Case Name: Graham & Co. v. Duckwall, Fitch & Co.
Court: Kentucky Court of Appeals
Jurisdiction: Kentucky
Decision Date: 1871-05-09
Citations: 8 Bush 12
Docket Number: 
Parties: Graham & Co. v. Duckwall, Fitch & Co.
Judges: 
Reporter: Kentucky Reports
Volume: 71
Pages: 12–22

Head Matter:
Case 5 — PETITION OEDINAEY
May 9.
Graham & Co. v. Duckwall, Fitch & Co.
APPEAL PROM JEEEERSON COURT OE COMMON PLEAS.
1. Merchandise brokers and eactors or commission merchants.— Some of the distinctions between them and their respective powers and duties defined.
2. A broker is a mere negotiator between other parties, and does not ordinarily act in his own name, but in that of his employer. He is not intrusted with the custody of goods which he may be employed to buy or sell, and is not authorized to buy or sell them in his own name.
3. A eactor may buy and sell in his own name, as well as in the name of his principal, and he is intrusted with the possession, management, control, and disposal of the goods to be bought or sold, and has a special property in them.
4. A broker has ordinarily no authority viriute officii to receive payment for property sold by him; and if payment is made to him by the purchaser it is at his own risk, unless from other circumstances the authority can be inferred.
5. Ie a broker sells the goods oe his principal in his own name, WITHOUT SOME SPECIAL AUTHORITY so to do, inasmuch as he exceeds his proper authority, the principal will have the same rights and remedies against the purchaser as if his name had been disclosed by the broker.
6. Factors may sue in their own names for the price of goods sold by them for their principal, and have a right in their own names to receive payment, and to discharge the debtors from their official transactions, unless notice is given to the contrary by their principal.
7. Where goods were sold by sample, as in this case, and the purchasers were informed in the city of Louisville, at the time of the sale, that they were not in possession of the seller, but were in the East, and were to be shipped and delivered to the purchasers thereafter, the law will infer that the purchasers knew the goods belonged to other parties, and that the seller was a mere broker.
8. C., B. & Co., in Louisville, sold goods by sample on thirty days’ time to D., F. & Co., in said city. The goods were shipped by eastern merchants to D., F. & Co. After the thirty days expired D., F. & Co. paid C., B. & Co. the price of the goods. The eastern merchants thereafter sued D., F. & Co. for the price of the same goods, and are held to be entitled to a recovery for the same.
The following instruction was improperly refused by the court: “If the jury believe from the evidence that the goods were shipped by the plaintiffs to and were received by the defendants directly from them, and that C., B. & Co. merely negotiated the sale between the parties, and never had the goods in possession, the law was for the plaintiffs, unless they should believe from the evidence that C., B. & Co. had express authority from the defendants.”
9. It is the resident agent or broker, and not the non-resident merchant or manufacturer, that is required by the act of March 2,1860, to take out license as peddlers to sell goods by card, sample,1 or otherwise.
The failure of a resident factor or agent to procure the license can not prevent a recovery by the non-resident principal of the price of the goods sold by such factor or agent, and shipped to the purchaser directly by such non-resident.
Gazlay, Ye aman & Reinecke, .... For Appellants,
CITED
1Domat’s Civil Law, 492, Cushing’s edition.
7 East. 558, Hinde v. Whitehouse & Galen.
1 Espinassi, 105, Rucker v. Cammeyer.
27 Maine, 362, Hinckley v. Arey.
15 East. —, Whitehead, &c. v. Tuckett.
4 Barn. & Cress. 547, Carr v. Hinchcliff.
11 East. 36, Favenc, &c. v. Bennett, &c.
1 Starkie, 185, Campbell, &c. v. Hassell, &c.
2 Barn. & Aid. 137, Baring, &c. v. Corned
4 Com. Bench, 149, Ireland v. Thompson.
20 Wendell, 267, Saltus v. Everett.
34 New York Reports, 424, Higgins v. Moore.
3 Foster (N. H.) 373, Fowle v. Leavitt.
Story on Agency, sections 28, 34, 106, 109.
O. F. Stirman, . Barret & Rober' For Appellees,
CITED
Payley on Agency, 280, Dunlap’s edition, 278.
Statute of March 2, 1860, 2 Stanton, 805.
Story on Agency, section 109.
Payley on Agency by Lloyd, 279, 280.
2 Campbell, 242, Blackburn v. Baldwin.
1 Greenleaf on Evidence, section 79.
1 Starkie, 233, Campbell v. Hassell.
4 Burrows’s Reports, 2104.

Opinion:
JUDGE PETERS
delivered the opinion oe the court.
This action was brought by appellants, wholesale grocers in the city of Philadelphia, against appellees, grocers in that part of the city of Louisville known as Portland, to recover of them $1,130.18, the price of a bill of goods sent to them by appellants, of which a bill of particulars is filed and made part of the petition, dated December 4, 1867.
Appellees in their answer deny that they ever purchased a bill of goods of appellants at any time whatever, and deny that they owe them $1,130.18, or any part thereof, or any sum of money whatever. But state that some time in November, or early'in December, 1867, Cutter, Bement & Co., doing business as commission merchants in Louisville, called on them at their place of business in Portland, and offered to sell them coffee and syrup by sample on thirty days' time, and exhibited to them the samples of the articles they proposed to sell, informing them that they did not have the articles which they proposed to sell them in store; but said they had them somewhere in the East, and it would be about two weeks before they could deliver them; that they told said Cutter, Bement & Co., if their coffee and syrup corresponded with the samples, they would take .a specified quantity of each at the price at which they offered them; that the goods were shipped to them by rail, a part from New York and a part from Philadelphia; but that they did not receive with them, nor by mail or other wise, any account or letter of advice to inform them that said goods were the property of any other person than Cutter, Bement & Go.; and at the expiration of thirty days, the time on which they made the purchase, they paid Cutter, Bement & Co. $1,127.18, the price which they agreed and promised to pay for said goods.
They further state that when they purchased the goods they believed Cutter, Bement & Co. were the owners; that no other person or persons were disclosed to them as the owners; and they paid them therefor, believing at the time that they alone had the right to receive the price.
By an amended petition appellants charge that Cutter, Bement & Co. were merchandise brokers, and as such sold the goods to appellees, and by their letter, under date December 2, 1867, informed them of the sale, and directed the shipment of the goods, -which letter with a duplicate of the bill of lading and bill of goods they file with their amended petition.
In their answer to the amended petition appellees deny that Cutter, Bement & Co. sold them the goods as brokers, or that they had any knowledge " or information sufficient to form a belief as to whether or not they were brokers." They allege that Cutter, Bement & Co. did business on Third Street in Louisville, where they advertised themselves as commission merchants and auctioneers; they deny that they had any knowledge, or information sufficient to form a belief that said Cutter, Bement & Co. were brokers, or sold the goods as appellants' agents, and deny that they ever received a bill of the goods or a bill of lading.
After the pleadings were made up the issues of fact were submitted to a jury, who found a verdict for appellees, and a new trial having been refused by the court below, a judgment was rendered in conformity to the verdict, from which this appeal is prosecuted.
When the evidence was closed three instructions were asked by appellants, all of which were refused, and two given which were asked by appellees; and whether the court erred in refusing and giving instructions is the important question in this case.
For appellants it is insisted that Cutter, Bement & Co. acted in the sale of the goods to appellees as merchandise brokers, and not as factors or commission merchants; and that as the goods were sold by samples, and appellees were informed at the time of sale that they were not in the possession of Cutter, Bement & Co., but were in the East, and were to be shipped and delivered to them in two weeks thereafter, the law will infer that they knew the goods belonged to other parties, and if they paid the price to Cutter, Bement & Co., they did it at their own risk.
The correctness of this position is controverted by appellees, and they contend' that as the party who made the sale to them did not disclose the character in which he acted they had a right to infer that he was the owner of the goods, or at most that as Cutter, Bement & Co. were doing a business under a sign as commission merchants and auctioneers, in dealing with them the law would imply that they acted in the transaction as factors; and if in the latter capacity, a payment to them would be binding on the owners.
As the evidence was conflicting, and the jury have made a verdict, we can not disturb their finding, and unless the court below ei'red in giving or withholding instructions, or in the admission or rejection of evidence, the judgment must stand.
Mr. Justice Story, in his work on Agency, section 28, defines a broker to be an agent employed to make bargains and contracts between other persons, in matters of trade, commerce, or navigation, for a compensation, commonly called brokerage; or in the language of Lord Chief Justice Tindal, " a broker is one who makes a bargain for another, and receives a commission for so doing." And Justice Story further says: "Properly speaking, a broker is a mere negotiator between other parties, and never acts in his own name, but in the names of those who employ him. Where he is employed to buy or to sell goods he is not intrusted with the custody or possession of them, and is not authorized to buy or sell them in his own name. He differs from a factor in some very important particulars. A factor may buy and sell in his own name, as well as in the name of his principal; a factor is intrusted with the possession, management, control, and disposal of the goods to be bought or sold, and has a special property in them, and a lien on them. A broker, on the contrary, usually has no such possession, management, control, or disposal of the goods, and consequently has no such special property or lien." (lb., sec. 34.)
If a broker sell the goods of his principal in his own name (without some special authority so to do), inasmuchc-as he exceeds his proper authority, the principal will have the same rights and remedies against the purchaser as if his name had been disclosed by the broker. (lb., sec. 28.)
In sec. 109 Justice Story, in the same work, says: "A broker employed to buy or sell goods without limitation of price has the incidental authority to bind his principal by any price at which he honestly buys or sells. So a broker authorized to sell goods without any express restriction as to mode may sell the same by sample or with warranty. Ordinarily he can not make the contract in his own name, but ought to do it in the name of his principal. So he can not buy or sell on credit except in cases justified by the usages of trade. So a broker has ordinarily no authority virtute offioii to receive payment for property sold by him; and if payment is made to him by the purchaser it is at his own risk, unless from other circumstances the authority can be inferred."
But factors stand in a different relation to their principals. The same author, in section 110, says: "Factors may sell the goods of their principal in their own name, and may buy in like manner, and in each case the principal will be bound by their acts in the same way and to the same extent as if his own name were used." And in section 111 it is said they have a special property in goods consigned to them, and for many, if not for most purposes (except as between themselves and principal), they are treated as the owner of the goods; and consignees for sale, such as commission merchants, are described as factors.
It is to this consideration that factors are to be treated as special owners of the property consigned to them that may be referred many of the rights and powers attributed to them.
They may sue in their own name for the price of goods sold by them for their principal; and of course they have a right, in their own names, to receive payments, to give receipts for payments, and to discharge the debtors from their official transactions; at least unless notice is given to the contrary by their principal. (Ibid., sec. 112.)
Having thus ascertained the difference between factors or commission merchants and brokers, and their respective powers and duties, we may with the more confidence examine into the action of the court below in granting and refusing instructions.
Appellant asked the court to instruct the jury: First, if they believe from the evidence that the goods were shipped by them to and were received by appellees directly from them, and that Cutter, Bement & Co. merely negotiated the sale between the parties, and never had the goods in possession, the law was for appellants, unless they should believe from the evidence that Cutter, Bement & Co. had express authority from appellants to receive payment from appellees. This instruction was refused, and one given, on motion of appellees, to the effect that if the jury believed from the evidence that Cutter, Bement & Co. sold the goods to them by sample, without disclosing to them at the time that they were acting for appellants in making said sale, and appellees paid the price to Cutter, Bement & Co. when due without notice that appellants claimed the price and looked to them for payment, the law was for them.
We do not propose to enter upon an analysis of the evidence; but to determine whether the first instruction asked by appellants was properly refused, it must be ascertained whether it was a mere abstraction or baseless proposition.
Appellees certainly knew that the goods were not in possession of Cutter, Bement & Co. when they made the purchase, for they were so informed; and they were also informed that they were in the East, and would be shipped to them; and there was evidence conducing to show that they got a bill of lading, with the names of appellants at the head of it, showing their business, place of business, that they were the owners of the goods, and shipped them directly to appellees, dispensing with all agents and consignees. This was enough at least to have put appellees on the inquiry as to who were the owners of the goods, and in what character Cutter, Bement & Co. acted in making the sale, and to authorize the first instruction asked by appellants; and any instruction in conflict with it is deemed erroneous.
Wherefore the judgment is reversed, and the cause is remanded, with directions to award a new trial, and for further proceedings consistent with this opinion.