Cooper v. Hong Kong & Shanghai Banking Co. — 12 N.Y. St. Rep. 265

Majority

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William B. Cooper, Jr., App’lt, v. The Hong Kong and Shanghai Banking Corporation, Resp’t.^[1]

(Court of Appeals,

Filed November 29, 1887.)

Headnote

Principal and agent—When relation exists—Commission merchant— Lien for freight paid on goods.

A firm at Manilla shipped sugar to New York and took bills of lading-therefor transferable to their order on payment of the freight. In order to realize on said sugar they drew bills of exchange payable to the defendant, which were accepted by a Scottish firm (connected with the Manilla-firm) payable in London. The bills of lading, indorsed in blank, were delivered to the defendant as collateral security for the payment of said bills-of exchange. Pursuant to instructions from the Scottish firm defendant delivered the shipping documents for the sugar to the plaintiff,who agreed to store it as the defendant’s property as soon as landed, and to protect at.d preserve unimpaired the lien of the defendant. In order to obtain possession of the sugar plaintiff was compelled to pay the freight from his private-means. Plaintiff was a commission merchant whose practice had been when goods of the Manilla firm were received, to sell the same and account for the proceeds, reimbursing himself for his payments of freight from such proceeds. Both of said firms failed before the bills of exchange-matured and the sugar did not sell for enough to pay them and the freight. Held, that the plaintiff in paying the freight was not acting as agent of the consignor, but paid it on the faith of the property, that he was entitled to be paid the amount of his outlay for freight, etc., and for his services in attempting to sell the sugar before the said bills of exchange were paid.

Appeal from a judgment of the New York court of common pleas, general term, modifying a judgment entered upon the report of a referee.

John M. Bowers, for app’lt; Amasa A. Redfield, for resp’t.

The plaintiff in this action obtained judgment against the defendant for $17,371.81, damages and costs, which judgmeilb was entered upon the report of a. referee. The defendant appealed from that judgment to the general term of the common pleas of the city of New York and that court modified the judgment by deducting:

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therefrom, $15,977.41, leaving but $1,394.40, in favor of the plaintiff. From the judgment as modified by the general term the plaintiff has appealed to this court.

The referee found the following among other facts: The plaintiff is a general commission merchant in the city of New York, and the defendant is a foreign corporation; that there was a firm of Martin, Dyce & Co., doing business as. merchants at Manilla, in the Phillippine Islands, and that, firm was composed of the same persons as the firm of Martin, Turner & Co., doing business as bankers in Glasgow, Scotland; that about the 20th of August, 1883, Martin, Dyce & Co., were the owners of a large amount of sugar, which they were intending to ship to the city of New York and thence to Canada; that they placed the sugar on board the ship Henrietta and took bills of lading therefor, transferable to their order on payment of the freight, and these billsi of lading they indorsed in blank. For the purpose of realizing on the sugar as early as possible, Martin, Dyce & Co., drew four bills of exchange addressed to Martin, Turner & Co., requesting them to pay to the order of the defendant corporation six months after sight the aggregate sum of nineteen thousand and some odd pounds sterling, .and to charge the same to the account of the sugar shipped by the Henrietta to New York; that on the 17th of October, 1883, each of these bills was accepted in writing by Martin, Turner & Co., payable in London; that at the time of the making and delivery of these bills of exchange to the defendant corporation, and as collateral security for the due acceptance and payment at maturity of the same, Martin,_ Dyce & Co. delivered to it the bills of lading indorsed in blank by them for the sugar shipped on board the Henrietta; that about the 5th of November, 1883, Martin, Turner & Co., at Glasgow, wrote to the defendant corporation at London, and asked it to forward to the plaintiff at 168 Pearl street, New York, through its agency in that city, the shipping documents for the sugar shipped, per Henrietta, which had been hypothecated to such defendant, relative to the acceptance of Martin, Dyce & Co., amounting to nineteen thousand and some odd pounds sterling, as above-stated.

The letter further stated that in exchange for these shipping documents the plaintiff would give "the defendant a letter of obligation, undertaking to Jiold the sugar on its account and pay to it the proceeds when realized; that on the 19th of December, 1883, the plaintiff received from the New York agent of the defendant corporation the bills of lading above mentioned for the said sugar, and at the same time the plaintiff delivered a receipt therefor, a copy of the material portion of which is as follows:

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“New York, December 19, 1883.

“Received from the agent, Hong Kong and Shanghai Banking Corporation, bill of lading and invoice for merchandise as follows: ” (Here follows a description of the sugar.) “Which merchandise I agree to store as the bank’s property as soon as landed in any acceptable warehouse, delivering warehouse receipt, with policy covering the goods fully against .fire, made out or indorsed to the order of said agent (on the understanding, however, that he is not to be chargeable with any expense incurred thereon), which are to be retained by him until Martin, Turner & Co., accepted against said merchandise, shall have been paid or satisfactorily provided for. The intention of this arrangement is to protect and preserve, unimpaired, the lien of the bank or its agent on said merchandise.

(Signed) “W. B. COOPER, Jr.,

“ Trustee.”

The plaintiff subsequently caused the sugar to be entered in the custom house, discharged from the ship and placed in a public warehouse, taking warehouse receipts in his own name as trustee, and insured the sugar against loss by fire. In order to obtain possession of the sugar he was compelled to and did pay the ship’s claim for the freight, which amounted to the sum of $13,546.39. This payment he made from his private means. Just prior to March 15, 1884, the agent of the defendant demanded of the plaintiff the warehouse receipts for the sugar, which the plaintiff declined to deliver until payment to him of the amount of his outlay for freight and insurance, together with the amount of a claim he made for his services in attempting to sell the sugar. Thereupon an agreement was made between the parties providing substantially that the plaintiff should give up the warehouse receipts, and that the defendant should deposit with the Central Trust Company $23,000, to abide the judgment of the court in an action which was to be brought by the plaintiff against the corporation to enforce his claim for repayment to him of the amount he had paid for freight, etc., as above stated. On the twenty-sixth of February, and before the maturity of the bills of exchange drawn by Martin, Dyce & Co. upon Martin, Turner & Co., they both made an assignment and went into bankruptcy. The sugar did not sell for enough to pay the claims of the defendant holding the bills of exchange above mentioned, and the freight paid by the plaintiff.

It appears in the evidence that the plaintiff was a commission merchant in the city of New York, having business transactions with the firm of Martin, Dyce & Co. at Manilla; that these transactions consisted in soliciting

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orders here for such of the products of the East Indies as were dealt in by that firm, and to be delivered by Martin, Dyce & Co., and he also acted as a commission merchant for them in the sale of goods which they sent to New York for that purpose. There were no other relations between the parties. The practice of the plaintiff had been when goods of the firm were received in New York to sell the same and account for the proceeds. He paid the freight on the various cargoes which were received by him by advances made by himself, and reimbursed himself for his payments from the proceeds of the sale of the property.

There was evidence tending to show that his advances were made, not upon the faith of credit of his consignor, but upon the security of the property which was consigned here, and tipon the faith of which the advances were made by him. It also appears that although he sometimes drew drafts upon the firm for the purpose of paying freight and other charges upon the goods coming here, yet he always himself provided for the payment of such drafts, and when they matured he paid the money. There was also evidence that in this particular case he availed himself of no moneys raised in that way, but advanced the amount directly from his own pocket.

The referee decided that the freight thus paid by him in the case in question he was entitled to have repaid before the defendant corporation would be entitled to the property, and he gave judgment accordingly. The general term did not reverse the referee’s decision upon any question of fact, but, assuming the facts to be as found by the referee, that learned court deduced a different conclusion of law, and held that the plaintiff in advancing the money to pay the freight on the goods in question was simply performing a duty which he owed to Martin, Dyce & Co. as their agent, and was doing for them what they would have been obliged to do themselves if they had been here, and that as the lien of the defendant corporation was the paramount one, the plaintiff in paying that freight could not be substituted in their place aiid have himself a lien superior to that of the bank.

• In this result we think the learned general term fell inte an error.

It maybe assumed that Mr. Cooper, acting in his capacity as commission merchant for the firm of Martin, Dyce, & Co., in regard to this cargo of sugar which was to arrive per Henrietta, went to the agent of the defendant in New York, for the purpose of seeing what arrangement could be made[1] for the sale of the sugar and the payment of the proceeds to the defendant so far as its claim went. The defendant was in this position: lb had advanced money upon bills of ex

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change and had received as collateral security for their payment the bills of lading indorsed in blank by the consignor of the sugar. This placed the title to the sugar in the corporation defendant. The sugar was in the Phillippine Islands and was to be brought to New York and thence transported to Canada for ultimate consumption there. The transportation necessarily involved a large expenditure in the way of payment for freight. The carrier had the first lien on the goods to secure the payment of such freight. When the sugar arrived in New York, no matter who was the owner, or what the liens on the property were, the property itself could not be taken from the possession of the carrier until the freight thereon was paid in full. The defendant, therefore, whether as pledgee or owner, had the right to its possession only on payment of the freight. In truth, however, the only interest which the defendant had was that the property should sell for the highest amount in order the more effectually to secure it for the advances it had made upon the bills of exchange in question.

When the plaintiff went to the agent of the defendant and the agreement above alluded to was made, we think that he stood in no position towards the firm of Martin, Dyce & Co., which made it his' duty to advance the money necessary to the payment of the freight out of his own pocket, and trust to the personal credit of Martin, Dyce & Co., for re-payment. On the contrary, taking the situation as. it then was and reading the receipt signed by the plaintiff and delivered to the agent of the defendant in New York, we think the transaction amounted to this: Here was a large amount of sugar coming to the city of New York owned by Martin, Dyce & Co., really, but subject, first, to the lien of the carrier for freight, next to the lien of the defendant to hold it as security for the payment of the bills of exchange, and in case of failure, subject to the right of defendant to sell the same.

From the evidence in the case, we think the referee was fully justified in holding that it was' not the duty of the plaintiff to personally advance the money to pay the freight on the property and trust to the personal credit of Martin, Dyce & Co. for repayment; that he did not in this transaction so far occupy the position of agent to Martin, Dyce & Co. as to make it incumbent on him to do what they would have been bound to do if here, namely, to pay the freight to the extent at least of making such payment from his own funds.

Looking at the situation as it existed at that time, we think the fair construction to be placed on the receipt is that the plaintiff was to take the property from the carrier upon its arrival and store it as the bank’s property as soon

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as landed, and that in order to do that, it was known by both parties that it would be necessary to pay the carrier-the freight on the property. As the defendant could not have procured the property until the payment for freight had been made, when it permitted the plaintiff to take the prqperty and store it as the- property of the bank, he was entitled to be repaid by the bank the expenses actually and necessarily incurred by him in the performance of that agreement, and those expenses included the amount he was obliged to pay in order to obtain the delivery of the property to him, thus enabling him to fulfill his agreement to' store the same as the bank’s property as soon as landed.

The statement in the receipt as to the intention of the-arrangement being to protect and preserve unimpaired the lien of the bank or its agents on this merchandise shows plainly why this arrangement was entered into, and that the arrangement is fully carried out when the lien of the bank is kept exactly in the same state that it was in when the agreement was made, namely, the right to the possession of the property upon its arrival in New York upon payment of the freight to the carrier.

It is stated that the plaintiff made this payment, not at the request of the defendant, or its agent, but in pursuance of his duty to his principals, Martin, Dyce & Co. What has already been said answers that statement. The-very fact that the plaintiff was permitted to have the shipping documents, which entitled him to the possession of the property upon signing the receipt above-mentioned, shows that there was an implied request on the part of the defendant that he should do those things which were necessary to be done in order to enable him- to carry out the agreement which he made with the bank’s agent to store the goods as the property of the bank as soon as they arrived.

There being no unvarying rule or law which makes it the duty of a commission merchant to advance from his own pocket the moneys due for freight upon property consigned to him by his principals, the plaintiff was not himself bound in his character simply as a commission agent to make such payment. There being no absolute legal rule in such a case imposing such responsibility upon a commission merchant it depends in this case upon the facts whether there was any such duty owing by the plaintiff to his principals, Martin, Dyce & Co. upon that question the evidence, to say the least, was conflicting, and that which tended to show that there was no such agreement or custom between the parties was amply sufficient to support the finding of the referee that the plaintiff in paying-this freight money was not acting as the agent of Martin,

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Dyce & Co., but paid it on the faith and strength of the-property whose possession he thus acquired.

We think the judgment of the general term modifying the judgment entered upon the report of the referee should be reversed, and that of the referee affirmed, with costs.

All concur, except Rapallo, J., absent.