Case Name: In the Matter of the Application of a Majority of the Directors of James Chambers, Limited, for a Final Order Dissolving the said Corporation; John E. Jacobs, Receiver of James Chambers, Limited, Appellant; Commonwealth Shoe and Leather Company, Petitioner, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1897
Citations: 17 A.D. 340
Docket Number: 
Parties: In the Matter of the Application of a Majority of the Directors of James Chambers, Limited, for a Final Order Dissolving the said Corporation. John E. Jacobs, Receiver of James Chambers, Limited, Appellant; Commonwealth Shoe and Leather Company, Petitioner, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 17
Pages: 340–345

Head Matter:
In the Matter of the Application of a Majority of the Directors of James Chambers, Limited, for a Final Order Dissolving the said Corporation. John E. Jacobs, Receiver of James Chambers, Limited, Appellant; Commonwealth Shoe and Leather Company, Petitioner, Respondent.
Principal and agent—provisions of an agreement indicating that goods were to he sold on commission—right of the principal to reclaim the goods or their proceeds from a receiver of the agent.
' Where a corporation makes an agreement with a manufacturer which provides that goods shall he shipped to the corporation oh commission to be sold at a minimum price named, that the corporation shall receive, hold and sell the goods as a factor or agent for the manufacturer, shall render accounts of sales on or before the fifteenth of each month, shall pay at the end of the month the amount of the selling price less a stipulated commission, and that the goods shall remain the absolute property of the manufacturer until sold and delivered by the corporation to customers, the relation created between the parties is that of principal and agent, and the manufacturer is entitled to reclaim the goods or their proceeds as against a receiver of the corporation, appointed before the agreement expired, who has come into possession of some of the goods and of moneys, accounts, bills and okoses in action, the proceeds of other of the goods.
A provision in such an agreement that the manufacturer shall receive, not the proceeds of the sales themselves, but an amount equal to the selling price less the commission, does not indicate a change in the relation of the parties, but merely fixes the amount to be paid to the manufacturer.
A permission to the agent to wait until the middle of the month to render accounts of sales, and until its end for payment, is not designed to give credit to the agent for the money and to permit it to mingle the moneys of the manufacturer with its own, but is designed merely to permit of a short credit to purchasers and to give the agent an opportunity to make collections and to remit for various sales at one time instead of remitting for each sale separately.
Ingraham, J., dissented.
Appeal by John E. Jacobs, receiver of James Chambers, Limited, from an order of the Supreme Court, made at the Hew Ybrk Special Term and entered in the office of the clerk of the county of Hew York on the 21st day of December,. 1896, directing him to pay the petitioner the proceeds of sale of certain goods.
George 8. Hastings, for the appellant.
Charles E. Hughes, for the respondent.

Opinion:
Williams, J.:
The proceeding for dissolution was commenced October 25,1895. The appellant was then appointed temporary receiver, and acted as such until he was appointed permanent receiver July. 2, 1896. An agreement was made between the petitioner and the corporation June 1, 1894, whereby, among other things, the petitioner agreed to manufacture and ship to the corporation, for sale on commission, boots and shoes; to invoice the goods at the petitioner's regular jobbing prices for stock goods, the corporation not to sell below the invoice prices, and to account for the goods at the selling prices less the commission, and the corporation agreed to receive, hold and sell the goods,- as factor or agent for petitioner; to render petitioner, on or before the fifteenth of each month, an account of the goods sold during the preceding month, and to pay to petitioner, on or before the last day of each month, an amount equal to the selling goriee less a commission of twelve and one-half per cent, and it was further agreed that the goods remaining on hand, and unsold by-the corporation, eleven months after the date of its shipment, might, at the option of the petitioner, be charged to the corporation, at the -invoice prices less twelve and one-half per cent, and a further discount of ten per cent.of the net amount after deducting commission, and such charges- to be-paid the last, day of the month following, such charge; that the petitioner should, at all reasonable times during* business hours, have access to the goods in the hands.of. the corporation ; that all the goods should, remain the absolute property of the petitioner until sold and delivered by the corporation to customers, or charged under the eleven months' provision; that all goods, as soon as shipped by the petitioner, should be deemed in the custody of the corporation, which should thereafter bear any loss resulting from the destruction, of, or injury to, such -goods from whatever cause, and in case of such destruction or damkge, the goods should be paid for, as if they had been sold by the corporation at invoice prices, at the time of such destruction or damage. The agreement was to commence June 1, 1894, and was to expire January 1, 1896, but any goods held by the corporation at the expiration of the agreement should be held, disposed of and paid -for under the terms of the agreement. Pursuant to this agreement, goods were shipped, from time to time, between June 1, 1894, and October 25, 1895. At -the latter date when the receiver was appointed, some of the goods were in the hands of the corporation unsold, and they went into the custody of the receiver. The court on the application of the petitioner, Hovember 13,1895, ordered. these goods to be-delivered to it, and they were so delivered; other goods had. been sold and delivered to customers, but had not -'been paid - for, and accounts, bills and dioses in action which. were proceeds of such sales, made in August, September and October, came-' into the custody of the receiver. These amounted to, August sales, $1,374,17, and September and October sales, $3,881.13; in. all, $5,255.30.
There were never any goods charged under the eleven months' clause in the agreement.
The petitioner before commencing this proceeding made claim to tiie moneys, accounts, bills and choses in action, which the receiver refused" to recognize. The court held the petitioner entitled to this money, and directed it to be paid by the receiver. We think the disposition of the fund made at Special Term was correct. The agreement clearly created between the parties the ordinary relation of principal and agent. The general rule is that the relation between a commission agent for the sale of goods, and his principal, is fiduciary; that the title to the goods until sold remains in the principal, and when sold, the proceeds, whether in the form of money or notes or other security, belong to him, subject to the lien of commission agent for advances and other charges; that the agent holds the goods and the proceeds upon an implied trust to dispose of the goods according to the directions of the principal, and to account for and pay over to him the proceeds of such sales; that the relation between the parties in respect to the proceeds of the sales is not that of debtor and creditor simply; that the money and securities are specifically the property of the principal, and he may follow and claim them so long as their identity is not lost, subject to the rights of bona fide purchasers, for value, and in case of bankruptcy or insolvency of the agent, the goods and their proceeds do not pass to the assignees in bankruptcy or receiver in insolvency for general administration, but are subject to the paramount claim of the principal.
This relation between the parties is- subject to modification by express agreement, or by agreement implied from the course of business or dealing between them. The parties may so deal that -the consignee becomes a mere debtor to the consignor for the proceeds of sales, having a right to appropriate the specific proceeds to his own use. (Baker v. N. Y. Nat. Ex. Bank, 100 N. Y. 31; Com. Nat. Bank of Penn. v. Heilbronner, 108 id. 439.) The only question here is whether, under the agreement made between the parties, their relations as to the proceeds of the property after the sales had been made, were those of debtor and creditor simply, or whether they were those of principal and agent.
It seems to us that all the. provisions of the agreement indicate that the relation of principal, and agent continued after the sales, and attached to the proceeds of such sales. The agreement provided that the goods should be shipped to the corporation for sale on commission, and prescribed the minimum price at which the sales should be made; that the corporation should. receive, hold and sell the goods as a factor or agent for the petitioner, and render accounts of the sales the mid die-of the month, and pay at the end of the month, the amount of the selling price, less the commission, and that the goods should remain the absolute property of the petitioner until sold and delivered by the corporation to the customers.
These and other provisions in the agreement clearly indicate an agency for the sale of goods on commission. The goods until sold were to be the property of the petitioner, and the corporation was to sell the petitioner's property as the petitioner's agent. The relation of principal and agent certainly existed as to the property until its actual sale and delivery. Why should it be said to terminate at the precise moment of the sale and delivery of the property, and not to continue as to the proceeds of the sales ? It may be said that the agreement provided for payment to the petitioner, not of the proceeds of the sales themselves, but of an rniount equal to the selling ¡Drice, less the commission We think this language was used not to indicate a change in the relations of the parties, but merely to fix the amount to be paid oyer to. the petitioner. It may be said that the allowance of time until the middle of the month to render accounts of the' sales, and until the last of the month to pay over the money, indicated a design to give credit to the corporation for the money, and permit it to mingle the moneys with its own. We think the time for rendering the account was fixed for the purpose of enabling the corporation to account for all the sales at one time rather than the several sales separately, and that the time for payment was fixed to permit a short credit to the purchasers, and to give the corporation an .opportunity to make collections, and remit for various sales at one time, instead of remitting for each sale separately.
We see nothing in the agreement to lead us to conclude that, as to'the proceeds of the sales of these goods, the relation of principal and agent did not exist. The moneys, therefore, collected by the receiver belonged, not to the corporation, but to the petitioner, and the order directing the payment thereof to the petitioner was properly made and should be affirmed, with costs.
Patterson, O'Brien and Parker, JJ., concurred; Ingraham, J., dissented.