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are subject to the same penalty, and become incapable of exercising any public employment.
And having now quoted the laws in force immediately concerning merchants, who cannot always act without their substitutes and dependants, the transition is natural from the former to the latter, and I shall therefore proceed to treat of them in order.
Of Factors, Supercargoes, Brokers, und Agents."
ALL these denominations import and signify the same thing, in regard of their function, though different in the method and place of discharging it, and is always understood to be one who acts for another, and who buys, sells, and negociates, in conformity with the orders of his principal, under the various circumstances of his principal's limitations and directions. * The former of these are generally established in some foreign parts, to transact the business of purchasing, selling, transporting, and exchanging, that shall be committed to his care; and the latter more properly for the receiving and paying of monies; whilst the supercargo's employ is confined to the sales of goods under his direction on some voyage, and it may be the purchase of others, in conformity with the orders his employer may give him ; they ought all to be masters of the trade and business they engage in, as many advantages, or the reverse, depend on their conduct
and proceedings. Factor. A Factor is but a servant to the merchant, and receives from him in lieu of wages,
a commission of factorage, according to the usage of the place where he resides, or the business he transacts, this being various in different countries, and on the purchases and sales of different commodities : he ought to keep strictly to the tenor of his orders, as a deviation from them, even in the most minute particular, exposes him to make ample satisfaction for any loss that may accrue from his non-observance of them; and it is very reasonable it should be so, as the distance of his situation renders him unable to judge of his principal's views and intentions; therefore he should submit blindly to them, though always exerting his best endeavours for the merchant's interest, as his gain is certain, whilst his employer's is precarious.
A factor is usually paid for his trouble by a commission of so much per cent. on the del credere goods sold, but sometimes he acts under a del credere commission, in which case, comission
for an additional premium beyond the usual commission he undertakes for the credit of the persons to whom he sells the goods consigned to him by his principal; and this undertaking, though verbal, is not affected by the statute against frauds, 29 C. II. C. 3. S. 4. which in general invalidates any verbal undertaking to be responsible for the debt of a third person, and the factor is usually sued as if he himself were the purchaser of the goods. Del credere is an Italian mercantile phrase, which has the same signification as the Scotch word warrandice, or English word guarantee. A factor who has general orders to dispose of goods for his principal to the best
What is a
* As to these agents in general, see Bac. Abr. Title. Merchant and Merchandize B. Selwyn's Nisi Pri. Tit. Factor's Com. Dig. Tit. Mercbant.
advantage, is bound to exercise that degree of diligence which a prudent man exercises in his own affairs; and consequently the factor is authorized to dispose of the goods on the best terins which can be obtained at the time; and if it shall appear that he has done so, and that he has sold the goods to persons in reputed good circumstances at the time, and to whom at that time he would have given credit in his own affairs, he will not be liable to his principal, although some of these should fail, and for such trouble the factor is generally paid by a commission of so much per cent. upon the goods sold. According to this practice, the principal runs all the risk and the factor is sure of his commission, whether the event be favourable or not. Many merchants do not chuse to run this risk, and to trust so implicitly to the prudence and discretion of their factor; and therefore the agreement called del credere was invented, by which the factor for an additional premium beyond the usual commission, when he sells his goods on credit, becomes bound to warrant the solvency of the purchaser. Mackenzie v. Scott, 6 Bro. P. C. 287. And Lord Mansfield said in Grove v. Dubois, 1 Term. Rep. 115. That a commission del credere, was an absolute engagement to the principal from the broker, and made him liable in the first instance, Hence, where a factor under a commission del credere, sold goods and took accepted bills from the purchasers, which he indorsed to a banker at the place of sale, and having received the banker's bill (payable to the factors own order) on a house in London, indorsed and transmitted it to his principal, who got it accepted; it was holden, that on the failure of the acceptor and drawer of this bill, the factor was answerable for the amount. Mackenzie v. Scott, 6 Bro. P. C. 280.
A sale by a factor creates a contract between the owner and buyer, although unknown to each other, and this rule holds even in cases where the factor acts upon a del credere commission. Scrimshire v. Alderton. Strange 1182, and exparte Murray Co. B. L. 379. 5. Ed. Hence if a factor sells goods, and the owner gives notice to the buyer to pay the price to him and not to the factor, the buyer will not be justified in afterwards paying the factor, and the owner will be entitled to recover the price in an action against the buyer, unless the factor has a lien on such price. Drinkwater v. Goodwin, Cowp. 251. If goods are bought by a person as a broker, though without disclosing the name of the purchaser, until he has become insolvent, the purchaser thus knowing that the party acted as an agent, cannot set off the price of the goods against a debt due to him from the broker, but is still liable to the vendor. Waring v. Farenc, i Camp. 85. But where a factor, acting under a del credere commission, sells goods as his own, and the buyer does not know of any principal, the buyer may, in an action brought against him by the principal, set off a debt due to him from the factor. George v. Claggett, 7 Term. Rep. 359. And the circumstance of persons selling goods being described in the catalogue of sale as sworn brokers, is not sufficient notice to the purchaser that they are only agents in that transaction, to prevent him from dealing with them as principals. Blackburn v. Scholes, 2 Camp. 343. Moore v. Clementson, 2 Camp. 24. And where goods are sold by a broker without disclosing his principal, the purchaser is justified in paying him in the same, or in a different manner from that stipulated for by the terms of the contract; though it would be otherwise where the principal is disclosed at the time of the sale. (Coates v. Lewis, 1 Camp. 444. Blackburn v. Scholes, 2 Camp. 343. and Favenc y. Bennett. 11 East. 36. which appear to over-rule the case of Kymer v. Sawercropp, 1 Camp. 209. and 180. c.) Where however a factor sells goods as a principal, and before they are all delivered, or any part of them paid for, the purchaser is informed that they belong to a third person, in an action by the latter for the price of them, the purchaser cannot set off a debt due to him from the factor. Moore v. Clementson, 2 Camp. 22.
Where a broker is authorized by one man to sell goods, and to buy such goods for
another, an entry in his books of a 'sale of these goods from the one to the other, signed by him, is in general a binding contract between the parties, the bought and sold note, which is a copy of this entry, is not sent to the parties for their approbation, but to inform them of the terms of the contract. Hayman v. Neale, 2 Camp. 337. The authority, however, of the broker may be countermanded at any time before a memorandum of the contract of sale is written and signed by him, pursuant to the
t frauds, although he has previously entered into a verbal agreement to sell the goods. Farmer y. Robinson, 2 Camp. 339.
If goods in the City of London are sold by a broker, to be paid by a bill of exchange, the vendor has a right, within a reasonable time, if he is not satisfied with the sufficiency of the purchaser, to annul the contract. The vendor, however, must intimate his dissent as soon as he has had an opportunity to enquire into the solvency of the purchaser, and five days was considered too long a period for this purpose. Hodgson v. Davis, 2 Camp. 530.
When unlimited orders are given to factors, and they are left to sell or buy on the best conditions they can, whatever detriment occurs to their constituents, they have their excuse in their hands, as it is to be presumed they acted for the best, and were
governed by the dictates of prudence. ' Vern. 117. A factor is barely a trustee for his principal; therefore, if this latter, having goods " Vern 248. in the other's hands, owes him money by simple contract, and then dies indebted by and 2 Vern. 638. specialty, more than his assets are worth, the factor cannot retain the goods.
But see 6 East. 28. Ambl. 252. 3 Bos. and Pal. 488. 490. Jac. B.R. If a factor receives only a bare commission to sell and dispose, it will not enable him Barton and
is to trust; for, in the due execution of his authority,' he ought on a sale to receive quid Saddocks. pro quo and, on the delivery of the one, to receive the other; for, otherwise, by
that means, as they may trust six months, they may trust sixteen years, not by virtue Yelv. 202. of any clause in their orders that leaves them at liberty to act as they think best, or of 100,101. doing as if the affair was their own, may they trust an unreasonable time, as ten or
twenty years, instead of one, two, or three months, supposing this the accustomary time of credit for the like commodities: and so it was adjudged, where one had remitted jewels to his factor in Barbary, who disposed of the same to Mulleshack the Emperor, for a sum certain, to be paid at a time, which being elapsed, the factor not obtaining it, was forced to make the same good to his principal.
It is now held, that a factor may sell on credit, unless the usage of the trade be to the contrary. Willes Rep. 406. 3 Bos. and Pul. 489. i Camp. 259. Selw. Ni. Pri. 2 Ed. 829. - A factor, as such, has not any authority to pledge, but only to sell the goods of his principal. Paterson v. Tash, Str. 1178. pr. Lee, Ch. J. Hence, if the factor pledge the goods of his principal, the latter may recover the value of them in an action of trover against the pawner, on tendering to the factor what is due to him, without making any tender to the pawnee. Daubigney v. Duval, 5 Term. Rep. 604. And where a factor pledges the goods of his principal as his own, the pawnee cannot claim to retain against the principal for the amount of the factor's general lien at the time of the pledge. M*Combie v. Davis, 7 East. 5.
The same rule holds with respect to a bill of lading, which has been indorsed to a factor by his principal, for the bill of lading, which is the symbol of the delivery of possession, cannot give a factor a greater authority, than the actual possession of the goods themselves. Hence, as a factor cannot pledge the goods of his principal by delivery of the goods, so neither can he do it by an indorsement and delivery of the bill of lading, for though the indorsement of a bill of lading gives the indorsee an irrevocable right to receive the goods, yet it will not have that operation, where it is
Bulst. 1. part 103.
intended as an assignment of the property in the goods, yet it will not have that operation, where it is intended as a deposit only, by a person not authorized to make such deposit. Newsom v. Thornton, 6 East. 17.
The maxim, that the principal is civilly responsible for the acts of his agent, univer sally prevails both in courts of law and equity. 4 Term. Rep. 66. pr. Lord Kenyon, . Ch.J. and upon this principle it was held by Holt, Ch. J. that a merchant was answerable for the deceit of his factor who had sold some silk to the plaintiff as silk of a superior quality, knowing it to be of an inferior quality. Hearn v. Nichols, i Salk. 289.
Again, one and the same factor may, and generally does, act for several merchants, who must run the joint risk of his actions, though they are mere strangers to one another; as if five merchants shall remit to one factor five distinct bales of goods, and the factor makes a joint sale of them to one man, who is to pay one moiety down, and the other at six months end ; if the buyer breaks before the second payment, each man must bear a proportional share of the loss, and be contented to accept of their dividend of the money advanced. . But if such a factor draws a bill of exchange upon all those five merchants, and one Salk, 186. of them accepts the same, the others shall not be obliged to make good the payment. Tamen quære de hoc. "There is now no question upon this point, it is clear they would not be liable. See Williams v. Thomas. 6 Esp. Rp. 18. Bull. Ni. Pri. 279. Marius, 2 Ed. 16. Chitty on bills, 4 Ed. 47.50.
And as the authority and trust reposed in factors is very great, so ought they to be provident in their actions for the benefit of their principals; and therefore, if factors shall give time to a man for payment of monies contracted on sales of their Heath v. principal's goods, and after the time is elapsed, they shall sell goods of their own Turner,
Winch to such persons for ready cash (leaving their principal's unreceived) and then such 24, 25. vid. men break and become insolvent, the factor, in equity and honesty, ought to make 11 East.36. good the losses ; for they ought not to dispense with the non-payment of their principal's monies, after they become due, and procure payment of their own to another man's loss, though, by the laws of England, they cannot be compelled. If goods are remitted to a factor, and upon arrival he shall make a false entry at the Molloy 428
Lane's Rep custom-house, or land them without entering, whereby they shall incur the seizure or 65 forfeiture, whatsoever the principal is endamaged, he must inevitably make good, nor Jac. 265.
7 Term will such general clause help him, as above; but, if a factor makes his entry, according Rep. to invoice, or his letters of advice, and it happens that these are erroneous, if the Heu, Bla. goods are then lost, the factor is discharged.
And as fidelity, diligence, and honesty, are expected from the factor, so the law requires the like from his employer, judging the act of the one to be the act of the other; and, therefore, if a merchant shall consign counterfeit jewels to his factor, who sells and disposes of them for valuable considerations, as if they were right; if the factor receives any loss or prejudice thereby, by imprisonment or other punishment, the master shall not only make good the damage to the factor, but also render satisfaction to the party damnified: And so it was adjudged, where one How was possessed of three counterfeit jewels, and having factors in Barbary, and knowing one Southern, a merchant, was resident on the place, consigns those jewels to his factor, who, receiving them, intreated Southern to sell them for him, telling him that they were good jewels; whereupon Southern, not knowing they were counterfeit, sold them to the king in whose dominions he resided, for eight hundred pounds (they being worth really but one hundred pounds) and delivered the money to the factor, who remitted the same to How: the king, not long after, finding himself cheated, committed Southern to VOL. L
not relieve in snch cases,
prison, till he repaid the eight hundred pounds. Whereupon Southern coming to
England, brought his action against How, and had judgement to recover his damage ; 2 Roll.5.26 for the principal shall answer for his factor in all cases, where he is privy to the act or 268.ace wrong: and so it is in contracts, if a factor shall buy goods on the account of his Bridgman principal (especially if he has used so to do) the contract of the factor will oblige the 126, 127, P Popham principal to a performance of the bargain. 143.
When factors have obtained a profit for their principal, they must be cautious how
they dispose of it, for if they act without commission or order, they become responSouthcole's sible. Goods remitted to factors ought in honesty to be carefully preserved, as the
sem se trust reposed in them is great; and therefore, a factor robbed, in an account brought 4 Rep. 84. boy
against him by his principal, the same shall discharge him. And so it is as if a factor buys goods for his principal, which afterwards happen to be damnified, the principal must bear the misfortune; but, if a factor shall dispose of the goods of his principal, and take money that is false, he shall make good the loss; yet, if he receives monies, and afterwards the same is by edict or proclamation lessened in value, the merchant, and not the factor, must there bear the loss.
The factor must likewise be careful in regard of letters of credit, observing nicely whether they are for a time limited, or to such a value, or not exceeding such a sum,
or general, as he may otherwise bring himself into considerable losses. Quere, if · If a merchant remits goods to his factor, and about a month after draws a bill on equily may him, the factor, having effects in his hands, accepts the bill, then the principal breaks,
against whom a commission of bankrupt is awarded, and the goods in the factors hands are seized; it has been conceived, the factor must answer the bill notwithstanding, and come in a creditor for so much as he was inforced by reason of his acceptance to pay. Chapman v. Derby, 2 Vent. 117.
But this doctrine is now over-ruled, for a factor has a general lien upon all goods of his principal in his hands for whatever may be due to him. Houghton v. Matthews, 3 Bos. and Pul. 488, 9. Sweet v. Pym. 1 East. 4. 1 Selw. Ni. Pri. Tit. Factor, 831. Bac. Ab. Tit. Merchant and Merchandize, B.
A factor, who enters into a charterparty with a master for freightment, is obliged by the contract; but if he loads abroad generally, the goods, the principals, and the lading, are made liable for the freightment, and not the factor.
This must be intended where the factor or agent executes the charterparty, and personally covenants for the performance of it. 5 East. Rep. 148.
The factor having money in his hands appertaining to his principal, receives orders from him, to make insurance on ships and goods, as soon as he has loaded, which, if he has neglected to perform, and the ship miscarries, he shall (by the custom of merchants) be obliged to make good the damage. i Marshall on Insurance, 205 to 218. And, in
case of loss, he ought not to make a composition without orders from his principal. Coore and When goods are consigned to joint-factors, they, in the nature of co-obligors, are
answerable for one another for the whole. 3 Wils. 114. Dawbeny, a 2 Leon. 1š, One joint-factor may account without his companion by the law of merchants ; for
by factors are often time dispersed, so as they cannot be both present at their accounts. and Tuck. A merchant delivered goods to be sold in Spain, and the factor sells them to one 2 Roll's. who becomes a bankrupt: we judge here that he shall be discharged. Repts. 197. In account it was held per Curiam, that if a man delivers money to his bailiff or Vent. 113. factor to lay out for him in commodities, he cannot bring an assumpsit, but only an
account ; for it may so happen, that the factor hath laid out more money than he had received. 2 Camp. 238. Bac. ab. Merchant and Merchandize, B. But an assumpsit will be on a promise to dispose of goods in a particular transaction, and to give an account ala mreof, Salk, 9. Carth. 89. Comb. 149.