Theophilus Parsons.

Laws of business for all the states of the Union : with forms and directions for all transactions. And abstracts of the laws of all the states and territories on the various topics online

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Online LibraryTheophilus ParsonsLaws of business for all the states of the Union : with forms and directions for all transactions. And abstracts of the laws of all the states and territories on the various topics → online text (page 15 of 70)
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goods fit for the China market, which he offered to sell cheap. Bui
the court held that such a letter was not a warranty, but merely an
invitation to trade, it not having any specific reference to the good*
actually bought by the plaintiff.

If these declarations are intended to deceive, and have that effect,
they may avoid the sale for fraud. And affirmations of quantity or
quality, which are made pending the negotiations for sale, with a
view to procure a sale, and have that effect, will be regarded as a
warranty ; thus, in New York, it was held that a representation
made by a vendor, upon a sale of flour in barrels, that it was in
quality superfine or extra-superfine, and worth a shilling a barrel
more than common, coupled with the assurance to the buyer's agent
that he might rely upon such representation, was a warranty of the
quality of the flour; So in England, where upon the sale of a horse
the vendor said to the vendee, " You may depend upon it, the horse


is perfectly quiet and free from vice ; " this was held to amount to
an express warranty that he was quiet and free from vice.

Goods sold by sample are warranted by such sale to conform to
the sample ; but there is no warranty that the sample is what it ap-
pears to be. Thus, in England, there was a sale of five bags of hops,
with express warranty that the bulk answered the samples by which
they were sold. The sale was in January ; at that time the samples
fairly answered to the commodity sold, and no defect was at that
time perceptible to the buyer. In July following, every bag was
found to have become unmerchantable and spoiled, by heating,
caused probably by the hops having been fraudulently watered by
the grower, or some other person, before they were purchased by
the defendant. The seller knew nothing of this fact at the time of
sale, and the samples were as much damped as the rest ; and it was
then impossible to detect it. It was held by the court that there
was here no implied warranty that the bulk of the commodity was
merchantable at the time of sale, although a merchantable price was

A breach of warranty does not always authorize the buyer to re-
turn the article sold, unless there be an agreement to that effect, or
fraud ; but only to sue on the warranty, and recover damages for
the breach of it. But if one orders a thing for a special purpose
known to the seller, he may certainly return it if it be unfit for that
purpose, if he does so as soon as he ascertains its uufitness.

The seller of goods actually in his possession as owner is held to
warrant his own title by the fact of the sale. But if the property
be not in the possession of the vendor, and there be no assertion of
ownership by him, no implied warranty of title arises.

If a thing is ordered for a special purpose, and is supplied, there
is an implied warranty that it is fit for that purpose. In one case,
the defendant was a dealer in ropes, and represented himself to
be a manufacturer of the article. The buyer, a wine-merchant,
applied to him for a crane-rope. The seller's foreman went to the
buyer's premises, in order to ascertain the dimensions and kind of
rope required. He examined the crane and the old rope, and took
the necessary admeasurements, and was told that the new rope was
wanted for the purpose of raising pipes of wine out of the cellar, and



letting them down into the street ; when he informed the buyer that
a rope must be made on purpose. The seller did not make the rope
himself, but sent the order to his manufacturer, who employed a
third person to make it. It was held that, as between the parties to
the sale, there was an implied warranty that the rope was a fit and
proper one for the purpose for which it was ordered. And the
seller was held responsible, not only for the rope, which broke, but
for a pipe of wine which was thereby lost.

This principle must not be applied to those cases where an ascer-
tained article is purchased, although it be intended for a special
purpose. For if the thing itself is specifically selected and purchased,
the purchaser takes upon himself the risk of its effecting its purpose.
This is illustrated in an 'English case thus : " If a man says to an-
other, ' Sell me a horse fit to carry me,' and the other sells a horse
which he knows to be unfit to ride, he will be liable for the conse-
quences ; but if a man says, ' Sell me that gray horse to ride,' and
the other sells it, knowing'that the buyer will not be able to ride it,
that would not make him liable." If he said, " Sell me that gray
horse if he is fit to ride," and the seller sold it knowing he was not
fit, he would be liable.

It has been much discussed whether a bill of sale, describing the
article sold, amounts to a warranty that the article conforms to the
description. It seems now to be well settled that it does. In a
recent Massachusetts case, there was a bill of sale as follows : " H.
& Co. bought of T. W. & Co. two cases of indigo, $272." . The arti-
cle sold was not indigo, but principally Prussian blue. No fraud
was imputed to the seller, and the article wps so prepared as to de-
ceive experienced and skilful dealers in indigo. The naked question
was presented, whether the bill of sale constituted a warranty that
the article sold was indigo. And the court held that it did. Here
the warranty implied by the bill of sale was as to the kind of goods.
In another case the bill was, " Sold E. T. H. 2,000 gallons prime
quality winter oil" The thing sold was oil, and winter oil ; but not
prime quality. And the court held that the bill of sale amounted
to a warranty that it was of that quality. In an English case, a
vessel was advertised for sale as " copper fastened ; " and this was
held to be a warranty that she was so fastened according to the
usual understanding of merchants.


One who sells provisions is always considered in law as warrant-
ing that they are good and wholesome.

Bill of Sale of Personal Property.

Know all Men by these Presents, That I (name of the seller)

in the county of for and in consideration of the sum of

to in hand well and truly paid, at or before signing, sealing, and

delivery of these presents, by (name of the buyer) the receipt whereof I the said
do hereby acknowledge, have granted, bargained, and sold,
and by these presents do grant, bargain, and sell unto the said

To Have and to Hold the said granted and bargained
unto the said heirs, executors, administrators, and assigns, to

only proper use, benefit, and behoof forever, and the said
does vouch himself to be the true and lawful owner of the goods and effects hereby
sold, and to have in himself full power, good right, and lawful authority to dispose
of the said in manner as aforesaid, and I do, for my-

self, my heirs, executors, and administrators, hereby covenant and agree to warrant
and defend the said (the goods sold) unto the said

heirs, executors, and administrators, and
assigns, against the lawful claims and demands of all persons whomsoever :

In "Witness Whereof, the said have hereunto

set hand and seal this day of

In the year of our Lord one thousand eight hundred and sixty-

Executed and Delivered in Presence of


Sill of Sale of Personal Property, with a Condition to make it a
Mortgage, with Power of Sale.

Know all Men by these Presents, That

in consideration of paid by the receipt

whereof is hereby acknowledged, do hereby grant, sell, transfer, and deliver unto
the said the following goods and chattels, namely :

To Have and to Hold all and singular the said goods and chattels to
the said and executors, administrators, and assigns,

to then- own use and behoof forever.


And hereby covenant with the grantee that the

lawful owner of the said goods and chattels ; that they are free from all incum-
brances, that have good right to sell the

same as aforesaid ; and that will warrant and defend the same against the

lawful claims and demands of all persons.

Provided Nevertheless that if the grantor , or executors,

administrators, or assigns, shall pay unto the grantee , or executors,

administrators, or assigns the sum of in from

this date, with interest semi-annually at the rate of per cent per annum,

and until such payment shall not waste or destroy the same, nor suffer them or any
part thereof to be attached on mesne process ; and shall not, except with the con-
sent in writing of the grantee or representatives, attempt to sell or
to remove from the same or any part thereof, then this deed, as
also note of even date herewith, signed by the said
whereby promise to pay to the grantee or order the said sum and
interest at the tunes aforesaid, shall be void.

But upon any Default in the performance of the foregoing condition,
the grantee , or executors, administrators, or assigns, may sell the said

goods and chattels by public auction, first giving days' notice hi writing of

the tune and place of sale to the grantor or representatives. And out of

the money arising from such sale the grantee , or representatives shall be

entitled to retain all sums then secured by this mortgage, whether then or there-
after payable, including all costs, charges, and expenses incurred or sustained by
them hi relation to the said property, or to discharge any claims or liens
of third persons affecting the same, rendering the surplus, if any, to the grantor
or executors, administrators, or assigns.

And it is Agreed that the grantee , or executors, administra-

tors, or assigns, or any person or persons in their behalf, may purchase at any sale
made as aforesaid ; and that, until default hi the performance of the condition of
this deed, the grantor and executors, administrators, and assigns, may

retain possession of the above-mortgaged property and may use and enjoy the

In "Witness Whereof, the said hereunto set

hand and seal and affix and cancel the stamp required by law, this
day of hi the year one thousand eight hundred and

Signed, Sealed and Delivered in Presence of



SUCH sales are not unfrequent in this country; and the seller al-
ways agrees and promises that he will not pursue that trade, business,
or occupation again. There are numerous cases, both in English
law-books and in our own, which have arisen from bargains of this
kind. The law seems now to be settled, that such a contract is
wholly void and inoperative, provided the seller agrees to give up his
business and never resume it again, at any time or anywhere ; that is,
without any limitation of space or time ; because it is against the
public interest that a man should be permitted to cast himself out
from his business or trade for the rest of his life. But the contract
is good, if for a fair consideration the seller agrees not to resume or
carry on that business within a certain time, or within certain limits.
What these limits must be is not certain. The courts say they must
be " reasonable," and made in good faith. A contract not to carry
on a business in a certain town would undoubtedly be good. So, we
should say, would be a bargain not to do so within a certain State.
In one case in Massachusetts, a contract not to use certain machines
in any of the United States except two (which were Massachusetts
and Rhode Island) was held valid, all of the States but two being
considered as a sufficiently defined or limited place ; but this was
unusual. The courts generally would sanction such a bargain, if it
were limited to only a part of the United States ; as to all New
England, for example.

In such a contract, it would be better for the parties to agree upon
the amount which the seller should pay by way of damages, if he
violated his bargain, because it might be very difficult to prove
specific damages.; and such a bargain, if it were reasonable, would
be enforced by law.

Such damages, agreed on beforehand, are called liquidated dam-
ages. In all cases where damages are demanded, and are not agreed
on, they are called unliquidated damages, and it is the duty of the
jury to determine, from the evidence before them, what damages
the injured party has suffered, and what amount would indemnify



HEBE is an instance where a Latin phrase has become English,
by general adoption and use. In transitu means " in the transit,"
and the English phrase may just as well be used ; but the Latin
one is used much oftener. "What the whole phrase Stoppage in
transitu means, is this. A seller, who has sent goods to a buyer at
a distance, and after sending them learns that the buyer is insolvent,
may stop the goods at any time before they reach the buyer. His
right to do this is called the right of Stoppage in transitu.

If the goods are sent to pay a precedent and existing debt, they
are not subject to this right.

The right exists only upon actual insolvency ; but this need not
be formal insolvency, or bankruptcy at law ; an actual inability to
pay one's debts in the usual way being enough. If the seller, in
good faith, stops the goods, in a belief of the buyer's insolvency,
the buyer may at once defeat this stoppage, and reclaim the goods,
by payment of the price. So he may, by a tender of adequate
security, if the sale be on credit.

The stoppage must be effected by the seller, and evidenced by
some act ; but it is not necessary that he should take actual possession
of the goods. If he gives a distinct notice to the party in possession,
whether carrier, warehouseman, middleman,* or whoever else, before
the goods reach the buyer, this is enough. But a notice of stoppage
in transitu, to be effectual, must be given either to the person who
has the immediate custody of the goods ; or if to the principal whose
servant has the custody, then at such a time, and under such cir-
cumstances, as that he may, by the exercis.e of reasonable diligence,
communicate it to his servant in time to prevent the delivery to the

Goods can be stopped only while in transitu ; and they are in
transitu only until they come into the possession of the buyer. Bui


this possession need not be actual, a constructive possession b/ the
buyer being sufficient to prevent this stoppage ; as if the goods are
placed on the wharf of the buyer, or on a neighboring wharf with
notice to him ; or in a warehouse with delivery of the key to him,
or of an order on the warehouse-man.

But the entry of the goods at the custom-house, without payment
of duties, does not terminate the transit. If the buyer has demanded
and marked them at the place where they had arrived on the termina-
tion of the voyage or journey, personally or by his agent ; or if the
carrier still holds the goods, but only as the agent of the buyer ; in
all these cases the transit is ended. But if the carrier holds them
by a lien for his charges against the buyer, the seller may pay these
charges and discharge the lien, and then stop the goods in transitu.

If the buyer has, in good faith and for value, sold the goods, " to
arrive," before he has received them, and indorsed and delivered
the bill of lading, this second purchaser holds the goods free from
the first seller's right to stop them. But if the goods and bill are
transferred only as security for a debt due from the first purchaser
to the transferee, the original seller may stop the goods, and hold
them subject to this security, and need pay only the specific ad-
vances made on their credit, or on that very bill of lading, and not
a general indebtedness of the first purchaser to the second.

A seller who stops the goods in transitu does not rescind the sale,
but holds the goods as the property of the buyer ; and they may be
redeenfed by the buyer or his representatives, by paying the price
for which they are a security ; and if not redeemed, they become
the seller's, only in the same way as a pledge might become his ;
that is, he may sell them at a proper time, and in a proper manner,
and with due notice, so that the buyer may protect his interests.
And if the seller then fails to obtain from them the full price due,
he has a claim for the balance upon the buyer. If he gets more
than the amount due to him, he must pay over the balance to the
buyer or his assignees.

An honest buyer, apprehending bankruptcy, might wish to return
the goods to their original owner; and this he could undoubtedly
do, if they have not become distinctly his property, and the seller
his creditor for the price. But if they have, the buyer has no


more right to benefit this creditor by suJi an appropriation
of these goods, than any other creditor by giving him any other


A GUARANTOR is one who is bound to another for the fulfilment
of a promise, or of an engagement, made by a third party. This
kind of contract is very common. Generally, it is not negotiable ;
that is, not transferable so as to be enforced by the transferee as if
it had been given to him by the guarantor. No special form or
words are necessary to the contract of guaranty ; and if the word
" guarantee " be used, and the whole instrument contains all the
characteristics of a note of hand, payable to order or bearer, then it
is negotiable. Thus, in a case in New York, the instrument was as
follows : " For and in consideration of thirty-one dollars and fifty
cents received of B. F. Spencer, I hereby guarantee the payment
and collection of the within note to him or bearer. Auburn, Sept.
25, 1837. (Signed) Thomas Burns." And it was held negotiable.
What negotiable means will be more fully explained in the chapter
on Notes of Hand and Bills of Exchange.

The guaranty may be enforced, although the original debt cannot ;
as, for example, the guaranty of the promise of a wife or an infant ;
and sometimes the guaranty of a debt is requested, and given, for
the very reason that the debt is not enforceable at law. But, gener-
ally, the liability of the principal measures and limits the liability of
the guarantor. And if the creditor agree that the principal debt
shall be reduced or lessened in a certain proportion, the obligation
of the guarantor is reduced by law in an equal proportion.

A contract of guaranty is construed somewhat strictly. Thus, a


guaranty of the notes of one, does not extend to notes which he
gives jointly with another.

A guarantor who pays the debt of the principal may demand from
his creditor the securities he holds, although not an assignment of
the debt itself, or of the note or bond which declares the debt, for
that is paid and discharged. And sometimes the creditor will not
be permitted to resort to the guarantor, until he has collected as
much as he can from these securities.

Unless the guaranty is by a sealed instrument, there must be a
consideration to support it. If the original debt or obligation
rest upon a good consideration, this will support the promise of
guaranty, if this promise was made at the same time with or prior to
the original debt. But if that debt or obligation be first incurred
and completed, before the guaranty is given, there must be a new
consideration for the promise to guarantee that debt, or the guar-
anty is void. But the consideration need not pass from him who
receives the guaranty to him who gives it. Any benefit to him for
whom the guaranty is given, or any injury to him who receives it,
is a sufficient consideration if the guaranty be given because of it.

A guaranty is not binding unless it is accepted, and unless the
guarantor has knowledge of this. But the law presumes this accept-
ance in general, when the giving of the guaranty and any action on
the faith of it, by the party to whom it is given, are simultaneous.
In New York, wherever the guaranty is absolute, notice of its ac-
ceptance is unnecessary, unless expressly or irnpliedly required by
the offer of guaranty. But, generally, an offer to guarantee a future
operation, especially if by letter, does not bind the offerer, unless he
has such notice of the acceptance of his offer as would give him a
reasonable opportunity of making himself safe.

If the liability of the principal be materially varied by the act of
the party guaranteed, without the consent of the guarantor, the
guarantor is discharged. Many interesting cases have arisen, which v
involve this question. Thus, where a bond was given conditioned
for the faithful performance of the duties of the office of deputy col-
lector of direct taxes for eight certain townships, and the instrument
of appointment, referred to in the bond, was afterwards altered, so
as to extend to another township, without the consent of the surety,


the Supreme Court of the United States held that the surety was
discharged from his responsiblity for moneys collected by his princi-
pal after the alteration. Again, in an English case, the facts were,
that, in a bond by sureties for the careful attention to business and
the faithful discharge of the duties of an agent of a bank, it was pro-
vided " that he should have no other business of any kind, nor be
connected in any shape with any trade, manufacture, or mercantile
copartnery, nor be agent of any individual or copartnery in any man-
ner or way whatsoever, nor be security for any individual or copart-
nery in any manner or way whatsoever." The bank subsequently,
without the knowledge of the sureties, increased the salary of
the agent, he undertaking to bear one-fourth part of all losses
which might be incurred by his discounts. It was held that this
was such an alteration of the contract, and of the liability of the
agent, that the sureties were discharged, notwithstanding that
the loss arose, not from discounts, but from improper conduct of
the agent.

The guarantor is also discharged if the liability or obligation be
renewed or extended by law. As if a bank, incorporated for twenty
years, be renewed for ten more, and the officers and business of the
bank go on without change ; the original sureties of the cashier are
not held beyond the first term. So a guaranty to a partnership is
extinguished by a change among the members, although neither the
name nor the business of the firm be changed. But a guaranty, by
express terms, may be made to continue over most changes of this

A specific guaranty, for one transaction which is not yet exhausted,
is not revocable. If it be a continuing or a general guaranty, it is
revocable, unless an "express agreement, founded on a consideration,
makes it otherwise.

A creditor may give his debtor some accommodation or indul-
gence, without thereby discharging his guarantor. It would seem
just, however, that he should not be permitted to give him any in-
dulgence which would materially prejudice the guarantor. Gener-
ally, a guarantor may always pay a debt, and so acquire at once the
right of proceeding against the party whose debt he has paid. On
this ground, it has been held, that where a surety requested the


creditor to proceed against the principal debtor, and the creditor
refused to do this, and afterwards the debtor became insolvent and
the surety was without indemnity, still, the surety (or guarantor)
was not discharged, because he might have paid the debt, and then
sued the party whose debt he paid. In New York, it seems to be
the law, that, if the surety requests the creditor to proceed against
the principal debtor, and he refuses, and the principal debtor after-
wards becomes insolvent, the surety will be discharged. If, by gross
negligence, the creditor has lost his debt, and has deprived the
surety of security or indemnity, the surety must be discharged, un-
less he was equally negligent. If a creditor gives time to his debtor,
by a binding agreement which will prevent a suit in the mean time,
this undoubtedly discharges the guarantor (unless the surety con-
sents to the delay) because it deprives him of his power of acquiring
a right of proceeding against the debtor, by paying the debt ; for the
debtor cannot during that time be sued.

If there be a failure on the part of the principal, and the guarantor
is looked to, he should have reasonable notice of this. And, gener-
ally, any notice would be reasonable which would be sufficient in
fact to prevent his suffering from the delay. And if there be no
notice, and the guarantor has been unharmed thereby, he is not dis-

Online LibraryTheophilus ParsonsLaws of business for all the states of the Union : with forms and directions for all transactions. And abstracts of the laws of all the states and territories on the various topics → online text (page 15 of 70)