Frequently the question of credit arises after a contract for future delivery has been made, and the following may be helpful:
Question—Will you kindly give us your opinion in the following matter: A makes a sale to B of a certain quantity of lumber for future delivery, payments to be made on a credit of sixty days’ time. Before the delivery of lumber begins, A has reason to believe that the responsibility of B is not satisfactory to him and refuses to ship the lumber except for cash with discount for the difference in time. What redress has B in this matter, if he is not in a position to pay cash?
Reply: The refusal of A to ship the lumber to B under these circumstances constitutes a breach of contract, for B has an action against A for damages. Something more than dissatisfaction with B’s financial responsibility is necessary to furnish A with a valid excuse for his refusal to ship except for cash.
IN MOST STATES A CONSIGNEE MUST BE NOTIFIED OF THE ARRIVAL OF HIS LUMBER.
Question—Is a railroad company obliged to notify the consignee of the arrival of lumber when it is billed and the bill of lading reads: “Order of shipper, notify consignee,” and if the carriers fail to notify the consignee, have they the right to charge demurrage or storage for the lumber so held? Would it make any difference if the lumber were billed direct to the consignee and were not an “Order notify shipment?” Have the courts made any rulings of this matter, and where can we find them?
Reply: A railroad company is, of course, bound to comply with the undertaking set forth in its own bill of lading. If it accepts goods to be carried and delivered under a bill which expressly directs it to “notify the consignee” there is no ground upon which it can escape its obligation actually to notify the consignee except the impossibility of finding him by the ordinary means. If the consignee can readily be found the carrier has not fulfilled the task which it has expressly and in definite terms undertaken to fulfill until it has found him and notified him. It has no right to charge demurrage or storage until such notification has been duly given. If the consignee cannot be found by the exercise of reasonable diligence then the attempt to find him will serve the carrier as well as an actual notification. If the bill of lading does not, in express terms, direct the carrier to notify the consignee this duty still rests upon the carrier by common law as it is interpreted in this State. In some States (Massachusetts, for example) the carrier is not bound to notify the consignee of the arrival of his goods unless the contract of carriage expressly so directs. But in New York the courts hold that this is one of the carrier’s duties, as carrier, without any special stipulation regarding it. This is the rule, as the courts of New York have announced it. “The rules as to the delivery of goods at their place of destination by a carrier that prevail in this State are as follows: If the consignee be present upon the arrival of the goods, he must take them without unreasonable delay. If he be not present, but live at or in the vicinity of the place of delivery, the carrier must notify him of the arrival of the goods, and then he has a reasonable time to remove them. If he be absent, unknown, or cannot be found, then the carrier can place the goods in its freight house, and if the consignee does not call for them in a reasonable time, its liability as a common carrier ceases.”