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The motivation of commercial law through selection of cases within the experience of high school students

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THE MOTIVATION OP COMMERCIAL LAW THROUGH SELECTION OP
CASES WITHIN THE EXPERIENCE OP HIGH SCHOOL STUDENTS
A Thesis
Presented to
the Faculty of the School of Education
The University of.Southern California
In Partial Fulfillment
of the Requirements for the Degree
Master of Science in Education
by
Myron James Garver
August 1941
UMI Number: EP54209
All rights reserved
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UMI EP54209
Published by ProQuest LLC (2014). Copyright in the Dissertation held by the Author.
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unauthorized copying under Title 17, United States Code
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T h is thesisj w r it t e n u n d e r the d ir e c t io n o f the
C h a ir m a n o f the ca n d id a te ’ s G u id a n c e C o m m itte e
a n d a p p r o v e d by a l l m em bers o f the C o m m itte e }
has been p resen ted to a n d a ccep ted by the F a c u lt y
o f the S c h o o l o f E d u c a t io n o f T h e U n iv e r s it y o f
S o u th e rn C a l i f o r n i a in p a r t i a l f u l f i l l m e n t o f the
re q u ire m e n ts f o r the degree o f M a s t e r o f Science
in E d u c a tio n .
D a te . . t e s
t .30,...1941.......
Guidance C om m ittee
E. G. Blackstone
C hairm an
Louis P. Thorpe
D. Welty Lefever
TABLE OP CONTENTS
CHAPTER
I.
-PAGE
THE PROBLEM AND PURPOSE OP THE STUDY. . .
1
The problem • • • • • • • • • • • • • •
1
Statement of the problem
» • • • • •
1
Importance of the study . . . . . . .
1
Organization into chapters
II.
• • • • • •
2
Previous studies. • • • • • • • • • • •
2
Method of procedure • • • • • • • • • •
9
THE CASE STUDIES. . .
................
11
Case involving sales and implied
warranties. • • • • • • • • • • • • •
11
Case involving personal injury and
liability of a school for injury
to school athlete • • • • • • • • • •
15
P r o o f ...................
17
Case involving nuisance
........
18
Case, involving torts, liability for
negligence of a common carrier
. . •
21
Case involving agency and scope of
authority
...............
Case involving rentals and lease
25
...
29
Case involving receipts • • • • . • • •
32
Case involving offer and acceptance • •
34
iii
CHAPTER
PAGE
Case involving breaking of a lease • •
36
Case involving personal property • • •
.38
Case involving personal property,
bailment • • • • • • • • • • • • • •
43
Case .involving stolen personal
property • • • • • • • • • • • • • •
45
Case involving contracts, rewards. • •
47
Case involving tenancy, duties of
landlord . • • ............. .
. .
51
Case involving corporation, bank
failure. • • • • • • • • • • • • • •
53
Case involving insurance, insurable
interest •
55
Case involving agency and claims for
injuries • • • • • • • • • • • • • •
Case involving agency
• • • • • • • •
57
59
Case involving contracts, high
pressure s alesmanship...........
62
Case involving agency, trade secrets .
64
Case involving contracts.........
66
Case involving checks, negotiable
instruments. . . . . . . . . . . . .
68
Case involving contracts, considera­
tion .............
71
iv
CHAPTER
PAGE
Case involving federal law,
interstate commerce
..........
73
Case involving a bet on a student
body election • • • • • • • • • • • •
75
Case involving overcharge on a
utility bill. .
.................
76
Case involving auto accident,
insurance • • • • • • • • • • . • • •
III.
78
CONCLUSIONS
BIBLIOGRAPHY.................................
84
CHAPTER I
THE PROBLEM AND PURPOSE OP THE STUDY
Commercial law as it is presented t o d a y in the
secondary schools of the United States fails to meet
the needs of many of the students.
It
has become too
vocational and does not supply the actual law-knowledge
that is necessary for the average citizen.
I.
THE PROBLEM
Statement of the problem.
It is the purpose
of this study to present a group of case studies in
business law which it is hoped will be useful in the
motivation of interest in the subject.
Importance of the study.
The average commer­
cial law book of the day supplies case studies which
deal with cases In which the students have little
actual interest.
The parties in these cases as a
rule are adults, the matters dealt with far out of
the scope of the students1 experience.
Small wonder
then, that an assignment of cases of this type may
prove distasteful to the students.
As an aid to the motivation of commercial law
these cases are designed to prove interesting to the
high school students.
In general they deal with
parties of a common age level with the students.
The matters involved are disputes into which the
students themselves may become involved in their
high school experience.
Many of the cases are built
around actual occurrences in high school life.
Throughout, they are designed to interest the high
school student, to make him wish to enter into dis­
putes, the settlement of which will involve a visit
to the commercial law text.
The main purpose of the study then, is to
construct cases in commercial law which will be
interesting to high school students, and if this
interest be aroused, then added law-knowledge is
almost certain to be acquired.
II.
ORGANIZATION INTO CHAPTERS
Chapter I includes a statement of the problem,
the procedure followed, and a summary of previous
studies'.
Chapter II presents the cases and their
proper legal solutions.
Chapter III includes the
findings and recommendations.
III.
PREVIOUS STUDIES
Pew studies which deal with the motivation of
commercial law have been made*
There is one study
however, in which W. H. Wing3" prepared a list of
possible legal disputes which might be encountered by
the average citizen.
The list was prepared from two
previous studies of © similar nature by Koepke
Stenberg^.
and
Some 140 various types of disputes were
listed in the check list and lists sent to 625 peoplB.
Two hundred and ninety-eight of the lists were re­
turned and the disputes which occurred most often
were:
Rank
1. Amounts of water, gas, telephone
or electric bills.
2. Paying cash for articles and then
finding it impossible to get
adjustments for defects.
3. Failure to secure a receipt.
4. Failure of a landlord to keep
a building in good repair
5. Attempt to collect a past-due
account•
6. Nuisances.
7. Notices to vacate property before
a certain date.
Percent
33.3
24.3
18.3
18.3
18.1
17.0
13.7
W. H. Wing, ,fAn Analysis of Commercial Law
Concepts Needed by the Average Citizen,11 (unpublished
Master’s thesis, The University of Iowa, 1938).
2
H.
P. Koepke, "Commercial Training Needs of
Farmers,” (unpublished Master’s thesis, the University
of Iowa, 1934).
3 G. B. Stenberg, "A Study of Special Divisions
of Business Law in Iowa,” (unpublished Master’s thesis,
The University of Iowa, 1935).
4
Rank
8. Overdrawing a bank account.
9, Differences of amount in check
stubs and the bank’s state­
ment •
10. Compensations due for industrial
accidents.
11. Divisions of property.
11. Claims against insurance
companies for automobile
accident insurance*
11* Claims against insurance com­
panies for payments due
because of injuries*
11. Attempt to break a lease*
11. High pressure salesmanship.
12* A closed bank.
12* Method of filling out income
tax reports.
13. Refusal to accept C.O.D.
shipments *
Failure to put agreements in
writing.
Dealings with employees.
14. Claims for damages {insurance
company not involved).
15. Sending currency in a letter
instead of check or money
order*
15* Shutting off gas, water or
electricity*
15* Amount of tax assessed.
16* Loss of articles in hotels*
16* Claims against railroad, bus,
air lines for damage or break­
age of articles in transit.
16. Inability to meet installments.
17. Buying goods that are not
returnable.
18. Failure to read insurance policies
thoroughly.
19. Signing documents when ignorant
of the contents*
19. Lot lines.
20. Attempt to get released from
contract.
Percent
12.7
12.3
12.0
11.7
11.3
11.3
11.3
11.3
10.0
10.0
9.7
9.7
9.7
9.0
8.8
8.8
8.8
8.3
8.3
8.3
8.0
7.7
7.3
7.3
6.7
5
Rank
Percent
20# Allowing insurance policies
to lapse#
6#7
20. Purchases not as advertised#
6#7 '
21. Intestacy#
6.3
22. Garnishments
6.0
Damage to or loss of
rented property.
23. Telephone and telegraph
message incorrectly trans­
mitted.
5.7
Practice of some business
houses to add various
"service charges" to the
cost of articles.
5.7
24. Inability to collect on open
account.
5.3
The collection ofinstallments. 5.3
Trespassing.
5.3
Failure to pay insurance
premium when due.
5.3
Claims against insurance
companies for fire insur­
ance payments.
5.3
Oral contracts.
5.3
25. Incorrectly drawing up other
legal documents (besides
wills and deeds).
5.0
Payments on note without
having payment recorded on
note.
5.0
Trying to return goods bought
on approval.
5.0
Seller refusing to deliver
purchased goods.
5.0
Holding a check too long
before endorsing it.
5.0
26* .Purchasing goods from a
salesman without proper
inspection.
4.7
Whether or not certain fix­
tures may be removed.
4.7
Killing animals.
4.7
Negligence in controlling
animals.
4.7
6
Hank
27. Reckless driving.
Killing trees, shrubs, or
plants•
28. Investment advice given by
a reputable business man
or some other person of
standing in the community
to another.
Unknowingly buying stolen
merchandise.
Claims against a city, town,
or village.
A ffhot tip” on the stock
market which proved false.
29. Finding property belonging
to another.
Being an executor or admin­
istrator.
Damage to, or loss of,
borrowed property.
30. Damage to property bought on
the installment plan and
then repossesed by the
seller*
Incorrectly drawing up a will
Failure to check invoices or
sales slips.
Refusal to accept goods
delivered*
31. Failure to insure C.O.D.
shipments*
Failure to keep an inventory
of household articles.
32. Purchasing goods without de­
termining the cost.
Purchasing goods at auctions*
Investment advice given in a
circular letter*
Dividend payments or non
payments•
Failure to use the proper
endorsement on a check or
note.
Failure to get title to real
estate*
33. Past consideration*
Making long-term oral con­
tracts.
Percent
4.3
4.3
4.0
4.0
4.0
4.0
3.7
3.7
3.7
3.3
3.3
3.3
3.3
3.0
3.0
2.7
2.7
2.7
2.7 ;
2.7
2.7
2.3
2.3
7
Rank
34.
35.
36.
37*
Claims for damages because
of bodily injury in­
flicted.
Failure to file and present
proof of claim against a
bankrupt.
Investment advice given by
a broker or dealer to a
customer.
Attempt to foreclose too soon
after a debt comes due.
Attempt to set aside a will.
Failure to notify an insurance
company of change of address
Implied contracts.
VS/hether or not an option
exists.
Failure to use a notary public
Selling to persons not quali­
fied to purchase.
Claims against insurance
companies for payments
arising on the death of a
policy holder.
Usurious interest.
Sunday and holiday contracts.
Writing checks so that they
can be easily altered.
Making an offer to sell to a
second party before with­
drawing offer made to a
first party.
Rights df option.
Agency.
Purchasing articles from
drunkards•
Incorrectly drawing up a
deed.
Failure to get a bill of sale.
An incorrect offer or accept­
ance*
Wrongfully holding another*s
property.
Failure to change the benefi­
ciary in an insurance
policy when for some reason
the previous or original
beneficiary is no longer
desirable*
Percent
2.3
2.3
2.0
2.0
2.0
2.0
2.0
2.0
2.0
1.7
1.7
1.7
1.7
1*7
1.3
1.3
1.3
1.3
1.3
1.0
1.0
1*0
1.0
8
Rank
Percent
Investment advice given by a
banker, or executor of an
estate to his client.
1.0
38. Brokerfs failure to purchase
stocks or bonds for a customer
as soon as possible after
order was received.
.06
Copyrights or patents.
.06
Instituting bankruptcy pro­
ceedings.
.06
Claims for damages because of
personal statements in news­
.06
papers.
.06
Failure to record mortgages.
.06
Moral consideration.
Claims for damages because of
personal oral statements.
.06
39. Failure to give notice of dis­
honor to the endorsers of
notes •
.03
Interstate commerce.
.03
Claims for damages because of
false arrest or imprisonment.
.03
.03
Failure to record titles.
Guaranteeing an account for
another person.
.03
Someone trying to collect a
bill previously paid.
.03
Receipt not marked rtpaid in full”. .03
Failure to record deeds.
.03
Whether or not there is Insurable
interest.
.03
These studies have attacked the problem from
the standpoint of attempting to find out just what
type of law-knowledge is required of the average
citizen.
Since the types of disputes which these studies
found to be common are experienced by the average
citizen, it would seem that a class in commercial
9
law should have some training in their solutions.
IV.
METHOD OP PROCEDURE
Cases, therefore, were written which involve
the disputes of the average, citizen based on the
list which appears on pages three to seven.
The
cases were also written so that they would present
the problems in the every day situations that
arise in the life of a high school student as far as
possible and should be of value in the present life
of a student, thus proving interesting and helpful
to him.
Since the cases are designed for use in a
high school commercial law class, some cases are
included on the subjects generally considered in
such a class.
These, too, are presented in such
a way that they become realistic to the student as
they involve problems which he meets in his school
experience.
After the cases were written, the points of
law involved were carefully checked in the California
Civil Code.
The points of law having been checked
carefully, similar cases involving the same points
of law were looked up in the case records of Calif­
ornia and the several state courts, and the federal
courts*
The decisions in these cases are cited in
providing the correct legal solutions to the cases
presented*
The advice of several attorneys was
also solicited in checking the correctness of the
legal solutions to the cases.
CHAPTER II
THE CASE.STUDIES
I.
CASE INVOLVING SALES AND IMPLIED
WARRANTIES
Bill Hulsman, a senior in Brookfield High
School, purchased a tennis racquet from the Sport
Shop.
He paid nine dollars cash.
Upon playing with
the new racquet for the first time the frame cracked
Bill returned the racquet and asked for a refund of
his money or a new racquet.
The Sport Shop manager
refused to either replace the broken racquet or
refund the money.
What may bill do?
In the first instance it should be realized
that this situation would seldom arise in the courts
mainly because of the policy of most stores to re­
place defective merchandise in order to malntin good
will with the public.
But assuming that the store
is obstinate, what can Bill Hulsman do about it?
There is involved in the law of sales a doc­
trine known as implied warranties under which
doctrine the seller impliedly warrants, from the
nature of the agreement, that the goods he is sell­
ing are suitable for the purpose for which the
12
purchaser has informed him he intends to make of
the item*
Under this situation Bill can say quite
handily that the seller knew what use he intended
to make of the racquet and impliedly warranted that
the
racquet could well he used for this purpose*
It appears thatBill looked
before purchasing it*
at the racquet
If such examination had re­
vealed the defect In the racquet and Bill still wanted
it, then there would be no warranty In his favor.
However, it is frequently difficult for one to see
thin cracks in the frame even upon close Inspection,
and if the examination will not determine the de­
fects, that is, if they are latent, then the warranty
is still held to attach*
As to the remedies Bill has his choice*
can
He
return the racquet and get his money back, or
he can accept another racquet from the seller if he
desires*
If Bill had not yet paid the entire price for
the racquet, and only a few strings were broken, he
might as a remedy set up the value of the strings and
subtract same from the amount yet to be paid, thus
accomplishing what in law is known as !,set-offu•
Finally, Bill bought the racquet at a Sport
Shop in which place it is safe to assume many such
13
racquets are sold.
This makes a difference in that
the seller is placed in a position where he is more
apt to know of defects in the merchandise and thereby
causes a reliance by the purchaser on his knowledge#
It is this reliance upon the superior knowledge by the
vendor, by the vendee with inferior knowledge, that is
the primary basis of the entire doctrine of implied
warranties as to quality and merchantibility#
To bring such a case, involving only a few dollars
to court would possibly cost much more than the rac­
quet is worth.
However, there are many pressures
which Bill could bring to bear on the Sport Shop
which would force it to make amends to him without
taking the matter to court*
First of all, their
business is based on the good-will of the citizens of
the town*
Bill could suggest to them that if he men­
tioned the matter of the defective merchandise to his
classmates it would lose a great many customers among
the students#
JPLso, he might suggest that the shop
might lose the business of the athletic director of
the high school if the matter were mentioned to him*
Billfs parents too, might spread a great deal of
unfavorable advertising about the Sport Shop#
The
manager of the shop would probably hesitate to refuse
14
to make a settlement in the face of any one of these
suggestions on Bill*s part.
If the matter did come to court, however, one
of the Sport Shopfs few hopes would he to assert
that Bill had not broken the racquet in the course
of its proper use, but that he had hit it against a
post or something of that sort.
would have
Such a statement
to be proved by properevidence, and it
would be very
difficult to do so.
In this case, then,
it would appear that the Sport Shop has set forth an
implied warranty, and that Bill can recover the pur­
chase price of the racquet if the case were taken to
court•
The general remedies that would apply in a
case of breach of warranty are as follows:
1.
If the buyer has not paid the full price
he may keep the defective goods and set up the value
of depreciation caused by the defect as against the
amount he still owes.
2.
may refuse
If he has not received the goods yet, he
to accept them and sue the seller for any
damages he has sustained.
3.
He may keep the goods and sue- for damages.
4#
He may rescind the agreement by returning
15
the goods and recover any part of the purchase price
he has already paid.
Legal references to prove the above statements.
1.
California has adopted the Uniform Bales
Act virtually verbatim, and the sections pertaining
to implied warranties are:
Civil Code 1733-55,
U. S. A. Sects 13-15.
2.
Cases similar to the stated situation
which have been decided in favor of the plaintiff.
a.
Pacific Commercial Co. v. Greer
(1933) 129 C. A. 756, 19P2d543.
b.
Couts v. Sperry Flour Co. (1927)
85 C. A. 156 . . . 259 P 108.
CASE II.
INVOLVING PERSONAL INJURY AND LIABILITY
OF A SCHOOL FOR INJURY TO SCHOOL ATHLETE
Tom King, fullback on the Brookfield High
football team is injured in practice one afternoon.
Infection sets in, and Tom is confined to the hospi­
tal for a period of three months.
His parents refuse
to bear the expense for the injury, and sue the
Brookfield High School for the.amount of the hospital
bill, $300.00.
What will be the result of this Case?
The law protects certain interests by providing
16
for liability on the part of those who invade them*
Such liability includes whatever is the proximate
result of such invasions.
One such interest which
the law regards as worthy of its protection is the
right to be free from harmful bodily contacts, whether
caused by negligence or intention.
The remedies pro­
vided in such cases are in the form of damages to the
injured person to compensate him for the harm.
The
action is a common one and known as one for assault
and battery.
Oftentimes, it is found that such an invasion
as mentioned has taken place, harm has resulted, but
there is no liability on the part of the person who
caused it.
This result is reached because there is
found to be an implied consent on the part of the
injured person to the injury,
Tom King, in the course
of the football practice, is tackled by another player.
The player used no more violence on Tom than the
rules would allow.
Although he has not been unlaw­
fully violent, still, Tom was cut on the leg, and
later poisoning developed as a direct result of the
tackle.
Neither the player who tackled Tom, nor the
Brookfield High School (whose coach cleansed the
17
wound and told Tom to see his doctor) is liable for
the hills which arose as a result of the poisoning
which later set in.
When Tom joined the football team and played
football> he showed a willingness to submit to such
bodily contacts or restrictions of liberty as are
permitted by its rules and the cut was sustained in
the course of it*
This would relieve the fellow who
tackled Tom of any obligations for the results of
Tom’s injury*
The Brookfield High School is in the
same position as the player, for it is not liable
to Tom’s parents for such infection resulting from
ordinary contacts of the game, consented to by Tom*
The Brookfield High School does: not pretend
to furnish medical attention for the students, but
the coach administered first aid*
When the coach
tended Tom’s injury he used ordinary care and pre­
caution.
Despite the coach’s advice to Tom that he
go to a doctor, Tom neglected to do so, and therefore
the school is not liable for the injury or costs.
Proof.
Law Institute:
Restatement of Torts by the American
Consent-Section 50.
One who gratuitously renders services to
another . . . is subject to liability for
18
bodily harm caused to the other by his failure,
while so doing, to exercise with reasonable care
such competence and skill as he possesses or
leads the other reasonably to believe that he
possesses*^
The above statement of the general law would
make the High School liable for the injury if its
agent the coach in the course of gratuitous aid to
Tom had not taken reasonable care in treating Tomfs
cut and then had told him not to worry any more about
the matter*
CASE III.
INVOLVING NUISANCE
Jim Baker1s dog, Toughie, always followed Jim
to school*
One day on the return trip home the dog
passed a group of grammar school students, one of whom
picked up a rock and threw it at the dog*
the child*
The dog bit
The parents of the child demanded that the
dog be destroyed*
What may be the outcome of the case?
The dog, Toughie, has always been a model dog.
Jim always found him to be fond of little children,
and there had never been any indications of his being
vicious.
When one of a group of grammar school students
1
Opelt v* Barnes. 41 Cal* Jlpp. 776*
19
picked up a rock and threw it at the dog be became
frightened and bit the child*
The childfs parents
have no recourse against Jim because he is not liable
for such an injury by his dog, unless he is naturally
vicious or has vicious tendencies, and he has know­
ledge of such propensities on the part of the dog*
In this esse Jim is not liable for damages, nor
may the parents of the child have the dog destroyed*
A general principal of law is the right of a private
individual to abate a nuisance*
But here we find no
nuisance in the form of the dog and its acts*
A
nuisance is anything which is injurious to life or
property*
Toughie clearly does not come within such
a classification.
If he had been known to do things
like this before, we would find a justification in
the parent's demand that he be destroyed*
If the dog were in the habit of snapping at
children when it walked with Jim, then, the question
of negligence on his part would arise*
This would be answered by the fact that the
child had aggravated the dog and contributed to its
own injury— still leaving Jim probably not liable
for injuries, but perhaps, giving rise to a right of
the parents to have Toughie killed (since he was in
20
the habit of hurting people, and this constituted
an interference with the public enjoyment of life)*
Several similar cases have occurred in our
courts with the results suggested in this case*
The owner of a dog is not liable for the
injuries caused by it unless it is vicious and
the owner has notice of that fact*^
If an animal of heretofore peaceable dis­
position, while in the charge of the master
or of a servant, suddenly and unexpectedly
either through fear or rage, inflicts injury,
neither is responsible, if at the time he was
in the exercise of due care.3
Another case placed the blame for an attack
by an animal on the person who angered the beast*
. • • if the injured party imprudently or
negligently places himself in a position to
be attacked, or by his own negligence contri­
butes to his injury, the owner will be
exonerated from liability (even assuming absolute
negligence on the part of the owner of the dog*4
The Civil Code of California does not give any
statement in the law of nuisances which would allow
the dog to be destroyed or the master to.be held
liable*
2
3
Roos v* Loeser. 41 Cal. App. 782*
Clowdis v* Presno Plume. 118 Cal. 315.
4
Opert v. Barnes
21
A nuisance is anything which is injurious to
health, or is indecent or offensive to the
senses, or an obstruction to the free use of
property, so as to, interfere with the comfort­
able enjoyment of life or property, or unlaw­
fully obstructs the free passage or use, in
the customary manner of any navigable lake, or
river, bay, stream, canal, or basin, or any
public park, square,-street, or h i g h w a y . ^
Therefore, it would appear that in this case
the dogfs owner could not be held liable for the dog
could not be held to be a vicious one, and the owner
was not aware that the dog might become aroused*
Also, the act of the child in inciting the dog to
anger clearly placed the blame on the child himself.
If the dog, however, could be held to be a vicious
one, and guilty of such acts in the past, then the
parents of the child could have held the owner
responsible, and the courts would have so decided.
CAST IV.
INVOLVING TORTS, LIABILITY FOR
NEGLIGENCE OF A COMMON CARRIER
The Brookfield band accompanies the football
team on all their trips.
The band instruments which
are owned individually by each member of the band
are transported by a local trucking company.
5
California Civil Code 3479.
One
22
Saturday two members of the band find that their
instruments have been severely damaged in transit,
and they seek to recover from the Brookfield Transit
Company whose truck carred the instruments on this
occasion.
The local trucking company which is engaged
to carry the band instruments to the locale of the
football games, is termed a common carrier, that is,
a company which offers to carry goods for anyone
between certain terminals, and which is bound to
carry for all who tender their goods and the price
of carriage.®
Common carriers such as the Brookfield Transit
Company are responsible to the extent of being in­
surers of the band instruments which they are carry­
ing for the Brookfield band.
A common carrier is not only responsible for
negligence but is an insurer against any loss
not occasioned by act of God, the public
enemies, or the fault of the party suffering
the loss.
When the two members of the band arrived at
® California Civil Code 2110.
7
Bohannan v. Hammond. 42 California 227.
23
the game, and found that their drums had been in­
jured in transit, they had a right to recover from
the Transit Company to the extent of the damages
they suffered from the battered condition of the
drums.
As a common carrier, the Transit Company
is bound to safely transport the drums and deliver
them to the point of their destination, unless
they are lost by the act of God, and the burden of
proving this would be upon the company#
When the carrier is exempted from liability
for any loss or damage, except that due to
negligence, the burden of proof is on the
carrier to show that the loss was not due to
its negligence.”
It would appear then according to the law
and previous decisions that the boys would have a
strong case against the company, and could expect
to collect damages for in this case the injuries
to the musical instruments were obviously not caused
by an act of God, and the company would almost surely
be guilty of negligence.
The liability of the company is based on the
assumption that when the boys paid the company for
the transportation, there was not agreement between
8
Bohannan v. Hammond. 42 Cal. 227.
24
the company and them which might tend to decrease
the liability of the company for losses or injuries to
the band instruments occurring in transit.
Ordinarily there is an agreement insisted upon
by the carrier, that it will be liable only for auch
injuries as may be caused by its own negligence*
Such a contract is upheld as a reasonable limita9
tion on the carrier1s liability*
If the boys had made such an agreement with
the Brookfield Transit Company, the company would
not be liable for the injury to the drums in
transit -unless it had been negligent in its handling
of them*
Fortunately for the boys, the burden rests
upon the company in this matter, to show that the
damage caused was not due to its negligence*
If it
has no proof of its care, then, the boys will recover
to the extent that they were damaged*
It would, no
doubt, be very difficult for the carrier in this case
to prove that it had exercised the necessary care,
and since the burden of proof of this point would
rest with the company, then the boys seem to have a
9
California Civil Code* 2174.
25
clear case for damages due to the injuries to their
drums *
The carrier, probably would be insured to .
care for this damage, as numerous cases of this type
come up in the routine of business for common carriers.
Evidence in this case would have a great bear­
ing upon the result.
The Transit Company might put
in a counter claim of bad order in which case the
boys might be called upon to show their instruments
were in good shape when they were placed in the hands
of the Transit Company.
This fact could be establish­
ed by testimony of several friends who had seen the
instruments delivered or in use on the previous day.
Furthermore, it is the custom for carriers, when
receiving a shipment to examine its condition, and
if it is in ”bad order” to make such a notification
on the forms it uses.
Failure to do this might be
accepted as tentative evidence that the goods were
not in ”bad order”.
The Transit Company then would bear the burden
of proof that they had exercised proper care.
CASE V.
A CASE INVOLVING AGENCY AND SCOPE OF AUTHORITY
The Brookfield school paper was supported by
funds alloted from the general student body fund and
26
by money earned from subscriptions and advertising*
The editor put out two extra editions of the paper
which increased the yearly bill by $50 over the
amount alloted in the budget*
At the end of the
year the treasurer of the paper was not able to pay
the $50 to the local newspaper for the printing bill
incurred by the two extra editions*
The printer took
his bill to the superintendent of schools and demanded
payment*
It developed that the editor of the school
paper had not even secured the consent of the faculty
advisor to print the extra editions*
tendent refused to pay the printer*
The superin­
What will the
result be?
The high school has as its head the superin­
tendent > and under him, the teachers carry on the
work of the school.
One teacher is appointed as
director of the school paper, and under his direction
an editor carries on the actual production of the paper*
This break-down of authority is called agency.10
The agency is a relationship which results from
the manifestation of consent by one person to another
that the other shall act on his behalf and subject to
10
California Civil Code. 2295*
27
his'control, and consent by the other so to act*
Here
the editor has been clothed with authority to contract
for the printing of the school paper, for which the
faculty advisor will pay out of the student body fund
allotted*
The newspaper knows of the editor only,
and has dealt with him in the past and has had its
bills paid.
There has never been any indication on
the part of the school authorities that the student
editor did not have any right to arrange for the print­
ing of the paper.
When the editor of the paper put out two extra
editions, without the consent of the faculty advisor,
although he had not been forbidden to do so, he was
subjecting to liability his superiors, for these were
transactions usual in such business, and the printer
had no notice of any limitations or restrictions as
to the number of editions which the student editor
might order.
. . . an agent has authority to do everything
necessary or proper and usual in the ordinary
course of business for effecting the purpose of
his agency.11
Where an agent is by his principal put in
charge of a business as the apparent manager
thereof, he is clothed with apparent authority
11
California Civil Code. 2319.
28
to do all things that are essential to the
ordinary conduct of such business at that
place, and third persons, acting in good
faith, and without notice of or reason to
suspect any limitations on his authority,
are entitled to rely on such appearance#^
Although the editor has exceeded his authority
in ordering the special editions, there will still be
an obligation on the part of the superintendent to
pay the $50 bill, because the editor has what is
called apparent authority as far as outsiders are
concerned, i*e#, the local newspaper knew that the
editor could incur bills for publishing the school
paper, and did not know of any limitations as to the
number of editions to which this authority extended#
There is an implication then that the agent may carry
on all such business as is a natural part of his
authorization to do a particular thing#
Here the
editor could edit the paper and, so far as the printer
knew, publish as many editions as he saw fit, a trans­
action clearly within the editor's apparent authority#
The only conclusion that is logical is that
the school would be liable to pay the $50 printing
bill as its agent had apparent authority to order the
printing of the extra editions.
12
Cowell Lime Co. v. Santa Cruz County National
Bank. 82 Calif. App. 519.
29
The school, on the other hand, would have a
valid claim against the editor or his parents (if
he is a minor).
It might not he good school policy
to exercise this right, but thekschool would have
a good claim.
CASE VI.
CASE INVOLVING RENTALS AND LEASE
Brookfield High School leased a large plot of
land near the school from one Prank Baker for the
purpose of carrying on its interscholastic athletic
contests.
The High School paid Mr. Baker a rental
of $1500.00 a year for the use of his land*
In the
middle of the first year of the schoolfs use of the
land, a city zoning' ordinance was passed which pro­
hibited the use of the particular area for athletic
contests.
The school secured premises elsewhere and
notified Mr. Baker that because of the new law it
would be impossible to carry out the use of the lot
intended in their lease and that therefore, they were
giving up the lease.
Mr. Baker objected that the
ordinance was not his fault and that further the
land was still there for some other use that the
school might make of it.
At the end of the year Mr.
Baker sued the school for $1500.00.
The school had
30
offered to pay f750.00 which was for the one-half
year they used the lot.
Where the premises are leased for a special
purpose and this purpose later becomes illegal by
statute the lessee is excused from further liability
for rent and the lease may be terminated by him.
However, a distinction must be made between
a restrictive and a permissive provision in the
lease.
If the provision is merely permissive, the
lessee may still use the premises for other purposes
and he will not therefore, be relieved of liability
for rent* if it is a restrictive provision the lessee
cannot use the premises for any other purposes and
he is excused from any liability from rent.
This
is the Common Law rule despite the general rule
that rent always issues from the land, because here
the lessor can no longer use the land for any pur­
pose, whereas in the permissive cases the lessee
may still, enjoy the land in .many a new way.
In the particular question much depends upon
the intent of the parties in making the lease.
It
would appear from the word solely in the lease that
13
California Civil Code. Sec. 1932.
31
Mr* Baker, at the time of the lease, desired that
the land he used for such purposes only; therefore,
when this purpose was prohibited the school could
make no other use of the land under the term of the
lease, and hence they must be relieved from further
payment of rental.
• • • a clause in the lease stating that
the building was leased for the purpose of
conducting a saloon and selling liquors there­
in was held to be restrictive.14
In California, however, it is very doubtful
if it would make any difference if the particular
provision were interpreted as restrictive or per­
missive in view of the code section which says,
When the greater part of the thing hired has
been destroyed the lessee may bring the lease
to an end if he so desires•
It is true that this code section has been usually
applied to cases where there has been a physical
destruction of the thing hired, as by fire, but the
consensus of legal opinion is that in a proper case
such as the question presents the interpretation of
the code section will extend its application to
cover situations where illegality destroys the in­
tended, primary use*"^
14
Brunswick-Callender v. Seattle Brewing Co.
98 Wash. 12— 167 P 58.
California Civil Code. 1932.
16 Ibid.
32
Therefore, the case in question would he decided
in favor of the school, and they would not be held
liable for the rental of the athletic field for the
.use to which they were to put the field has been made
illegal by the city ordinance forbidding the same.
CASE VII.
CASE INVOLVING RECEIPTS
Prank Roberts bought a model T for §60.00.
He
paid the merchant the full amount in cash, the mer­
chant giving him a receipt therefor.
Frank did not
bother to look at the paper until he reached home—
when he found out that the amount which he was
supposed to have paid was put down as $50.00.
The
merchant later seeks to recover §10.00 more and shows
his duplicate receipt for $50.00 paid by Prank.
Will
this be final evidence of what Prank paid?
Generally, there is a rule in evidence which
is known as the parole evidence rule— this provides
that the terms of a written instrument shall not be
contradicted by outside evidence.
Receipts given for
the payment of money are not written instruments, the
terms of which cannot, be contradicted within this rule.
A receipt for payment of money is subject
to explanation, contradiction, or avoidance.1
17
California Fruit Packers v. Merritt Fruit
Co. Cal App. 507.
33
• • • parole evidence is admissible to show
that the receipt which the defendant pleaded
in full of demands applied only to certain
accounts (i.e., that a different sum was paid
than stated on the receipt
Here is found the seller of the automobile
through carelessness, or otherwise, putting down the
wrong amount of payment on the receipt and in the
course of his dealings forgetting that the boy had
really paid the full $60.00.
When he offered the
carbon to prove that he still had $10*00 owing to him,
then Prank was not bound by this, but could offer to
show that the merchant had made a mistake in the amount
recorded.
The reason for allowing outside proof of
such payment is on the theory that this paper handed
from the seller to Prank, was not intended to be an
exclusive memorial of the transaction and that it is
quite possible to make mistakes in the preparation of
such receipts.
Therefore, Frank could attempt to prove that he
had paid the full amount, and the mere fact that the
receipt showed a payment of $50.00 instead of $60.00,
could not be held to be a true statement.
The proof,
18
Coe v. Moline Power Farming Corp. 202 N.
Western Rep. 265.
34
of course, might be difficult, but it could be attempt­
ed*
Witnesses to the payment of the sum would have
to be provided, also witnesses might be found who
might have known of the amount of money which Prank
had before he went into the garage and after he came
out.
Other witnesses might be able to swear as to
his intentions in the matter*
He would have to try
every angle to show that he had made the payment.
A mere statement on his part, contradicted
by a statement of the merchant would set off one
another and the presumptive evidence of the written
instrument would, in the lack of other evidence, be
apt to be conclusive.
CASE VIII.
INVOLVING- OFFER AND ACCEPTANCE
Charles Hagen was in attendance at an auction
sale when bidding began upon a watch in which he
was interested.
John put in two bids on the watch
and finally, with John’s $20.00 bid as high, the auc­
tioneer began his last call for higher bids.
John
suddenly recalled that his birthday was only a week
away, that there was a good possibility that he would
receive a watch as a present from his parents, so he
called out that he was withdrawing his offer.
The
auctioneer sold the watch to the previous bidder for
35
$15*00, and now is suing Charles for the remaining
$5.00*
Can he collect?
The answer to this question falls in the field
of contracts, and more specifically in that section
of the field known as "offer and acceptance"*
Where the auction is. with reserve, and most
auctions are such, the offer is.made "by the bidder,
and the manifestation of the assent and acceptance
of the offer on the part of the auctioneer is the
falling of his hammer*
Either the bid or the mer­
chandise may be withdrawn at any time before the
hammer falls, and thus as a corrallary an auctioneer
may accept any bid that he chooses in an auction
19
with reserve*
Thus, in the above question, John was quite
safe in withdrawing his offer, as the hammer had not
yet fallen, and revocation was alright up until
that time*
Two cases of a similar nature have been decided
in favor of the person who withdrew his bid before the
falling of the hammer*
In the case of the Hibernia
Savings and Loan v. Behnke
PQ
, and the case of Young v*
19 California Civil Code. 1741.
20
Hibernia Savings and Loan v* Behnke. 121 0*
339 53 P812.
36
Patterson
, similar decisions were rendered.
CASE IX.
INVOLVING- BREAKING OP A LEASE
Mr. MacDonnel has rented a house by the month*
After living in the house for six months, he suddenly
decided to move.
Without giving any notice, he
packed his belongings and moved out on the day his
last rent period expired.
Has the landlord any rights
to collect because he has not been given notice by
Mr* MacDonnel?
Suppose a lease had existed with two
months to run.
First of all, two situations must be distinguish­
ed between.
A lease for one month, which is a definite
period, and a lease from month to month, which is an
indefinite period.
In this latter case the relation
between the lessor and lessee is contemplated for
an uncertain period of time and during the duration
thereof the tenant will pay his rent by the month.
Notice in such a situation is required by either
party for a period as long as the rental period. 22
Thus, if a person leased from week to week, notice
21
^
Young v. Patterson. 9 C. A. 469--99P 552.
California Civil Code. 1946.
37
would have to be given a week in advance; if from
month to month, notice would have to be given a month
in advance#
In the case of Dorn v. Oppenheim,23 and the case
24
of Owen v# Hirzihoff
the decision was that notice
as long as the rent period was required#
Therefore,
in this case, Mr. MacDonnel would be liable for one
monthfs rental as he had failed to give the landlord
proper notice.
If it is assumed that a lease had been in
existence for a fixed period, and that the lease
had two more months to rim, then Mr. MacDonnel would
be liable for the two monthfs rental#
The only
question here is the possible remedy that the land­
lord may have open to him.
He may wait until the end
of the two month period and sue for the rental, or
if the rent had been paid every month, then the land­
lord could sue at the end of each month for the rental
due him.
There is also one other remedy open to him.
He may sue immediately if he desires, and his damages
in such a suit will be the amount that Mr. MacDonnel
23
*
Dorn v. Oppenheim. 45 Cal. App. 312..187 P. 462.
Owen v. Hirzihoff. 2 Cal. App. 622#.84 P274.
38
owed for the two months, less the reasonable rental
25
value of the premises for that period.
In the absence of a written lease, some proof
of the existence of an oral agreement as to the fixed
period would have to be established.
In this case,
however, the facts show the intention, and the land­
lord could collect unless proper notice was given,
CASE X.
INVOLVING PERSONAL PROPERTY
Schulte Bros, operate a parking lot across the
street from Brookfield High, which lot is enclosed
by barriers and has but one entrance and one exit*
Cliff Baker parked there one morning, paid his twentyfive cents for the privilege, and received a ticket
which stated that it must be surrendered before the
car could be taken away.
At the attendants direction,
Cliff left the key in the car.
When he returned to
get his car after classes were over, the car was not
there.
Is Schulte Bros, liable to Cliff for his car?
First of all, two situations must be distinguish
ed between.
Parking a car may either involve mere
25
California Civil Code, 3308,
39
rental of parking apace,
ment.
26
or it may involve a bail­
In the former instance there is ordinarily no
obligation assumed by the attendant of the station
or lot with reference to the safe keeping of the
car, and hence no liability in the case of theft.
However, if the transaction were a bailment, the
attendant would then be under a duty to exercise
reasonable care to prevent the auto from being stolen,
although he would not necessarily be an insurer against
theft.
His inability to return the car to the owner
would establish again a prima facie case of liability
which he would have to rebut by proof that he had
exercised care to prevent theft, and that in spite
of this the car had been stolen.
What is the distinction then between a situa­
tion where there is a mere rental, and
there Is a bailment?
one where
This again depends upon the
extent of the parting of the bailor of his dominion
over the property and the exercise of such dominion
by the supposed bailee. ,Did the owner surrender
control over the car to the attendant?
it would appear that he did.
26
In this case
The turning over of
Thompson v. Mobile Light Co. 101 So. 77
Ala. 525. 35 A. L. R. 921.
40
the keys to the parking attendant, and the ruse of a
sort of checking system by the lot management, the
fact that there are attendants to watch the cars,
the fact that there is only one exit and entrance,
all of these are factors which must be considered
in the determination of which category the facts
bring the case.
In this case as all of the above
are present, it would appear quite definitely that
a bailment was present and therefore the lot would
be liable to Cliff unless it can rebut prima facie
27
liability.
At the trial the case would resolve itself as
follows;
All Cliff would have to do is to say that
he "bailed" his car with the defendant, and then
show that it was in fact a bailment, and that the
car was not there when he returned.
Then the lot
would try to show that by evidence of "habit and
care" that it was normally very careful, and had
exercised proper care in this case.
Undoubtedly Cliff in this case could prove
that a bailment exists because he had surrendered
27
Beetson v. Hollywood Athletic Club, 109
Cal.' App. 715...293 P. 821.
41
his keys, and had received a ticket which had to be
returned before the car could be released to him*
The fact that he still held the ticket while the
car had been released without it would successfully
rebut any argument that the lot attendant had exer­
cised due care, for undoubtedly the car had been
removed without the surrender of the ticket which
Cliff had in his possession.
The case then, is a clear one against the lot,
with the only proof to be rendered that the car was
missing from the lot, and that the ticket for the
car had remained in Cliff's possession and had not
been surrendered to any Other party.
Several similar cases have resulted in deci­
sions establishing the liability of the parking lot.
28
The cases of Galowitz v. Magner,
General Insurance
pQ
Corporation v. Service Parking G r o u n d s , w e r e decided
against the lot.
In this case let it be supposed that on the
parking lot ticket was printed, frNot responsible for
28
Galowitz v. Magner. 203 N.Y.S. 421..208 App.
Div• 6.
29
General Exchange Ins. Corp. v. Service
Parking grounds. 254 Mich. 1..235 NW. 898.
42
loss by fire or theft.”
Would the lot then be
liable?
Generally the lot could not escape their
common law liability for negligence, no matter what
they put on the ticket*
Thus, in the case of Galowitz v. Magner
30
where the plaintiff drove his car on a lot, paid
his fee, and received a ticket, the lot was still
held liable for the loss of the car*
On the ticket
in this case the statement appeared that the lot was
not liable for loss through fire or theft*
Now, if the parking lot expressly told the
customer of this, or could prove that he read the
statement on the card, then perhaps there could be
applied regular contract liability, for when facts
are known to both parties, and stipulations put in,
they may hold.
However, in general, the lot would be held
responsible for the loss in spite of any statements
that might be printed, or any signs that might be
displayed.
30
Galowitz v. Magner. 203 N.Y.S. 421..208
App• Div• 6•
43
CASE XI.
INVOLVING PERSONAL PROPERTY, BAILMENT
George Dunn went into the
for lunch.
Acropolis Restaurant
The waiter took his hat and coat and hung
them on a hook on a post near the table.
After
George finished his meal, he could not find the coat.
Can he recover the value of the coat from the res­
taurant?
This is a question under the field of bailments
in the subject of personal property.
George cannot recover for his coat under the
above situation.
No bailment is created unless the
intended bailee actually comes into possession of,
or becomes the custodian of, with full dominion,
care, and control of the item to be bailed.
In this
case, although the waiter took the coat, he did not
assume custody of it, inasmuch as it is a matter of
common courtesy for waiters to take the customers*
wraps and hang them up nearby.
However, if the waiter had taken the coat to
a place somewhere out of the reach and knowledge of
the customer, or if the customer had checked the coat,
or if the attendant could be expected to stand guard
over the coat, then it might be said that a bailment
44
had taken place.
Even if this be held a bailment, there would
still be the need to establish that the bailee was
negligent, for the bailee is not an absolute insurer
and is liable for some degree of negligence only.
However, if again a bailment is assumed, there
is a chance that the bailee under this situation might
be deemed to be prima facie liable, and the only way
he might be absolved of liability would be for him­
self to establish that he was not negligent.
This, of
course, is putting the burden on the bailee, whereas
in the normal case, the plaintiff, bailor, would have
the burden of so establishing if he desired to collect.
Thus, in this case, if there had been a bailment there
is a good chance that the bailee could not have over­
come the prima facie liability with which he would be
charged.
However, since there was not any bailment,
no further statement is necessary, for the waiter and
his employer could not be held liable.
Pour similar
cases have all been decided in favor of the defendant.
31
31
Apfel v. Whites Inc. 180 N.Y.S. 712..110 Misc.
670.
Wentworth v. Riggs. 143 N.Y.S. 955..159
App. Div. 899.
Zeterstrom v. Thomas 104 A. 237..92 Conn.
702. A.L.R. 392.
45
There might be an extra-legal recourse for
George to attempt*
The restaurant must maintain a
good name, and maintain good-will of the customers.
If the fact were published that a coat had been
stolen, the restaurant would suffer, and George
might easily recover damages if he suggested to the
owner that he would publish that fact of the theft
to all his friends.
CASE XII.
INVOLVING STOLEN PERSONAL PROPERTY
Jimmy Melton received a wrist watch as a gift
upon graduation from grammar school.
On his first day
in high school the watch was stolen from his locker
by a classmate.
The stolen watch was sold to George
Dunn, a student, who wore it openly for three years.
In his senior year Jimmy Melton noticed the watch on
George’s wrist, and seeks to recover the watch.
There is a statute which provides that no action
shall be brought for the recovery of personal property
or for damages for its possession or detention, more
than three years after the cause of the action arises.
The question here is whether or not George
acquired title to the watch by adverse possession.
He
46
has apparently held possession of the watch openly
and adversely for the three year statuatory period
of limitations on actions such as this*
The thief,
however, could not have acquired any title thereto
merely by keeping the watch hidden for the statuatory
period*
For adverse possession there must have been
an open and notorious possession during the running
of the limitations period.
However, during the period
the holder must maintain a claim of title which the
thief could not do.
George, in this case, has held
the goods under a claim of title, for his purchase
was in good faith, and he has openly worn the watch
as his own for three years.
May the true owner of the watch now recover the
property?
George never did acquire title by his pur­
chase, for the vendor had no title which he could
pass, however George, by his own acts of open and
notorious possession under a claim of right, did
secure title which is good against any claims, even
a claim of the previous owner.
George may also sell
the watch and the purchaser would acquire good title.
Therefore according to the law, George has
good title to the watch, and may retain it in his
possession.
Actually and morally, however, he should
47
return it to the person from whom it was stolen and
bend every effort to apprehend the thief.
George
should have exercised proper care when he bought
the watch to see that it was not a stolen one, and
that the vendor did have good title.
In purchasing
goods from.private parties this care should always
be taken.
Several cases similar to the above have been
decided In favor of the person who purchased the
32
stolen property.
CASE XIII.
INVOLVING CONTRACTS, REWARDS
Bill lost his watch at school and posted a
notice on the school bulletin board offering a two
dollar reward to any one who found it.
Cliff Baker
did not know of the reward notice, but he did find
a watch with Bill’s name engraved on its case.
returned the watch to Bill and was thanked.
He
After­
ward, Cliff saw the reward notice, and demanded the
reward from Bill.
Can he collect?
32
L.R.A.
Gatlin v. Vault. 91 SW 38...7 Ind...254.
Chapin v. Freeland 8 NE 128...142 Mass. 383.
Shelby v. Shaner 115 P. 785...28 Okl. 605 34
(N.S.) 621.
48
If Cliff so desired he could take the case to
a petty claims court and sue for the two dollar reward.
Generally in the field of contracts it is said
that before a contract will arise there must have
been an offer and an acceptance of that offer.
Thus,
in the field of rewards, the offer would be an amount
put up by the person requiring the act or service, and
the acceptance of it would be the doing of that service
in response to the request.
Thus, we see a difficulty
arising in the situation as presented in the above
question, i.e., where the service desired is done,
but not in response to the request.
Is this a suffi­
cient acceptance to cause the creation of a valid
contract, with all deriviative liability upon the
offeror for non-compliance with the terms of this
offer?
There has been a split in the cases on this
point.
The general American rule however is that
Cliff could not recover in this case.
An offer must
be accepted with knowledge of its existence, and with
a view towards obtaining the.reward.
35
have been decided thus.
33
111. 610.
Several cases
Howland v. Rounds. 41 N.Y. 604..10 Am. Rep. 654.
Williams v. West Ry. Co..61 N.W. 456...191
49
The minority American view is that a reward
is a peculiar type of contract situation, in which
the promise becomes binding in favor of anyone who .
performs the conditions attached thereto, whether he
has knowledge of the reward of not*
There is a
reason of policy behind this latter view in that the
offeror will suffer no new detriment, that is, he
expects to have to pay so much for the return of the
item in question anyway, and that further it will
tend to increase public honesty as to things found*
34
In the case of Sullivan v* Phillips
the reward was
granted in spite of the fact that the person doing
the service had no knowledge of it.
In general, however, the general American policy
holds, that the reward is not due unless the service
is performed with knowledge of the existence of the
offer of reward.
In the state of California the case would pro­
bably be decided according to the general American
policy, for California cases in the past have been so
decided*
34
26 Yale L. J. 169, 182.
50
In til© case of Hewitt v. Anderson,
35
and the
*2 ^
case of Wilson v. Stump,
it was held that the
person who performed the service without knowledge
of the offer could not sue and collect the reward.
Therefore, it would appear that Cliff could
not collect the reward in this case*
It must be
noted however, that had the offer of reward been
placed in a newspaper the reward could have been
37
collected as in the case of Ryer v. Stockwell*
Also had the offer been made by a public ad­
ministration such as a city council or state legisla­
ture, the reward could have been collected.
The
policy here is that the reward is in the nature of
a bounty for whoever does the job and that no contract
38
39
is contemplated.
The cases of Smith v. State,
and Choice v. Dallas,40 have established this as a
precedent.
^ Hewitt v. Anderson. 56 Calif. 476.
36
Wilson v. Stump. 103 Calif. 255. 36 Pac. 151.
37
Ryer v. Stockwell. 14 Calif. 134, 73 Am., Dec. 634.
86 A. L. R. 579.
39 Smith v. State. 151P. 513..38 Nev. 477.
40
Choice v. Dallas (Tex. Civ. App.) 210 S.W. 753.
51
CASE XIV.
INVOLVING TENANCY, DUTIES OP LANDLORD
The Brookfield High School Hi-Y club leased
an unused store building for a club house and in­
stalled equipment for recreation.
The roof of the
building developed a leak, and a ping-pong table was
destroyed.
The club sought to recover damages from
the landlord, and to force him to repair the roof.
It is the general rule in this country that
the tenant has the burden of making repairs, and
his failure to do so amounts to permissive waste.
This obligation arises from the duty of the tenant to
return the property and premises in their original
condition, and hence he is bound to keep them pro­
tected from wind, water, etc., so that further
injury may not result.
However, this duty of the tenant to make ordi­
nary repairs does not cover any necessity to make
substantial repairs involving the substitution of new
structures, or parts thereof, though such parts are
defective and even worn out through age, nor need he
restore what has been destroyed by accident.
It would appear that a hole in the roof might
involve such great repairs as would constitute "sub­
stantial”.
Therefore, it could safely be said that
52
the tenants of the building would not be liable for
the repairs on the roof.
However, it is very doubt­
ful if the Hi-Y club could collect for their damaged
ping-pong table.
Since the tenant is generally bound to inspect
the premises before he rents, he comes under the
rule of Caveat Emptor (let the buyer beware).
The
landlord owes no duty to repair, and is thus generally
not liable for injuries to the tenant or to his pro­
perty resulting from the condition of the premises.
Therefore the landlord in this case would not be
liable for any damages, however as this is a "sub­
stantial repair" it would now become incumbant upon
him to fix the roof so as to continue the premises
habitable, and prevent future recurrance of the
difficulty.
. . . if landlord doesnft repair after notice,
tenants may go ahead and repair and charge off
to the extent of one monthfs rent, or he may
vacate the premises and stand discharged from
the terms of the lease.41
In the case of Farber v. Greenberg 4 ? and Nelson
v. Meyer
43
41
42
43
the decision was to the effect that the
Calif. Civil .Code. 1941 and 42.
Farber v. Greenberg. 98 C.A. 675...277 P.534.
Nelson v. Meyer...96 C.A. 66...270 P 719.
53
landlord was not liable for damages to tenants pro­
perty.
The club could, however, hold the landlord
for the repairs on the roof so as to render the
building habitable.
CASE XV.
INVOLVING CORPORATION, BANK FAILURE
George Bunn, James Melton, and Ray Burke, all
21 years of age and seniors in Brookfield High, have
carried on a stamp buying and selling business for
several years as a partnership.
The business has
been profitable, and in expanding they borrowed f100.00
from the local bank.
They decided to form a corpora­
tion, and went through all necessary formalities to
attain that status.
The boys are the sole stockholders
of the corporation, and deposited the corporate funds
in the local bank.
the bank failed.
Before their note had been met
The receiver of the bank sued the
boys on their note; they in turn wish to set off the
amount of the funds deposited in the bank, some
$150.00.
May this set-off be permitted?
The question here is essentially whether or not
the sole share holders of a corporation may set-off a
corporate claim in a suit against them on a personal
note.
The answer is that they may hot do so.
In the
54
first place even though the boys own all the stock,
by the.very nature of a corporation, they are not
the corporation,
A corporation is a separate entity,
44
distinct from its componant stockholders.
The
shareholders do not own the rights of action of the
corporation, and hence can not sue upon them.
The
bank owes the boys nothing; it owes the corporation
1150.00.
On a question of policy it might be argued
that as the boys own all the stock, they are the
same as the corporation and therefore they should
not be forced to sue separately in the corporate name.
Obviously there are other creditors of the bank, how­
ever, and an allowance of this set-off would, be giving
the boys unfair advantage.
Thus, it must be answered that the boys cannot
set-off their claim versus the suit of the bank on
the note.
The corporation could sue in its own name,
but any recovery in such a suit would have to be
based on a pro rata portion along with the other credi­
tors.
Thus it may be seen that the basic essential to
the answer of this question is the distinctiveness of
44
Corpus Juris.
Corporations Sect. 16.
55
the corporate organization, in that it is a separate
entity, apart from all its component shareholders*
In the cases of Gallagher v. Germania Brewing
Company,
45
and State v. Weston Bank,
Ac
similar de­
cisions were reached*
CASE XVI.
INVOLVING INSURANCE, INSURABLE INTEREST
Walter Cowles, a student in Brookfield High,
operated a hot dog stand located on the end of a pier,
overlooking a lake in Brookfield*
He sold lunches to
sightseers who took trips around the lake on a small
motor launch owned by the Scenic Corporation of Brook­
field.
The launch always tied up at the end of the
pier near Walter’s lunch stand*
Realizing that the
income from his business would be seriously reduced
if the launch were lost, Walter attempted to take out
insurance upon the launch.
would not sell him a policy.
The insurance company
What may he do?
The law of insurance places certain limitations
on the persons who may take out policies, both as to
45
Gallagher v. Germania Brewing Co. 54 N.W.
1115, 53 Minn. 214.
46
State v. Weston Bank. 251 N.W. 164...125
Neb. 612.
56
property policies and those concerned with life or
injury to the person*
One may not insure the life
of just anyone else, ,nor can anyone insure any article
desired; a person must have an insurable interest.
Insurable Interest is a pecuniary reason for desiring
the continued existence of the property, arising out
of a right or.a liability, connected with the property
which the law can perceive.
Title to the property,
legal or equitable, is not essential to this interest;
47
it can exist without, and independent of, ownership.
The interest which the law will regard as an
insurable Interest cannot be a speculative one.
The
sum named in an insurance policy must be in reasonable
proportion to the probable loss, and must show that
the insured is seeking protection and is not merely
speculating.
In this case Walter does have a pecuniary inter­
est in the launch, but that interest is no more than
an expectation of profit, and has no legal basis.
The
loss that would be his through a loss of the launch
would not be an immediate one, and would not give him
the rights of an Insurable interest.
47
Davis v. Phoenix Ins. Co. Ill Calif. 109..43
P. 1115.
57
Walter is not without possible alternatives
in his plight, however,
He could take out a value
policy on the earnings of his business.
Such policy
would cover his earnings and guard them against possi­
ble depreciation through loss of the launch.
He
cannot, however, show any insurable interest in the
launch, and could not collect on such a policy.
In the cases of Riggs v. Commercial Insurance
40
Co.
4,0
and Hayes v. Milford Fire Insurance Co.
decisions have been rendered which show that no specu­
lative purpose gives a person insurable interest in
anotherfs property.
CASE XVII.
INVOLVING AGENCY AND CLAIMS FOR INJURIES
Hap 0*Conner, a senior in Brookfield, drove a
truck for the Brookfield Grocery Co. after school hours
and on Saturdays.
Late one Saturday Hap made his last
delivery and on the way back to the store stopped to
see his girl.
Her little brother was having a party
and Hap was persuaded to give all the guests a ride on
the truck.
While on the joy-ride one of the small
48
Riggs v. Commercial Ins. Co. 25 N.E. 1058..
125 N.Y. 7...10 L.R.A. 684.
49
Hayes v. Milford Fire Ins. 49 N.E. 754,
170 Mass. 492.
58
children fell off and was injured#
child sue the grocery company#
The parents of the
Can the company be
held liable for the acts of its agent in this case?
This can be considered as a !,frolic and detour11
problem, i.e#, an agent strays from the course of his
employment, and in so doing, he injures someone who
attempts to recover from his employer*
The injury
to the child was caused by the grocery truck and while
its driver was operating it.
This would naturally
raise a presumption that it was being used in the
employer’s business at the time.
In this case, how­
ever, the facts show that the truck was packed with
the children being taken on a frolic*
It is impossible
to say the driver was discharging his duty to the
grocery at this time.
The only possibility that at the very moment of
the accident Hap was engaged in the grocery’s business,
is the one that after his temporary excursion he had
finally made up his mind to return to the company garage
and thus resumed his duty*
Hap’s purpose alone was
insufficient to bring him back within the scope of his
employment*
The injury was done while the truck was
still far off its proper route.
This departure from
duty exempted the grocery from liability until duty was
59
resumed, and at the time the child was hurt, it can
hardly be said that there was such a resumption*
This
will free the grocery from liability for this act of
its agent— while not in the scope of his duty*
There is not liability on the part of the
employer where there is an abandonment of duty
and an injury occurs before re-establishing
■it.5 0
The master is not liable for the torts or
negligence of his agents in any matter beyond
the scope of their agency.51
Therefore, the parents of the injured child
can maintain no successful action against the grocery
company.
Any action they take could only be directed
against the driver*
CASE XVIII.
INVOLVING AGENCY
Lin Howard, a hot headed youth, has a job with
J. H. Watson a manufacturer of ice-cream.
Lin de­
livers the ice-cream to the customers and also collects
for it.
Watson has instructed Lin to use no force in
making collections, but to phone him if any dispute
should arise.
Lin delivered a load to Carlos Conti
who would not accept it, claiming it was not properly
50
Fiocco v. Carver et al* 234 N.Y. 219.
51
Turner v* North Beach Ry. Co* 34 Cal. 594.
60
iced.
Lin insisted on leaving it, and when Carlos
refused to pay, a fight ensued.
Carlos was severely
beaten, and since Lin has no money, Conti sought to
recover damages from Watson the employer.
Is this
possible?
Often in business an employer is liable for
injuries inflicted by his servant where the agent
has flagrantly disobeyed the instructions of his
employer.
Obviously the master himself is not guilty of
any wrong, but the doctrine of respondeat superior
(let the master answer) is accepted and the master
is held.
Here Lin is found to be acting in the general
scope of his employment (e.e., to deliver and collect
for the ice cream).
The fight occurred while he was
attempting to further Watsonfs business interests
even though he was disobeying orders.
The instruc­
tions to Lin as to consulting Watson when a dispute
over payments arose, were secret in that they were
known only to the employer and his driver, and not to
any of the customers.
Such instructions are good
only as between Watson and Lin and when Lin disobeyed,
his acts were within the scope of his authorized
61
employment as it appeared to Carlos Conti*
When wrongful acts are done to a third
party by an agent and while engaged in his
master’s business, that master will be liable
for injuries resulting*52
As a result Carlos Conti will be able to
maintain a successful action against Watson
for the
damages he received in the fight with the truck
driver.
The master is liable for acts of his servant
in the general scope of employment, whether,,
the acts are negligent, wanton, or wilful*
The one point in this case which differs from
case seventeen is that in this case the agent caused
injuries while in the line of his duty*
Therefore,
he was acting for his master, and the master is liable
for the acts of his agent.
Watson in this case would
be liable for damages caused by his agent Lin, in
spite of the fact that Lin was disobeying orders
when he caused the altercation with Conti, and in­
flicted injuries to the latter.
In this case the employer hasa case
for suit
against Lin*
52
California Civil Code* 2338*
53
Son v* Hartford Ice Cream Co* 102 Conn* 696*
62
When the agent subjects his principal to
liability because of a negligent or other wrong­
ful act, he is subject to liability to the
.
principal for the loss which results therefrom.54
Lin also could be charged with assault and
battery in this case if Conti pressed the charges*
The fact that the principal becomes liable
does not exonerate the agent from liability fop
a tortious act committed under his authority.55
CASE XIX.
INVOLVING CONTRACTS, HIGH PRESSURE SALESMANSHIP
Mr* Chandler, tennis professional at the Brook­
field Tennis Club, kept attempting to talk Dick Johnson
into taking tennis lessons.
He used high pressure
methods and one started to give Dick a lesson.
No
mention of duration of the course of lessons or price
was discussed, and Dick never did agree to take, or pay
for, any of the lessons.
Silently however, he allowed
the lessons to continue to the end of the full course
of 12*
At the conclusion of the course Dick refused
to pay, and Mr. Chandler wants to know how to collect.
Involved here is the problem of whether there
was a contract between Chandler and Dick.
If there
54
Cal. Jr. Restatement of Agency. P 401*
55
Cal. Jr. Agency. P 101.
63
can be found no agreement to pay for lessons received,
then we cannot make Dick pay for the course.
For the formation of a contract, there must be
found an offer of some kind on the part of one of
the parties and an acceptance of it and the obliga­
tions arising therefrom by the other party.
Here,
can be found what is called an implied in fact con­
tract, i.e., where there is no express agreement
between the parties, but one performs for the other,
with the otherfs knowledge, a service usually charged
for, and the other avails himself of it,
A
promise
to pay the reasonable value of the services is implied.
When Dick took the tennis lessons, a full
course, from Chandler, a tennis teacher, he knew that
there was usually a charge.
He went ahead anyway to
the very end of the instruction.
This would seem to
imply that he was willing to pay for what he learned
from the instructor.
The offer is found in the giving of lessons,
and the acceptance of the benefits in silence raises
the implied in fact contract and an obligation on
Dick’s part to pay arises.
Mr. Chandler should be
able to collect from Dick for the value of the set
of lessons given.
64
The voluntary acceptance of benefits of a
transaction is equivalent to consent to all the
obligations arising from it, so far as the facts
are known, or ought to be known to the person
accepting#56
Performance to oneTs knowledge of services
usually charged for, and no dissent is ex­
pressed, or the person avails self of the
services, implies a promise to pay the rea­
sonable value of the services#57
Certainly then, Dick is liable to pay for the
entire course of lessons, and by his acceptance of
the training has put into effect an implied contract
to accept the obligations as he accepted the services*
If Dick were a minor, he could, of course, abrogate
the contract#
CASE XX.
INVOLVING- AGENCY, TRADE SECRETS
The Busy Bee Milk Farms hired James McGee as
one of its drivers and solicitors*
He was supplied
with a milk truck etc#, and for five years he worked
for the company.
He collected bottles and delivered
milk, and kept a special confidential list prepared
by the company of the names and addresses of all its
customers on his route, with the days of delivery and
amounts that each customer wanted#
This list, of
56
Cal# Jur. 9*
57
Young v# Bruere. 78 Cal. App. 126#
65
course, was very valuable to
the farms. McGee suddenly
quit his job without warning
and went to work at the
Out Hate*Milk Company and began to solicit the patron­
age of all the customers whose names he learned while
working for the Busy Bee Farms.
The Busy Bee Farms
want to know if they can do anything to keep from
losing these customers through McGee*s actions.
As a general rule, an agent is under a duty
to his principal not to use or communicate the infor­
mation confidentially given him by the principal or *
acquired by him in the course of his agency, in com­
petition with or to the injury of the principal, on
CO
his own behalf or on behalf of another. °
Here, James, when working
Farms became acquainted with
for the
BusyBee
the confidential trade
list which was the basis of that companyfs business
and profits.
The fact that he no longer worked for
the Farm, in no way relieved him of the duty of
keeping the customer list a secret and not using it
for the Out Rate Company*s or his own advantage.
Jim had a perfect right to work for another
Milk company, but only in a fair manner and he could
58
California Civil Code. 95.
66
not violate the confidence of the Busy Bee Farms.
His actions in soliciting the Busy Bee customers
for the Cut Hate Company are in effect, robbing his
old employer and the court will enjoin him from doing
it any further.
A list of customers is a trade secret which
is absolute property of the company operating
the route; a company may enjoin its former
driver from soliciting work from any of the Q
persons who had formerly been his customers.
Therefore James could not solicit business
from these former customers, however he could re­
ceive business from them otherwise the court would
be keeping these people from choosing where they
wanted to trade*
He could only be stopped from solicit­
ing business from the trade list which he had learned.
Actxially the Busy Bee Farm would have a difficult time
to do anything about the matter as Jim could say that
the customer offered him their business.
He would
have to be careful, however not to solicit their
customers•
CASS X X.
INVOLVING CONTRACTS
Red French, a very hot tempered fellow, became
exceedingly angry when he found that a little of
kittens belonging to his little daughter had been
-------- gg-------
New Method Laundry v. MacCann. 174 Calif. 26.
67
stolen.
He cursed the unknown thief, and declared,
"I’ll give $100.00 to the person who finds the
thief, and 1*11 give an attorney $100.00 for prose­
cuting him.11
Boh Hall, a high school boy, heard the state­
ments and attempted to find the kittens.
one the next day, and returned it*
one dollar.
He located
French gave him
Bob continued his search and found that
an odd fellow, Harry Burns, had the kittens.
A
search warrant was procured and the other kittens
were found.
Bob brings this suit to recover the rest
of the $100.00 reward on the ground that it was offer­
ed as a reward and he had discovered the thief and
thus earned it.
When the parties to an agreement undertake
that no legal obligation shall be created, their
undertaking will be respected by the law.
So where
words appropriate to an offer— as here, Red’s offer
of $100.00 to the person who found the thief— are
used evidently as an explosion of wrath so that no
reasonable person would be justified in taking them
literally.
acceptance.
No contract then, will result from the
In this case it appears that the language
used by Red was not such as under the circumstances
68
would show an intention to pay a reward and Bob
had no right to regard it as such*
Red*s language
was like an explosion of wrath against someone who
had stolen his child*s favorite playthings, and was
coupled with threats and boasts of how he would prose­
cute the thief*
Bob should have regarded the tirade
as the extravagant exclamations of an excited man
rather than as an offer and intention to make a
contract*
The law does not make a contract where the
party intended none.^O
• • • circumstances and language used did
not show an intention to contract to pay a
reward.
As long as there was no real *intent on the
part of Red to offer such a sum as a reward, and as
long as Bob could not be justified in regarding it
as such, there will be no obligation on the part of
Red to pay the $100*00 or any part of it*
CASE XXI.
INVOLVING CHECKS, NEGOTIABLE INSTRUMENTS
Bernard Johnson, 17 years of age, had a checking
60
Bennett v. Northwestern Nat. Ins. Co. 84
Cal. App. 130.
61
Higgins v. Lessig. 49 111. App. 459.
account at the Bay City Bank*
He saw a bicycle he
wanted and gave the merchant a check for $40*00*
The merchant endorsed the check to the Gas Company
for his gas bill*
Bernard then decided to call the
f,dealft off, because he knew his father would not
condone the purchase.
Bernard called the bank and
had payment stopped on the check*
The Gas Company
notified the merchant of what had happened.
The Gas
Company argued that it had a right to be paid from
this check, because it is just the same as currency,
and it was endorsed to the Gas Company which had
nothing to do with the bicycle sale.
The merchant
argued that Bernard had no right to call off a con­
tract between them.
Can the merchant and the Gas
Company prevail and force payment of the check and
keep Bernard from disaffirming it?
Involved is not only the right of a holder of
a negotiable instrument (a written instrument signed
by the maker and payable to the bearer or indorsee on
demand), but also the right of a minor to disaffirm a
contract made by him*
Due to the tender age and immature judgement of
some young people under the age of 18, the law has
held that minors under this age may disaffirm contracts,
70
except for necessities, which they have entered into,
and may not be forced to abide by them.
So in this
case Bernard was at liberty to disaffirm the contract
by stopping payment on the check.
course, have to return the bicycle.
He would, of
62
The problem, of course, becomes more complica­
ted when a third party enters the picture as did the
Gas
Company.
The check made out to the merchant
and payable on demand to him was a negotiable instru­
ment and could be indorsed to anyone which indorsee in
turn, could collect on it from the bank*
At the time
that the payment on the check was stopped, the merchant
had divested himself of his rights to it, and it w a s .
wholly a matter between Bernard and the Gas Company.
It would seem at first that Bernard would have to
pay this innocent party, but such is not the case.
A promissory note, check, etc., is voidable by the
infant who makes it and indorsees acquire title good
63
against all except the infant.
The infant could at
any time before ratifying the transfer, intercept pay­
ment to the indorsee; but until he does so, the
transfer, is valid and the indorsee may enforce
California Civil Code. 35.
Tracy v. Gauchin. 1-4 Cal. App. 158.
71
collection.
Therefore, Bernard, although he made a
bargain and gave a negotiable instrument therefor,
still could disaffirm his contract and avoid paying
a check to an innocent third party.
In general the warranties of endorsement would
hold in the case if one of the parties had not been a
minor.
These warranties are as follows*
1.
That the instrument is genuine.
2.
That he has good title to it.
3.
That all prior parties had capacity to
contract.
4.
That the instrument is at the time of his
indorsement valid and subsisting.
5*
That, inaddition, on due presentment
it
shall be accepted or paid or both, and that if it be
dishonored, he will pay the amount thereof to the
holder, or to any subsequent indorser who may be
64
compelled to pay it.
CASE XXII.
INVOLVING CONTRACTS, CONSIDERATION
George Grocutt had a job selling papers on the
corner for the Brookfield Times.
64
He managed to make
California Civil Code. 3147.
Uniform Negotiable Instruments Act. Section 66.
$21.00 per week from it.
A Mr. Lowse offered him
$10.00 a week if he would stop selling and distribut­
ing the Times from this corner, such offer.to be good
so long as he abstained from so doing. George accepted
and Lowse continued payments for several months and
then stopped.
Has George any action for' continued
payments ?
The problem here is not one of offer and accept­
ance.
Surely both of these are present here.
There
is however, a rule in the law of contracts that there
must be a consideration on the part of the promisee
for the promise.
By consideration is meant that there
must be something done by the promisee, or given, that
will be of benefit to the person making the promise.
This is a historic rule which has grown up with the
law, and still exists today.
The value or the adequacy of the consideration
is not of much moment, but the fact must be established
that some consideration exists.
In this case George’s
abandonment of a valuable job was sufficient considera­
tion for the promise.
The contract was to be for as
long as George refrained from selling the Times, and
George did quit his job in reliance upon the promise
of Lowse, and so is entitled to the $10.00 a week.
73
There is another problem in this case, namely,
was the promise to pay ”so long as George refrained
from selling”, sufficiently clear?
In a similar case, Hague v. N. Y. Evening
Journal Publishing Company,
the court held that
such a promise was good, and that the payments
should continue as long as the person refrained
from selling the papers*
The case of Carnig v* Carr,®®
and the case of Pennsylvania Company v* Dolan,
were also similarly decided.
Therefore, in this case, George can continue
to collect as long as he fills his promise.
CASE XXIIX.-. INVOLVING FEDERAL LAW, INTERSTATE COMMERCE
A federal law prohibits the transportation of
intoxicating liquors in interstate commerce into any
state the laws of which prohibit the manufacture or
sale therein of intoxicating liquors for beverage
purposes.
Harry Brown, while in Wyoming, purchased
65
Hague v. N. Y. Evening Journal Pub. Co.
164 App. Div. N. Y. 126.
66
67
Carnig v. Carr. 167 Mass. 544. 46 N.E. 117.
Pennsylvania Co. v. Dolan, 32 N.E. 802.
74
two quarts of whiskey.
He put the liquor in his own
car and drove to Denver, Colorado.
Colorado had a law against the manufacture
and sale of intoxicating liquor for beverage purposes-.
Harry, is now being prosecuted under the Federal law.
He maintains that since the liquor-was for his own
use, and carried in his own car, and not for sale,
that it was hot interstate commerce, and that the
law does not apply.
The Federal law in the case is a proper regu­
lation under Article I, Section 8, Paragraph 3 of
the United States Constitution, giving Congress the
power to regulate interstate commerce.
The only means of introducing these forbidden
goods into Colorado from outside the state boundaries
was through transportation of some sort, and so far
as the federal law is concerned the type of carrier
does not affect the case.
The United States Supreme
Court in deciding what is commerce has said that it
is traffic, intercourse, trade, navigation, communica­
tion, the transit of persons, and the transmission of
messages; that *transportation alone is commerce, and
it is immaterial whether the transportation is gratui­
tous or whether it is for the carrier himself, or in
the conduct of business.6®
68
Adair v. U. S. 208 U. S. 161.
75
The cases of Kirmeyer v. Kansas,
AQ
TJ. S. v.
Simpson,^ and Gloucester v. Pennsylvania,^ have
involved a similar situation, and all have held that
the person carrying articles across state lines which
were forbidden within the state to which the person
was’going are violating the federal law of interstate
commerce•
CASE XXIV.
INVOLVING A BET ON A STUDENT BODY ELECTION
George and Tim made a bet of $5.00 each on the
election for president of the student body*
They
placed the money in the hands of Mary to hold as
stakeholder until the results of the election were
announced.
After the election, but before Mary had
turned the money over to the winner, George, who had
lost the bet, demanded the return of his money from
Mary.
Can George recover this money?
Small though it is, this is still a gambling
contract and opposed to good morals.
Such contracts
are not enforced by the courts which regard them as
clearly against public policy.
69
70
71
Kirmeyer v. Kansas. 236 U. S. 568.
U. S. v.
Simpson 262 U.
S. 465.
Gloucester v. Pennsylvania. 114 U. S. 196.
76
Mary probably would wonder, If under her duty
as holder of the bets, she should keep the money for
Tim, but George could recover ,the five dollars after
the election— provided he notified Mary before she
had given it to Tim.
Mary, the stakeholder, would not be liable
to George for paying the money to Tim on this illegal
contract between them if she paid the winner before
receiving notice that George had repudiated his end
of the bargain.
Cases which have held gambling contracts to be
7P
illegal are:
Wise v. Rose, ^ Gridley v. Born,
Matthews v. Lopus. 74
CASS XXV.
*7**
and
INVOLVING OVERCHARGE ON A UTILITY BILL
Mrs. Melton received a gas bill calling for a
payment of $20.00.
The usual family bill is about
$4.00, and the huge increase seems to have no possible
explanation.
Upon checking with members of the family
it seems that no unusual amounts had been used, but
72
Wise v. Rose. 110
73
Cal. 159.
Gridley v. Born. 57 Cal. 78#
74
Mathews v. Lopus. 24 Cal. App. 63.
77
the meter reading does call for the amount charged by
the company.
Of course, this reading had been taken
by a company employee, and his figures would be im­
possible to check since the meter now registers a
different figure than at the time it was read by
the company agent.
The meter may be checked for
accuracy, and it would be well to call in an outside
authority to do this rather than depend upon the
company*s checking, inasmuch as it is an interested
party.
What recourse has Mrs. Melton?
This is a most common type of dispute, and
one in which the customer.is almost helpless.
How­
ever, Mrs. Melton could sue the company for a rebate,
and this procedure might be so distasteful to the
company that they might make some adjustment out of
court.
If the company were forced to come into court
over the matter, they would be forced to a great ex­
pense.
They would have to produce their books of
original entry, and the posted entry, to prove their
accuracy in the matter.
This would involve a great
loss of office time, and the whole case would be
disadvantageous to them.
Therefore, they might be
glad to settle the matter to Mrs. Melton*s satisfaction
78
out of court by accepting a reasonable payment.
How­
ever, to get any settlement, Mrs, Melton would Have to
bring suit.
If the company did fight the case in court,
however, the private individual would have a very
difficult time t o .prove that she did not use the
amount charged.
If the company had made no error in
bookkeeping, then the case would surely be decided in
its favor.
No case has come into the courts in California
involving such a matter, but by hearsay the same
situation as described above has occurred and the
company was glad to settle the matter out of court
to the pleasure of the plaintiff.
The company was
most anxious to keep the matter out of court to avoid
the expense and loss of time.
CASE XXVI.
INVOLVING AUTO ACCIDENT, INSURANCE
Dick Jergins, a senior in Brookfield High, pur­
chased a new Chevrolet coupe on the installment plan.
The finance company required a standard Insurance
policy which covered fire, theft, and collision insur­
ance.
Several weeks after the purchase, he was
involved in a crash with another car.
The other car
79
was damaged to the extent of $150.00, and the driver
received a broken leg*
At the scene of the accident
Dick told the injured driver that his insurance company
would take care of the matter.
Upon presenting the claim to his insurance
company, Dick finds that he does not have a policy
that covers the damages to the other car or the in­
juries to the driver.
The other driver sues for the
personal damage, and the repairs to his car.
Would
Dickfs statement at the scene of the accident place
the blame for the collision on him?
Dick*s statement after the accident would not
of itself tend to place the blame for the accident
on him.
Such a statement might be admitted in evi­
dence against him to prove that he was at fault, but
it would have to be bolstered up by other evidence
sufficient to preponderate in favor of the driver of
the injured car.
Statements of the type found here are called
nadmissions,f in the law of evidence.
They are made
by one of the parties involved in a suit and have
reference to the existence of facts of material value
to the case, and against the interest of the party to
the litigation who makes them.
80
To have such a statement as Dick made admit­
ted into evidence, it must appear to the court that
it is sufficient to constitute an admission on his
part.
The difficulty in these matters is the draw­
ing of a line between just a statement, and what
will be an admission.
In similar cases, such a statement by the
driver of the machine has been admitted as valid
evidence of admissions of negligence on his part.
In an automobile accident case, testimony
that defendant stated that he had insurance,
and that insurer would take care of the matter,
held competent as tending to establish defend­
ant *s negligence by admission.*75
. . . allowed statement after collision that
insurance company would pay repair bill as
material being against interest.7^
. . . allowed into evidence a statement after
accident by driver that he waa insured and nwill
take care” of any liability.77
In these cases then, statements such as Dick
made were all admitted into evidence which was
damaging to the person who made the statement.
75
In
Fleming v. Flick. 35 P. 210. 140 Oal. App. 14.
76 Symons v. Wooden. 274. P 987. Cal. App. 39.
77
Maberto v. Ifolfe. 106 Cal. App. 202.
81
tills case Dick’s statement might cause him to be
held liable for tiie accident and resultant damages.
Had he made no such statement the evidence in the
case alone would have to prove his guilt.
Dick, of course, should have known just what
his insurance policy covered.
Had he been aware
that it did not cover property damage, or damage to
another car, then he would probably never have made
the statement at the scene of the. accident.
Such
a statement should never be made as it does tend to
establish negligence on the part of the person making
the statement•
CHAPTER III
CONCLUSIONS
1*
In almost every case mentioned in the pre-.
ceeding pages, the matter of proof is the important
consideration if the case reached a court of law*
toy statements that are made, or contentions that
are held, must be substantiated by adequate proof*
Therefore it Is important that in any business deal­
ing the interested person should have witnesses who
can observe the transaction and verify the circum­
stances*
If the contract be an oral one, then it
must be made certain that there are proper witnesses
who hear the transaction.
Otherwise the case will
merely be one person1s word against another’s*
Each
case, therefore hinges upon the proof that can be
brought in court, and no action will have a chance
of success in a court of law unless all the statements
sind contentions can be proven*
2*
In most of the cases mentioned, the costs
of court action would exceed the extent of damages*
Few of the cases would .ever reach a court of law.
In
almost every instance the parties would be much better
off if they could reach some amicable agreement without
83
taking the matter to court.
Compromise then is
much cheaper, and should be attempted before any
civil action be taken to court.
3.
Extra-legal pressures, are very important
in settling small claims.
Often it is unnecessary
to even take a matter to court when other means of
settlement may be attempted with every chance of
success.
If one of the parties be a merchant, a
settlement may be easily reached by applying certain
pressures.
A business establishment must maintain
the good will of the public, and adverse’criticism
is unhealthy to the business.
In almost any small
claim against a merchant the person involved may
settle the matter easily by suggesting to the mer­
chant that the matter will be aired to friends,
school-mates, parents, and the community in general.
This pressure would have an excellent chance of
success.
B I B L I O G R A P H Y
BIBLIOGRAPHY
A. BOOKS
Bogart, Goodman, and Moore, Introduction to Business
Law* Ginn and Co#
Peters, Pomeroy, Commercial Law*
Publishing Company*
B.
South-western
UNPUBLISHED MATERIALS
Koepke, Commercial Training Needs of Farmers*"
Unpublished Master’s thesis, University of Iowa,
1935#
Sewell, F. C., "An Analysis of the Textbooks Used
in the Teaching of Law in the Secondary Schools
of the State of California*" Unpublished Master’
thesis, University of Southern California, Los
Angeles, 1928*
Stenberg, G. B., "A Study of Special Divisions of
Business Law in Iowa." Unpublished Master’s
thesis, University of Iowa, 1935*
Wing, W* H*, "An Analysis of Commercial Law Concepts
Needed by the Average Citizen." Unpublished
Master’s thesis, University of Iowa, 1938.
C*
STATE COURT RECORDS FROM WHICH CASES ARE CITED
Alabama Reports
American Law Institute, Restatement of Agency, Vol.
I and II.
American Law Reports
American Reports
Atlantic Reporter
86
California Appellate Reports
California Civil Code
California Reports
Connecticut Reports
Law Reports Annotated
Minnesota Reports
Nevada Reports
New York Supplement
Northwestern Reporter
Pacific Reporter
Southern Reporter
Southwestern Reporter
Washington Reports
Yale Law Journal
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