Case ID: ky_46/html/0697-01.html
Source: Caselaw Access Project
Author: {"author": "■UunGE Sijüpson", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

De Lazardi, & Co. vs Hewitt, Allison, & Co.
    Appeal from the Louisville Chancery ‘Court-.
    Chance ry.
    
      Case 163.
    Case stated.
    A factor or general agen tto sell, is not personally liable for losses arising from sale on credit, where he adheres to the custom of the place where the sales are made, and the purchasers are good at the date of the sales, *nd the principal had reasonable e.
    
      
      Factors. Agents. Partners and Partnership.
    
    
      October 11.
   ■UunGE Sijüpson

delivered the opinion of the Court.

■ Be Lazardi & Go. of New Orleans, and Hewitt, Allison & Co. of Louisville, Kentucky, entered into -an •agreement in February, 1841, to purchase a large quantity of sugar, on joint account, to be sold by the latter in Louisville, free of charges and commissions, except actual expenses: (he profits or losses to be equally shared. 'The-sugar was purchased, shipped to Louisville, and ‘there sold under this agreement. A general depression ■in business that season, operated adversely to l.he success ■of the adventure, and occasioned a considerable Joss to ■the parties concerned. A large porlion-of the sugar hav. ■iug been sold on credJi and some of the purchasers having failed, whereby the loss on the speculation was greatly increased, a contest has arisen among the parties in ¡relation to the loss on the credit sales, the plaintiffs in ■error insisting it should all fall on the house in Louisville, ■and-the latter house contending it is only liable for one ‘hair.

It appears in proof that the sugar market in Louisville in tire spring and summer of that year, was unusually ■dull a>nd inactive, and sales of sugar were generally on ■credit. And it is alledged by Ilewitt, Allison & Co. in their bill, and not-denied by the answer, that it was distinctly understood by the parties when the adventure was agreed upon, that.most of the sales would, in all proba, bility, have to be on credit..

If the firm of Hewitt,, Allison & Co. were to be regarded in this transaction, as the mere agents of .Be Lazardi & Co., and the sugar had been consigned to them as such, to sell in the usual way in -Louisville, even then ihoir liability for the losses that have occurred on sales made by them, would be very questionable, A general agent or factor, selling toa person of good credit at tfiS time, payable at a future day, where the usage is to sell upon credit, is not liable though such vendee may after-wards become insolvent, provided the credit given was reasonable and usual, and his principal was made acquainted with the transaction within a reasonable and usual space of time: (Smith’s Mercantile Law, side page, 87.)

The proof is abundant that the sales upon which losses have been sustained by the subsequent failure of the vendees, were made to persons who, at the time, were in good standing and credit, and to whom- sales on time would then have been made by the most prudent and cautious dealers in Louisville. There is some contrariety in the evidence in regard to the usual credit given at that period upon sales of sugar; some of the witnesses stating'that four months was the usual credit, and others that there was no particular usage on the subject, sales being frequently made on a credit of four or six months with a promise of renewal at the expiration of the time; from which- the inference is fairly deducible, that the course of trade in this article, had not then a fixed and limited credit, an extension beyond which should be considered as unreasonable. The sales having been made on the most advantageous terms that could be procured, the article of sugar going off very heavily in market that season, there is nothing in the credit given, that can subject the house of Hewitt, Allison & Co., to liability for the whole loss occasioned by the failure of the vendees.

It is not denied-that an account of the sales was made and transmitted to De Lazardi & Co. within a reasonable time, but it is contended that the account was unfair and deceptive, and not calculated to apprise the owners of the sugar of the true nature and .character of the sales which-had been made¡ The sales on time, where interest was payable from the day of sale, were entered on the ac. count equal'to cash, without noting the length of credit given, and the credit given on sales where there was a promise of renewal, was alone mentioned, no allusion being made to the agreement for further extension of time on the expiration-of the credit. The evidence is contra-* dietory in relation to the construction that would be given by merchants to an account made in this way. Some of the witnesses proving, equal to cash, would be understood to mean, the money was secured so as to make it equal to cash, and the consignor as having a right, on such an account having been rendered, to call on the consignee immediately, for the amount of sales, whilst others prove it would be understood by merchants to mean only, that although the sale was on credit, yet the money carried interest and was thereby equivalent to cash. From the evidence, the account may be regarded as ambiguous, and if it stood alone without any explanation, might not be deemed such as the law requires the agent to return to his principal. But the account was taken to New Orleans by the chief clerk of Hewitt, Allison & Co., who had made it out, and was thoroughly acquainted with the whole transaction, and who having a letter of introduction from his employers to De Lazardi & Co., hada personal interview with some of the members of the firm, handed them, the account of sales, and according to his recollection, explained it fully. If, however, no explanation was actually made, he was there prepared to explain any part of the account that is at all equivocal,- and if it were not understood, or its meaning regarded as doubtful by them, it was their duty to have made such enquiries as was necessary to its full comprehension. It is obvious, however, they sustained no injury by the entries as made. They assert, it is true, they would have obtained a guarantee, had they learned from the account, the sales were on credit. The idea of loss from the want of this information is, however, repelled by the fact that no guarantee was procured by them on the sales expressly entered on the account as made on time.

Partners ar® each bound to bear their equal part of lass, unless there has been a culpable unfaithfulness in duty to the ah> sent partner.

Should there be however any doubt as to the liability of Hewitt, Allison & Co., regarding them as agents, there is another aspect of the transaction, in which, in out-opinion, their liability cannot be extended beyond one half of this loss. The two houses were in reality partners in.the speculation. The purchase of the sugar was a joint one, and in the sales there was to be a community of profit and loss. There may be a partnership in one adventure as well as- in a continuing business-. Sueft © paitnesrsbip existed on this occasion. The respective-rights and liabilities of the part'es must therefore be determined, not by the law in relation to principal and' agent, but by the terms of the partnership and the law on this- subject. The loss incurred has therefore to be divided between, them, unless the house in Louisville, by its conduct in some respect, has made itself liable as a partner, in-this transaction for the whole of it. It results from that broad principle of equity, that from every person standing in an attitude of trust'and confidence in respect to another, a conduct marked with the most serupu. lous good faith shall be required, that paitners should act with the utmost candor and fairness towards each other, and with the most honorable exactness in the management of their joint business. That such has been the conduct of the house in Louisville in this transaction, is perfectly manifest. That they exercised their best judgment and utmost vigilance, may. well be presumed; w-ben it is recollected, they were acting for themselves, as well as others, and must have been sensible that one half of any loss incurred would fall upon them. There has been nothing done by. them which would make one partner responsible to the other. The sales were according to-the usual- course of. business. They were made to individuals apparently good at-the time, and such as discreet and prudent men would have sanctioned.. Nothing, has transpired since the sales to make them respon. sible for- this loss. They have not been instrumental in misleading, at least not intentionally, the other, members ©f the firm. They have withheld no-information that-would- have been- useful to their partners. They have acted- throughout in good faith, and there is no part of their conduct of which their partners have any just reaí' son to- complain..

Pirlle for appellants ; Gulhrde foi appellees.

Wherefore, there being no error in the decree of the-Chancellor, it is affirmed.