Case Name: Hanson Kelley versus Israel Munson
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1811-03
Citations: 6 Tyng 319
Docket Number: 
Parties: Hanson Kelley versus Israel Munson.
Judges: 
Reporter: Massachusetts Reports
Volume: 7
Pages: 268–273

Head Matter:
Hanson Kelley versus Israel Munson.
A sale by a factor creates a contract between the owner and the buyer; and if on credit, the buyer may not pay the factor after notice from the owner, except where the factor sells in his own name, and is responsible to the owner for the price, whether collected or not; or where he sells to his own creditor, there being mutual dealings between them.
This was an action of assumpsit, brought to recover the proceeds of eighteen hogsheads of molasses, alleged to have been shipped by the plaintiff at St. Vincents, and consigned to the defendant for sale. There was also a count for 1000 dollars, money had and re ceived by the defendant to the plaintiff's use.
Upon the trial of the action before Parker, J., at the last November term in this county, the plaintiff offered certain evidence to prove that in November, 1807, one Elias Williams was at Wilmington, in North Carolina, (where the plaintiff resides,) in the schooner Fair Trader, of which he was master, and one Moses Wallis, of Salem, was owner; that the plaintiff put on board said vessel a quantity of lumber, to be carried to Barbadoes, and delivered to his consignee there, on payment of certain freight, stipulated in the bills of lading.
* The vessel did not arrive at Barbadoes, but was [ * 320 ] driven by contrary winds to St. Vincents, as stated by 'Williams, the master. At this latter place, he sold the whole cargo to one Dunham, receiving part of his payment therefor in the produce of the island, with which he sailed in January, 1808; and after stopping at Havanna, arrived at Charleston, South Carolina, in April following. The plaintiff went there, and attempted to get from Williams the proceeds of said cargo, or compensation therefor, but could obtain nothing. Williams left the remaining sum due for the said cargo in Dunham’s hands, at St. Vincents, with orders to ship it in molasses to the defendant, as soon as the new crops should come in, and the price become lower. It appeared that the molasses in question was afterwards shipped, in pursuance of this order.
The plaintiff also produced a deposition of said Williams,
taken since the commencement of this action, in which he testifies, “ that, on or about the twentieth day of December, 1807, he sailed from Wilmington, on board the lugger Fair Trader, bound for the West Indies; the said lugger having on board, on freight and consignment, a cargo of lumber, about ninety thousand ; that, in January following, he sold the said cargo of lumber at St. Vincents, to W. Dunham, for and on account of the plaintiff, amounting to upwards of 2000 dollars, the proceeds of which he, Williams, ordered to be shipped to Boston, to the care of the defendant, to whom he gave orders to sell the same, and remit the money to him, that he might settle with the plaintiff, the freight of said cargo having been paid to him, Williams, at St. Vincents; and that he, Williams, had good reason to believe, and verily did believe, that in consequence of said orders, two different shipments had been made to the care of the defendant, to be remitted as aforesaid, say, in all, thirty-five hogsheads of molasses, all of which was the property of the plaintiff, as remittance in payment for the said lumber.
* Before the commencement of this action, the said [ *321 ] Williams drew an order on the defendant, in favor of the plaintiff, for the net proceeds of said molasses; but, before the order was presented, the defendant had been summoned as the trustee of said Williams, at the suit of said Wallis. This action was then defended by Wallis, in the name of Munson, who had no interest therein, but was merely a trustee for whoever might be the right owner.
Williams died in February, 1809, since which his administrators claim the said proceeds for the benefit of his creditors, it being understood that his estate is insolvent.
The defendant produced the letter of Williams,
advising him of the intended shipment of the molasses; also the invoice and bill of lading, in which it is expressed to be shipped on the account and risk of Williams. The defendant also produced other letters from the said Williams to said Wallis, written at St. Vincents, tending to prove that he had in his possession there certain effects of said Wallis, arising from the freight of said cargo of lumber, or otherwise ; and it did not appear that any act was done by Williams, at St. Vincents, to separate the effects of Wallis and the plaintiff, or to ascertain whether any part, or how much of the proceeds of the plaintiff’s lumber, was carried away by Williams from St. Vincents; nor whether any, or how much, was left in the hands of Dunham, at St. Vincents, as before mentioned.
Upon this evidence it was contended for the defendant, at the trial, that the plaintiff had not proved any right to these specific goods, and of course could not recover in this action, even if the jury believed that they were purchased in St. Vincents with the proceeds of the lumber, which was shipped by the plaintiff.
The judge directed the jury, that if they believed, from the evidence, that the molasses, which was shipped by Dunham to Munson, was purchased with the proceeds of the cargo shipped by the plaintiff at Wilmington, and sold on his account [ * 322 ] by Williams, as testified by him in his deposition ; * then it came to Munson, as the agent or factor of the plaintiff, through the medium of Dunham and Williams; and that the plaintiff had a right to draw it out of the hands of Munson, notwithstanding Williams, by his letter of advice and bill of lading, shipped it on his own account and risk; that Munson might, before notice from the plaintiff, have safely paid it over to Williams; but as the money was still in Munson’s hands, if they believed the deposition of Williams, the property of the plaintiff in the molasses was clearly proved, and he now had an undoubted right to recover the proceeds, deducting the expenses, commissions, &c.
The jury found a verdict accordingly, in favor of the plaintiff, upon which judgment was to be rendered with additional interest unless the Court should be of opinion that the direction of the judge was wrong in law; in which case the verdict was to be set aside, and the plaintiff to become nonsuit.
Selfridge and Whiting argued for the plaintiff, and Jackson for the defendant.

Opinion:
Sewall, J.,
delivered the opinion of the Court.
(After stating the facts at the trial from the judge's report, including his direction to the jury, his honor proceeded as follows.)
Was the direction given to the jury at the trial correct in point of law upon this evidence ? is the question to be considered.
Upon the supposition relied on for the defendant, that Williams conducted fraudulently and tortiously in going to St. Vincents, in selling the plaintiff's cargo there, and in directing the proceeds remitted to Boston in his own name; and, in short, that in the transaction proved, independently of Williams's own testimony, he was not the agent therein of the plaintiff, either by contract or by necessity ; yet as he had been made to some purposes the agent of the plaintiff, and the subject of the demand, now in question, is ascertained to be the proceeds of the plaintiff's cargo *sold at St. Vincents, we see no just reason for consid- [ * 823 ] ering the property in the hands of the defendant, the proceeds of a payment for that cargo, as acquired to Williams by a breach of trust and a fraudulent course of conduct. Dunham and Munson, the intermediate agents of Williams, so far as they had proceeded under his directions, or, if that had happened, had given any credit to Williams upon the score of this property, without notice of the claims of the present plaintiff, would have been considered as indemnified by the color of right in Williams, while possessing and disposing of it in the usual course of business.
But, between Williams and the present plaintiff, (and as a question of property it is altogether between them,) it would be unjust, and it is not required by any general principles important to mercantile credit and confidence, that the fraud of Williams, according to the present supposition, should be allowed a further success to his own emolument. Nor would an acquisition, effected in the manner supposed, be rendered more just or legal by an appropriation of it to the general creditors of the guilty party, or to discharge any debt of his, where the credit had not been obtained by his possession and apparent ownership of the property in question.
It is true that Williams, supposing his conduct fraudulent and tortious, incurred himself every risk attached to the sale at St. Vincents, and the remittance to the defendant; but the transaction being without the plaintiff's consent, and by the supposition, without any authority from him, this circumstance of Williams's risk will not operate to deprive the plaintiff of his right against his trustee. For the sake of a remedy, where property has been wrongfully embezzled by an agent, or obtained and disposed of by a person acting without title, or under a void authority, the party injured may dispense with the wrong, may waive the tort, as it is expressed, may adopt the agency, becoming, in that case, liable to all the consequences of adopting it, may suppose the transaction to [ * 324 ] have been for his account and to his use, and then those who hold, or are indebted for the proceeds, hold for the account of the right owner as a principal, and are indebted to him.
Upon the other supposition made, and depending wholly upon the credit to be given to Williams's testimony, contradictory as it is, in some respects, to the presumptive evidence arising from the circumstances of his conduct, that he acted by necessity, with fair intentions, and for the interest of his employer, in selling at St. Vincents; then the transaction has been throughout for the account and at the risk of the plaintiff, independently of his consent, and notwithstanding Williams used his own name, and was not, in every disposition of the plaintiff's cargo, or the proceeds of it, careful to distinguish, and to give notice who was the general owner, and that he himself was but a factor for another.
The general rule is, that a factor's sale creates a contract between the owner and the buyer; and where a factor having sold upon credit, the owner or principal gives notice of his interest and claim to the buyer before payment, and requires him not to pay the factor, the buyer will not be justified in afterwards paying the factor. And this rule applies whether the factor has or has not named his principal at the time of the sale.
There are exceptions to this rule; as where the factor sells in his own name, being himself responsible for the price of the goods sold, whether collected or not; or where he sells them to his own creditor, where there are mutual dealings. The principal cannot, in those cases, interfere, to the prejudice of the party dealing with the factor, without any knowledge.of his agency; and only the balance, if any be due to the factor, may be reclaimed by the principal.
These exceptions are not applicable to the case at bar, or rather confirm the application of the general rule ; for Williams never was personally responsible, unless he became so by his own wrong. This his principal may dispense with, if he pleases; and the intermediate agents have * indemnified themselves, [ * 325 ] or are not liable to any loss by this decision.
Upon the whole, it is the opinion of the Court, that the direction upon the evidence given at the trial was correct, and that judgment be entered according to the verdict.
2 L. Raym. 1216, Lamine vs. Dorrell. — 2 Lev. 245. — Bull. N. P. 133.
2) Bull. N. P. 130.
[The principal may always maintain an action, and is generally liable to be sued when discovered.— Thomson vs. Davenport, 9 B. & C. 78.—4 M. & R. 110. — Patterson vs Gaudoseque, 13 East. 62.— Cochran vs. Irlam, 2 M. & S. 301, n. — Ed.]