Case Name: John Fraser & Co. vs. Tenants, Clow & Co.
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1852-01
Citations: 5 Rich. 375
Docket Number: 
Parties: John Fraser & Co. vs. Tenants, Clow & Co.
Judges: O’Neall, Evans. Frost and Withers, JJ. concurred.
Reporter: South Carolina Law Reports
Volume: 39
Pages: 375–386

Head Matter:
John Fraser & Co. vs. Tenants, Clow & Co.
As a general proposition, the instructions given by a principal to his agent constitute the leading outlines of the contract between them, and the agent, who seeks a recourse upon his principal, must shew that he has conformed to the instructions.
But where the instructions of the principal are silent, much of necessity must often be left to the discretion of the agent; and if, in the absence of instructions, there be a known usage oí trade, or a mode of transacting business, applicable to a particular agency, the agent is not only permitted, but it is his duty to conform to it.
Before Evans, J. at Charleston, Fall Term, 185L
The report of his Honor, the presiding Judge, is as follows :
“ On the 3d July, 1847, the defendants wrote to the plaintiffs, directing them to buy 500 bales of cotton, and “ for the amount to draw on our friends, Messrs. James Lee & Go. New York, at ten to sixty days sight, as may be most convenient to you.” On the 30th July, Lee & Co. wrote to Fraser & Co. agreeing to accept, and saying, “ on the receipt of invoice and bills of lading, such drafts conforming thereto will have due honor.” About the 1st of October, the cotton was purchased, and before the 8th was put on board of a ship which sailed on the 35th. On the 5th October, Fraser &. Co. notified Lee & Co. that they had drawn on them at 13 days, for $ 13,000, and would draw for the balance (about $7,000) the next day. In this letter they say, “ these drafts will not be presented for some days, but you will be good enough to notice their maturity, and negotiate on your said friends accordingly. We will transmit you one of the bills of lading in a few days.”
“ On the 8th October, Fraser & Co. wrote to the defendants, who reside in Liverpool, informing them of the shipment, and saying they had first taken the bills of lading in their (the defendants’) names, but had afterwards cancelled these and taken out new bills to their own order. The reason assigned for this change was the distrust from the failure of certain large houses in Liverpool-The words are, “ in the face of such failures, we are sure there will be difficulty in negotiating on English houses, (for none can stand higher than those that have failed,) and Messrs. Lee & Co. may find it convenient to have the bills in that form in effecting their negotiations.” This letter was enclosed in one to Lee & Co. unsealed, with a request that they would read it and forward it by the packet of the 16th. In this letter was also enclosed the bills of lading endorsed in blank. In the letter, Fraser &■ Co. say, “ we will thank you to negotiate for the amount with Mr. E. L. Trenholm, who is in New York, and will call on you. The bill for $>13,000 we have kept, intending to run the time out, but it is now cancelled.” This letter was sent enclosed to E. L. Tienholm, but he having left New York, it was returned to Charleston.
“ On the 23d October, Fraser & Co. wrote to Lee & Co. enclosing the letters which had been sent to Trenholm as above stated, with the bills of lading endorsed, and requested that the amount should be paid into Bank. They also informed them that the ship sailed on the 15th.
“ On the 27th October, Lee & Co. wrote to Fraser & Co. declining to accept the bills of lading, and to pay for the cotton without further directions from their principals, Tenants, Clow & Co. on account of “ the change in the consignment, and the delay in sending the shipping documents.” After this refusal, Trenholm went on to New York. Negotiations were had with Lee & Co. who finally proposed that they would accept bills drawn on them at sixty days, on the condition that the transaction should be ratified by their principals. This was refused on the 4th November, and on the same day Trenholm wrote to the defendants enclosing copies of the correspondence, and enclosing also the letter of Fraser & Co. to them of the 8th of October. Notice was also given that Fraser & Go. had drawn on them for the amount of the cotton, but the bills of lading did not accompany the letter, but were sent with the bill of exchange to the Bank of Liverpool.
“ On the 3d December, Tenants, Clow & Co. wrote to Fraser <fc Co. acknowledging the receipt of the letter of the 4th of November. They say on the same day they were waited on by Mr. Langton, of the Bank of Liverpool, who said he had the bills of lading and the draft, but had peremptory orders not to deliver the bills of lading without payment of the draft. Acceptance was refused. Subsequently an offer was made to deliver them on acceptance, but this was also refused. They also say, that for the reasons assigned, they decline to have any thing to do with the cotton, and approve the conduct of Lee &• Co. in every particular. The cotton was afterwards sold on account of Fraser & Co. at a great loss, which is sought to be recovered in this action. In addition to the letters, there was some parol evidence, which I will now state.
“ Mr. Adger said, it was very usual to take the bills of lading to the order of the shipper, when endorsed it is under the control of the holder, and will facilitate his negotiation of bills drawn on the shipment, and is often demanded by the drawee of such bills as a security. To take the bill of lading, payable to the order of the shipper, would be no departure from his instructions, if he endorsed and forwarded them as directed. It could work no injury to the principal. The failure of Reed, Irving & Co. and other houses in Liverpool, occasioned great embarrassment and great difficulty in negotiating bills, and in such case it was a great advantage to one negotiating a bill of exchange to have the bills of lading. The steamer from Boston, of the 1st November, would anticipate a vessel from this port, sailing on the 15th of October. The bill of lading is the evidence of ownership. If in the bill a name be mentioned, the cotton would belong to him, but if payable to order, then, when endorsed, it would belong to the holder. An agent would have the right to change a bill to A. B. to one payable to order. The bill in this form was the best security to the agent in New \ ork. The agent should send the bills of lading immediately, and his sending them to another might imply a suspicion.
“ Mr. Matheison said that an agent to buy was usually reimbursed by the bill drawn according to directions. The usual mode is to draw to order, and to endorse the bills of lading. The agent drawn on has a right .to complain if this is not done. The steamer from Boston, of the 1st November, would arrive at Liver pool before a vessel sailing from this port on the 15th of October. If a bill of lading be sent to a third person to be delivered, no right would pass until it was delivered. It is no deviation from the usual practice to send the bills to a partner in New York to be delivered. Bills of lading sent to New York are usually payable to order, that the agent there may sell his bill of exchange, and secure it by a delivery of the bills of lading. A delay of nineteen days in the delivery might or might not be a prejudice. The principal might be benefitted by having the bills of lading, as he might in an emergency raise money on them. This was all the evidence.
“I charged the jury as follows, so far as my charge is brought into question by the grounds in the notice. That Fraser &• Co. when they bought the cotton, accepted the terms proposed. These were:
“ 1. That Fraser & Co. should buy for Tenants, Clow & Co. 500 bales of cotton. In making the purchase, they were agents merely, and the cotton, when bought, belonged to the defendants.
“ 2. The plaintiffs were to pay for the cotton, and were to be reimbursed by bills on Lee & Co. at from 10 to 60 days after sight. That this was the mode of payment as agreed on by the contract, and Fraser &. Co. had no right to demand any other.
“ 3. That the bills of lading were to be sent to Lee & Co. as a condition of their acceptance.
“ After stating what I supposed to be the contract, I instructed the jury that Fraser & Co. had no right to change the mode of payment. If they did so, it was a disaffirmance of the contract, which discharged the defendants from any obligation to perform. I then stated the evidence and expressed my opinion, that neither the request to arrange for the payment, as made in the letter of the 8th, with Trenholm, or the request in the letter of the 23d, to pay the money into Bank, was such a change in this part of the contract as discharged the defendants from liability. It was a mere request that the money should be paid without the formality of drawing a bill, but no demand that the money should be paid at different times than those agreed on. Mr. Matheison said it was no deviation from usage to send the bills of lading to Trenholm, one of the partners, in New York, and the jury were instructed that if this was done bona fide, that Trenholm might deliver them to Lee & Co. it was the same as if sent directly to Lee & Co. and in my judgment would not discharge the defendants, especially as the bills were afterwards sent in time to be forwarded to England before the cotton would arrive.- I also told the jury that drawing a bill on the defendants for the amount of the cotton, after Lee & Co. had refused to receive the bills of lading and to pay for the cotton, though a departure from the contract as to the mode of payment, yet it had been forced on them by the refusal of Lee & Co. to pay according to the original contract.
“ 2. That Lee & Co. had stipulated that the bills of lading should be sent to them. Nothing was said in the letters as to the person to whom the bills should be payable, and I did not consider the bills as sent was any deviation from the original contract. It was a time of great commercial embarrassments, and the form used was a benefit to Lee &• Co. and no prejudice to the defendants. Nor did I consider the change in the bills was any violation of the duty of Fraser & Co. as agents, having the control of the shipment. The instructions of the principal were silent on the subject, and they might well conclude, under the circumstances, that the change was desirable. But, in conclusion, I told the jury that if the change in the bills of lading, and thoy were sent to Trenholm instead of Lee & Co. in order that Trenholm might withhold them, unless payment was made or secured in some way inconsistent with the contract, that was an assertion of title to the property as owner inconsistent with their agency, which discharged the defendants from their obligation to perform, and if they found this fact to be true, then their verdict should be for the defendants. In any other view, I thought the plaintiffs entitled to a verdict. I am not sure but on this point I stated the law too strongly for the defendants. ' A mere design to violate a contract, which was never executed, and from which no injury resulted to the other, can hardly be a violation or refusal to perform.”
Verdict for plaintiffs.
The defendants appealed and now moved for a new trial, on the following grounds:
1. Because his Honor erred in charging the jury, that neither in omitting to send the bills of lading directly to Lee & Co., nor in requiring them by their letters of the 8th and 23d of October, 1847, to negotiate with E. L. Trenholm, or pay the money into Bank, nor in drawing directly on Tenants, Clow & Co. in Liverpool, instead of drawing on Lee & Co., did the plaintiffs, Fraser &. Co. depart from the instructions of their principal.
2. Because his Honor erred in charging the jury, that the motive of Fraser & Co. determined the character of their act in changing the bills of lading and forwarding them to their own partner in New York and keeping the control of them, and that the jury were to judge of this motive : whereas, it is submitted, that the act itself was inconsistent with any claim of agency; and asserted their ownership of the cotton shipped.
3. Because, as agents, Fraser & Co. were bound to send the bills of lading direct to Tenants, Clow & Co. or to Lee & Co. and to draw on the latter bills at from 10 to 60 days, and any deviation from this course released the principals from obligation to fulfil the contract.
4. Because the rescinding of the bills of lading, and the subsequent conduct of Fraser & Co. asserted rights inconsistent with the character of agents, and authorized Tenants, Clow & Co. to reject the cotton.
5. Because the construction of the contract is matter of law to be decided by the Court, and that the verdict being against the true construction, ought to be set aside.
Mermninger, for appellants,
cited 3 Johns. R. 534; 1 Caiup. 53 ; 5 B. & P. 61; 11 Eng. C. L. R. 254; 4 Wash. C. C. R. 549; 1 lb. 453 ; Paley on Ag. 28 ; 4 Robins. Ad. R. 218 ; 9 Cranch, 189 ; 81b. 317; 1 Wheat. 208; Story on Con. § 303.'
Petigru, contra.

Opinion:
The opinion of the Court was delivered by
Whitner, J.
The plaintiffs, factors .in Charleston, were authorized to buy cotton for the defendants, merchants in Liverpool. Five hundred bales were bought and shipped, which the defendants, under the circumstances, declined to accept, whereupon the cotton was sold at considerable loss, and this action was brought and a recovery had in the Court below for the difference.
The precise character of the contract between these parties, the extent and effect of alleged deviations therefrom, having reference to the relation they sustained to each other, have undergone a searching analysis by appellants' counsel.
The grounds of appeal complain of a departure by the agents from the instructions of their principals, whereby the latter, it is insisted, were released from their obligation to fulfil their contract, and, consequently, that no cause of action had accrued. It is urged that the act of the plaintiffs, in a given instance, was inconsistent with any claim of agency ; that the true construction of this contract was wholly matter of law, and, consequently, for the Court alone ; and error is attributed to the presiding Judge in his instructions to the jury in certain particulars enumerated. To these grounds and the facts of the case, reference will be made in their order, without a detailed narrative, as the report of the Judge is full and minute, presenting the entire transaction. As a general proposition, the instructions given constitute the leading outlines of the contract, and the agent, who seeks a recourse on his principal, must show that he has conformed. As it is said, " if the order or power given marks precisely what is to be done, he who accepts and executes it ought to keep close to what is prescribed in it." (1 Dom. B. 1, Tit. 15.) The primary obligation of an agent, whose authority is limited by instructions, is to adhere faithfully to those instructions in all cases to which they ought properly to be applied. (Rundle vs. Moore, 3 Johns. Cas. 36.) Very exact conformity to orders is required in the execution of a commission to purchase, especially as to price, quality or kind, and the destination proper of the thing purchased. Slight deviations in these particulars may justify a repudiation of the contract. (Paley on Agency, 28.) These are ingredients essential in their character, and is referred to now only as illustrative of general principles. The deviations here complained of are as to other points and involve other questions, and there are many modifications of general principles applicable to the exigencies of such agencies. Mr. Story, in his work on Agency, sums up one of his chapters by saying, " that there are certain duties appropriate and belonging to certain classes of agencies resulting either from the general usages of business, or the habit of dealing between the parties, or the special functions to be performed, which cannot be deemed of universal application or obligation." (Story on Agency, § 209.)
The alleged departures from instructions are enumerated in the first ground, and are :
First. In not sending the bills of lading directly to Lee & Co. instead of enclosing to one of their own firm, then supposed to be in New York.
Second. In requiring Lee & Co. to negotiate with E. L. Tren-holm, the individual above alluded to, instead of drawing at once on Lee & Co. as they had been authorized.
Third. In requesting, subsequently, a payment into Bank by Lee & Co. at their earliest convenience.
Fourth. In drawing directly on defendants subsequently, when Lee & Co. had declined to act in the premises without further advices, &c.
As to the mode of transmitting the bill of lading, the instructions were silent, and the question of course presents itself, if one of several modes be selected, and delay ensues, shall the agent be held to answer for the casualty because the adoption of another might have been more fortunate ? Had it been committed to one of the partners going forward, a like disaster may have befallen it, and yet, I presume, on the score of prudence, such a course would have been regarded well advised. In the absence of direction from the employer, the Judge subjected this act of plaintiffs to the double test, whether it was in conformity with usage. and whether, in fact, in this particular, it was bona fide on the part of plaintiffs.
These were considerations properly arising, such as were appropriate for the jury, and when found by them, authorize a legal conclusion adverse to appellants' proposition.
On the Circuit, the Judge instructed the jury that plaintiffs had no right to change the mode of payment, and if they did so, it was a disaffirmance of the contract, which discharged the defendants. This points to the second and third enumerations contained in the first ground of appeal. The letter of instruction gave authority to draw on Lee & Co. of New York, at from 10 to 60 days sight, as may be most convenient to plaintiffs. Lee & Co. promised to give due honor to such draft on the receipt of invoice and bills of lading. When the bill of lading was forwarded to Trenholm, and instead of drawing on Lee & Co. they were authorized to negotiate with him for the amount, here was no new term imposed. It was, in effect, but a postponement to draw until, by personal interview, the day, within the instructions, best suited to the convenience of Lee & Co., might be ascertained, beneficial to the drawees and in no way prejudicial to the principals, or outside of their instructions. If that was the design, and it is a legitimate inference, the conclusion follows and excludes the idea of deviation from the contract in its greatest strictness. So again, when the bill of lading was subsequently forwarded, and Lee & Co. requested to pay the amount at their earliest convenience into Bank to the credit of the plaintiffs, we are to inquire wherein was the deviation. Lee & Co. were to accept and pay, by original agreement, by draft at from 10 to 60 days sight, on receiving the invoice and bills of lading. By substitution, the latter were sent, these being essential to Lee & Co. and the payment as to time was Submitted to their convenience. A Bank was indicated as a suitable recipient for the fund, instead of the holder of a bill of exchange, and the day of payment to be fixed by the debtor at his earliest convenience. instead of the creditor at the shortest moment his cupidity or apprehension might suggest. Unless there is some magic in a bill of exchange, unknown to this Court, the consequences sought by this defence should not be permitted. Certainly the declension of Lee & Co. was not put on this footing, nor can an avoidance of the contract by these defendants be sanctioned on this account. The remaining objection taken in the first ground, because the defendants were directly drawn on subsequently, cannot avail. Lee & Co. had refused to receive the bill of lading or pay for the cotton, and hence the propriety and necessity of resorting to defendants. The call upon them to accept or repudiate was proper and indispensable. The second ground of appeal maintains that the act of changing the bills of lading and forwarding to their own partner in New York, was, of itself, inconsistent with any claim of agency, and that motive could in no way determine its character. It will be perceived, by a careful review of the charge of the presiding Judge, that, in the consideration of this question, the double aspect, in which it was treated on Circuit, rendered the rule more stringent as to the claim set up by plaintiffs, and, to the extent it operated, was beneficial to the defendants.
The plaintiffs were held to shew, not only that the act of changing the bills of lading was, of itself, consistent, but that in its performance the purpose was pure. The motive of the party belonged to the jury, and so, too, the question of usage upon which the act itself and by itself was to be viewed. The reason given was, in their judgment, sufficient to rescue the act from suspicion, and as a question of commercial usage, both in reference to the proper mode of taking out the bill of lading originally, which is brought up in the third ground, and of the right' of the agent to change it, the proof was direct and positive. And this also is established by the verdict.
The presiding Judge held that, as to the bills of lading, the instructions of the principals were silent. Much of necessity must often be left to the discretion of the agent, and if, in the absence of instructions, there be a known usage of trade, or a mode of transacting business applicable to a particular agency, in such case the agent is not only permitted, but it is his duty to conform to it. (Story on Agency, § 199.)
If the order or power be indefinite, the agent may set such bounds, or give to it such extent, as may reasonably be presumed to be agreeable to the intention of the person who makes the order or gives the power, whether it be with regard to the thing itself which is to be done, or the way of doing it. (1 Dom. B. 1, Tit. 1.) This is a rule of civil law and founded in good sense. What better exponent of the nature and extent of implied authority can be resorted to, I cannot conceive. They are not looked to for the purpose of enlarging the powers of the agent, but for the purpose of interpreting the powers conferred. It cannot be admitted that these bills of lading, as soon as taken out, were without and beyond the control of the agent, thereby in • vesting a full and complete title in another, analagous, as it has been insisted, to the transaction of bargain and sale, wherein the execution of the deed passes the title. The right to the possession, management and control, with which these plaintiffs were entrusted and could properly exercise over this cotton, resulting from the very nature, ends and design of their agency, constitutes an essential difference. The analogy cannot illustrate, at least until the rights of third persons attach.
Without protracting these views, perhaps already extended beyond the occasion, I will only add, the original instruction of the defendants pointed to Lee & Co. as friends who would honor the drafts authorized, and that Lee & Co. in assuming this very responsible position, did so with a qualification, that the invoice and bills of lading were to be forwarded simultaneously. This may therefore be regarded as a part of the undertaking of plaintiffs, but for no good reason unless made available by proper endorsements. The mistake, then, was in the first bills of lading taken out, and if it had not been corrected, might have justly subjected the plaintiffs to censure and it might be to loss, if loss had ensued, by this deviation.
The change was competent, prudent and proper. The bona Jides of the plaintiffs in certain acts, and their consistency with commercial usage, have each been established by the verdict of the jury, who were correctly instructed by the Judge on the Circuit. The motion for new trial is therefore dismissed.
O'Neall, Evans. Frost and Withers, JJ. concurred.
Motion dismissed.