New Orleans Republican. [volume] (New Orleans, La) 1867-1878, 1875-03-26

OV0F ana ABOVE T00 CO0ml1U1OUs Out NO pokC
Of tho proceeds was paid over. Soon after
bankrupt act, having applied the money to
his own use. Mr.. Justice Nelson said:
Looking at it [the easel asfhus presented
it seems to me there is great difficulty in
saying that tho flour was net received and
held BY tho bankrupt in strictly fiducisry
character. The article was placed in his
possession simply to sell it and to remit
the proceeds over and above his commission.
The money was not the bankrupt's when it
the owner of the -four. 1t was gross
breach of trust to apply it to his own use.
l have looked at the case Of Chapman vs..
Forsyth, Howard, 2O2, but do not regard
it as controlling the one in hand. The pro
vision in the present act is much broader
than in the act of 184l."
The factor or commission merchant No.
ceiving from the owner property consigned
to him to be sold, and the proceeds to be
posal, we can regard in no other light than
that of acting in fiduciary capacity. The
doctrine contended for as arising from Gus.
tom and usage. that the property consigned
or its proceeds becomes the property Of the
factor, for which he simply becomes the
debtor of the owner, has no foundation in
equity or reason. The party c0nsigning his
property to the care of another and placing
it at his disposal for the benefit of the owner
is not presumed to recognize any such doc
trine. The natural and obvious presump-
ton is that the consignor cOnfides in the
probity and the sense Of justice and honor
of his factor, that he will dispose of the
property sent to him for sale to the best in
terests Of the owner, and that he will &C.
curely keep and return to him when re-
quired the money for which the property
was sold, after deducting the expenses and
fair compensa' on for his services in dis
posing OF it. Every prudent dealer seeks
to have the greatest amount of security
practicable in his business affairs. Such
person would surely feel more secure when
relying upon the simple obligation of the
agent to securely keep and return to him
the money in his hands, the proceeds of sale
of his property, than to know that such pro-
ceeds were intermixed with the moneys of
the agent and to be used by him as his own,
leaving the principal to rely solely on the
credit and responsibility of the factor, thus
taking all the risks anu casualties of trade
which might overwhelm his factor in bank.
ruptcy and financial ruin, and throw upon
himself the loss OF the property intrusted to
his factor. To exOnerato the factor from
liability on the ground of his passing over
to his general account the proceeds of the
of the consignor and becoming the
debtor OF the latter for such prOcf eds, it 70
we'll established, as We have seer, that it
must be shown that the owner or consignor
knew of such custom and usage and as
sented to it. The custom insisted upon by
the defendants as prevailing in this respect
in New Orleans is not proved to have been
known BY the defendant and that he as
sented to it.
We conclude that factors and commission
when exercising their functions
of receiving. selling, taking their commissions
and accounting to their principals, are acting
in a tiduciary capacity within the meaning
and intendment of the thirty-third section OF
the bankrupt law of 1867, and are not re-
leased from obligations contracted in that
capacity by discharge in bankruptcy. In
this conclusion we think we are abundantly
sustained by the decisions and authorities
we have adverted to.
1t is therefore ordered that the Judgment
of the district court be affirmed, with costs.