Case ID: ny_14/html/0267-01.html
Source: Caselaw Access Project
Author: {"author": "A. S. Johnson, J. Mitchell, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Sherwood against Stone and another.
    The contract of a commission merchant, whereby he assumes the responsibility of a factor upon del credere commission, is not within the statute of frauds relating to promises to answer for the debts, &c., of third persons, and in therefore valid, though by parol.
    The action was tried by a referee, who found the following facts: In September, 1853, the defendants, who were commission merchants doing business in the city of New-York, agreed by parol with the plaintiff, who resides in Onondaga county, that if he would forward to them at New-York about six thousand pounds of butter which he; owned, they would sell it for a commission of five per cent, which should cover cooperage and storage, and guaranty to the plaintiff the sales. In pursuance of this agreement, the plaintiff forwarded the hutter to -the defendants, who received and sold it in parcels to different persons. The sales amounted to $1256.29. About five thousand pounds were sold by the defendants on a credit of ten days, and before the credit expired the purchaser became insolvent, and the defendants had been unable to collect the price. The counsel for the defendants insisted that the promise or agreement of the defendants to guaranty the sales, was void by the statute of frauds. ' The referee held the contract valid, and gave judgment in favor of the plaintiff for the amount at which the butter was sold, including the price of that whiph the defendants had been unable to collect, after deducting certain amounts which had been paid to the plaintiffs, and the commissions of the defendants. The counsel for the defendants excepted. The judgment was affirmed at a general term of the supreme court in the fifth district. The defendants appealed to this cout.
    
      J. K. Porter, for the appellants.
    
      B. D. Noxon, for the respondent.
   A. S. Johnson, J.

The defendants.insisted on the trial that the responsibility of a factor upon a del credere commission could not be assumed by parol, but that such a contract fell within the terms and meaning of the statute of frauds. (2 R. S., 135, § 2, sub. 2.) The precise point was decided against the views of the defendants, in Wolff v. Koppel (2 Denio, 368), by the late court for the correction of errors, affirming the decision of the supreme court in the same case. (5 Hill, 458.) The doctrine Of the case in the supreme court, and the reasoning of Mr. J. Co wen, in the opinion of the court, are approved and expressly adopted by the court of exchequer, in Couturier v. Hastie (8 Wels., H. & G., 40), notwithstanding that whatever doubt existed on the point had grown out of the decision in Morris v. Cleasby (4 M. & S., 566). The point is settled by these cases', in accordance with convenience, and it ought not to be reexamined.

The judgment should be affirmed.

Mitchell, J.

The principal question discussed on the argument was, whether the agreement was not within the statute of frauds, as a special agreement to answer for the debt of anothfer. It was decided in England, in the cases of Groves v. Dubois (1 Term R., 112), and Bize v. Dickanson (1 id., 285), that such agreements are not collateral. This was the common law, as received at the date at which our constitution adopted it; and the same decision was made in Wolff, &c., v. Koppel (5 Hill, 458), and in the same case in the court for the correction of errors (2 Denio, 368), where also it was held that the agreements are not within the statute of frauds. (7 Pick., 220.) Those decisions must control this court. The courts of England changed their opinion, and adopted a contrary view of the contract in Morris v. Cleasby (4 Maule & Selwyn, 566), and Peele v. North-cote (7 Taunt., 478), and other cases. But that change cannot alter our law, especially after it has been settled by a decision of the highest court.

The different and contrary results are produced by the different views of the contract in the two countries. In Eneland they understand the guaranty to be a contract to pay, if the money cannot be collected of the purchaser. Here it is understood to be a contract, directly with the principal, , to pay him on the expiration of the time of credit, whether the purchaser be solvent or not; that is the whole contract between the factor and his principal, and is an original underraking, without any relation to the debt or liability of another. The law (not the contract of the parties) then adds a quality to such a transaction, that although the factor may sue the purchaser in his own name, the principal has also the right to sue. This, however, does not convert an express original undertaking of the factor with his principal, absolutely to pay the debt at maturity, into a collateral and conditional agreement to pay it if the' purchaser does not. A guaranty by a factor differs very espe.cially from a promise to pay the debt of another in another particular; the principal transfers a right (although not the exclusive right) to the factor to sue for and recover the money in Ms own name, and to ■ collect the debt and hold the money, accounting only for the net balance of account between the- parties. Thus the debt of the purchaser is to some extent made the' property of the factor, and he to that extent becomes the purchaser of it, and so far substitutes his liability in place of that of the purchaser. The effect of this generally is to make the factor practically the owner of the debt, and this is almost invariably so, if he remains solvent and on just terms with his principal. Then the principal is unknown to the purchaser.

The judgment should be affirmed.

Comstock, J., having' been counsel in the cause, took no part in its decision. All the other judges concurred.

Judgment affirmed.