Reply: One who has sold goods on credit is not justified in refusing delivery simply because the buyer’s financial standing changes for the worse between the time of sale and the time of delivery. In the case here put, for example, there is nothing to show that the buyer is not now amply able to pay for the goods, or that the contract would have been declined by the seller if the buyer’s rating at the time had been what it is now. The seller is entitled to refuse delivery only if the buyer, before delivery is made, commits any act of insolvency. He need not become a bankrupt or make an assignment for creditors. He is insolvent, within the meaning of this rule, if he fails to pay any just and admittedly proper debt promptly upon its due date. As long as he is paying his bills whenever they fall due the seller has no ground upon which to declare that he is not “keeping his credit good,” if the buyer in this case is not solvent, as the word is here defined, the seller need not continue the deliveries. If the buyer is solvent the seller is not justified in his position. In that case the buyer need not pay for the goods already delivered until the time named in the contract for payment arrives, and he has a valid claim for damages arising out of the seller’s failure to make the other deliveries in strict accordance with the contract.
A BUYER HAS A CLAIM WHEN HE ACCEPTS A DRAFT ON INFERIOR LUMBER.
Question.—We bought a car of lumber through a broker. Terms were: Sight draft with bill of lading attached for three-fourths of the amount of the invoice, the balance to be paid on arrival and inspection. We accepted the draft on presentation and when the car arrived we instructed our truckmen to draw the lumber in. Upon examination we found that it was all more or less below grade. We wired shippers accordingly and asked for instructions. We also wrote them a letter to the above effect and told them that we could not use the lumber and that we would hold it for their instructions. Do we need to keep the shipment? Can we compel sellers to return us the amount of the draft and freight charges?
Reply: The buyers are not bound to accept any lumber not in accordance with the order. They have a valid claim against the sellers for the amount already paid towards the purchase of the goods, for the amount expended for freight and for any other useless expense to which the buyers were put as a result of the sellers’ failure to do their contract duty. The buyers also have a claim for damages, if any, caused by the breach of contract on the part of the sellers. The latter were bound to supply lumber regularly sold and accepted by the trade under the terms covering the grade in question, and their failure so to do was an actionable breach of contract.