Case ID: ny-super-ct_31/html/0626-01.html
Source: Caselaw Access Project
Author: {"author": "Jones, J. \n      Barbour, C.J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

WILLIAM E. HOY, Survivor, &c., Plaintiff and Appellant, v. WILLIAM READE, Defendant and Respondent.
    An agent to purchase, who pays the purchase-money, has a lien on the goods purchased for his reimbursement, his disbursements, and commissions.
    He is nob obliged to resort to the goods in the first instance for his reimbursement; but if, after demand, the principal does not reimburse the agent and pay his disbursements, charges, and commissions, he may immediately sue the principal for the amount expended in the purchase, and for the amount of his disbursements, charges, and commissions, "without resorting to the goods purchased.
    In such an action, proof that the goods were purchased pursuant to the principal’s direction, of the amount expended therefor, and of the amount of the disbursements, charges, and commissions, and that the same were necessary and usual, makes out a prima facie case.
    If, before action brought by the agent, he has wrongfully converted the goods purchased, such conversion does not constitute a defence to the action, but the principal, if he still remain the owner of the property, may offset,' recoup, or counterclaim the value of the property so converted.
    If, in such action, the complaint, in addition to the requisite averments, also add a sale by the agent of the goods purchased, the amount received on such sale, and that such amount was less than the sum due the agent, and demand judgment for the difference between the two sums, such additional averments do not change the cause of action, but amount simply to giving a credit on the sum which otherwise would be due them.
    Before Barbour, C.J., Jones and Fithian, JJ.
    
      [Decided December 4, 1869.]
    This case was tried before Chief-Justice Robertson and a jury,
    The action was brought by agents to purchase, to recover against the principal the amount paid by them in the purchase, and also their commissions and expenses, less the sums realized by them on a- sale of the goods purchased, made by them after their principal had refused to reimburse them.
    On the trial the plaintiffs proved the contract between them and defendant to have been, that they, plaintiffs, were to purchase for defendants, through their agents, Fowle, Bain & Co., of Baltimore, and Howe & Heddeburn, of Alexandria, from 100,000 to 300,000 bushels of corn, at a limit, of 86j- cents a bushel, subject to defendant’s order to stop at any time; the corn to be delivered on boats, or placed in store subject to liis order; the drafts of the agents, or plaintiffs’ own drafts, were to be presented to Marquand & Dimmock for payment, were to be sufficient guarantee that the corn was purchased, and the face of them was to be paid on presentation; and defendant was to come into plaintiffs’ office every day to receive reports of purchases.
    ■ The- other evidence, so far as it bears on the points discussed and. decided by the court, is sufficiently referred to in the opinion.
    Upon the plaintiffs resting their case, defendant moved for a dismissal of the complaint on the following grounds :
    • 1st. That there is no evidence of what was paid for the corn at Baltimore and Alexandria.
    2d. That no notice of the time and place of sale of the corn was given to the defendant, but that Fowle & Co. assumed the transaction as their own and converted the corn to their own use.
    3d. That a portion of it, according to the plaintiff’s own showing, was shipped by him to some other place without the knowledge or consent of, or any notice to the defendant.
    4th. That the plaintiffs by their manner of dealing with the property had converted the same to their own use, and had assumed the purchase as their own, and absolved the defendant from any responsibility.
    The court dismissed the complaint. Judgment was entered on such dismissal against plaintiffs in favor of defendants.
    From this judgment the present appeal is taken.
    
      Mr. Charles Tracy for appellant.
    The plaintiffs’ evidence established every fact which was necessary to entitle them to recover.
    The- defendant having wholly refused to accept or pay for the corn, the plaintiffs had a right to -resell it, and look to him for the deficiency of proceeds (Harfield v. Goodhue, 3 N. Y., 62, 73,1 Sandf. S. C. R., 360; Corlies v. Cumming, 6 Cowen, 181; Gihon v. Stanton, 9 N. Y., 476; Bryce v. Brooks, 26 Wendell, ,367; Knapp v. Alvord, 10 Paige, 205; Blackman v. Thomas, 28 N. Y., 67).
    The plaintiffs were not hound to sell at auction, nor to give particular notice of the time or place of sale. The demand of payment and the general notice that the corn would he sold for reimbursement were sufficient (Crooks v. Moore, 1 Sandf. S. C. R., 267; Pollen v. Le Roy, 30 N. Y., 549, 10 Bosw., 38; 2 Parsons on Contracts, 484; Pollen v. Le Roy, 30 N. Y., 558).
    The case is one of great equity in favor of the plaintiffs.
    The defendant engaged the plaintiffs in this transaction upon assurances of prompt payment of the drafts to be drawn for the purchase price, which, if fulfilled, would have required no cash advance from the plaintiffs. The purchases were necessarily ■made in the plaintiffs’ name, and on their personal responsibility. The defendant’s default cast upon the plaintiffs the burden of payment.
    The defendant’s refusal to pay, at first, was on the pretence that storage receipts were required; but the contract had made the drafts themselves evidence entitling the plaintiffs to payment. This objection was promptly removed by the production •of the receipts.
    The next pretence was that .the corn was not merchantable, which was a false pretence.
    The next objection appears for the first time by the answer, namely, that the defendant did not have notice of the purchases, and so could not ship, and thereby lost the sale of exchange. But, by the contract, the defendant undertook to call daily and inquire whether there were purchases, and by the, evidence he had very early notice of the purchase, and then placed his refusal to pay on another ground, namely, that the corn was not merchantable, and no evidence was given of the intention to ship and to sell exchange, nor of any loss of the sale of exchange, and the corn was in fact, sound and merchantable.
    The whole course of the defendant has been contrary to his obligations, and he has wrongfully subjected his commission, merchants to the necessity of paying for the corn and the storage, and to seek a partial relief by the resale of the corn which the defendant had refused to accept.
    
      Mr. Joseph Larocque for respondent.
    There was no competent evidence in the case to submit to the jury as to the first cost of the corn in question, or the amounts, if any, actually expended for storage, cartage, insurance, or any other expense or charge in connection therewith.
    There was no competent evidence in the case to submit to the jury as to the amount realized upon the pretended resale of the corn.
    The plaintiffs’ own witness proved a course of dealing with the property which absolutely absolved the defendant from any responsibility. -
    . A factor who has purchased property for account and by order of his principal, and has advanced money of his own on such purchase, has a lien upon the property for such-advances. His right to sell the property for his reimbursement, in the evenf of his principal’s failure to repay his advances, is the same as that of an ordinary pledge, and to be exercised in precisely the same manner (Marfield v. Goodhue, 3 N. Y. Rep., 62, at p. 73; Taylor v. Ketchum, 35 Howard Pr. R., 289).
    When there is no special contract prescribing the time and conditions of a sale by the pledgee, a sale binding upon the debtor can only be made after proper demand by him of payment, and reasonable notice to him of the time and place of sale; and such sale must necessarily be at public auction. The rule on this subject is well settled by Dykers v. Allen, 7 Hill, 499; Wheeler v. Newbould, 5 Duer, 34; Genet v. Howland, 45 Barb., 560; Milliken v. Dehon, 10 Bos., 328; 27 N. Y. R., 365.
    Even if the factor to purchase should be regarded as authorized to sell for his reimbursement, on the default of his principal, in the same manner as a vendor on default of his vendee, the plaintiffs have, nevertheless, so dealt with the property in. question as to absolutely absolve the defendant from any responsibility. When a vendee, refuses to accept or pay for goods according, to the terms of his contract, the vendor may resell the goods, and recover from the vendee the difference between the contract price and the market price at the time of delivery as his damages.
    . To charge the vendee, however, with this difference, the vendor is bound to make a proper ’demand of payment, to give notice of his intention to resell, and to make the resale in accordance with the ordinary usage of the particular trade (Pollen v. Leroy, 30 N. Y., 549).
   By the Court:

Jones, J.

The general rule is, that a lienor may, the moment the demand for which he holds the lien becomes due, bring an action thereon, without first having recourse to the property on wdiich he has a lien (Cross on Liens, p. 69).

In such action he would make a grima faoie case for a recovery by proving his demand.

If, however, before action brought, he had wrongfully eonverted the property on which he had the lien, the defendant, if he remained the owner of the property, might offset or recoup the value of the property so converted (Stearns v. Marsh, 4 Denio, p. 227; Edwards on Bailments, p. 213).

It is conceded in this case that plaintiffs were defendant’s agents to purchase the corn, under an agreement that they were themselves to pay the purchase-moneys to the vendor in the first instance, and then call on defendant for repayment; and that they, having so paid the purchase-money, had a lien on the corn therefor. This being so, then, under the above principles, the . plaintiffs, unless they were bound to resort for their repayment to the corn in the first instance, were entitled to bring an action at once to recover the sum paid by them, and their charges and commissions, and to recover in that action the full amount thereof, upon proof of having bought the corn and paid therefor pursuant to the defendant’s instructions, and of the amount of such their payments, charges, and commissions.

If, however, the plaintiff had wrongfully, and without any authority, sold the corn, the defendant might set up as a defence by way of counterclaim, the fact of such unauthorized sale, and ask to set off the value of the corn against the plaintiffs’ demand.

But this would be an affirmative defence, and the defendant would be called on to sustain it by affirmative proof. He would be bound to prove not only the unauthorized sale but the value of the corn.

.Ho such counterclaim is set up in the answer, and there is no proof of the value of the corn either at the time of or subsequent to its sale by plaintiffs, other than such as is furnished by plaintiffs’ admission of what it brought on its resale, which is less than plaintiffs’ demand; and, consequently, plaintiffs, if they have proved their demand, and are not obliged to have recourse to the corn in the first instance, are entitled to recover the amount of their demand, less the credit they have voluntarily given.

First, then, were plaintiffs bound, in the first instance, to resort to the corn \

For if they were, then, in addition to proving the contract, their compliance therewith, and the amount of their commissions and charges, and the amount paid by them in the purchase, they would have to prove a proper sale by them, and the amount realized from such sale, 'in order to enable them to recover.

It is. claimed that a factor to sell is bound, in the first instance, to resort for repayment of his advances to the consignee of the consigned goods, and can only hold the consignor personally liable for the difference between the advances and the sum produced by a sale of the. consigned goods, and that the burden of proving the amount of that difference rests on the factor; and it is further claimed that the same doctrine is applicable to an agent to purchase.

The doctrine in relation to factors to sell is properly laid down.

In Gibson v. Stanton (9 N. Y., 476), the action was assumpsit, brought to recover money paid on four drafts, drawn by defendants on plaintiffs, and paid by plaintiffs. The plaintiffs were commission merchants, and'defendant consigned to them goods to he sold on commission, of which consignment defendant notified plaintiffs by letters, accompanying the said drafts.

The cause was tried before a- referee. On the trial plaintiffs sought to recover, upon proof of the payment of the drafts by them, and that they were drawn against the consignments aforesaid, without showing what disposition had been made of the goods, or what were their proceeds, or that they had rendered any account of such proceeds. The referee reported in favor of defendants. From the judgment entered on that report plaintiffs appealed to the General Term, where it was affirmed; on appeal taken to the Court of Appeals, that court affirmed the judgment below.

. The decision necessarily proceeded upon the following propositions :

1. That a factor for sale, has a lien for his advances on the goods consigned to him.

2. That he must exhaust that lien before he can resort to the personal responsibility of his principal.

Consequently, we see that those propositions are laid down in the opinion of the court; and the case is a direct adjudication that the factor must show that he has exhausted the lien before he can sustain an action against his principal on account of his advances.

It results that such an action can only be sustained for the balance remaining due after exhausting the lien, and that the burden of proving what the balance is rests on the factor.

Whether this doctrine applies to an agent to purchase, or not, depends on the applicability of the principles on which it is founded.

The doctrine, as is well said in Corlies v. Widdifield (6 Cowen, 181), arises out of the very nature of the transaction.

The consignee, with power to sell, receives the proceeds of sale in the first instance, and is bound to account for and pay over the same to the consignor. Now, says the consignor, I desire to use a portion of the anticipated proceeds of the sale at present, and wish you to pay me now a portion of what you will owe me when you sell the goods. This is the correct exposition of the word “ advance,” when used to indicate payments made by a consignor—with power to sell, to the consignor on account of the consignment, as is ably shown in the case of Gibson v. Stanton. It is, in fact, a prepayment on account of a debt anticipated by both parties to arise to that or a greater amount, from the consignor to the consignee, out of the performance by the consignee of a contract existing between them. It necessarily results that before the consignee can call on the consignor to pay back any portion of this prepayment, he must show the performance of this contract, and that his indebtedness arising thereout did not, as was anticipated, amount to the prepayment.

This principle is inapplicable to an agent to purchase. In such case there is no anticipated debt to become due from the agents to the principal, arising out of the sale of the goods by the agent, on account of which any prepayment can be called for or made; and consequently there is no debt the inadequateness of which, to absorb a prepayment, is necessary to be ascertained before any portions of a prepayment thereon can be recovered back. Again, there is no, anticipated fund t to come to such agent’s hands, to which the parties contemplate that he must first look for satisfaction of Ms advances; that would be in direct conflict with the nature of the transaction; it would be absurd for one to employ another to purchase goods and advance the purchase-money, with the view of having that other retain the goods and sell them to pay back to himself his advances, holding his principal for any deficiency, and paying over any surplus.

If there were such anticipated fund, the application of wMch was thus contemplated, the effect of the transaction would be the employment of one by another to purchase goods, and advance the purchase-money with the sole view of having such employe retain the goods, and sell them to pay back to himself his advances, holding his principal liable for any deficiency, and pay over any surplus. The result of this would be that the principal would never obtain possession of the goods purchased for him, and the whole transaction would be simply one for the settlement and paying over of differences.

I therefore conclude that an agent to purchase is not bound to resort, in the first instance, to the goods purchased to obtain payment of the purchase-money advanced by him, but that his advance is a loan to the principal, he having a lien on the goods as collateral security.

. The next point for consideration, is: Have plaintiffs proved their demand ? It is claimed they have not.

(a) Because by their act they have rescinded the contract.

(b) Because they should have notified defendant of their purchase, and received directions from him before incurring the expense of storage and extra cartage.

(c) Because, as it is said, they have not proved how much they paid on the purchase of the corn, or for its cartage or storage.

The claim of a rescission is based on the act of plaintiffs in selling the corn, whereby they became unable to deliver it.

So far as the plaintiffs are concerned, this, under the evidence (whatever might be its effect if there were no proof on the subject), was not a rescission by them. The evidence is that they declined to assume the corn, and notified defendant that they would sell the corn tó reimburse themselves, and would not compromise with him except on full payment of every dollar they had lost.

This, instead of being a rescission, is a clear avowal of intention to hold defendant hable for his breach of the contract which had already occurred.

" Nor can defendant, on his own part, rescind the contract for this act of the plaintiffs; he had broken his contract, had refused -to pay plaintiffs the amount of their demand, and to receive the corn. A cause of action had already arisen in favor of plaintiffs for such breach, and he cannot discharge that cause of action by rescinding a contract, already broken by him, on account of .a subsequent act done by plaintiffs, which resulted from his own breach. What might be his rights in case of a sale prior to a demand on him for payment it is unnecessary here to determine.

Under the evidence, plaintiffs were not to notify defendant of their purchases, but he was to call into their office every day and receive their reports. He did not call at their office, and therefore it was his own neglect if he did not receive immediate notice.

Although defendant had vessels at the place where the com was purchased, yet he did not notify plaintiffs of that fact or give them any directions concerning the corn; they were, therefore, justified in storing it.

Defendant agreed that the drafts of the firms at Baltimore and Alexandria should be a sufficient guarantee that the com was purchased, and that they would pay the face of the drafts: When the drafts were presented payment was refused, because storage receipts were not attached; the storage receipts were produced, then payment was refused on different objections ; finally, defendant promised to pay if the corn was in good merchantable order. The corn was proved to have been in good merchantable order. Defendant had also been informed of the quantity of corn purchased and the prices paid for it, and had also been shown the invoices. During the negotiations for a settlement of the controversy, although defendant endeavored to get plaintiff to throw off the commissions and storage, yet no objection was raised to the correctness of the charges for storage and commissions and for moneys paid for the corn. This was sufficient to authorize the jury to find an acquiescence by the defendant in the correctness of those charges shown on the invoices, especially in view of the fact that, by his agreement, he in effect stipulated that the drafts of the houses in Baltimore and Alexandria should be evidence of the purchase of the corn, and of the price paid for it, which stipulation seems by the proof to have been one of the considerations upon which plaintiffs entered into the contract.

■ The plaintiffs then, having sufficiently proved their demand, and not being obliged to resort, in the first instance, to the corn itself or its proceeds, were improperly nonsuited.

It may be suggested that they have brought their action on the theory that they were obliged to resort to the corn in the first im stance, and could only hold defendant for the balance remaining due after application of the proceeds of the corn, and can, there- > fore, recover on that theory only.

It is true they allege in this complaint that they did sell the corn, and the sum they obtained for it, and that it was less than the sum due them, and demand judgment for the difference between the two sums..

These allegations are wholly unnecessary to the cause of action contained in the complaint. They amount simply to giving a credit on the amount which would otherwise be due them, and' showing how that credit was produced. The giving a credit and showing how it was produced does not change the cause of .action.

It will be observed that the question as to the right of an agent to purchase, who has paid the purchase-money, in the first instance, to sell for his reimbursement, after demand for repayment, without giving notice of the time and place of sale, and bind the principal by the result of such sale, has not been discussed. That question does not arise in the case as now presente^.

If the defendant should amend his answer setting forth such a sale by the plaintiffs, alleging the value of the corn, and seeking to counterclaim such value, then the question would arise ; or, perhaps it might be raised under the present pleadings by an offer to prove the actual value, though that is exceedingly doubtful-

As the testimony now stands, however, it is not raised, for even conceding that the defendant may, under the present pleadings, claim that the sale, admitted in the complaint, was a wrongful conversion of the com, yet there is no proof of its value at that' time Or subsequently, other than the admission in the pleadings as to its proceeds on such sale (Story on Agency, p. 371), and for these proceeds plaintiffs have already given credit in their complaint.

Judgment reversed, and new trial ordered, with costs to the appellant to abide event.

Barbour, C.J.

(dissenting). To entitle the plaintiffs to recover in this action, they were bound to prove upon the trial, first, that they purchased the corn for the defendant, under and in pursuance of the powers in that regard conferred upon them by the latter; secondly, that the defendant, upon being duly advised of such purchase, and of the amount of the plaintiffs’ advances or liabilities, refused to take the corn or pay such charges; and thirdly, that the plaintiff thereupon sold the corn in open market, after notice to the defendant that he would do so, for the best price it would bring, or that the price for which it was sold was then the fair marketable value of the corn at the places where it was purchased. \

Sufficient evidence was given upon the trial to warrant a finding by the jury, if credited, that, by the original agreement between the parties, the plaintiffs were to purchase the corn through their agents in Baltimore and Alexandria; that such agents should draw upon the plaintiffs’ house for the amounts of their purchases, and that, upon the presentation of those drafts, or those of the plaintiffs’ firm, to the firm of Marquand & Dim-mock, they should he paid immediately; it being understood that tire presentation of the drafts to Marquand & Dimmock would be a sufficient guarantee that the corn was bought, and they would pay the face of the draftsand that the price was limited at first to eighty-five cents, and subsequently, to eighty-six and a half cents, per bushel.

Mo evidence was given for the purpose of proving what the corn actually cost beyond the agreement touching the presentation and payment of drafts, above referred to, and the presentation thereof, unless it was to he found in two letters written by the plaintiffs’ firm to their agents in Baltimore and Alexandria, respectively, certain accounts rendered by such agents to the plaintiff, showing purchases of corn by them for the latter, with their disbursements, and the testimony of those agents as witnesses, to the effect that some corn was purchased by them for the plaintiff, without stating in detail the prices paid therefor. By one of those letters the plaintiffs’ firm directed their agents to purchase two hundred and fifty thousand or three hundred thousand bushels, not at or under eighty-six and a half cents per bushel, which was the highest price limited by the instructions of the defendant, but at eighty-six cents; or, if such agents should be able to secure a desirable lot for a cent more, they were ordered to pay it. The other letter directs the agents to pay eighty-five cents; which price, one of them testified, was afterward extended by the plaintiffs to eighty-seven cents per bushel. The accounts show that more than half of the corn charged for therein was purchased at eighty-seven cents ; being half a cent per bushel in excess of the price at which the plaintiffs’ firm were limited by the defendant.

Considering that those letters or orders of the plaintiffs’ firm did not disclose any agency, on the part of the writers, that the persons to whom they were written were directed to purchase at a price exceeding the extreme limit fixed by the defendant, and that more than half the corn purchased by the plaintiffs’ agents was bought for a price beyond such limit, it seems to me impossible to conclude, as a legitimate deduction from the evidence, that the corn in question was purchased by the plaintiffs, as agents of the defendant, under and in pursuance of the power conferred upon them by the' latter. Hay, more, I am clearly of opinion that the evidence ‘in that regard given upon the trial, was such as would have required the jury to find that the corn in question wa's not purchased by the plaintiffs as agents for the defendant, and under his instructions, if that question had been submitted to them.

• Having arrived at this conclusion, it is unnecessary for me to consider the somewhat singular claim of the plaintiffs’ counsel, that the presentation to the firm of Marquand & Dimmock of the drafts which had been drawn upon the plaintiffs, by their own agents, was, under the agreement between the latter and the defendant, at least, prima facie evidence before the court and jury that com had been purchased for the defendant, in pursuance of such agreement, equal in amount to the drafts, so as to throw the onus of proving the contrary upon the latter. I may say, however, that the sole object of that portion of the contract seems to have been to provide for the prompt payment of the drafts, without delays for settlements of accounts; an arrangement, probably, which was sufficient to render the defendant liable for damages on protest, in case of failure to meet such drafts as should actually be drawn in accordance with the provisions of the agreement, but not enough to charge him, in an action of this character, with the amount of the drafts, as for moneys expended for him under the contract. It is sufficient, however, to say that, even if such' presentation of the drafts could be taken as prima faoie. evidence that corn to that amount had been purchased under that agreement, the presumption arising therefrom was removed by the testimony which showed that more than half the corn represented by such drafts was purchased at a price exceeding the limit fixed by the contract, and, therefore, not under it: The evidence to establish the purchase and expenditure under the agreement was, therefore, wholly insufficient ; and, for that reason, the complaint was properly dismissed.

I am also of opinion that the plaintiffs failed upon the trial to prove such a sale of the corn, or marketable value, as would have enabled the jury to ascertain and determine the amount of damages sustained by the plaintiffs, even if they had succeeded in showing that the corn mentioned in the complaint was purchased under the contract. If such purchase had been made, and the defendant had failed to perform the agreement on his part, the plaintiffs would have had a right to sell the corn at auction, at the places where they had bought and stored it, on due notice to the defendant, and to have charged the latter with the deficiency. Or, at their option, they could, themselves, have kept the corn, upon the refusal of the defendant to receive the same, and upon proving the market value at the places of purchase at the time of such refusal, they would have been entitled to recover the difference between such-market value and the amount properly expended by them in the transaction. But no notice of a contemplated sale was given to the defendant, nor was any legal evidence presented upon the trial tending to show what was the market value of the corn where purchased, eitherwhenthe defendant refused to receive the same or at any time. Not ónly were the sales accounts read by the plaintiffs insufficient, of themselves, to prove the fact that the sales mentioned therein were actually made, but, even if that deficiency had been supplied, the market value would not thereby have been proven. The market value of an article of merchandise is not usually established merely by proving the price for which it has been sold by private negotiation.

The judgment should be affirmed, with costs.