THE MACMILLAN COMPANY NEW YORK BOSTON CHICAGO DALLAS ATLANTA SAN FRANCISCO MACMILLAN & CO., LIMITED THE MACMILLAN CO. OF CANADA, LTD. Problems CASES AND OTHER MATERIALS FOR THE STUDY BY LINCOLN FREDERICK SCHAUB " PROFESSOR OF COMMERCIAL LAW IN HARVARD UNIVERSITY AND NATHAN ISAACS PROFESSOR OF LAW IN THE UNIVERSITY OF PITTSBURGH ALBOR New York THE MACMILLAN COMPANY 1921 All rights reserved HF1235 COPYRIGHT, 1921, BY THE MACMILLAN COMPANY Set up and electrotyped. Published July, 1921 Printed in the United States of America J7 C PREFACE The conventional excuse is no doubt expected for adding a book on a subject on which a library has already been written. It is simply that this book is very different from the others in its point of view and methods. If authority is needed for the obvious proposition of business policy as well as of law, that to disparage the wares of another is not a legitimate way to advertise one's own, it is contained in this book (§§45, 46). As a matter of fact, we do not need this warning, since we see much to praise and admire in the long line of works on business law; from that of Malynes down through the works of Jacob, Beawes, Story, Smith, Parsons, Huffcut and several distinguished living authors, to the great unfinished collection of the Commercial Laws of the World, further progress on which has been unhappily arrested by the war. It is no disparagement of these works to say that none of them fills a particular niche whose importance has been constantly brought home to us by our experience in the teaching of commercial law in collegiate schools of business. What has not been done to any considerable extent is to deal with legal rules from the standpoint of business. This book aims, in common with the others, to give some understanding of the legal rules governing the more familiar business transactions and business relations, but its principal concern is to show the legal system in its relation to the problems and policies of business administration. It is not an "elementary" law book. Possibly it may be thought by some not to be a law book at all. It is intended for mature and intelligent readers and students whose chief interest lies in the field of business, whether or not they have. any special knowledge of law. In fact, however, the law-trained. man may find it a particularly convenient bridge for crossing the gap that tends to separate the law in books from the law in business. He may find the point of view presented here of in 452566 terest to him even as a lawyer-for the lawyers of today aim rather to be business caretakers and expert counsellors than eloquent advocates such as their grandfathers wished to be. Reflection on these business problems suggests to the lawyer, now and then, a living business origin for legal propositions-an explanation which affords a welcome substitute for the game of hide-andseek with an hypothesis which some one may have conjured up. (Cf. for example §§12, 13, 52, 197, 229, 270, 341.) And if he is inclined to look forward rather than backward, certainly the actual workings of the law in business are a consideration of prime importance. To the lawyer who ventures into these pages, some of the juxtapositions will seem odd and more puzzling than to his business client, just because in the lawyer's study of legal concepts he has never had occasion to bring together widely divergent parts of the law for comparison in concrete business problems in which they happen to present alternative solutions. To the lawyer there is very little in common, unless he has mastered the rare art of seeing through the dead rule to the living reality beyond, in a contract requiring a deposit from an employee, a criminal prosecution for embezzlement, and a surety bond. Yet, as modes for enforcing responsibility of employees for money entrusted to their care, it is a practical business problem to compare their workings. A cynic may ask, "Why not add the cash. register to the list?" The joke is not without its point, for the law is not the only means that man can devise for serving particular ends, and to the business man it is only by reference to these ends that the law assumes a real interest and an immediate importance. We have, accordingly, endeavored to "anatomize" business, as an old writer on business law once said, and study the part played by the law in this anatomy. Does the law help or hinder or otherwise affect the process of engaging in business? How does it stand by, when the trader makes representions to the public and when he negotiates and closes bargains with individual members of that public? What function. does the law play in enforcing the mutual obligations of business man and customer? What effect has the law on those internal problems of a business which we may roughly call business |