Bell v. Palmer — 6 Cow. 128

Majority

p. 128

Bell, and others against Palmer and Hamilton.

UTICA,

Aug. 1826.

Headnote

AcStosignee, or fact», mating advances on the goods of his consign- or, or principal, to an amount even beyond their value, is yet bound to obey the instructions of the latter as to the iho,e thLTbe no agreement to that effect. And if, being instructed to sell immediately,he refuse the first offer, in expectation of a more favorable market ; and afterwards sell at less than the offer ; he i. liable, thonch lie act in perfect ¿mod faith.

Assumpsit, tried at the New York circuit, December 3, 1823, before Edwards, C. Judge, when the following facts appeared :

The defendants, at Neto-York, having on hand a quantity of cocoa consigned to them by D^Arcy and Dedier, of Baltimore, at the request of Darby, one of the plaintiffs, consigned to their house of trade at Leghorn {Italy) a part of this cocoa in two parcels on an advance by the plaintiffs of £2100, sterling; the defendants agreeing to ke personally liable for the advance. The consignment to the plaintiffs was by the ship Minerva Smith, which ar- ,

p. 129

lived at Leghorn September 1, 1819. The consignment was accompanied with the defendants’ letter of instructions as to the principal parcel, dated the 23d of June previous, in which they said, ” we enclose invoice and bill of lading for 910 bags of Guayaquil cocoa, of a very superior quality ; amounting per invoice to $13,660. It is our wish that an immediate sale be made of this shipment on its arrival; and Mr. Darby gives us assurances oí a favorable result, judging from quotations of the article at your port.” A subsequent letter as to the smaller parcel referred to the former letter for instructions. The article was ready for sale at Leghorn on the 20th of September. Between that day and the 28th of the same month, the plaintiffs had an offer of 12 ⅜- pesos per cwt. which they declined, on the ground that it would not cover anticipations, freight, insurance and charges ; and it was finally sold, not till June, 1820, at $11, per cwt. In the mean time, they had made various attempts to sell at a greater advantage. On the 9th of August, 1820, the plaintiffs sent to the defendants their account of sales and account current, shewing a balance in their favor of $2565, 52, for which this action was brought. The defendants refused to pay that sum ; but on the 1st of April, 1822, they paid the plaintiffs $600,26, which would be 20 cents more than the balance due the plaintiffs, if they had taken the offer of 12 f pesos.

Evidence was given at the trial upon the question whether the plaintiffs had conformed to the spirit of their instructions ; and whether the defendants had acquiesced in their proceedings. But it is not necessary to state this; as the case here turned on the charge of the judge upon the effect of the instructions.

In his charge, he stated the rule of law io be, that (unless a special agreement exists) consignors, by receiving an advance upon property shipped, subject it to the power of the consignees, and part with their right to control the disposition of it; so far as to enable the consignees to hold it a reasonable time to consult the market, and to adopt

p. 130

such reasonable measures, as may be necessary to enable them to reimburse themselves. The letter of instructions he considered immaterial; for if there was no special a-, greement, the instructions could be of no avail against the lien of the plaintiffs.

The jury finding difficulty on the question of the agreement, the judge further charged them, that in order to, hold the plaintiffs liable, they ought to find, that there was an express agreement, that the goods should be sold immediately on their arrival. That if there was not an agreement to that effect, the letters of instruction were of no importance ; and ought to be laid out of the question ; and that it lay with the defendants to establish the agreement.

The jury found for the plaintiffs $2514,02.

J. Duer,

now moved for a new trial, on this ground, (among others :) that the plaintiffs were bound by the defendants’ instructions, to sell the cocoa immediately on its arrival ; and the judge erred in charging the jury that the letters of instruction were of no importance, and that there must have been an express agreement. (1 John. Cas. 436, 437, 462 to 467, note. 4 John. Rep. 103 . 13 id. 332.) He agreed that the plaintiffs had acted in good faith; but this was not enough. They should have accepted the first offer of 12 § pesos per cwt. He denied that there was any authority for requiring a special agreement ; and insisted that the right and duty of the consignees were not varied by the advance. True, he said, the consignee has a lien, in such a case ; but he has no right to sell in virtue of his lien merely. Before that can be done, the pledgor must be formally called on to re.-, deem.

The instructions in this case are sufficiently explicit. A request by one having a right to command, is always construed imperatively. No discretion was allowed; and the parties must have so understood the letter.

It was a condition that we should not be liable unless there was an immediate sale. This should have been strictly per

p. 131

formed. Where one is under art obligation to sell, if he lets an opportunity to sell to advantage pass, and after-wards sells at a less advantage, he must abide the loss. (Curry v. Edensor, 3 T. R. 524.)

P. W. Radcliff and T. A. Emmet, contra.

The letters of the defendants do not import an absolute order to sell immediately, and, at all events, whatever might be the state of the market. They must be understood as meaning a sale which should not be injurious to the consignor. If otherwise, the order was not obligatory. It was not competent for the defendants, after receiving an advance oil the credit of the cocoa, to compel a sale which would not cover advances and charges, unless there was a special agreement at the time, authorizing such an order. Otherwise the consignor may defeat the object of the consignment, which is security for the advance. Whether there was such an agreement, is a question of fact; and was properly put to the jury.

It is conceded that we acted in good faith. This was sufficient under the circumstances. (3 Cowen, 281.) We were not bound literally to follow instructions, at whatever sacrifice. (1 John. Cas. 174. 3 id. 311. 4 Bin. 361 . 1 Yeates, 486 . id. 409. 1 Liv. on Agency, 369.) If we had sold, and the market had afterwards ris- * en, the case would have been stronger against us.

The lien gives a right to hold the goods, ifnot to sell them. There was no need of calling on the defendants to redeem. There was authority to sell, though not positive and effectual instructions to sell immediately.

All we contend for is, that the consignee should have a reasonable time to look to the market.

This is not the case of a will, in which we admit that the mere expression bf a wish is to be construed imperatively.

But when one parts with an interest in property, he parts pro tanto with the control of it. He cannot diminish its value bv hastening the sale, whether it be the sole

p. 132

security, or not. He can no more do this than a mortgagor of real estate, who is always bound personally.

The counsel also cited 2 Oall. 13.

J. O. Hoffman, in reply.

The judge finally excluded from the jury every thing except the question whether there was an express agreement. He did not even leave room for them to find an implied agreement. No authority lias been, or can be cited, shewing the necessity of any agreement, to secure the control of the consignors.

The lien was merely on the proceeds of the goods; not on the goods themselves. These were to be sold; and so both parties understood. The instructions of the principal must be obeyed. The plaintiffs were the mere agents or factors of the defendants. And the lien for advances was never held to give the factor a control beyond what he would otherwise have. The principal may order a sale when he pleases; and require his factor to rely on his personal security for the balance of the advance, if it exceeds the amount of sales. The consignee always agrees to this. It is implied from the nature of the transaction.

In good sense, these instructions were to sell at the market price on the first offer.

Curia, per

There is no dispute but the advance on the goods exceeded their value ; and the defendants admit their liability to refund the difference between the money loaned, and the value of the cocoa at 121 pesos. But they contend that the plaintiffs, not having taken that price when offered, and having subsequently-sold for eleven, must bear the loss. Whether the plaintiffs were bound to have taken that offer, and to have sold immediately on the arrival of the cocoa; or whether they were justified in holding it longer, to try the market, is the only question.

The judge at the trial charged the jury, that the letters of instruction were to belaid out of the question, unless there w;as an express agreement to sell immediately-. In

p. 133

this I apprehend there wa3 an error. The plain tiffs, by their representative, Darby, had refused to purchase, buti solicited the consignment of the cocoa. They received it\ as factors ; and of course under the rights and duties which S exist by law between principal and agent. The plaintiffs J having advanced money upon the goods, gave them a lien J for the mount of their advance ; but I do not find arjy.jiu- | thoxity for saying that the lien thus created alters the rights j of the parties in any respect, so far as relates to the duty i of the factor in making sale of the goods. Nor is there ; any reason why it should. The principals are liable for / the money advanced ; and the goods being at their risk, are j subject to their order and control, in every respect not in-| consistent with the lien of the factor.

The factor’s lien is upon the goods, and upon the proceeds. (Cowp. 256.) The most advantageous sale should be made ; that the balance, if in favor of the principal, may be as large as possible ; and, if against him, as small as possible. It istheduty of the factor to manage the affairs of his principal in the same manner, and with that care and diligence, which a prudent and discreet merchant would exercise in relation to his own affairs. But he must still obey his instructions ; because it is the I principal who bears the loss. The factor must, for that, reason, be liable for negligence or for departure from instructions in the same manner as in ordinary consignments.

It was said by this court, in Rundell v. Moore, (3 John. Cas. 37,) that agents or factors who disobey their instructions through mistake or design, are undoubtedly responsible. In Evans v. Potter, ( 2 Gall. 13 ,) Story, justice, says, “ a factor is bound to ordinary diligence in relation to the property confided to him. Where the orders leave the management of the property to his discretion, he is bound only to good faith and reasonable conduct.” “ If he can advantageously sell the property, and neglect so to do, he must answer in damages. But if the markets are low, or unusually crowded, if new and unexpected difficulties arise, he is not obliged to sell at all events, and under every disadvantage.” The same doctrine of

p. 134

the liability of the factor for ordinary negligence, is found ⅛ the treatises on agency, by Paley and Livermore, and cases cited by them. (See also 1 John. Cas. 178, 9.) But *he consignee must obey his instructions. If he sell under the given price, though from good motives, he is bound to make good the loss. (Guy v. Oakley, ( 13 John. 333 , 4.)

If the principal give orders to his factor, they must be pursued, or he becomes liable. If none are given, or they are not clear and explicit, the factor is allowed to use his best discretion according to the usage of trade. (Geyer v. Decker, 1 Yeates, 487 .) This ease was cited to shew that orders to sell on arrival, were complied with, if a sale was made within six months. But the time was not made a point in the cause. The breach, it was contended, consisted in selling on credit, when the orders were for cash ; the language being to sell on arrival, and remit the produce by the same vessel, or any other vessel, to Philadelphia, in bank notes. The court held that was no direction to sell for cash only. They also say, there was strong proof of icquiescenee.

The case of Dusar v. Perit, ( 4 Bin. 361 ,) maintains the proposition, that a departure from instructions, may be excused by an event not contemplated at the time the instructions were given. The supercargo, in that case, was compelled to go to the Havanna to repair his vessel, in consequence of an accident. He'sold the vessel and part of the flour, at the limited price. The residue of the flour wras sold at less than the price fixed by his instructions, in consequence of the arrival of other cargoes. The general principle, of the liability of agents in case of deviation from instructions, is not at all impugned by this case. Yeates, justice, says, “I think it a matter of great moment in commercial transactions, that agents should be strictly held to execute the orders of their principals ; but I do not think this such a case as demands the court’s interposition in order to guard that principle.”

In none of the cases cited, nor in any which 1 can find, is {he distinction taken which was relied on by the judge :

p. 135

to wit, that in cases where advances are made on goods consigned, the consignee is not bound to obey the instructions of the consignor.

The analogy between consignor and consignee, and mortgagor and mortgagee, does not strike me as very forcible, except it be that the mortgagee, in the act of foreclosing his mortgage by sale, resembles the consignee in selling goods, upon which he has made advances. In such case, should the mortgagee refuse a higher price, and afterwards take less, ought he not to account to the mortgagee for the highest price offered ?

I do not wish, however, to be understood as now expressing an opinion upon what I conceive to be the question hereafter to be tried, to wit : whether the plaintiffs were guilty of negligence by disregarding their instructions. That is a question of fact, which should have been submitted to the jury.

A new trial must be granted; the costs to abide the event.

New trial granted.