, the

construction of such warranty is for the court .W hether or not the language is unmistakable isfor the court to decide , and on this question thediff erent courts are liable to decide differently.

8 2 . W ill a general warran ty be held to ex

tend to known or paten t defects ?

No,for the reason that the buyer and seller

cannot be presumed to rely on and to assert, respectively, the truth of what they know is untrue .But the buyer may prefer to rely on a warrantyrather than on his own judgment, and have thewarranty so worded as to protect him againstpatent defects.

83 . W hat is impliedly warranted by the seller ?His title to the goods sold . This is now the

general rule, though formerly held otherwise .

1 19

88 . Where the buyer rel ies on the seller’sskill or judgmen t in ordering goods to be usedfor a particu lar purpose made known to the

seller, and the goods are such as the sellerusually suppl ies in the course of his business,what implied warranty binds the seller ?

That the goods in question are reasonably fitfor the particular purpose for which purchased .

This rule is based on the fact that in such casethe buyer trusts to the seller to supply the appro

priate goods, and not to h is own inspection orinstructions.

89 . May there be an implied warranty of

merchantableness of goods sold ?

Yes , as where a sale of goods by descriptiontakes place , and the buyer has not an opportunityto examine them .

90 . Does an implied warranty of wholesomeness accompany a sale of provisions ?

I t has been so held in some cases,especially

where the goods are bought for domestic consumption and not as merchandise . On this pointthe modern decisions seem to be less strict thanBlackstone states the rule to be at common law .

(See 3 Blackstone,

1 20

9 1 . What implied warranty accompanies a

sale of goods by sample ?

That the bulk of the goods shall correspond inquality with the sample . But there must be anunderstanding between the parties , express orimplied , that the sale is by sample , and the merefact that a sample is shown is not suffi cient toestablish such understanding .

92 . Is the term ! warranty, as used in re

gard to quality, fitness, condition and sale bysample,

strictly speaking,correct ?

Inasmuch as , in such cases , the buyer may re

ject the goods if not conforming to the repre

sentation, it would seem that! condition ! would

be the preferable term , but warranty is the expression generally used .

93 . W ill an express warranty exclude an impl ied one upon the same subject ?

Yes , if such appears to have been the intentionof the parties upon a construction of the contract .But the intention may sometimes be shown tohave been to superadd the express warranty tothe implied one , for the further security of thebuyer, as where an express warranty that goods

1 2 1

sold shall pass inspection was held not to excludean implied warranty of merchantableness .

94. What is the duty of the buyer and seller,respectively, in the matter of performance of thecon tract of sale ?Of the seller to deliver the goods , and of thebuyer to accept and pay for them , according tothe provisions of the terms of the contract .

95 . Where nothing is said in the contract asto relative time of del ivery and payment, whatis the law ?

That delivery and payment are concurrentconditions . That is to say, the sale is for cash ,and the seller is not bound to deliver

,nor the

buyer to pay, except upon performance , or tenderof performance, by the other .

96 . What is del ivery ?

V oluntary transfer of possession of the goods .This transfer may be either actual or constructive, as by delivery of the key of the place wherethe goods are stored , or of the bill of lading .

97. In the absence of any agreemen t on thesubject, express or implied, where is the placeof del ivery ?

The seller’s place of business if he has one ; if

1 23

100 . When a certain number of days are

spec ified for del ivery, how are they counted ?

They are counted consecutively, beginning withthe day after that of the contract, and includingSundays . But if the last day of the number fallson Sunday, it is not generally counted , the timefor delivery being then extended one day . Inmercantile contracts the term ! month is construed as meaning a calendar month .

10 1 . Where the seller del ivers a greaterquantity of goods than contracted for, is the

buyer bound to accept ?

According to the general rule in this countryhe is not . But it has been held in some casesthat he is so bound , where a greater amount thancontracted for is delivered , with a request toselect or separate the required amount, if suchselection or separation imposes on him no additional trouble or expense .

10 2 . What is the rule where the goodsordered are sent, correct in quan tity, but m ixedwith other goods ?That the buyer is not bound to accept . Thebuyer cannot be thus compelled by the action ofthe seller to go to the extra trouble of separationor assortment .

103 . What is the position of the parties wherethe seller del ivers less than the amount contracted for ?

The buyer may refuse to accept . If he accepts,however, it is generally held that he must pay forsuch partial del ivery at the contract rate , thoughhe may reduce the amount to be paid the seller ifhe can show that he has sustained damages bythe seller’s failure to fully perform .

104. Where a certain sum or amoun t is

named , may the parties yet save themselvesfrom l iability as to exact compliance in thisrespect ?

Yes,by inserting into the agreement such qual

ifying terms as! more or less ! or ! about,

! orother qualifying provisions, as the capacity of acertain plant or warehouse, the exigencies of thesituation as determined by future developments,etc .

105 . What are the rights of the parties to acontract for the sale of goods to be del ivered ininstallments and separately paid for, wherethere is a failure to del iver one or more installmen ts, on the one hand, or failu re to pay on theother ?

1 25

On this point the authorities differ . But theweight of authority in this country is that suchbreach by the seller entitles the buyer to repudi

ate the whole contract , though there seems nowell- settled rule as to the position of the sellerin case of default by the buyer .

106 . Where the seller is to del iver the goods,and he del ivers to a carrier for transm ission tothe buyer, is this a performance of his agreement to del iver ?

Prima facie it is, the carrier being generallyconsidered the bailee of the party to whom thegoods are sent ; but if the seller is bound to deliver at the buyer’3 residence or at a distant place,the carrier is the seller’s bailee, and delivery tosuch carrier is not delivery to the buyer. And inall cases the seller must use due care and diligence in del ivering to the carrier.

10 7. What is, ordinarily, the purchaser’sright of inspection ?

Unless otherwise agreed between the partiesthe purchaser has the right to inspect the goodsbefore accepting . He may, of course, waive inspection, and such waiver may be implied as wellas express, aswhere the purchaser fails to mspectwithin a reasonable time .

1 27

the seller, but that payment to a broker or to anagent not intrusted with possession is not binding .

1 1 2 . Classify the rights of the unpaid selleragainst the goods.

In general , and subject to certain exceptions,he has : ( 1 ) A lien on the goods for the price whilehe retains possession of them ; (2 ) In case of theinsolvency of the purchaser, the right to stop thegoods in transit after he has parted with the possession of them ; (3 ) A right of resale .

1 1 3 . How may the unpaid seller of goods,while still in possession of them ,

lose his rightof l ien ?

By waiver, and this waiver may be either express or implied , as where he sells the goods oncredit or takes negotiable paper in conditionalpayment .

1 14. May the seller’s l ien , thus waived, berevived ?

Yes , as where the term of credit on which thegoods were sold has expired , or the negotiablepaper taken in conditional payment has been d ishonored

,or where the purchaser has become insol

vent even before expiration oi the term of credit .

1 28

1 1 5 . In case of partialdel ivery, may the sellerexerc ise a right of l ien on the remainder ?Yes, unless such partial delivery was so mad e

as to indicate an intention of waiving the lien .

1 1 6 . May the seller’s l ien be destroyed by asubsale or other disposition by the purchaser ?

Not unless the seller has assented to such d isposition . But his assent may be either expressor implied .

1 1 7. How only may the right of stoppage intransit be defeated other than by waiver, or bydel ivery to the purchaser or its equ ivalent ?

W hen the purchaser in possession, with the

seller’s assent, of the bill of lading representingthe goods transfers same to a bona fide purchaserfor value .

1 1 8 . Againstwhom may the right of stoppagein transit be exerc ised ?

Only against an insolvent purchaser . Andsuch right of stoppage is paramount to the claimsof all parties claiming under the purchaser, except a bona fide purchaser for value of the bill oflading . It is subject , however, to the carrier

’

s

lien for his transportation charges .

1 19 . By whom

Not only by the unpaid seller, but also by anyone standing in a substantially analogous position . Thus, the right of stoppage in transitumay be exercised by an agent of the seller towhom the bill of lading has been indorsed by asurety who has paid the price, by an agent whohas bought goods for h is principal with his ownmoney, etc . , etc .

1 20 . What is the essential featu re of stoppagein transitu ?

That the goods be, at the time, in the possession of a middleman or intemediary for the purpose of transmission from the seller to the purchaser . And delivery to the purchaser even afterbankruptcy, or to h is trustee or assignee in bankruptcy, terminates the transit , and with it , ofcourse, the seller

’

s right of stoppage .

1 2 1 . Reverting to Question 1 1 7, what effecton the right of stoppage in transitu has a transfer of the bill of lading by the purchaser by wayof pledge or mortgage ?

In such case the seller may still in equity exercise the right , but subject to the pledgee

’

s or themortgagee’s incumbrance, and he may also com

1 31

He may either sue for the price or resell . That isto say, he may ( 1 ) store or retain the goods forthe purchaser, and sue him for the contract price ;(2 ) he may, as agent for the purchaser , sell thegoods and recover the difference between thecontract price and the price real ized on the resale .It is sometimes said that he may also elect toretain the goods as h is own , and recover thedifference between the contract price and themarket price at the time and place of delivery ;but since in such case the seller both keeps thegoods as his own and at the same time sues onthe contract, it would seem that he can resort tothis third-named remedy only in cases where theproperty has not passed . For if the propertyhas passed he can only keep possession of thegoods for himself on the basis of rescission , inwhich case he could not be consistently allowedto still maintain an action on the contract thusrescinded for the diff erence between the contractand the market prices as above .

1 2 5 . What is the seller’s remedy where thepurchaser refuses to accept and pay for goods,the property in which has not passed ?

Since in such case the goods are still his , h isonly remedy is , in general , an action for damages

132

against the purchaser for non-performance . If,

however, by the terms of the contract , the priceis payable irrespective of delivery, the seller may,of course, sue for the price upon breach of thepromise to pay, leaving the purchaser to his crossaction in case of non-delivery by the seller afterreceiving the price .

1 26 . Where the property has passed, what isthe seller’s remedy upon breach of the prom iseto pay ?

He may sue for the price of the goods . If thesale is on credit, or payment is made dependenton a contingency, the seller must , of course , waittill the credit period has passed, or the conditionis fulfilled .

1 27. Where the property has thus passed,but the seller is still in possession of the goods,may he rescind the contract and keep the goodsas h is own ?

According to some of the decisions in thiscountry, he has this remedy among others, inwhich case he can recover the difference betweenthe contract price and the market price at thetime and place of delivery .

1 28 . In what two ways may the purchaser’

s

I 33

right of action arise on account of breach of

contract by the seller ?

( 1 ) By breach of the principal contract for thetransfer of theproperty and delivery of possession ;( 2 ) by breach of a collateral contract of warranty,as, in case of some defect in the goods , coveredby a warranty clause .

1 29 . Before the property has passed , what isthe purchaser’s only remedy for breach of contract by the sel ler ?

An action for the breach . W here he has madepayment and the seller fails to deliver, the purchaser may rescind and sue on an implied contractfor money had and received , or without rescinding he may sue for non-delivery, and recover themarket price of the goods. If h e has not paid ,he may recover damages for the breach , and themeasure of damages in such case is generally thedifference between the contract price and themarket price at the time and place of delivery,since

, with the money still in his possession , hehas the open market in which to buy .

1 30 . What is the measure of damages wherethere is no market price ?

In such case the measure of damages may be

I3S

1 3 2 . Is mere knowledge by, or communication to, a party of the spec ial c ircumstances of

the case, suffic ien t to charge him with l iabilityfor special damages ?

No ; such knowledge or communication mustbe received under such circumstances asto reasonably imply that it formed the basis of the agreement ; that is , in the absence of an express agreement to that eff ect as to lead a reasonable man tocontemplate the special damages as a probableresult of a breach of the contract .

1 33 . W hen will spec ific performance be

granted a party through a suit in equ ity ?

Only where he has no adequate remedy at law .

For example , where the goods contracted for areof unusual rarity, or possess an intrinsic value asa work of art , so that the purchaser cannot gointo the market and secure their equivalent

, an

action at law for damages will not afford him anadequate remedy, and a suit in equity for Specificperformance will l ie .

1 34 . W here the property in the goods haspassed to the purchaser

,what are his rights in

case ofwrongful failure or refusal, on the seller’spart

,to del iver?

He has the same right of action on the contract

as if the property had not passed , and in additionthe rights of an owner , so that he may, if not indefault himself, maintain an action in tort forconversion and even of replevin .

1 35 . Under an executory con tract of sale,

where a warranty (or undertaking) of qual ity ,fitness or condition of the goods is broken , whatis the purchaser’s right ?

In such case the warranty or undertaking isconsidered a condition precedent to the purchaser’s obligation under the contract , and he

may consequently reject the goods and refusepayment .

1 36 . Under l ike c ircumstances, bu t where theproperty has passed, what are his rights?

In most jurisdictions it is held that by accepting the goods, the purchaser has waived his rightto reject , and must seek his remedy either by anaction for damages for breach of the warranty, orby setting up such breach in diminution or extinction of the price , and this both in case of anunconditional sale of a specific chattel , when thecontract itself works an acceptance , or in case ofa contract for the sale of unascertained goodssubsequently accepted . But in some jurisdictionsit is held that in case of breach of an express

warranty the purchaser may rescind the contractand return the goods.

137. In this connection , what distinction issometimes made between breach of conditionand breach of warranty ?

To the effect that a warranty survives acceptance, even as to known defects, so that the purchaser may recover damages for breach thereof,while a condition does not so survive, so that thepurchaser, upon acceptance after opportunity toinspect, is precluded from recovering damages forbreach of the condition . But while th is is held tobe the law by some of the cases, the decisions aregenerally to the effect that in such case the purchaser may, in effect , treat the breach of condition as a breach of warranty, with its properremedy, as above .

1 38 . What is the measure of damages forbreach of warranty of qual ity, condition orfitness ?! he loss directly resulting to the purchaserfrom the breach . Such loss or measure of damages is prima facie the difference between theactual value of the goods and their value if theyhad been as warranted . But the rules regardingspecial damages also apply .

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