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Sales, 19 Bus L.J. 37 (1932)

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 THE BUSINESS LAW JOURNAL
-Terre Haute & L. R. Co. v. Sherwood,
132 Ind. 134, 31 N. E. 781, 17 L. R.
A. 342, 32 Am. St. Rep. 239; Inman v.
South Carolina R. Co., 129 U. S. 128,
9 S. Ct. 249, 32 L. Ed. 612.
"Elliott on Railroads. § 2746: The
shipper suing for nondelivery of his
goods has the burden of proving that
fact. Owing to the essentially nega-
tive character of the issue, however,
slight evidence of nondelivery will
suffice, citing Chicago, St. L. & N, 0.
R. Co. v. Provine, 61 Miss. 288; Wood-
bury v. Frink, 14 Ill. 279; The Falcon,
3 Blatchf. 64, Fed. Cas. No. 4617.
"In the case of Terre Haute &
Logansport R. Co. v. Sherwood et al.
(1892) 132 Ind. 129, 31 N. E. 781,
783, 17 L. R. A. 339, 32 Am. St. Rep.
239, Elliott, C. J., speaking for the
court, lays down the doctrine that:
" 'In cases where the carrier has full
custody of the property, there is, prima
facie at least, actionable breach of the
contract, when the failure to safely
carry is shown, because, as said in the
case of Inman v. S. C. R. Co., 129 U.
S. 128-139, 9 S. Ct. 249, 32 L. Ed.
612 :"In case of loss, the presumption
is against the carrier."
" 'The common law has been relaxed
so as to permit a common carrier to
limit his liability, but this change in
the law does not go to the extent of
allowing a carrier to contract for a
complete exemption from liability, nor
does it go to the extent of changing
the rule that, when the failure to carry
is affirmatively shown, the burden of
showing exemption from the duties and
obligations imposed by law rests upon
the carrier. The rule that the pre-
sumption is against the carrier in cases
where he has full charge and custody
of the property is in harmony with the
doctrines sustained by a long line of
cases, a line beginning far back in the
early years of the common law, and
continuing unbroken to the present,
that where injury to a passenger is
shown, the presumption is that the
carrier was in fault. The rule that
the burden is on the carrier, who has
the exclusive custody of the property
is a reasonable one, inasmuch as it is
but just to require the carrier who has
the property in complete custody, who
knows and controls th6 men who man-
age the instrumentalities of transporta-
tion, and who has the means of ex-
planation at hand, to show what caused
the loss or injury, rather than to cast
that burden upon the shipper, whose
means of information are comparatively
meager, and whose power of securing
knowledge of the facts is circumscribed
within very narrow limits.'
"There is a line of cases not in
harmony with the view above stated.
The leading case is that of Nye-
Schneider-Fowler Co. v. Chicago & N.
W. Ry. Co., 106 Neb. 149, 182 N. W.
967; but in that case, and in all others
that appear to be in conflict with this
view, the facts proven distinguish the
cases from the one at bar, for example,
in the case above cited there was evi-
dence introduced as to the shrinkage
in varying amounts during shipment.'
In the case at bar, there was no evi-
dence introduced to show how much, if
any, shrinkage, or whether there had
been any shrinkage at all in the course
of shipment, and in other cases the
questions involved would rest upon the
instructions given by the court to the
jury when evidence of shrinkage was
introduced.
"In this case there is a positive find-
ing of fact that the carrier received a
certain amount of grain and failed to'
deliver that amount at destination. The
evidence is sufficient to sustain the find-
ing of facts, and the conclusions of. law
thereon are not erroneous."
SALES
Damages for Delay in Delivery
Pastor v. B. Lindner & Bro., Inc., New
York Supreme Court, Appellate Divi-
sion, 253 N. Y. Supp. 184
The defendant purchased of the
plaintiff a quantity of velvet manu-
 THE BUSINESS LAW JOURNAL
factured in Germany for the New
York market. The plaintiff brought
this action to recover a balance due
for the goods. The'defendant coun-
terclaimed for damages on account
of delay in delivery of the velvet.
It appeared that when the goods
arrived they were accepted by the
defendant, which reserved its claim
for damage because of delay. Prior
to the contract delivery date the de-
fendant had resold the goods at a
profit.. The defendant's: customer
accepted deliveries under the resale
contracts and paid the full price.
The question presented concerned
the proper measure of damage for
the delay in delivery. It was held
that the measure of damage was the
difference between the contract price
and the market price at the time and
place of delivery. This raised a
further question as to whether the
profit realized by the defendant on
the resale should be considered in
mitigation of the damages. It ap-
peared that the resale price of some
of the velvet was lower than the mar-
ket price at the time the goods should
have been delivered but higher than
the market price at the time delivery
actually was made. It was held that
with regard to these goods the profit
on the resale should be considered in
mitigation of damages. The resale
price of the balance of the goods was
below the market price in New York
on the date when the goods were-due
and also below the market price in
New York on the date of actual de-
livery. It was held that the defend-
ant's profit on the resale of these
goods could not be applied as a credit
in mitigation of the damages.
The following paragraphs are
quoted from the court's opinion:
"It is well established that in cases
of failure to deliver the measure of
damages is the difference between the
contract and market prices at the time
and place of delivery, and that such
rule shall be applied, irrespective of
any resale contracts which may have
been made by the buyer. 2 Williston,
Sales, § 599i. The damage, moreover,
cannot be increased by any contract at
a price in excess of the market, and
cannot be reduced by any contract
under the market or by the kindness of
a subvendee. Foglino & Co., Inc. v.
Webster et al., 244 N. Y. 516, 155 N.
E. 878. In such cases there is always
involved uncertainty as to execution of
the resale contract. The possibility of
liability on the part of the purchaser
for his failure to deliver to his cus-
tomer at the reduced price fixed by his
contract remains. The rile of differ-
ence between contract and market price
is now incorporated in the Personal
Property Law, § 148, sub-see. 3.
"The counterclaims must be con-
sidered separately. In the case of the
printed velvets which are involved in
the third counterclaim, the goods were
purchased at from $4.50 to $4.75 per
yard. They were all resold at prices
ranging from $4.50 to $5.65 per yard.
The market price of this merchandise
in New York in May, when one-third
of the quantity was due, was $6 per
yard; in June, when the second in-
stallment of one-third was due, the
market price was $5.75 per yard; in
July, when the final installment was
due, the market price was $4.50 per
yard; and in August, when delivery
was actually made, the market price
was $4.25 per yard. It is thus ap-
parent that defendant resold the velvets
at prices higher than those prevailing
at the time of actual delivery of the
goods.
"The difficulty in applying the gen-
eral rule of damage without mitigation,
as defendant urges, is that defendant
would get two profits out of a contract
that only guaranteed it one. It would
receive a profit under the resale con-
tract which results from a sale above
 THE BUSINESS LAW JOURNAL
the market prevailing at the time of
actual delivery, and would receive in
addition profit in the form of damages
represented by the difference between
the two market prices. , It would thus
be considerably better off because of
the breach than it would have been
had the contract been carried out ac-
cording to its terms. Obviously, a re-
sult so unjust should not be allowed,
unless adherence to a fixed rule of
damage compels it. The correct rule
would seem to be that established by
the English decisions which allows the
profit which the purchaser has made
under his resale contract above the
market at time of delivery to be ap-
plied as a credit in mitigation of dam-
ages.
"This is the rule established by the
privy council in Wertheim v. Chicou-
timi Pulp Company, [1911] L. R. App.
Cas. pages 301, 308. In that case there
was involved a sale of pulp wood which
defendants failed to deliver at the time
fixed by their contract. Plaintiffs had
made resale contracts prior to the de-
livery date fixed by this contract at
prices which were below the market
price on the date of delivery fixed by
the contract but above the market price
at the date of actual delivery. The
court limited the damages awarded to
the plaintiff to the difference between
the resale price and the market price
at the time and place of delivery fixed
by this contract. In Williams Brothers
v. Ed. T. A4gius, Ltd., [1914] L. R.
App. Cas. pages 510, 522. The House
of Lords had occasion to discuss the
Wertheim Case, supra, and explained
the decision as follows: 'Wertheim's
Case (2) was a case, not of delivery
withheld, but of delivery delayed. The
buyer, therefore, got the goods, and
the only damage he had suffered was
in delay. Now, delay might have prej-
udiced him; but the amount of prej-
udice was no longer a matter of
speculation, it had been put to the test
by the goods being actually sold; and
he was rightly, as I think, only held
entitled to recover the difference be-
tween the market price at the date of
due delivery and the price he actually
got.'
"This decision has been recognized
in this country in Tennessee Fertilizer
Company v. International Agr. Corp.,
146 Tenn. 451, 243 S. W. 81. More-
over, Williston, 2 Sales, p. 1500 writes:
'It may be said that there is no such
general rule for damages for delay as
is applicable to damages for total fail-
ure to perform, and that therefore this
case (Wertheim Case, supra) is not in-
consistent with the other decisions cited
in this note.'
"In his opinion in the Wertheim Case
Lord Atkinson said: 'The purchaser
not having got his goods should receive
by way of damages enough to enable
him to buy similar goods in the open
market. Similarly, when the delivery
of goods purchased is delayed, ti.e
goods are presumed to have been at
the time they should have been de-
livered worth to the purchaser what
he could then sell them for. or buy
others like them for, it; the open m, r-
ket, and hen they" are in fact de-
livered threy are similarly pre sumed to
be, for thc same reason, worth to the
purchaser what he could then sell for
in that market, but if in fact the pur-
chaser, when he obtains possession of
the goods, sells them at a price greatly
in,advance of the then market value.
that presumption is rebutted and the
real value of the goods to 1,im is pruved
by the very fact of this sale to be more'
than market value, and the loss he sus-
tains must be measured by that price,
unless he is, against all justice, to be
permitted to make a profit by the
breach of contract, be compensated for
a loss he never suffered, and be put. as
far as money can do it, not in the same
position in which he would have been if
the contract had been performed, but
in a much better position.'
"The equitable result reached in the
Wertheim Case can hardly be ques-
tioned. Only a desire to keep the rules
of damage simple and not subject to
refinements because of special circunm-
stances in each case could lead to a
mechanical application of the difference
 THE BUSINESS LAW JOURNAL
in market prices without reference to
the actual situation existent in indi-
vidual cases.
"The judgment on the second
counterclaim, so jar as appealed from,
presents a different situation. The
goods were transparent velvets, cost-
ing in Krefeld $2.15 per yard, or $3.52
landed in New York. All the mer-
chandise was resold at prices ranging
from $4 to $4.25 per yard, thus giving
an actual profit on each yard. The
goods ordered should have been de-
livered, one-third in May, when the
market price was $5.85 per yard, one-
third in June, when the market price
was $5.75 per yard, and one-third in
July, when the markk', price ranged
from $5 to $5.75 per yard. In August,
when aclivery was actually made, the
market price had dropped to $4.50 per
yard. An inspection of these figures
reveals that at no time did the defend-
ant resell at a price lying between the
market price in New York on the date
when the goods were due or the mar-
ket price in New York on the date of
actual delivery. In other words, on the
reasoning of the Wertheim Case, no
offset is possible, since the resale price
was not high enough to have mitigated
the damages which, in contemplation
of law, flow naturally from delayed
delivery."
Seller's Opinion as to Quantity of
Lumber Not False Representation
C. W. Denning & Co. v. Suncrest
Lumber . Co., United States Circuit
Cout of Appeals, 51 Fed, Rep. (2d)
945
The plaintiff brought this action
to recover on promissory notes given
for the purchase price of timber.
The plaintiff, the Suncrest Lumber
Company, sold the timber to the de-
fendant, C. W. Denning & Company.
The contract was for the sale of the
merchantable timber on a large tract
of timber land owned by the plain-
tiff. The timber was described in
the contract as "twenty million feet
of merchantable timber." The de-
fendant agreed to pay $100,000 for
the timber. This amount was based
upon the assumption that the pur-
chaser was obtaining twenty million
feet under the contract and was pay-
ing therefor at the rate of $5 per
thousand feet. Of the purchase price
i 50,000 was paid in cash and notes
were executed for the remainder.
Two of these, amounting to $25,000,
remained unpaid at the time the ac-
tion was brought.
It appeared that at the time the
defendant was negotiating for the
purchase of the timber the plaintiff's
manager stated to the officer of the
defendant conducting the negotia-
tions in its behalf that he believed
the boundary of timber to contain
twenty million feet. He also stated
that it had been cruised by one
Lemieux, whose cruise showed thirty-
six million feet, but that he thought
that estimate too high. A copy of
Lemieux's cruise was furnished to
the defendant and its representatives
made a visit to the timber and looked
it over without cruising it or esti-
mating it, however. There was no
evidence that the plaintiff's manager
used the cruise for the purpose of
deceiving the agents of the defend-
ant, that he made any false repre-
sentations of fact, or that he ex-
pressed any opinion which he did
not honestly entertain.
After the execution of the con-
tract the defendant began cutting
timber upon the land and continued
to do so until approximately eight
and one-half million feet had been
cut. The defendant paid $75,000
upon the purchase price and then
ceased operations because of the
 THE BUSINESS LAW JOURNAL
condition of the lumber market,
which had declined, and because it
had on hand a large quantity of
lumber which it was unable to sell.
Shortly thereafter the defendant's
mill was destroyed by fire.
When the suit was brought the
defendant pleaded that there was a
deficiency in the timber sold and in-
terposed by way of counterclaim
fraud and false warranty in the sale
of the timber, entitling it to a can-
cellation of the notes outstanding
and to a recovery of payments al-
ready made in excess of the value of
the timber conveyed. The defendant
introduced evidence showing that the
merchantable timber on the bound-
ary did not exceed fifteen million
feet. The plaintiff's evidence, on
the other hand, showed that it was
well in excess of twenty million feet.
The trial court charged the jury
that there was no evidence of fraud
and withdrew the question as to
fraud from the jury's consideration.
He also withdrew the defendant's
claim of damages on account of the
loss of prospective profits on the
deficiency in the timber conveyed.
He instructed the jury that there
was no warranty of quantity in the
sale of the timber, but further in-
structed them that if they should
find that there was less than twenty
million feet, the defendant would be
entitled to recover for the shortage
at the rate of $5 per thousand feet
and would be entitled to credit the
amount of the recovery on the notes
sued on and have judgment against
the plaintiff for the balance, if any.
The jury returned a verdict for the
plaintiff for the sum of $12,500,
which amounted to a finding that
there was a shortage of 2,500,000
feet.
The defendant appealed from the
judgment entered on the verdict.
Three questions were raised by the
appeal. They were as follows: (1)
Whether there was error in with-
drawing the issue of fraud from the
consideration of the jury; (2)
whether there was error in withdraw-
ing from consideration on the issue
of damages defendant's claim to
prospective profits on the timber as
to which there was a deficiency; and
(3) whether there was prejudicial
error in the instruction that there
was no warranty as to the quantity
of the timber sold.
The appellate court answered all
of these questions in the negative and
affirmed the judgment. The court's
discussion of the questions is con-
tained in the following paragraphs
quoted from the opinion:
"Defendant's contention as to fraud
must fail because there is no evidence
of scicnter or fraudulent intent. There
is evidence, it is true, that plaintiff's
manager stated to the representative
of defendant that there was 20,000,000
feet of merchantable timber on the
land; but the evidence shows that he
stated this as a mere estimate or
opinion,-and there is no evidence that
he did not honestly entertain such
opinion. On the contrary, the evidence
leads irresistibly to tle conclusion that
he did entertain it both. at the time the
opinion was expressed and also at the
time of the trial. He furnished de-
fendant's representative with copy of
the Lemieux cruise showing that the
amount of timber on the land was
largely in excess of 20,000,000 feet, but
at the same time warned him that he
regarded this estimate as high and in-
vited investigation. Expressions of
opinion and estimates by one having
peculiar knowledge of the facts of a
 THE BUSINESS LAW JOURNAL
situation, or in position to have such
knowledge, may in some circumstances
amount to fraud; but before they can
be deemed fraudulent it. must appear
that they were made with knowledge of
their falsity or in reckless disregard of
truth. They can never be deemed
fraudulent where the party making
them honestly believes them to be true
and has a reasonable basis for such
belief.
"The general rule is well stated in
20 Cyc. 13, as follows: 'To constitute
actionable fraud, it must appear: (1)
That defendant made a material rep-
resentation; (2) that it was false; (3)
that when he made it he knew it was
false, or made it recklessly, without
any knowledge of its truth and as a
positive assertion; (4) that he made it
with the intention that it should be
acted upon by plaintiff; (5) that plain-
tiff acted in reliance upon it; and (6)
that he thereby suffered injury.
"This succinct and lucid statement
has been adopted in many decisions
(see 26 C. J. 1063), and has been ap-
proved by this court in an able opinion
by Judge Northcott in the recent case
of Erwin v. Jackson, 22 F. (2d) 56.
And it has been adopted also by the
Ninth Circuit in a case practically 'on
all fours' with the case at bar. Bell
v. Morley, 223 F. 628.
"Coming to the second question, we
think that the learned judge below
properly withdrew from the considera-
tion of the jury the question of pro-
spective profits on the shortage of the
timber. There was no evidence that
defendant had sold at a profit the
20,000,000 feet of timber which it had
purchased from the plaintiff; nor was
there evidence upon which to base a
reasonable conclusion that same could
he sold at a profit. The price of lum-
ber" had declined after the making of
the contract and the demand had fallen
off to such an extent that, after manu-
facturing eight and one-half million
feet, defendant voluntarily suspended
operations although admittedly a large
amount of timber remained uncut and
several hundred thousand feet of logs
which had been cut had not been sawed.
Manifestly whether a profit could be
realized by further operations under
such circumstances was purely a matter
of speculation. It is argued that be-
cause the shortage existed at the time
of sale, the ability to realize a profit
must be referred to that date. But the
answer -to this is that there was no
understanding that the timber was to
be sold, and it was not sold, by de-
fendant at that time. Defendant under-
took to manufacture the timber into
lumber and sell the lumber as it was
manufactured; and whether it would
realize a profit depended upon a num-
ber of factors, including cost of opera-
tion and the condition of the lumber
market. While engaged in its opera-
tions, conditions changed to such an
extent that it suspended the cutting of
timber for which it had already paid
and which was readily available. How
can it be said with any certainty that
it would have realized any profit on the
timber which was short, when the pros-
pect of profit on that which was avail-
able was so remote that operations were
suspended? To ask the question is to
answer it.
"Assuming, without deciding, that
profits from manufacturing the timber
into lumber and selling it were reason-
ably within the contemplation of the
parties, so that in case of shortage loss
of such profits could be considered as
an element of damages, it is clear that
to justify recovery the fact that such
profits would have been realized must
be established with reasonable cer-
tainty, and that a recovery of prospec-
tive profits cannot be allowed where,
as here, same are entirely speculative.
Boston & Albany R. R. v. O'Reilly,
158 U. S. 334, 15 S. Ct. 830, 39 L. Ed.
1006; Howard v. Stillwell & Bierce
,Mfg. Co., 139 U. S. 199, 205, 210, 11
S. Ct. 500, 35 L. Ed. 147; De Ford v.
Maryland Steel Co. (C. C. A. 4th) 113
F. 72; Taber Lumber Co. v. O'Neal
(C. C. A. 8th) 160 F. 596, 602; Curran
v. Smith (C. C. A. 3d) 149 F. 945,
952; Iron City Toolworks v. Weliseb
(C. C. A. 3d) 128 F. 693; Central
 THE BUSINESS LAW JOURNAL

Coal & Coke Co. v. Hartman (C. C. A. The contract provided that if any
8th) 111 F. 96, 102; Central Trust part of the machinery should be d&-
Co. of New York v. Clark (C. C. A. fective in material or workmanship
8th) 92 F. 293, 298; 8 R. C. L. 452;
17 C. J. 791.
the company would replace the de-
"On the third question, the instruc- fective part at any time within one
tion that there was no warranty of year from the date of shipment. It
quantity in the sale of the timber could was further provided that the com-
not have been prejudicial to the de- pany should not be liable for dam-
fendant, in view of the fact that the ages or delays caused by defective
court at the same time instructed the material or workmanship nor for
jury that they were to credit the de- damages due to delay in delivery
fendant at the contract price with any
caused by fires, strikes, combinations
shortage in the timber sold, and of the
further fact that the jury actually did of labor, or other causes beyond its
give the defendant credit for $12,500, control. The contract also pro-
which was the contract price for two vided that the receipt upon arrival
and one-half million feet. Even if the of any part of the machinery should
language of the contract be construed constitute a waiver of any claim for
as a warranty of quantity, there was
damages due to delay.
no evidence which would justify the
awarding of damages on a basis differ- On November 1, 1926, the plain-
ent from that upon which damages were tiff notified the defendant that it
allowed for shortage in the timber sold. would be ready to install the engine
Instead of presenting defendant's con-
within ten days and that the boat
tention under the theory of a breach of
warranty of quantity, the court pre- should be ready not later than De-
sented it under the theory of a breach cember 1st. The defendant's agents
of contract to convey; and under the assured the plaintiff that the ma-
latter theory instructed the jury to give chinery was in Elizabeth City and
defendant all that it would have been that only a few days would be re-
entitled to recover under the former."
quired to put it in first-class order.
The machinery, however, was not in
Elizabeth City. The defendant un-
Purchaser Entitled to Recover Where
dertook to furnish the plaintiff a
Unsuitable Machinery Installed
propeller wheel, a shaft, and a stuff-
Edenton-Mackeys Ferry Co. v. Fair- ing box. These items, which are part
banks-Morse & Co., Supreme Court of
of the propeller equipment and be-
North Carolina, 160 S. E. Rep. 572
long to the engine, were too small
The plaintiff was the owner of a and the engineer sent by the defend-
vessel used in operating a ferry. In ant to install the equipment stated
October, 1926, the plaintiff entered that the equipment was unsuitable
into a contract with the defendant and could not be used. Other
Fairbanks-Morse & Co. whereby the equipment had to be purchased and
defendant agreed to furnish and de- was installed in the boat about Janu-
liver to the plaintiff an engine and ary 10, 1927. The plaintiff was
propeller equipment to be installed compelled to pay $50 per day for a
in the vessel. The defendant agreed boat until January 10, 1927,. and
to deliver the machinery at Eliza- thereafter $75 per day for a period
beth City when notified. of ten days.
 THE BUSINESS LAW JOURNAL
The plaintiff brought this action
to recover from the defendant dam-
ages for breach of the contract. The
evidence showed that- the plaintiff
paid the full purchase price of the
equipment, although it knew that the
equipment was unsuitable. It ap-
peared that payment was made be-
cause the plaintiff had been assured
by the defendant's agent that an ad-
justment would be made and every-
thing would be taken care of.
The case was submitted to the
jury, which awarded the plaintiff a
verdict in the sum of $1,825. From
judgment upon the verdict the de-
fendant appealed. The judgment
was affirmed by the appellate court
which stated its reasons for the
affirmance as follows:
"The defendant resists recovery,
chiefly upon two grounds:
"(1) That the contract provides that
the defendant 'shall not be liable for
damages or delays caused by such de-
fective material or workmanship, and
it is agreed that the liability of the
company under all guarantees, either
expressed or implied, is specifically
limited to the replacement free of
charge, . . . of parts failing,
through defect in workmanship or
materials, within the time and in the
manner aforesaid.'
"(2) That the contract provides that
'the company shall not be liable for any
damages due to delay in delivery
caused by fires, strikes, combinations of
labor, or other causes beyond its con-
trol, and the receipt upon arrival of
any part of said machinery and mate-
rials shall constitute a waiver of any
claim for damages due to any delay.
Should the purchaser, because of de-
layed delivery, be held to have justifi-
ably declined to receive said machinery
or materials upoi arrival, any damage
due to such delay shall be measured
solely by the rental value of similar
machinery for the period of the delay,
and the company's liability shall, in no
event, exceed such amount.'
"These grounds of resistance to re-
covery are based upon the testimony
of the agent of the plaintiff to the
effect that, although plaintiff knew that
the propeller wheel, the shaft, and the
stuffing box delivered by the defendant
were too small, still no request or de-
mand was made upon the defendant to
supply such equipment with other
equipment suitable for the purposes
contemplated by the parties. The testi-
mony for the plaintiff further disclosed
the fact that, although it knew of the
failure of the defendant to furnish
materials contemplated by the contract,
nevertheless it accepted and paid the
purchase money for the engine.
"The plaintiff, however, contended
and offered evidence tending to show
that the propeller wheel, the shaft, and
the stuffing box were parts of the pro-
peller equipment of the engine, and
that without the propeller equipment
in controversy the boat could not be
operated. The plaintiff further offered
evidence tending to show that assur-
ances were given it by the general
agents of defendant that the defendant
'would arrange all matters satisfac-
torily.' The exact language of witness
for plaintiff was: 'I had the assurance
of Mr. Hill and Mr. Cross that every-
thing would be adjusted satisfactorily
to us; that everything would be taken
care of. . . . In December, 1926,
and prior thereto, they had told me
with reference to the propeller wheel
and shaft that was there, that these
matters would be adjusted. They told
me so afterwards when we had to buy
them, just before the boat left the rail-
way, the latter part of December or
January.' The evidence further dis-
closed that the defendant furnished an
engineer or mechanic to install the
equipment, and that said engineer in-
formed the defendant that the equip-
ment complained of could not be used
in the boat.
"These contontions, and the evidence
supporting them, raise the legal ques-
tion as to whether the assurances of
 THE BUSINESS LAW JOURNAL
adjustment given by general agents of
the defendane after the controversy
arose warranted the submission of the
case to the jury. A contract substan-
tially similar to the one involved in this
case was discussed and construed in
Fairbanks, Morse & Co. v. Twin. City,
170 N. C. 315, 86 S. E. 1051, 1)55:
In that case, the court remarked: 'Con-
tracts like this one are somewhat one-
sided and should not be too strictly
enforced, in favor of the seller, but
with some regard-to the just rights of
the buyer.' Declaring the law appli-
cable to the facts, the court said: 'It
will be found that, in most of the above
cited cases, the courts held that such
a transaction as the one here between
the agent of the seller, who is especially
commissioned to adjust the matter of
controversy between the parties, and
the buyer, by which, upon representa-
tions and promises that the machine
will be put in good or satisfactory
working order, the agent obtains the
notes for the price, will amount to a
waiver of the stipulation as to supply-
ing new parts for those proved to be
defective or for a return of the ma-
chine, and enable the buyer to recover
his proper damages to the extent he has
been injured and within the well;
settled rules relating to the assessment
of damages in such cases.' Kester v.
Miller, 119 N. C. 475, 26 S. E. 115;
Allen v. Tompkins, 136 N. C. 208, 48
S. E. 655.
"In the case at bar, the plaintiff
offered evidence tending to show.that
defendant, in response to a telegram
sent by plaintiff on November 30, 1926,
replied: 'Our Mr. Hill expects to be
in Edenton tomorrow and will discuss
this matter in person with you,' and
that thereafter the general agents of
the defendant from time to time gave
assurances that 'everything would be
adjusted satisfactorily.' This testi-
nimny and other testimony of like
tenor bring the case squarely within
the principles of law announced in
Kester v. Miller, and Fairbanks v.
Supply Co., supra."
Withdrawal of Seller's Offer to
Accept Return of Goods
United States Cutlery Co. v. Hawkins,
Louisiana Court of Appeal, 136 So.
Rep. 127
The plaintiff brought this action
against the defendant to recover the
sum of $111.08, the price of certain
cutlery ordered. by the defendant
through the plaintiff's .representative
on January 24, 1928, and shipped
by railway to the defendant on the
following March 9th. The cutlery
consisted of four gross of steak
knives at the price of $108 and four
kitchen sets at the price of $3.08.
The defendant admitted ordering
and receiving the goods but alleged
that they were found to be defective
and inferior and that the plaintiff
was notified of that fact. The de-
fendant further alleged that the
plaintiff agreed to accept the re-
turn of the steak knives and to credit
the defendant with the price thereof,
and in keeping with this agreement
the defendant, on June 2, 1928,
shipped the knives back to the plain-
tiff and should have been credited
with the price thereof, $108, which
would leave a balance of $3.08 due"
on the account. This amount the
defendant claimed to have offered
the plaintiff.
It appeared that on May 12th,
following the arrival, of the goods,
the defendant wrote the plaintiff a
letter. In this letter he made no
mention of any defects in the knives
but merely stated that he would like
to return them as business was ver'
quiet and he could not pay for them.
In reply to the defendant's letter the
plaintiff wrote him on May 16th.
 THE BUSINESS LAW JOURNAL
The plaintiff's letter read in part as
follows:
"However, in a partial effort to
meet your views, we will allow you to
return the stainless steak knives only,
not the kitchen sets of which four
were sent you, as the boxes would only
be broken and the goods damaged by
the time they would be received and
the costs of these sets is not large,
providing you prepay the transporta-
tion charges and the cartage both ways
and pay for the sets that you must
retain.
"If this proposition meets with your
approval, kindly let us know by return
mail the quantity of each of the steak
knives you are returning and we will
credit your account for the amount re-
ceived."
The plaintiff again wrote the de-
fendant on June 5th, enclosing a
statement of his account and re-
questing payment in full. The de-
fendant did not admit receiving this
letter, but it should have reached
him in about three days. On June
8th the box containing the steak
knives was delivered to the railroad
consigned to the plaintiff. The bill
of lading showing shipment of the
knives was dated June 2nd, but the
railway's receipt stamped on it bore
date of June 8th.
The plaintiff contended that as
the defendant did not promptly com-
ply with the conditions of its pro-
posal contained in its letter of May
16th it should have the right to
withdraw the offer to accept the re-
turn of the goods, and did in fact
withdraw such offer by its letter of
June 5th demanding payment of the
entire account of $111.08. The
court held that the proposal con-
tained in the plaintiff's letter of June
16th called for an immediate accept-
ance of the proposal by the defend-
ant and an immediate shipment of
the knives, and when the plaintiff,
hearing nothing from the defendant
with regard to the return of the
knives, on June 5th withdrew its
offer to accept the return thereof,
the matter reverted to the original
relation between the parties. The
defendant, therefore, was held liable
for the price of the goods. In'the
opinion the court wrote as
follows:
"At the time defendant initiated the
move to have plaintiff assent to the re-
turn of the steak knives and give him
credit for price of same, he was uncon-
ditionally bound for its payment. We
do not think him serious in the defense
passively asserted to the effect that
these knives were defective and in-
ferior. If plaintiff cared to relieve de-
fendant's hard-pressed condition to any
extent, it certainly had the right to
prescribe the terms and the conditions
upon which such relief would be given,
so far as its account against him was
concerned. The letter of May 16th
lays down the terms, in part clear and
in part ambiguous, which- defendant
was required to meet in order that he
would be relieved from payment'of the
price of these knives. Under the cir-
cumstances it required a strict com-
pliance on part of defendant with the
terms imposed upon him by plaintiff if
he would exact specific performance
by plaintiff. We do not think he did
this.
"We think a reasonable construction
of the second paragraph.of the quoted
portion of plaintiff's letter to defendant
of May 16th is this: That defendant
should advise plaintiff by return mail
if he accepted the proposal of the letter
and follow such acceptance by immedi-
ate shipment of the knives, without cost
or expense to plaintiff, and by payment
of the $3.08, balance due on the ac-
count. Why should plaintiff insist on
being advised by return mail if its
proposition was accepted unless it ex-
pected the goods to be returned as
promptly? The acceptance of the
 THE BUSINESS LAW JOURNAL

proposition by formal letter did not answer either by the next mail after it
mean much to plaintiff unless the goods is received or during the same day that
were immediately returned. Plaintiff the offer is received.' Waterman v.
desired to know 'by return of mail the Banks, 144 U. S. 394, 12 S. Ct. 646,
quantity of each of the steak knives 36 L. Ed. 479; Carr v. Duval, 14 Pet.
you are returning.' Not the quantity 77, 10 L. Ed. 361.
of knives you will return, or you ex- "On page 297 the author further
pect to return, but the quantity 'you says: 'An offer comes to an end at the
are returning,' which, according to expiration of the time given for its
what we deem a reasonable construc- acceptance-a limitation of the time
tion, means being returned contem- within which an offer is to run being
poraneously with the writing and mail- equivalent to the withdrawal of the
ing of the letter advising of the ship- offer at the end of the time named.'
ment of the goods. Defendant did not
do this, even should it be held that he
immediately wrote plaintiff accepting
its terms for the return of the knives. SURETYSHIP
"Our conclusion is that on June 5th
plaintiff had heard nothing from de-
fendant with regard to the return of Bond Guaranteeing Completion of
the knives, since writing him May 16th, Buildings
and therefore withdrew its offer to ac-
Mechanics' Trust Co. v. Fidelity &
cept return of the knives, and the
matter reverted to the original relation Casualty Co. of New York, Supreme
between the parties. Court of Pennsylvania, 156 Atl. Rep.
146
"We quote the following from 6 R.
C. L. page 610, bearing upon the In February, 1928, William H.
above-discussed issue: 'In transactions Turby planned to erect two double
between persons who are at a distance houses on a tract of land which he
from each other it is customary not owned. To finance his improvement
only to communicate offers by mail, but
to accept them in the same manner Turby applied to the plaintiff trust
. . . wher an individual makes afh company for a loan of $15,000 to be
offer by post, stipulating for, or by the secured by a first mortgage on the
nature of the business having the right land and the buildings to be erected.
to expect, an answer by return of post, Five thousand dollars of the mort-
the offer can endure only for a limited gage was advanced upon credit of
time, and the making of it is accom-
panied by an implied stipulation that the ground to clear off certain liens
the answer shall be sent by return of thereon and the remaining $10,000
post. If that implied stipulation is not was to be advanced to Turby for
satisfied, the person making the offer is construction of the proposed build-
released from it.' Maclay v. Harvey, ings. The bond and mortgage on
90 Ill. 525, 32 Am. Rep. 35.
the premises to cover the $15,000
"And the following from C. J. vol.
loan were executed by Turby in
13, page 280: 'Where the offer specifies
a time of acceptance, an acceptance favor of the plaintiff trust company
after that time will be nugatory as an on February 7, 1928. However,
acceptance, unless the offerer assents since the mortgage, to the extent of
thereto, with full knowledge that it was $10,000 of the loan, was on the
not made within the period named. An buildings not yet constructed, the
offer which calls for a reply "by re-
plaintiff required Turbv to furnish
turn mail," "in course of post," or the
like must be accepted by mailing an a personal bond in the sum of