Studies in Civics Part 40

4. An order for goods to be sent to a man's house, nothing being said about payment. An offer retracted before acceptance. An offer for a certain horse; an acceptance under the impression that a different horse is meant. A service permitted though uninvited; give an example. A man in St. Paul offers by letter a certain piece of property at a certain price to a man in Chicago; an hour after mailing the letter he changes his mind; how can he prevent a contract?

5. A agrees to give B $25 for a silver dime. But if this particular dime were of a rare kind and desired by A, a wealthy coin collector, to complete a set, would the consideration be sufficient? An offer shouted from a fourth story window just as the roof is about to fall, in consequence of which offer a fireman at unusual personal risk successfully attempts the rescue. An offer and acceptance for a horse which is afterwards discovered to have been dead at time of sale. A promise made under threat of spreading an infamous report. An agreement for the purpose of securing the postponement of the payment of a debt. How many "considerations" are there in a valid contract?

6. The sale of an unfashionable "ready-made" suit of clothes, nothing being said about the style. The sale of a plated watch chain, the dealer permitting the purchaser to suppose it solid gold. The sale of a blind horse, nothing being said about its sight, no effort being made to conceal its blindness, and full opportunity for examination being given to the purchaser. The sale of a house and lot at a certain price, greater than the purchaser had at first intended to give, upon the representation of the seller that he had "been offered" such a sum. The purchase of a piece of land which unknown to the vendor contains a valuable mine, nothing being said to mislead said vendor.

7. An oral order for goods to the value of $500. How does the buyer's receiving part of the goods affect the matter? How else could the contract be made binding? What position does a person a.s.sume by endorsing a note?

By orally saying that a debt of another will be paid? An oral engagement made December first to work a year beginning January first.

CHAPTER x.x.xII.

AGENCY.

Definitions.--An agent is a person authorized to act for another in dealing with third parties. The one for whom the agent acts is called the princ.i.p.al.

Authority of Agent.--An agent's authority may be granted orally or in writing. When written it is called a "power of attorney." A general agent has all the authority implied in his employment. A special agent has only such authority as is specifically granted.

Responsibility of the Princ.i.p.al.--Between the princ.i.p.al and his agent responsibility is determined by their contract. Expressly or impliedly the princ.i.p.al agrees to pay for the service rendered.

It is in the princ.i.p.al's relation to third parties that the most important rule of agency appears. It is this: _The princ.i.p.al is responsible for the authorized acts of his agent_. The theory is that the acts are those of the princ.i.p.al, the agent being merely an instrument. And accordingly, the princ.i.p.al is bound not only by such acts of his agent as he has really authorized, but also by such as he _apparently_ authorizes.

Responsibility of Agent.--The agent is responsible to his princ.i.p.al for any violation of their contract. Expressly or impliedly he is bound to obey orders, to exercise ordinary skill and care in the performance of his duty, and to refrain from putting his interests in adverse relation to those of his princ.i.p.al.

To the third party the agent is not responsible, except in the following cases: When he specifically a.s.sumes responsibility, when he conceals the ident.i.ty of his princ.i.p.al, when he exceeds his authority, or when he acts fraudulently.

Termination of Agency.--An agency terminates at the death of either princ.i.p.al or agent. It may also be terminated by revocation of authority, which takes effect upon receipt of the notice, or by the bankruptcy or lunacy of the princ.i.p.al, judicially declared.

_Pertinent Questions._

In the following cases name the princ.i.p.al, the agent, and the third party: A clerk in a store; a man employed to sell goods by sample; a cashier in a bank; a conductor on a train; a commission merchant; a partner acting for a firm, a sheriff.

May a minor act as princ.i.p.al? As agent? A watch left at a jeweler's store for repairs is injured by the workman; who is responsible to the owner? On account of a road overseer's neglect a horse is injured by stepping through a hole in a bridge; to whom shall the owner look for damages? If a person is notified that another claims to represent him as agent and he neglects to repudiate the claim, is he responsible for acts of the claimant as agent?

May an agent having authority to fix prices sell to himself?

May a clerk in a store take goods at regular marked prices?

An agent transacts business after his princ.i.p.al's death but before he has received notice thereof, is the transaction binding upon the heirs?

CHAPTER x.x.xIII.

PARTNERSHIP.

What it is.--Partnership is the relation existing between persons who have agreed to combine their property or skill for the prosecution of a given enterprise, and to share the profits or losses resulting therefrom.

How Formed.--Partnership being a matter of agreement is subject to the law of contracts. When the agreement is in writing, it is called "articles of copartnership." The articles usually specify the parties and the firm name, the nature and the location of the business to be carried on, the investment of each party, the basis for apportioning profits and losses, and sometimes the duration of the co-partnership. There are generally other provisions, their nature depending upon the circ.u.mstances.

Responsibility.--As to each other, the partners have the rights and duties which they agree upon.

As to third parties, the two most important rules of law are: first, that _the firm is bound by the acts of each member_, in matters pertaining to the firm's business; second, _each member is liable for all the debts of the firm_.

Dissolution.--If the duration of the partnership is not specified, it may be dissolved by any partner at any time. If its duration is specified, it expires, of course, by limitation or by mutual consent. In either case, the death of a partner dissolves the firm. If a partner becomes insane or acts fraudulently, the partnership may be dissolved by a decree of the court. The sale of an interest (which must have the consent of each partner) dissolves the partnership and forms a new one.

Notice of Dissolution.--That the retiring partners may be freed from responsibility for new debts, if the dissolution be by sale of interest (and this is a very common way), notice of the dissolution must be given to the world, and special notice of the fact must be given to those from whom the firm has been in the habit of buying.

Limited Partnership.--In most states, what is called a limited partnership may be formed, whereby the responsibility of some of the partners may be limited to their investment in the business. By this arrangement the private property of the special partners (as they are called) cannot be taken for debts of the firm.

In such a case, however, it is but just, and the law therefore demands, that notice of the fact of limited responsibility be given and that no appearance of responsibility be a.s.sumed. To this end it is required: (a) that the articles of copartnership be in writing, and that they be published and recorded; (b) that the amount contributed by the special partners be actually paid in; (c) that the names of the special partners do not appear in the firm name; (d) that they take no active part in the management of the business.

_Pertinent Questions._

Why are partnerships formed? May one person invest money while another invests skill? Is a person who receives a percentage of his sales by way of salary a partner?

Why cannot a partner sell his interest without consulting the other members of the firm? Why may the fraudulent act of a partner dissolve the firm? Why does the death of a member end the firm--that is, why not let his heir succeed to his right in the firm as he succeeds to his real estate?

May the _private_ property of a partner be taken to satisfy the debts of his firm? May the firm's property be taken to satisfy the debt of one of its members? Can men dissolve their debts by dissolving their partnership?

If one partner continues the business agreeing to pay all indebtedness of the firm, is the retiring partner released from obligation in relation to the debts? Show the justice of each requirement in case of special partners.

CHAPTER x.x.xIV.

CORPORATIONS.

Purpose--Partnership enables a number of persons, as we have seen, to accomplish by combining their property and skill what would be unattainable by them acting individually.

But the individual responsibility involved in partnership, and the difficulty of transferring interest, render necessary some other mode of combining capital for carrying on enterprises requiring vast resources, and, from their nature, demanding long time and freedom from interruption for their accomplishment. For instance, no one would dare to a.s.sume personal responsibility for the debts of a railroad, nor could such an enterprise be managed if every transfer of interest dissolved the company.

The desired limitation of responsibility and facility of transfer of interest are secured by the formation of _corporations_.

Nature.--But responsibility there must be, or the combination could transact no business. And responsibility depends upon personality--a _thing_ cannot be held responsible. As this personality does not exist aside from the persons of those uniting their resources, it must be created. The creative power is the legislature. The personality created is the corporation. [Footnote: From the Latin _corpus, corporis,_ a body.] A corporation is, therefore, an artificial or fict.i.tious person, created under general law or by a special act of the legislature, [Footnote: This special act defining the powers and duties of the corporation is called its _charter_.] and capable of acting within prescribed limits as if it were a natural person, but beyond those limits incapable of acting at all.

Management.--The persons who contribute to the capital of the corporation, or company, receive certificates of stock, that is, pieces of paper certifying that said persons own so many shares in the company. The capital, be it remembered, is the property of the corporation, not of the individuals. The number of these stockholders may be large or small, a dozen or a thousand. The general management of corporate business is necessarily entrusted to a small number of persons called directors. These are elected by the stockholders, each share having one vote. The directors select from their own number a president, a secretary, and other necessary officers. These persons and the other agents of the corporation carry out the policy determined upon by the directors.

Why Limited in Powers.--The question suggests itself, Why can a corporation do only certain things? The most obvious answer is, that this is consequent upon its mode of creation. Being a creature of the legislature, it can have only those powers which are specifically or impliedly granted to it. But pushing the matter farther, it may pertinently be asked, Why doesn't the legislature endow it with power to do anything that may properly be done by a natural person? Two reasons, at least, appear. First, from the corporation's standpoint, it is a matter of business prudence to have its purpose and powers defined: (a) to enable it to secure subscribers to its stock, as no one would like to risk his money blindly; and (b) because thus only can the directors be held to accountability. Second, from the standpoint of the public, for whom the legislature acts, the defining is necessary in order that corporations may be controlled and dangerous combinations prevented.

In this connection it may be noted that corporations are granted some privileges not possessed by individuals. For instance, private property such as land may be taken, even against the wishes of the owner, to permit the building of a railroad. This can be done, however, only on the ground of public good, and by giving the owner just compensation.

Responsibility.--A corporation, like any other person is responsible for any contracts that it makes, within its charter. It necessarily acts entirely through agents, hence the law of agency has an important bearing upon all contracts with a corporation.