Court Opinion

ID: 6502413
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:15:04.268374+00
Date Added: 2024-06-11T15:54:38.784729
License: Public Domain

ORMOND, J.
The first section of the bankrupt law declares, that its provisions shall not extend to one whose debt has been created “ as an executor, administrator, guardian, or trustee, or while acting in any other fiduciary capacity.’-’ It is in this case insisted, that a factor who commits a breach of his duty, by selling and retaining the proceeds of cotton intrusted to him to sell, is embraced by the act, and prohibited from taking advantage of its provisions. We are clearly of the opinion that this case does not come within the interdict of the statute. The “ fiduciary capacity” spoken of in the law, is a trust proper; otherwise every agent who had violated his authority, would be excluded from the benefit of the act. To this point the case of Chapman v. Forsyth, 2 Howard, 203, is a full authority.
It is, however, supposed that the act of the Legislature of this State, which makes it penal for clerks of steamboats, factors, &c. to sell, negotiate, transfer, or pledge money, or chattels, intrusted to them for safe-keeping, or for any special purpose, without authority to sell or transfer the same, contrary to good faith, &c. shows this to be a breach of trust, and therefore excluded from the benefit of the bankrupt law. The of-fence punished by this statute, does not appear to be the same as the case made by the replication to the plea, because the factor, in this case, had authority to sell. Independent of this consideration, we suppose it to be clear, that the construction of the bankrupt law must be the same all over the United States, and cannot be varied in each State of the Union by the local law. To understand the use of terms employed in it, giving or excluding its benefits, resort must be had to their meaning in the common law, and not in the local law of the State where the bankrupt may happen to be domiciled. The demurrer to the replication was therefore improperly overruled.
The questions presented on the bill of exceptions, involve the consideration of the relative rights of principal and agent. It is the duty of an agent, limited by instructions, to adhere faithfully to them, and if he departs from them, he becomes responsible to his principal for the injury actually sustained in consequence of such departure. Whether he may not, in any case, exceed his instructions without risk, need not be now discussed — the general rule certainly is, that ho must adhere lite*341rally to them, at his peril. [Paley on Agency, 7, 68 ; Leverick v. Meigs, 1 Cowen, 659; Liotard v. Graves, 3 Caines, 238; Mallough v. Barber, 3 Camp. 150; Short v Skipwith, 1 Brock. 103.]
It follows, necessarily, that when a factor sells the goods of his principal, it becomes his duty to disclose to him in a reasonable time, the fact of such sale; and that he cannot, without a breach of faith, employ the money of his principal in trade, but should hold it subject to his order. 'When, therefore, the sale of the cotton was made, in this case, the money belonged to the principal, and it was a breach of duty in the factor, not to disclose this fact to his principal, when directed by him to ship his cotton to Liverpool. The argument, that the planter has sustained no injury, if he intended to ship his cotton, is unsound. It cannot now be known, whether he would have desired his cotton to be shipped to Liverpool, if the fact of the sale had been disclosed to him; and the Court- correctly refused the instruction moved for on this point, not only for this reason, but because it was purely abstract.
If the cotton was shipped without instructions, the factor was responsible for any loss sustained thereby, unless the principal, after being informed of the fact, ratified the act. His instructions were to sell the cotton for the best price he could get in the home market, and did not authorize him, to expose the planter, to the hazards, or the fluctuations of the foreign market.
It appears in this case, that the cotton of the plaintiff was sold, with that of many others, in a large lot, at the price of thirteen cents per pound — the relative, or average value of that of the plaintiff, when compared with the whole lot, being twelve cents per pound. It was proved “that it was very common in the trade, for factors, in making large sales of cotton of different persons, to sell the same at an aggregate price, and to apportion the price, or sum received, among the persons to whom the different crops belonged, according to the relative value of each crop; but there were one or two factors in Mobile who would not do so.” The usage of trade, may doubtless be relied on by the factor, to show that he has been in no default, as every one transmitting produce to him for sale, must expect that it will be disposed of in the ordinary course of trade; *342unless by instructions to the factor, he expressly limits the mode and manner of selling.
Whether a usage which authorized the factor, or the broker through whom the sale was made, to determine that a particular lot of cotton was worth less than it actually sold for, in connection with other separate lots, we need not now determine, because we think no such usage is proved so as to be binding on the planter. The language of the bill of exceptions is, “ that it was very common in the trade, but that a few factors in Mobile would not do so.” This is certainly not proof of a usage of trade, and there being no authority shown for reducing the price, the plaintiff was entitled to the price his cotton actually sold for.
The cotton substituted for that of the plaintiff, being without his consent, was at the risk of the factors, and the plaintiff had the right to a recovery for the difference, between the amount his cotton was actually sold for in Mobile, and the net proceeds of the sale of the substituted cotton in Liverpool, which it appears he received.
, The factor being bound to adhere literally to the instructions of his principal, if he violates them is liable for the injury actually sustained by the principal, in consequence of the violation. in this case it appears, that the principal limited the sale of his cotton to fourteen cents per pound; but a disregard of this instruction would not necessarily impose a liability on the factor, to pay the difference between that price, and the price at \vhich it was sold, if sold for less. The actual injury would be, the price at which it’might have been sold during the season, to be ascertained by the price at which cottons of that quality were actually sold for. [Webster v.DeTastet, 7 Term Rep. 157; Short v. Skipwith, 1 Brock. 103.]
The Court charged the jury that if the factors sold the cotton limited at fourteen cents per pound, at a less price, or shipped it without the consent of the owner, they were liable for the price as limited. This, from the law as above laid down,, was erroneous. It is true, it appears to have been proved, that these factors sold other cotton of the plaintiff, during the same season, (in April, 1839,) for fourteen cents per pound, and this might have authorized the jury, in taking that as the value of , such cotton during that season. But the charge of the Court *343took that power from the jury, by instructing them, that they must give the plaintiff the price he had himself affixed to his cotton, instead of giving him the price his cotton might have sold for during the season, if his instructiohs had been obeyed. Upon this part of the case, the case referred to from 1 Brock. 103, is expressly in point. See also Stqry on Agency.
This view of the case renders it unnecessary to consider, whether this Court could not render a judgment here against Marshall alone. Let the judgment be reversed, and the cause remanded for further proceedings.