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OF THE DUTY AND LIABILITY OF AN AGENT TO HIS PRINCIPAL.

EBENEZER BURRILL v. JAMES PHILLIPS.

In the Circuit Court of the United States, for the District of Rhode Island.

NOVEMBER TERM, 1812.

[REPORTED FROM 1 GALLISON, 360-363.]

A factor, in making sales of goods on consignment, is bound not only to good faith, but to reasonable diligence.

Advances by a consignee are considered by the general law, as made on the joint credit of the fund and the person of the principal; and the factor may relinquish his lien on the fund without at all affecting his personal remedy.

THIS was an action of assumpsit brought by a factor against his principal, to recover advances made on account of cotton consigned for sale. The defences were, that the factor sold the cotton on credit to persons not in good credit at the time, and who afterwards failed, and that the advances were made on the credit of the cotton exclusively, and not on the personal responsibility of the principal.

STORY, J. As to the law applicable to the facts before the jury, I *take it to be well settled that a factor, in making sales of *686] goods on consignment, is bound not only to good faith, but to reasonable diligence. It is not sufficient, that he has been guilty of no fraud, or of no gross negligence, which would carry with it the insignia of fraud. He is required to act with reasonable care and prudence in his employment, and exercise his judg ment after proper inquiries and precautions. If he shut his eyes against the light, or sell to a person, without inquiry, when ordinary diligence would have enabled him to learn the discredit or insolvency of the party, I cannot admit that he is discharged from responsibility to his principal. So also he shall not be permitted to sell his own goods to the party, and take security, and at the same time to sell the goods of his principal to the same party without security. For he is bound to exercise at least as much diligence and care, as to his factorage, as his own private concerns. And in the supposed case, it may well afford ground of presumption, that the factor had knowledge of some latent defect

of credit, although in the commercial world in general the purchaser stood with a fair character. I do not, however, think, that the same presumption would ordinarily arise from the mere fact of the factor's taking security for advances made to the purchaser in money, or even receiving a premium for such advances. He may well refuse to lend his own money without security or a premium, upon grounds altogether distinct from a doubt of the solvency of the party. And in the present case it is shown not to be an uncommon course in trade.

In order to effect the factor with the imputation of negligence, it is not necessary that he should absolutely know, that the party was discredited. It is sufficient if he have notice of facts, which ought to put a person of ordinary prudence on his guard. For, as in equity causes, the factor will be held affected with notice, if the facts be such as ought to have put him upon farther inquiry. A sale, therefore, if made under circumstances of real or constructive notice, will be considered as made at the risk and on the account of the factor, and the principal may well, in a suit like the present, avail himself of the claim.

As to the point, that the advances were made exclusively on the credit of the fund without recourse to the principal, it is a mere question of evidence. There may be an agreement between the parties, which shall have this effect; and it cannot be doubted, that such an arrangement would, in point of law, be valid. It amounts to no more than the common case of selling with a del credere commission. But such an agreement is not legally to be inferred from the mere relation of principal and factor. vances between them are considered by the general law, *as made on the joint credit of the fund and the party; and the factor may relinquish his lien on the fund without at all affecting his personal remedy. When, therefore, a party sets up such an agreement, as it is in derogation of the general law, he is bound to make out in proof the agreement, and no presumptions of law arise in his favor.

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On the whole, if the jury are of opinion that the facts of the case prove such an agreement to consider the cotton as the exclusive fund of payment; or if they believe that the plaintiff had knowledge of facts, which ought to have put him on inquiry, or which afford a fair presumption of impending insolvency, then the verdict ought to be for the defendant; otherwise for the plaintiff.

The jury found a verdict for the plaintiff.

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COURCIER v. RITTER.

In the Circuit Court of the United States, for the District of Pennsylvania.

OCTOBER TERM, 1825.

[REPORTED 4 WASHINGTON, 549-554.]

General rule as to the duty of an agent in obeying the orders of his principal.

A merchant of Philadelphia sends a cargo of coffee to his correspondents at Bordeaux, and writes as follows: "Make sale of the coffee immediately on arrival, and forward the returns in the articles mentioned below, by the same vessel." It was the duty of the agent to sell immediately on arrival, no matter at what loss, if he could; or as soon as he could. He had no right to exercise any discretion. If the agent disobeys his orders, and makes a full and candid statement

of all the facts on which his judgment was exercised to his principal, and the latter makes no objection to his conduct, or is silent respecting it, this amounts to a recognition of it, and will excuse the agent. In the same case, the other part of the order was complied with; the agent sending the return cargo ordered, by the same vessel. The acceptance of that cargo by the principal, is no ratification of the agent's conduct, in not selling as soon as he could.

IN October, 1812, the defendant, a merchant of Philadelphia, consigned to the plaintiff, a merchant of Bordeaux, forty bags *688] of coffee, weighing between five and six thousand pounds, which were accompanied by a letter of advice, apprising him of the consignment, and containing the following order, viz., “you will please to make sale of the coffee immediately on arrival, and forward the returns in the articles undermentioned, by the same schooner." The vessel was compelled to put in at Bayonne, where she arrived in December of that year, but was not permitted to land her cargo until the 24th of March, 1813, when the coffee was placed in entrepot. On the 9th of February, 1813, the plaintiff wrote to the defendant, announcing the arrival of the vessel at Bayonne, and stating that the times were very dull; that the cargo could not then be landed, but that he should ship him by

the vessel, a return cargo as ordered; and concluding with assurances that he should use his best endeavors to obtain an advantageous sale of his coffee. On the 28th of April, 1813, he again wrote to the defendant as follows: "I have not been able yet to procure a sale for your coffee, but no exertions will be wanted to avail myself of the first favorable change in the market. Circumstances are not favorable at the present moment, and nothing but very dry and white Havana sugars can command any sales." The plaintiff did not again address the defendant, until the 21st of May, 1815, when he wrote to him and enclosed an account of sales, by which it appeared that the coffee had brought only one franc, seventeen centimes a pound, which made a considerable balance against the defendant, for which this action was brought. Two of the plaintiff's witnesses swore that the state of the market for all colonial produce, during the year 1813, was bad, and that the plan of holding up these articles, was generally adopted by the merchants of Bordeaux. One of them stated that during that year, sales were impossible; the other that till July, 1813, sales were made in Bordeaux, but that after that month the price was nominal, there being no purchasers. The clerk of the plaintiff swore, that sales of the coffee could not be made at Bayonne in that year; for which reason the plaintiff was unable to dispose of that consigned to him by the defendant. A fourth witness swore nearly to the same effect; and all of them agreed that the plaintiff adopted the same conduct in relation to his brother's coffee, as he did in the instance now under consideration; and that other merchants observed a similar policy, from a view to the interest of their employers.

These results were brought about by the operation of the allied armies about the time of these transactions.

On the other side, the captain of the vessel swore, that he had about the same quantity on board with that shipped by the defendant, which he sold at Bayonne, whilst it lay in entrepot, in two parcels, one for four francs twenty-five centimes per pound, and the other for four franes fifteen centimes per pound. But his officers were unable to dispose of the quantity which they took out. Two other witnesses, merchants of Bayonne, swore that this article sold there from March to May, 1813, at from four francs twenty centimes to four francs forty centimes, and in June, at from four francs ten centimes to four frances twenty centimes; and that

sales at those prices were easily effected, both publicly and privately, during those months.

For the plaintiff, it was contended by Chauncey & Binney:

1. That the operations of the hostile army to the north, and in the peninsula, during the year 1813, and down to the restoration of the Bourbons, produced a state of things which could not be known to, or anticipated by the defendant in October, 1812, and so reduced the price of all colonial produce in France, that had the plaintiff obeyed literally the order contained in the defendant's letter of October, 1812, he would have subjected his correspondent to a very considerable loss. That this was therefore a case where a consignee is justified in departing from the strictness of his instructions, and in exercising a discretion with an honest intention to promote the interest of his employer; and if he should be mistaken in his judgment, whereby a loss happens, it ought not to fall on the agent.(1)

2. That if the law be otherwise, still, by accepting the return cargo which was produced by an advance made by the plaintiff, and was not *purchased with the proceeds of the outward *689] cargo, and by not promptly objecting to the plaintiff's alleged violation of his orders, of which the letter of the 28th of April informed him, the defendant ratified what was done.(2)

Bradford & J. Sergeant, counsel for the defendant, contended, I. That the order being positive, nothing could excuse a violation of it but an inability to sell; the contrary of which is proved by the evidence.

II. That the letter of the 28th April, stating an inability to sell, disclosed no violation of the order; and consequently that the silence of the defendant could not be a tacit ratification of an act of disobedience not stated by the plaintiff.

WASHINGTON, J. There are two questions for the consideration. of the jury.

I. Were the defendant's orders disobeyed; and if they were, does the plaintiff stand excused by the circumstances which his counsel have urged in his favor?

(1) Dusar v. Perit, 4 Binney, 361.

(2) Cornwal v. Wilson, 1 Ves. 509; Smith v. Lascelles and note, Term, 188; Emerigon, 144, 145; Cairnes et al. v. Bleecker, 12 Johnson, 300; Vianna v. Barclay, Cowen, 281; Geyer v. Decker, 1 Yeates, 487.

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