The Settlement of Contracts by Mail or Telegraph: A Legal Perspective, Exams of Law

Download The Settlement of Contracts by Mail or Telegraph: A Legal Perspective and more Exams Law in PDF only on Docsity! COMPLETION OF CONTRACTS BY MAIL OR TELEGRAPH. The determination of the time when and the place where the factors which make up a contract merge in the contract itself is important for manifold reasons. For instance, it de- termines the moment when neither party can retract without the consent of the other, the moment when a chattel ceases to be the property of one and becomes the property of an- other, and so free from the obligations of the one and. subject to the obligations of the other,ino longer at the risk or charge of the one but solely at that of the other. The place where the contract is consummated determines the rule (lex loci) which must often decide its interpretation and its legality. A contract, like a man, is generally a citizen of the country, not in which it was begotten, but in which it was born. The considerations above often determine the liability for taxes or other liens and charges incident to the ownership of property, the possession of an insurable interest and the right to maintain an action with reference to the property in question. As a natural result the subject has been much mooted in the courts, and yet some simple questions which, in the nature of things, it would seem, must have frequently arisen for genera- tions past were not settled until well on in the present century and many are among the recent additions to the settled pro- positions of contract law among English-speaking men. The rules which have seemed to crystallize out of the mists and conflicts of the earlier discussions are, in the main, satis- factory and consistent. It is interesting in teaching "the law of contracts," to see how well it seems to satisfy the sense of justice of the abler and more earnest students. They often try, I learn, on reading the statement of a case, to forecast the decision, and find themselves seldom astray in this branch of the law. The process of the courts has been rather simple. A contract is analyzed into an offer and an acceptance. The COMPLETION OF CONTRACTS BY MIAILOR TELEGRAPH. 355 offer is no contract. It is only when an unqualified accep- tance meets an offer still outstanding that a contract results, but, oII such a meeting, the contract springs into existence, like Minerva from the brow of Jove, full panoplied eo instante. At that moment, in that place, the contract comes into being and must operate and be judged accordingly. Applying these rules it might seem easy to determine when and where a con- tract by correspondence is concluded, but the decision in individual cases has been often difficult and by divided courts, and the controversy over the question has been eager and unyielding among text writers and reviewers. In 18 18 the Court of King's Bench decided the much cited case of Adams v. Lindsell, i Barn. & Alderson 681, passing upon a claim for the non-delivery of wool, where defendants had sent by post to plaintiffs, in a neighboring county, offering 8oo tods of fleeces of a certain quality at a named price, "re- ceiving your answer in course of post." The offer was delayed by a misdirection. An answer accepting was sent by post the same evening the offer arrived. This answer, it was held, closed the contract the moment it was posted, and as the delay in reply- ing was due to the defendant's negligence in a misdirection, it was held it could not prejudice plaintiff's rights. That a sale to others, on not getting the expected reply, would not relieve the defendant. The court said: " For if the defendants were not bound by their offer when accepted by the plaintiff till the answer was received, then the plaintiff ought not to be bound till after they had received the notification that the defendants had received their answer and assented to it. And so it might go on ad iftfnitum." This doctrine received no material addition in England until the House of Lords decided, in 1848, Dunlop v. Hig- gins, i H. of Lds. Cases 381. The facts there passed on were that after some correspondence which had resulted in an offer of iron on certain terms from Dunlop, Messrs. Higgins imme- diately mailed a reply, "We will take the 2,000 tons you offer us." By mistake this reply was dated a day later than its true date, but the postmark showed it was mailed in due sea- son. It was held to be an-unconditional acceptance put in the post office in due time and that the contract was consummated 358 COMPLETION OF CONTRACTS BY MAIL OR TELEGRAPH. where an offer was not sent by post, but the secretary of a building society handed to the plaintiff, on July I, at Liver- pool, a written refusal "of the Flamank street property at 750 pounds for fourteen days." July 8 the Land Company got an offer of 760 pounds for this property, and the secretary, between 12 and I o'clock on that day, posted a letter addressed to the plaintiff at Birkenhead withdrawing the previous option. This was delivered to the plaintiff's address between 5 and 6 o'clock that evening, but he was out, and it first reached his hands about 8 o'clock. In the meantime, at 3.5o p. m. the same day, the plaintiff by his solicitor at Birnkenhead, had posted an unconditional acceptance of the offer, addressed to the secretary, which acceptance was received the next morn- ing. An action for specific performance of the contract was brought, and the principal opinion by thn late gifted Lord Herschell, whose sudden and lamented death in this country is so recent, is a model of lucid reasoning and a complete review of the English authorities to its date. The conclusiod is reached that an offer need not be made by post in order to constitute the post office the agent of the offerer to receive the reply. Lord Herschell states the rule thus: " Where the circumstances are such that it must have been within the con- templation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communi- cating the acceptance of an offer, the acceptance is complete as soon as it is posted." Professor E. T. Holland, in his " Elements of Jurispru- dence" (8th ed., p. 237-39), compares the doctrine of various European codes and nations on the subject, exhibits the English rule as above indicated, and shows that upon the Con- tinent views are by no means unanimous. To turn to the American decisions- In 1822 the Supreme Court of Massachusetts, in McCulloch v. The Eagle Ins. Co., I Pick. 278, decided that where an offer to insure property was posted January I, and followed by a letter retracting the offer on the second, although the reply accepting the offer of January I was posted before the retrac- tion was received, there was no contract. Chief Justice Parker holds the "treaty open" until the accepting letter was received COMPLETION OF CONTRACTS BY MAIL OR TELEGRAPH. 359 by the company, and prior to that the company withdrew its offer. So that Ithus early the Massachusetts court, under the lead of its great chief justice, put itself in conflict with the doctrine of the English court. In 1830 the Court of Errors of New York decided the case of Mactier's Admr. v. Fith, 6 Wend. 103, holding that an offer to sell a cargo of brandy having been sent from Santo Domingo to New York and having been accepted by a letter posted at New York on a certain day, the posting of the letter of acceptance closed the contract, and the death of the accep- tor, before his letter reached its -destination, did not alter its effect. The opinions rest expressly on Adams v. Lindse, supra, and Mr. Justice Marcy reviews and contrasts that de- cision with the conclusion of the Massachusetts court, and testing them by "reason and the practical results that are likely to flow from them," strongly adheres to the English authority. In 1849 the Supreme Court of the United States (Tayloe v. Merchants' F. Ins. Co., 9 How. 390) passed upon the case of a gentleman named Tayloe, who had obtained a proposition by post, from an insurance company, to insure his dwelling on certain terms. The letter reached Mr. Tayloe December 20, and on the next day he accepted by posting a letter to that effect and enclosing his check for the premium, as agreed. A day later, and before his letter had reached its address, a great part of the dwelling was consumed by fire, and the company later refused, on receipt of his letter, to accept the premium or issue the policy. It was held that the contract was complete the moment Mr. Tayloe mailed his letter of acceptance, and the cases of Adams v. Lindsell, I B. & A. 681, and Mfactier v. Frith, 6 Wend. 103, are quoted and adopted in Mr. Justice Nelson's extended and valuable opinion. In 1893 the Supreme Court of the United States, in Patrick v. Brennan, 13 S. C. R. 811, quoted at length from Tayloe v. Ins. Co., supra, and fully approved its doctrine on the above subject, finding authorities abundant to support it and citing with like approval the kindred English and American cases. The Court of Appeals of New York, in 1867, in Trevor v. 360 COMPLETION OF CONTRACTS BY MAIL OR TELEGRAPH. Wood, 36 N. Y. 307, held, " Where the offer is by letter or by telegram, the acceptance signified in the same manner is suffi- cient, irrespective of the time when it comes to the knowledge of the proposing party." The court cites no case dealing with acceptance by telegram but relies on the principles ap- plied to letters by post as entirely analagous. Attention is there called to the fact that in Mactier v. Frith, 6 Wend. 103, the letter of acceptance was not sent by public post, as "it was to go from New York to Jacmel, in the island of Santo Domingo, between which places .no communication was had at that time by mail." Many other cases are collected and the whole subject ad- mirably reviewed under the title " Letters" and sub title "Contract," 13 Am. & Eng. Enc. of Law, pp. 233 to 236. Professor Harriman, in his thoughtful and thorough little hand-book on " Contracts," after calling attention to the English doctrine on this subject, on page 94 says: "The "same rule prevails throughout the United States with the ex- "ception of Massachusetts, where an early case laid down the "doctrine that an actual communication of an acceptance is "necessary to complete the contract. There has been much "artificial reasoning on this point caused by a desire on the part "of judges and text writers to make every case harmonize "with the subjective, consensual theory of contract, that there "must be a meeting of minds to constitute a contract. It "would seem as if the simple and straightforward reasoning of "Lord Herschell in Henthorn v. Fraser, the latest English case "on this point, ought to sweep away the fog which has so "long obscured this simple though important question." He points out that in Alabama the doctrine prevails that when an offer and due acceptance are both sent by mail the contract becomes binding as of the date of the offer, but he deems this a mere judicial vagary. Mr. Harriman had the sagacity and felicity to point out in 1896 that there seemed little doubt that the peculiar doctrine of Massachusetts would be overruled in that State (Harriman on Contracts, p. 94, note), resting his prediction upon Bishop v. Eaton, 161 Mass. 496, which, though inconsistent with the earlier cases, did not review them and discussed the subject rather slightly. His COMPLETION OF CONTRACTS BY MAIL OR TELEGRAPH. 363 offerer's hands as soon as it is in the hands of his agent and that its subsequent loss, delay or miscarriage can have no effect upon the contract, which was consummated at that moment, any more than any other act or omission on the part of one party to a contract, or his agent, except as the other party assents thereto or avails himself thereof. If the sug- gestion of Professor Langdell that the letter of acceptance must be received and read to complete the contract be adopted, a most inconvenient element of uncertainty would be introduced and an acceptance by writing would always be ineffectual until the acceptor's voluntary act, namely, his read- ing it, operated in turn as an acceptance of the acceptance. If this is requisite then it must be pleaded and proved in all cases involving such a transaction unless it may be presumed from the proper mailing, even then it may be denied and put in issue and the receipt of the letter by the offerer is of no avail until he sees fit to read the acceptance. The acceptor has no means of knowing this, and cannot, during a length of time, treat the contract as complete. It is submitted, with deference, that the practice of business men is quite the reverse and the rule holding a sale complete on delivery of goods to a common carrier, addressed to the buyer and in accord with his order, strongly supports the view that the acceptance, being posted, closes the contract. If such goods are there- after destroyed, the loss falls on the consignee, not the con- signor. Lord Cottenham, in Dunlop v. Higgins, i H. L. C. 381, compared the letter of acceptance to one containing notice of dishonor of a bill of exchange. "Whether that "letter be delivered or not is a matter quite immaterial, because "for accidents happening at the post office he is not respon- " sible." This with the accompanying discussion has often been considered as a mere dictum, but in Household Ins. Co. v. Grant, L. R. 4 Exch. D. 216, the Court of Appeal speaking through Thesiger, L. J., held that this doctrine was a ratio decidendi in the above decision and so binding upon the English courts, and the majority of the court there hold that an acceptance duly posted binds the offerer whether or not it ever comes to his hand. Bramwell filed a very vigorous dissent and Sir F. Pollock 364 COMPLETION OF CONTRACTS BY MAIL OR TELEGRAPH. most eminent of English legal scholars, regrets that this dis- senting opinion did not prevail, although he holds that the result must be taken as final. (Pollock on Contracts, p. 36.) A like conclusion had been long before reached by the Court of Appeals of New York in Vassar v. Camp, I I N. Y. 441, decided in 1854, where it was held that merchants at Sackett's Harbor, having forwarded by post to a brewer at Poughkeepsie a proposed contract signed by the former in duplicate, for purchase and sale of barley, and the brewer having promptly signed the contract and deposited one of the duplicates so signed in the post office at Poughkeepsie, prop- erly directed to the merchant, that consummated the contract and it was obligatory on the merchants whether they received it or not. The Supreme Court of Wisconsin, in Washburn v. Fletcher, 42 Wis. 152, in 1877 fully adopted the doctrines of the above New York case and held the law well settled in England and this country as there announced. If the person making the offer fears he may suffer any hard- ship under this rule, he can adequately- protect himself by providing that unless the acceptance reaches his personal knowledge within a fixed time, the same shall have no effect. (Pollock on Cont., *36.) If the rule contended for by Merlin and Professor Langdell were sustained there would be no equally simple and convenient way for the acceptor to pro-. tect himself. - In a rule of this sort, so largely affecting commercial trans- actions, perhaps clearness, certainty and uniformity are more to be desired than perfect accord with the theory of the meet- ing of the minds in contracts and perhaps, if either should yield, it is rather this theory than the convenience of com- merce. In the judgment of the majority of the able judges who have considered the rule it is not in conflict with the elemen- tary requirement as to contracts. (See opinion Thesiger, L. J., in Household F. & C. Ins. Co. v. Grant, L. R., 4 Exch. _216.) He fully admits the hardship of the rule in some cases, but points out the far more mischievous consequences of the opposite rule. COMPLETION OF CONTRACTS BY MAIL OR TELEGRAPH. 365 The acceptance, of course, will not be consummated by mailing an unstamped letter: Blake v. Hainburg-Bremen F. . Co., 35 Albany L. J. 82 ; Britton v. Phzilips, 24 How. Pr. III. And the question of what is such a mailing as will close the contract was quite fully.examined by Mr. Justice Cozzens- Hardy in November last in the Court of Appeals, Chancery Division. See London & N. Bank, In Re, Jones* exparte, 69 L. J. Ch. 24; 8 1 L. T. 512. In that case a letter of allotment of shares was proved to have been delivered at the general post office at 7.3o a. m., by handing the same to a postman met at the entrance of the post office, with a small fee, on his offer to take the same. This letter, however, bore a post mark showing its posting at 11.3o a. m. At 8.3o a.m. a letter with- drawing the offer to subscribe for shares was delivered at the company's office and opened by its secretary at 9.30. It was shown by the postal regulations the postman was prohibited from taking charge of letters. It was decided that, although it is the settled law that an offer is to be deemed accepted when the letter containing the acceptance is posted, and no delay on the part of the post office in delivering the letter will be material, yet, a town postman is not an agent of the post office to receive letters and consequently the delivery to him of a letter of acceptance of an application for allotment of shares will not, for the purpose of fixing the time of the accep- tance, be regarded by the court as a posting of the letter. I add one comparatively late case showing the effect, in con- struing a contract, produced by the above- rule that a contract is made, not by the offer but by the acceptance, and so at the place the acceptance is mailed. In 1898 in Zeltner v. Irwin, 49 N. Y. Sup. 337, it was held that the advertising cir- culars of a stock broker, setting out the advantages of certain methods of dealing and the facilities of the broker, was no such offer as to make the mailing of a letter to him with funds for investment an acceptance. That this letter itself was an offer to contract and if the broker mailed back his acceptance from Pittsburg, Pa., it was this second letter which consummated the contract. Therefore the place of the mailing of this last letter determined the place where the contract was made, and so the law which governed it. That therefore the contract