Case Name: John McDonogh v. Auguste Delassus and another
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1845-05
Citations: 10 Rob. 481
Docket Number: 
Parties: John McDonogh v. Auguste Delassus and another.
Judges: 
Reporter: Robinson
Volume: 10
Pages: 481–505

Head Matter:
John McDonogh v. Auguste Delassus and another.
Where an agent of a third person, believing himself authorized as such to sell certain property of, his principal, receives from a purchaser, who also believed that he was authorized to sell, a part of the price, which was paid over to the principal, the purchaser, on discovering the want of authority in the vendor, may recover from the principal the amount so received by him, and this, though a balance may be still due by the agent to the principal, after crediting the former with the amount paid over by him. Art. 9134 of the Civil Code does not apply to such a case.'
An agent is bound to deliver to his principal whatever he has received by virtue of his procuration, though unduly. C. G. 2974.
The relation of principal and agent is not that of debtor and creditor from the moment that the agent receives money or property for the principal. It is a trust; and does not give the agent any title to the money or property so received, which would be the case if he were regarded as a debtor. The agent may become a debtor of the principal, but not until the dissolution of the contract of agency, and his neglect or refusal to account and deliver over the funds or property. While the agency continues, the property or money in the hands of the agent belongs to the principal, the agent being a mere trustee.
Appeal from tbe District Court of the First District, Buchanan, J.
Roselius, for the appellant.
L. Janin, contra.

Opinion:
Garland, J.
The plaintiff claims as against Auguste Delassus, one of the defendants in the court below, but against whom no judgment has been rendered, and who is not before us, that he be decreed to be the legal owner and proprietor of two lots of ground and the stores erected thereon, fronting on New Levée street, being Nos. 58 and 59, and, as such owner, that he be entitled to the possession and enjoyment of the same; and further, that said Delassus be ordered to authorize his wife to sign a renunciation in favor of the petitioner, and to give him an unincumbered title to said property -r and, in case the court should be of opinion that his (petitioner's) claim to said property is not valid, and that an unincumbered title ought not to be executed by Delassus, then he prays that L. B Macarty be decreed to pay him the sum of seven thousand dollars, with legal interest; but, if the title to said two houses and lots be declared valid against Delassus, then he prays for a judgment against Macarty for two thousand dollars, with interest.
The facts upon which these claims are founded, are, that, in the year 1840, the defendant Macarty being about to absent himself from the State, for a considerable length of time, if not altogether, gave his power of attorney to Delassus, conferring on him as extensive powers in relation to the administration and management of his property and funds in this State as could well be given, and, among many special powers granted, was an authority to purchase any real estate that might be mortgaged to him, and also power to sell, on such terms and conditions as the agent should think advisable, a large quantity of immovable property, which was mentioned in the act. Under this power of attorney, Delassus proceeded to manage and control the property and business of his principal, until some time in the year 1843, when the property of D. T. Walden, a bankrupt, was offered at public sale by his assignee. Upon nine lots of ground and the stores erected on them, so offered for sale, Macarty had a mortgage, and, as appears from the marshal's deeds of sale, Gasquet became the purchaser of two of them, Macarty of five, and Delassus of two. Some questions have arisen about the adjudications made at the sale and their legal effect; but it is not necessary to notice them here. From the evidence it appears, that Delassus was under the impression that all the lots and stores had been adjudicated to him as the agent of Macarty, and it is admitted in the record, that he would swear that he believed that, under the power of attorney, he had authority to sell them; and the evidence leaves no doubt on our minds that McDonogh entertained a similar belief. Accordingly, a verbal agreement was entered into by which Delassus, as agent as aforesaid, was to sell the nine lots and stores to McDonogh, for $22,500 cash, being at the rate of $2,500 each. Some short time after this Delassus represented, that two of the lots had been, contrary to his expectation, sold to Gasquet, and that he could only convey seven stores, which McDonogh agreed to take ; and, at the request of Delassus, who represented that he had an urgent use for money to remit to his principal, McDonogh advanced $7,000 on the price, and on the following receipt: " Received from Mr. John McDonogh seven thousand dollars, on account of the property sold him, as per act of sale to be passed before H. B. Cenas, Esq., notary public ; said property is composed of seven stores, from the estate of D. T. Walden, Esq. New Orleans, April 18th, 1843. (Signed) Per Proc. L. B. Macarty, Auguste Delassus." Of this sum it is clearly proved, that $6,000 was, on the same day, invested in two bills of exchange, which were remitted to Macarty in Paris, who it is admitted received the same, and got the money for them, which he has used. The remaining $1,000, Delassus swears was employed in paying a debt for which Macarty was responsible. The power of attorney, and other necessary papers, were put into the hands of Cenas, the notary, to draw up the act of sale for the seven lots and stores, who, when he examined the former, discovered that although Delassus had an authority to purchase property, yet he had no authority to sell any but what was specified, and these lots made no part of the special property. This discovery, as a matter of course, put an end to the transaction. Delassus then told McDonogh, that the title to two of the lots and stores, to wit, Nos. 58 and 59, were in his own name, and that he would convey him those two, which was agreed to, and an act of sale, dated the 28th of April, 1843, was drawn up by the notary, Cenas, and signed by both Delassus and McDonogh, and attested by one witness, and so left for the purpose of obtaining the signature of Madame Delassus to her renunciation of all rights of mortgage and privilege, which formed a part of the act. On the 18th of May, 1843, Delassus, for reasons stated in the letter of his attorney at law (which it is not necessary to state here,) addressed to the notary, declined proceeding to the completion of the act, and it remained in that situation.
From the accounts rendered by Delassus to his principal, for the months of May, June, July, August, September, October and November, 1842, it appears that at the end of each of those months, he had a large sum in his hands belonging to his principal. At the close of the last named month, the sum amounted to $84,968 78. The instructions of Macarty were, that $8,000 per annum were to be remitted to him in France, of which sum one-half was remitted semi-annually ; the remainder of his funds the agent was to invest in this State. Delassus says that, at the time he got the money from McDonogh, he was then $6,000 in arrear of this remittance, and that he had no money of Macarty's at the time, and could not have remitted him any unless he had received this money from McDonogh. He re ceived other sums of money for Macarty, subsequent to November, 1842, but at what time, or how much, is not stated. It is not proved, nor contended that Macarty knew, when he received the $6,000, from whom, or how Delassus got it.
The foregoing'appears to us a fair statement of the testimony, so far,as it relates to the controversy between the plaintiff and Macarty. Those portions of it which relate to the difficulty between the former and Delassus, we have endeavored to keep apart, as it seems to us that the consideration of the case has been much confused by arguing it as though it had been tried with Delassus, and he was a party before us. From the same cause, perhaps, has arisen some of the errors into which we think the district judge has fallen, who rendered a final judgment for the defendant Macarty, from which the plaintiff has appealed.
In his judgment the district judge says, that " the case has been tried as regards the defendant L. B. Macarty alone, upon the issue made up by his answer and supplemental answer.'' It is, therefore, important to see what those issues are, and whether they should have been tried without Delassus being before the court. The judge says truly, that those issues are not alto gether consistent with each other, nor are they responsive to the demand the plaintiff sets up against Macarty. He no where asks for a judgment against him for the two lots and the houses on them. That portion of the demand is directed against Delassus alone, and the demand against Macarty is exclusively for money; yet the court below has proceeded on the irrelevant and inconsistent pleas of one defendant, to decide a claim set up by the plaintiff against the other, who has filed no answer, and was not a party to the trial. In his first answer Macarty admits that Delassus held his power of attorney for specified purposes, and that the property at Walden's sale was adjudicated to J. R.. Jennings and Madame Lalaurie, and that the assignee of Walden had conveyed it to Delassus, all of which he says, is contrary to law, and that those sales are void. He then proceeds to say that, he is informed, that Delassus purchased the property for him; but he avers that he had no authority to do so, and he refuses to acknowledge or ratify the purchase, wherefore the sale is null, and the proper ty should be restored to the assignee of Walden, to be sold according to law; but if the sale is not annulled, then he says that he reserves his recourse on the assignee, who he prays may be made a party; and further avers that the sales to Delassus were intended for his benefit, and that he accepts them if he cannot procure their nullity, or his recourse on the assignee for the amount of the adjudication. There are other allegations in the answer equally contradictory of each other, and the prayers present various demands reponsive to the claims. That portion of the answer which directly applies to the plaintiff's demand against Macarty, denies that Delassus ever received any money from him, or remitted the same; wherefore he avers that the plaintiff has no claim as Delassus was never authorized to borrow money for him, or to remit him any, except such as he had collected from his debtors or tenants. The supplemental answer relates exclusively to the adjudication and title to the lots, and it is only necessary to say that it claims them on the ground that they were adjudicated to Delassus as agent for the defendant, and that he accepts them, and prays for a judgment.
In detailing the evidence, we have stated that it was admit ted on the trial that Delassus would swear that he had full authority to sell the seven lots and stores. The fact of the plaintiff's believing the same thing, is proved to our satisfaction, and neither party was undeceived, until the notary carefully examined the power of attorney, and informed them of their error. Before this was done, the plaintiff had paid the #7000 to Delassus, as the agent of Macarty. He acted under a full belief that he was the agent, and paid the money in good faith on account of what he believed to be a valid contract, which money was received by the defendant, or was applied to his benefit. This is a clear case of money paid and received in error. But as soon as the notary explained to the parties the actual authority conferred by the act of procuration, the position of things was changed, and the contract Delassus then made with the plaintiff, as to the two stores, was not as agent, but as a party acting for himself, in relation to a sale of property to which he had an apparent title, and which he claimed as his own, whether rightfully or not we shall not determine, until he is before us.
We now come to the only part of the case we propose to decide at present, except so far as our judgment shall open the question of the respective rights or claims of the parties to the title to the property and the mortgage thereon, which is to be hereafter settled, which is, can the plaintiff recover of Macarty the sum received by Delassus as his agent, and by him appropriated to his use ? The equity of the demand is so clear, that we cannot hesitate in saying that the plaintiff ought to recover unless there is some positive law to prevent it. The counsel for the defence here, and the judge below say, that there is such a law, and they rely upon article 2134 of the Civil Code as protecting him from responsibility. That article say's: " If .the debtor give a thing in payment of his obligation, which he has no right to deliver, it does not discharge his obligation, and the owner of the thing given may reclaim it in the hands of the creditor, unless it be discharged by the payment of money, or the delivery of some of those things which are consumed in the use, and the creditor has used them, in which cases neither the money, nor thing consumed, can be reclaimed, and the payment will be good." This article we find under the head of payment or performance in general, which, is a mode of extinguishing a conventional obligation. It therefore becomes necessary to examine the contract of mandate, and see whether it gives rise, at once, to the relation of debtor and creditor, in the same manner as other conventional contracts do. Pothier informs us, that it is of the class of contracts " de heinfaisance," regulated by the rules of natural justice. The mandatary is obliged by the contract, to render an account of his agency to his principal; and if he does not, it gives rise to the action mandati directa, on the part of the principal against the agent, in case he should, without just cause, fail in executing the mandate with which he is charged, in which action he is liable to be condemned to pay damages and interest for his unfaithful conduct." Pothier, Contrat de Mandat, Nos. 2, 3, 51, 61. Story, in his Treatise on Agency, section 203, says, it is the duty of the agent to keep regular accounts of all his transactions on behalf of his principal, and to render them at all reasonable times, and to pay over or deliver all the property and proceeds in his hands. It is the duty of the agent to keep the property of his principal separate from his own, and not to mix it; if he does, and afterwards he is unable to distinguish between the one and the other, the principal, as a penalty, has a right to take all. Ib. No. 205. Our Civil Code says, that the Hgent is responsible in damages for the non performance of his duty: he is bound to render an account of his management, and to restore to his principal whatever he has received by virtue of his procuration, even should he have received it unduly. Articles 2971, 2973, 2974. From these authorities, it seems to us that the law does not, by the contract of agency, establish at once the relation of debtor and creditor between the agent and principal. That the former may finally become a debtor, and the latter a creditor, is undeniable ; but not, we suppose, until the dissolution of the contract, and the neglect or refusal of the agent to account and pay over the funds and property in his hands. Whilst the agency continues, the property and money in the hands of the agent belongs to the principal: the agent is a trustee, and if he disposes of the property improperly, the principal can recover it from the possessor. The procuration in favor of Delassus was not revoked, and he notified thereof, when he received the money from McDonough. It was not received by Delassus in his individual capacity, nor so paid to him by the plaintiff; but it was received as agent, on account of a contract which both parties believed he was authorized to make. Macarty had a right to receive the money, although unduly received by his agent; he did receive it; and when the error was discovered, he had no right to keep it, because his agent had not been faithful in other respects, and thus enrich himself at the expense of another. If Delassus had obtained this sum from the plaintiff in his own name, and had given it to Macarty, we should not pretend that he was responsible for it, unless the money had been stolen, or procured by a gross fraud, which is not alleged nor pretended. But such is not the case. The name and credit of Macarty was used by his agent in a manner in which he believed at the time that he was authorized to use it, for the purpose of getting the money. He received it by virtue of his procuration, and gave it to his principal, who must restore it. Article 2134 of the Civil Code is not, in our opinion, applicable to the ease before us. Delassus did not give to Macarty a thing he had no right to deliver; on the contrary, what he gave he was bound, as his agent, to deliver; and, being proved to have been received and delivered through error, the money must be repaid. In his answer Macarty does not allege that Delassus was his debtor, nor that the money was received from him in discharge of an existing debt, although it was permitted to be shown at the trial, by Delassus' accounts, that he hadreceived large sums as agent, which had not been accounted for, and that no remittance had been made for a considerable time.
We are not prepared to establish, as a general rule, that the relation of principal and agent, is that of creditor and debtor as soon as the latter receives money or property for the former. We regard it as something more: it is a trust; and the receipt of the money or property does not give the agent a title to it, which would be the case if he be regarded as a debtor alone.
It is, therefore, ordered and decreed, that the judgment of the District Court be annulled and reversed, and that the plaintiff, John McDonogh, do recover of the defendant L. B. Macarty the sum of seven thousand dollars, with interest at the rate of five per cent per annum from the 23d day of June, 1843, the day of judicial demand, with costs in both courts; reserving to the plaintiff, to Delassus, McCarty, and the assignee ofWalden, all their rights or title to and mortgage on the lots Nos. 58 and 59, and the stores thereon, whenever the same shall come up for trial, whatever said rights may be.
An agent is a competent witness for his principal, in an action against the latter to recover a sum of money, alleged to have been paid to the agent through error, and admitted to have been paid by him to his principal. The witness is indifferent, being responsible to one or the other party for the amount in controversy.