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Pertinent Legal Findings 



SEliERS DUTY TO FUHNISH CABS 



Mauy buyers au.l sellers of lumber will be sur|irised to learu tliat 

 there lias never beeu any serious dispute over the ijuestiou whether, 

 when a eontrait to sell lumber calls tor delivery f. o. b. cars at 

 the place of shijinieut. the seller is impliedly bound to furnish the 

 necessary cars, in the absence of express agreement to the con- 

 trary. But the fact is that such question has not only been fre- 

 quently raise<l iu the courts, but the courts have not been able to 

 agree on what is the proper rule in such a case. The latest deci- 

 sions on the point, however, lean towanl the rule that unless the 

 contract of sale shows that the buyer has undertaken to furnish 

 the cars, it will be presumed that the seller oblig:ited himself to 

 procure them. 



The Kansas Supreme Court has said: "It is our understanding 

 that ihe phrase or formula, ' f . o. b. cars." has by long usage and 

 custom acquired throughout the business circles of the country a 

 definite and specific meaning generally understood by all business 

 people. When such phrase or formula is used in a business con- 

 tract between a buj'er and a seller of ordinary commercial com- 

 modities, where the use of a common carrier is necessary, the 

 parties intend thereby that the seller will at his own expense do 

 ■all that may be necessary to accomplish the loading and consign- 

 ment of the goods to the buyer, including the placing of cars 

 upon which to load the commodities sold; and when nothing 

 appears to modify or limit this meaning, courts should enforce 

 the contract so as to effectuate this intent. This rule is reason- 

 able, it harmonizes with existing business conditions, and is the 

 universal practice among business people. It is conceded that by 

 this phrase the seller is bound to deliver the goods to the buyer 

 by placing them on board the cars. How can he do this unless he 

 secures the cars?'' 



A similar decision has been handed down by the Wisconsin 

 Supreme Court, although that tribunal once adhered to the con- 

 trary rule. 



But in other states the rule seems to prevail that under a contract 

 for delivery f. o. b. place of shipment, the buyer is bound to 

 :furnish the necessary cars or vessels, unless the seller binds him- 

 self to obtain the same, or unless the buyer can show that by a 

 general lustom or by previous course of dealing between the 

 parties, it must have been mutually understood that the seller 

 would furnish the means of transportation. Thus it has been 

 held by the United States district court tor the northern district of 

 Illinois that a contract to sell coal f. o. b. the seller's mines 

 flierel.v required him to load cars to be provided by the buyer. 



Moral. — When mutual understanding as to who is to furnish the 

 necessary cars or vessel cannot be inferred from a general custom 

 of the trade or from previous course of dealings between the parties, 

 the contract of sale should expressly state who shall obtain the 

 transportation equipment. Otherwise it maj- take a lawsuit to 

 determine where the obligation rests, and in the meantime one 

 party or the other has incurred liability in damages for breach 

 of contract. Either the seller is entitled to damages for breach 

 of the buyer 's obligation to furnish ears, wherebj' the former has 

 been prevented from making delivery, or the buyer will be en- 

 titled to recover on the theory that the seller wrongfully refused 

 to make delivery. 



SBLUBB OF BUSimSS AS COMPETITOB 

 When a lumber dealer or manufacturer sells his business, how 

 far may he legally bind himself not to re-engage in the same line 

 of business, and is any contract necessary to prevent him from 

 competing with his successor? 



Answering the second question first, there are repeated court 

 decisions to sustain the statement that the mere fact that a lumber 

 manufacturer or dealer sells his business does not prevent him 

 from setting up a competing enterprise, but that his successor 



— 26— 



will lie awar.lcd legal relict ajiaiiisl any attempt im ills part tii 

 so conduct a new business that the public is apt to be deceived 

 into believing that it is a continuation of the old concern; anil 

 in Massachusetts and perhaps one or two other states, it is held 

 b}- the courts that a sale of the good will of a business implies an 

 agreement on the part of the seller not to re-engage in a similar 

 business in competition with the purchaser, on the theory that 

 such restraint is necessary in order to protect the buyer in the en- 

 joyment of his bargain. (S9 Northeastern Rejiorter .548.) But 

 the general rule is that the seller of any concern is left free t» 

 become his successor's competitor, unless he expressly promises, 

 on some valuable consideration, not to do so. The consideration 

 for such a promise is usually the purchaser's agreement tn buy 

 the business and good will at a certain price. 



The important point to be noted in this article is that t In- 

 law will not uphold such a contract if it unduly hampers the 

 seller in re-engaging in business. It is not every express agree- 

 ment not to re-engage in the lumber business that will be enforced. 

 Originally, any agreement whereby a person attempted to bind 

 himself not to resume a lawful occupation was declared by the 

 courts to be invalid, on the theory that he, his family ajid the 

 public are entitled to the benefits to be derived from his nn 

 hampered pursuit of his chosen vocation. The courts applieil the 

 principle that "competition is the life of trade;'' but this strict 

 rule has been greatly relaxed by the courts on recognition of the 

 fact that it is a gross injustice to permit one who has sold a 

 valuable good will to deprive the purchaser of the fruits of his 

 bargain, by re-entering the business before the purchaser has be- 

 come able to establish a reputation with his new trade. It is 

 now a general principle of law that an agreement not to engage 

 in competition with his successor will be enforced against the 

 seller of a business, if it is no broader than is reasonably neces- 

 sary for the protection of the juirchaser in the enjoyment of 

 the good will which he has bought. The test of the validity of 

 such agreements, as applied to the lumber trade, was thus stated 

 by the Florida supreme court in the case of Stewart vs. Stearns 

 & Culvert Lumber Company, 48 Southern Reporter 19; "Whether 

 such a contract unlawfully tends to restrain trade, or to a monopoly, 

 cannot be ascertained by any accurately defined rules, but must 

 be ascertained from a practical consideration of the circumstances 

 of the case. Where an agreement is lawful in itself and is so 

 limited that it will afford only necessary and proper protection 

 to the parties, and will not materially or really injure the public 

 it is valid, though it relates to and operates upon useful com- 

 modities." Thus what may be a reasonable restriction in one 

 case would be unreasonable in another. For instance, a retail 

 dealer whose business has been confined to a certain town and 

 the surrounding country could not bind himself not to re-engage 

 in the same business anywhere in the state. But the Indiana 

 appellate court has sustained the validity of an agreement by a 

 dealer in building materials, on selling his trade, not to compete 

 with his successor anywhere in the same county. (Trentman vs. 

 Wahrenburg, 6.5 Northeastern Reporter 1057.) On the other hand, 

 all the decisions sustain the validity of an agreement of a hard- 

 wood manufacturer or wholesale dealer, whose business has ex- 

 tended over several states, not to re-engage in that business in 

 competition with his successor in any of those states. 



In some states the courts hold that the restriction as to time 

 during which the competition is to be barred must be limited to 

 such period as will enable the purchaser of the business to become 

 acquainted with his trade; five years being treated as a reasonable 

 period in most instances. There are many decisions in other 

 states, however, to the effect that if such a contract is reasonably 

 limited as to territory, it will be enforced, although unlimited 

 or indefinite as to time. It will usually be found, however, to be 

 safest to limit the time to five years. 



