Court Opinion

ID: 6414804
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:55:21.579027+00
Date Added: 2024-06-11T15:51:30.343135
License: Public Domain

Foster, J.
This case must depend for its decision upon the application of well established legal principles to a state of facts of an unusual and extraordinary character. )
The defendants, commission merchants or factors in New Orleans, received during the rebellion in 1864 from the plaintiff a large quantity of bay consigned for sale, upon which they made advances in payment of freight and other charges amounting to about half its value. Three hundred and twenty-one tons of the hay were sold to the military officers of the United States for cash. The remainder, one hundred and thirty-four tons, were seized by military authority. No fault could be imputed to the factors for either of these events. The sales for cash were clearly within the scope of their authority, and the seizure by the strong arm of military power was an occurrence beyond their control.
The only payment which the United States officers would make, either for the hay purchased or for that seized, was in Certificates of indebtedness, the negotiable notes of the United States, payable to the bearer and upon interest at the rate of six per cent, per annum. The factors accepted these as payment, and at once sold them for their market value, ninety-three cents on the dollar. The plaintiff claims that the defendants are liable *367for the loss sustained by this sale at a discount, first, because as factors they had no right to take in payment such securities; and secondly, because, if justified in accepting them, they had no right to sell them below par without notice to him. And we are called upon to decide whether in either of these particulars they violated their duty, so as to render themselves personally answerable to their principal, the consignor, for the loss sustained by the sale of the certificates at a discount below their face.
The ordinary rule is clear, that factors must obey the instructions of their principal; that they may not compromise debts without authority; that they must, under a change of circumstances, advise the consignor, and await his directions; and that they must conform to the usages of trade presumed to be known to both parties, or to the course pursued by them and approved by the owner in former instances. But what is their duty in novel, critical and unforeseen emergencies? To answer this question we may refer to an opinion of Mr. Justice Story in a suit relative to the conduct of a supercargo who had totally departed from the instructions of the shipper, which is so apposite that we adopt its principles and the substance of its language. In circumstances of necessity or great urgency it is only necessary that the agent should act bona fide and with reasonable discretion. 61 What, then, was it the duty of the supercargo to do in such a case of unexpected occurrence, not within the contemplation of the instructions ? ” “ Now I take it to be clear that if, by some sudden emergency, or supervening necessity, or other unexpected event, it becomes impossible for the supercargo to comply with the exact terms of bis instructions, or a literal com pliance therewith would frustrate the objects of the owner and sacrifice his interests, it becomes the duty of the supercargo, under such circumstances, to do the best he can, in the exercise of a sound discretion.” “ He becomes, in such a case, an agent from necessity for the owner,” “ In all voyages of this sort there is an implied authority to act for the interest and benefit of the owner in all cases of unforeseen necessity and emergency, created by operation and intendment of law.” Forrestier v. Bordman, *3681 Story It. 43, 51. A justification founded upon necessary departure from the ordinary customs of trade or from actual instructions must undoubtedly be construed with considerable strictness. The agent cannot be allowed lightly or unadvisedly to assume a latitude of discretion not conferred upon him by express authority, or by those usages of trade, which both parties are presumed to have,known and contemplated. But the interests of commerce require, and the enlightened principles of commercial law bestow, a discretion which enables the factor to protect his principal from the irreparable injury which would be liable to arise in the absence of authority to act under critical circumstances, unexpectedly occurring, vrhich do not admit of delay for the purposes of communication and consultation. And the factor, so placed, who acts prudently and in good faith, as the owner himself, being a wise man, would have been likely to do if personally present, finds his protection in the sincerity and sound discretion of his conduct, and is not answerable for consequences, although subsequent events may demonstrate that his principal would have been the gainer by a different course from the one he has conscientiously and discreetly adopted.
This is the rule which must govern the decision of the case here submitted to us. It is a question of fact rather than of law. The good faith of the defendants is expressly conceded. We might, in strictness, give judgment for them on the ground that the case stated does not affirmatively establish their liability. But. we prefer, in conformity with what we suppose to be the intention of the parties, to consider and pass upon the question, whether the defendants did- act with such prudence and discretion as to exempt them from liability. Ought they to have refused the certificates proffered in payment ? If they had done so, the only redress open to the plaintiff would have been an application to the war department at Washington or to congress or to the court of claims. No rational man could regard these remedies as worth pursuing to avoid a discount of seven per cent., the whole amount of which was only $1659.28. The expense, the delay, the uncertainty of ultimate success, would have induced any one, having regard solely to his pecuniary *369interest, and acting in his own affairs, to accept the proffered certificates rather than to attempt to stand upon his strict legal rights, where no legal remedy was practically available without disadvantages disproportionate to the amount at stake.
The propriety of selling the certificates may be considered more questionable. As they were sold as soon as received, justice requires us to regard the factors’ entire judgment and conduct together, and if the principal was benefited by the whole exercise of their discretion, and placed in a better condition than if they had refused to assume the responsibility, it would be unfair to subject them to loss because they might in one respect have done still better. No one can say that they would have decided to accept the certificates without also, as a part of the same mental act, deciding to convert them forthwith into cash. But we do not proceed upon this narrow ground alone. In guarding the interests of a distant principal it was their duty to err on the side of prudence rather than of overconfidence. We must remember the situation of the parties and the country at the time of the transaction, and judge by the light they then had, and not according to the wisdom that comes after the event. The ordinary facilities of correspondence between Maine and New Orleans were greatly interrupted. No telegraphic communication was possible. The mails were slow and uncertain, and somewhat exposed to capture in transit. The interval within which the most speedy interchange of letters could take place was long enough for momentous events. The pecuniary credit of the government depended on the varying fortunes of war. A single disaster might have depressed the market value of the securities far below the point at which they then stood. Other factors and agents similarly situated with themselves deemed it their duty to realize at the current rates of the market. More than half of the proceeds of the property would be required in New Orleans to pay advances and charges. • The justification of the sale is not to be placed on the ground that they had a right to make a sacrifice in order to reimburse themselves, for factors cannot sell below limits without notice to the owner of the amount due ana a request for payment. But *370the fact that the consignor owed $14,303.45, payable in New Orleans, on account of this shipment, was a circumstance of some weight in determining the question of expediency. If the securities were to be sent to the North, and the money due to be remitted thence, double risks of transportation must be incurred.
It is impossible for us to conclude that the course adopted exhibited any such error of judgment or neglect of duty as ought to render mercantile agents personally responsible to their principals. Judgment for the defendants.