Case ID: misc_21/html/0559-01.html
Source: Caselaw Access Project
Author: {"author": "Chase, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Standard Fertilizer Co., Plaintiff, v. Corydon K. Van Valkenburgh, Defendant.
    (Supreme Court, Greene Trial Term,
    November, 1897.)
    1. Principal and agent — A contract creating a fiduciary relation and requiring returns in specie.
    Where a contract, also containing an appointment of agency, made between a corporation selling fertilizers and its agent, provides that “ cash or notes or other proceeds’of sales shall be sent to the Standard Fertilizing Company as and when received,” and subsequently provides that the agent shall “ settle in full for all spring sales by November 1st, and for all fall sales by January 1st next, either in cash or in notes'” approved by the company, the provisions, although inconsistent, must be deemed to create a fiduciary relation, requiring the agent to transmit bis receipts, in specie, to the principal.
    8. When a contract authorizes the agent to sell on credit — Conversion.
    The provisions requiring a settlement by November 1st and in full • by January 1st, taken in connection with the agent’s guaranty of all sales, constitute, however, authority to the agent to sell on credit; . and, where he is shown to have been unable to collect for sales, made, he cannot be held as for a conversion of fertilizers not-paid for; and ■ the remedy of the principal is on contract upon the guaranty of the agent •
    
      3. Power of agent to authorize a subagent to use the principal’s goods.
    The agent of á corporation, having power to appoint agents, to superintend their acts and to demand of them the proceeds of their sales, has power to authorize an agent, whose farm lies near the' highway, to use the fertilizers thereon, in part as a means of adver- . tisement for the principal, and to pay for those used at wholesale prices; and such use of the fertilizers by the agent merely creates a debt and is not available to the corporation as creating any liability to it, upon the part of the agent, predicated upon the fiduciary relation. Í
    Action íot conversion.
    F. L. Michael and Frank H. Osborn, for plaintiff.
    Crowell & Kerr, for defendant.
   Chase, J.

The plaintiff is á foreign corporation, engaged in the manufacture of fertilizers. On the 1st day of April, 1893, it appointed the defendant its agent in the town of Athens, N. Y., for the sale of its fertilizers. This appointment was termed an agreement, and was in writing, and provided among other things as follows: “ Goods to be consigned to you, and to be sold on account of Standard Fertilizer Company. All sales, shall be guaranteed by you, and all cash or notes or other proceeds of sales shall be sent to the Standard Fertilizer Company as and when received. . Notes taken for sales to be indorsed by you.” ■ The agreement also provided: . “ You are to settle in full for all spring sales by November 1st, and for all fall sales by January 1st next, either in cash or notes bearing interest approved by the Standard Fertilizer Company.” It also provided; “The Standard Fertilizer Company agrees to pay you as commission a sum equal to the amount received from you in excess of prices named in yóur consignment invoices, and on all sales for which you return to them cash July 1st, for spring sales November 1st, for fall sales they will pay an additional commission of $1 per ton.” Thereafter the plaintiff shipped to the defendant fertilizers amounting at the price named in the consignment invoices to $895.25.

The. defendant used a portion of such fertilizers on’ his farm, and the portion so used by him at the prices named in the consignment invoices amounted to $154.55. The balance of the fertilizers were sold by the defendant and the defendant has collected and paid to the plaintiff therefor, in full, except that there still remains uncollected by the defendant and unpaid to the plaintiff the sum of $31.95. This balance is still owing by the persons to whom such fertilizers were sold by the defendant.

The agreement is somewhat contradictory in its terms," in that it provides that “ cash or notes or other proceeds of sales shall be sent to the Standard Fertilizer Company as and when received,” and then further provides that the defendant is to “ settle in full for all spring sales by November 1st, and for all fall sales by January'1st next, either in cash or notes bearing interest approved by the Standard Fertilizer Company.” If possible, effect must be given to all parts of the agreement and the intention of the parties to the agreement should be carried out, if it can be fairly spelled out of the agreement itself. In my opinion the parties did intend that the defendant, under the agreement, should occupy a fiduciary relation toward the plaintiff, and notwithstand-ing the provision of the agreement that settlements should be made for spring sales by November 1st, and for fall sales by January 1st, the other part of the agreement providing for sending to the plaintiff the cash, notes and other proceeds of sales, as and when received, is binding upon the defendant and required him to send to the plaintiff the identical proceeds of all sales immediately on receipt of the same and not wait until November 1st or January 1st, as the case might be, to transmit such proceeds. The defendant, therefore, had no right under this agreement, to mingle the proceeds of fertilizers sold by him in any way with his own individual cash or property. The agreement clearly provides for taking notes and other proceeds of sale by the defendant for fertilizers. The agreement also expressly provides that all sales shall be guaranteed by the defendant. The provision of the contract providing that settlements shall be made in full by November 1st and January 1st, above stated, assumes that sales will be made for notes or other proceeds, and, I think, it may fairly be inferred from the agreement that the parties contemplated sales by the defendant to farmers on credit with or without notes, and thus give to such farmers an opportunity to harvest their crops, and pay for the fertilizers so purchased, on or before November 1st. The postponed day of settlement must have been provided to afford a reasonable time’for settlement for sales where credit had been given. If sales were only to be made for cash or notes to be first approved by the plaintiff, there was no reason for the guaranty, and if sales were not to be made on credit there Was no reason for postponing the day of final settlement, as a final settlement would take place after every sale. The agreement was intended to give to the defendant authority to sell the fertilizers on such terms as he, in his judgment, thought best. The security of the plaintiff rested in the fact that the fertilizers, and proceeds of fertilizers, remained their property; and in the further fact that the defendant was, by the agreement, the guarantor of all sales:

The plaintiff was further protected by a provision in the contract requiring defendant to render to the plaintiff; at any time, a statement of sales with a list of .purchasers’ names in full, and the further provision that plaintiff could at any time revoke the agency. If the defendant had the right, to sell fertilizers on credit, as I hold that he had, he cannot be hable for conversion of the fertilizers so sold, even although he has failed to collect therefore The plaintiff’s remedy is by suit on the guarantee. It follows, therefore, that this action cannot be sustained, so far as the amount of uncollected bills is concerned.

I have not considered the contention of the plaintiff that the defendant was required to pay over to them the full amount received.for the fertilizers without reference to the prices named in the consignment invoices, for the reason that it appears that the amount claimed in the complaint is made up with reference to the prices named in the consignment invoices and not otherwise, and the bills rendered to the defendant, and the demands made on the defendant were all with reference to the prices named in the consignment invoices, and not with reference to the prices at which the fertilizers were actually sold.

The defendant used some of the plaintiff’s fertilizers and unless this was done by plaintiff’s consent, judgment should be rendered herein, therefor. The defendant claims, however, that they were used by him with plaintiff’s consent, direction and approval. If sitch fertilizers were so used with plaintiff’s consent and approval, or by its direction, plaintiff ought not to succeed, and cannot succeed in this action.

The contract of April 1, 1893, was made on the part of the plaintiff, by W. T. Sawyer, its agent.. At the time of making this contract and immediately thereafter, Sawyer told the defendant that if ho used any fertilizer, ho wanted him to use the fertilizers of the plaintiff, and that he could use the plaintiff’s fertilizers at the wholesale price, and Sawyer urged the defendant to use the. plaintiff’s fertilizers freely upon his crops, to make a showing; and he said to the defendant that the defendant’s farm lay close to the road where it was very plain to be seen and fertilizers were something new in that section, and never had been introduced there, and he felt anxious that he should make as big a showing of them as he could. Similar statements were made to the defendant by Sawyer at different times thereafter, and Sawyer knew that the plaintiff owned a farm where he resided, and that the defendant used plaintiff’s fertilizers from time to time on such farm. These statements constitute a consent on the part of Sawyer to the defendant’s using plaintiff’s fertilizers, but the plaintiff asserts that Sawyer had no authority, as agent, to give any such consent or direction, and that the plaintiff is not bound by the same. It appears from the testimony, that Sawyer had been the agent of the plaintiff for several years. Bis business as snch agent was to appoint agents for the sale of plaintiff’s fertilizers, and he went to the defendant on the 1st day of April, 1893, for the purpose of soliciting defendant to become an agent for the plaintiff. It was a part of the duty of Sawyer to superintend the acts and conduct of the agents whom he appointed. He took orders from them which were forwarded to, and filled by, the company. He made a demand of the defendant for the balance remaining unpaid, on which demand this action is founded. There was nothing unusual in his acts or in what was said to put the defendant upon his guard," or to require him to make special inquiry of Sawyer’s authority. It is conceded that Sawyer had authority to make the written contract; and that he was authorized to superintend the acts and conduct of the agents whom he appointed. This being so, I am of the opinion that his consent to the defendant’s using some of the fertilizers, as stated, was within his apparent authority. Sawyer’s authority to authorize the defendant to sell fertilizers on credit apparently includes authority to assent to the defendant’s using some of the fertilizers on his own farm. While the defendant is liable on his guaranty, and for the fertilizers used by him in an action ex contracto, judgment cannot be rendered in this action against the defendant without proof of a breach of the trust reposed in the defendant, by the plaintiff. Code Civ. Pro., § 549.

The complaint of the plaintiff is dismissed, with costs.

Complaint dismissed, with costs.