Court Opinion

ID: 6314124
Source: CourtListenerOpinion
Date Created: 2022-02-18 20:21:03.152217+00
Date Added: 2024-06-11T08:59:11.445336
License: Public Domain

The opinion of the Court was delivered by
Gibson, C. J.
It rather seems the plaintiffs might have had recourse to F. De Lizardi & Co. on the bills accepted in advance, or by an action on their agreement to accept. It is fallacious to say there was no proof of privity between the particular parties. The consignees had given the plaintiffs a credit with that house for the very purpose of enabling them to draw on it in payment of purchases ; and the bills drawn in pursuance of it had been honoured in repeated instances; after which it would have been too late for F. De Lizardi & Co. to say they had made no engagement with the plaintiffs. They were in the predicament of a master who had recognised an authority in his servant to contract debts on his account, by previous payment of his bills. The promise to accept was doubtless made to the consignees, and not to the plaintiffs; but might not the plaintiffs, from whom a consideration moved on the faith of it, have maintained an action on it, or had the benefit of it, as a precursory acceptance ? It would seem from Smith v. Plummer, decided at the present term,* that they might. F. De Lizardi & Co., by their letter of the 29th of June, 1836, recognised the credit as granted specially in favour of the plaintiffs ; after which it would be a fraud in them to insist on want of privity with a house that had trusted the consignees on the faith of their promise. The operation was the same in substance as if the bills had been drawn by the consignees in the plaintiffs’ favour; and Powel v. Morrison shows they would, in that case, have been taken, with the advantage of an acceptance in advance. What the plaintiffs did, was to draw in favour of themselves by the consignees’ authority; and as their bills were consequently attended with the same advantage, I see nothing to have prevented them from recurring to F. De Lizardi & Co. as actual acceptors; and it is immaterial to the question that they subsequently discharged the responsibility of that house, by protesting the bills for want of a special acceptance. But here the defendants’ case stops.
No authority has been produced for the position of their counsel, that a consignor who has means of recourse to funds in the hands of a solvent house, may not stop the goods for the insolvency of the consignee at any time before satisfaction had; nor has any sufficient reason been given why he should not. A credit with a banker is not payment, but a means of payment, more or less secure, according to the solidity of the depositary ; and the greater or less certainty of *204the security cannot affect the question of it? character: it is but a security still. Here the consignees were the vendees and primary debtors; and what did they pledge as a guaranty 1 The acceptances of F. De Lizardi & Co.; and no principle is surer than that a creditor may press all his securities at the same time. The London house was but a surety; and it has never been adjudged that the existence of an additional security precludes the right of stoppage consequent on the failure of the principal debtor. Lord Kenyon is reported in Northey v. Field, (2 Esp. 613,) to have said that the leaning of the Courts in favour of stoppage in transitu, is a leaning in furtherance of justice; and if there ever was a case for its encouragement, it is the present, in which, to have deprived the plaintiffs of their hold on the goods, would have exposed them to the hazard, not only of the acceptors’ solvency, but also of their eventual liability. That house, it seems to us, might have been held responsible on the agreement to accept; but it might have seemed otherwise to the Courts of Westminster Hall — in fact, an opinion adverse to its liability, though no part of the case, it is proper for purposes of illustration, to say, was given by the plaintiffs’ own counsel in England — and it would be palpably unjust, did the law cast on them the burden of electing between consistent remedies at their peril. The protection given by this specific remedy would not have been entire, had it not been demandable in any event, and without waiting for the result of an application of collateral securities. Every judge and text writer speaks of the right as arising by the failure of the vendee, without regard to circumstances ; and it cannot be doubted, in this instance, that, as vendees, the consignees were the direct and principal debtors. What was said in Parsons v. Armor, (3 Wheat. 428,) — that a bill of exchange is a substitute for coin, and that a power to draw and throw the bills on the market is equivalent to a deposit of cash in the agent’s vaults — was said, not in regard to the relation of vendor and vendee, but in regard to the relation of principal and agent, and as affecting the agent’s right to purchase on credit under an authority to purchase only for cash. As nothing but an extinguishment of the debt is satisfaction between the buyer and seller, I would say that a power to check for a deposit in bank would not be payment to suspend the right of stoppage, unless it were so agreed, and the deposit were actually placed to the drawer’s account — certainly it would not produce that consequence if the deposit might be withdrawn, or the consignor’s check might be refused. On the principle of substituting the London house as the debtor, the bills, drawn as they were by the consignors, would have exonerated the consignees from all responsibility whatever ; but it has not been said that an action would not have been maintainable against them on the contract of sale, and why might they not proceed as well by an enforcement of their lien ? If the drawing of a bill had the effect of merging every- previous responsi*205bility, the right of stoppage, which is incident to the consignee’s liability on the contract of sale, would be extinguished by it in every case; but that it is followed by no such consequence, is shown, among other instances, by Feise v. Wray, (3 East, 94,) in which the right was sustained, though an endorsed bill, drawn by the consignor, and accepted by the consignee, had still a month to run. This would prove, were an authority wanted for so plain a principle, that liability on the original contract is not supplanted by a security given for the price; as is instanced also by the giving of the buyer’s own note or bill, which, though it operates an extension of the credit, extinguishes not the original contract; as well as by payment in the bills of a third person, which is not absolute satisfaction, unless it were declared so by the terms of the bargain. In Feise v. Wray, the counsel of the assignees did not pretend that the acceptance of a bill drawn for the whole, is payment for the whole; but only that as the holder might have proved under the commmission, the bill was to be taken as payment pro tanto; to which the Court answered, that even payment of a part did not preclude the consignor from stopping the residue. That case shows, also, that the consignor, being entitled to all the remedies for which he implicitly stipulated, is not precluded from stopping the goods by the existence of a collateral security. It would indeed startle the commercial community to say, that where the consignor has collateral means of payment, uncertain as it must be in its results, he shall not press a lien growing incidentally out of the consignee’s direct liability. The Messieurs De Lizardi and company have already contibuted their share of the loss suffered by these transactions; and the other creditors have no equity to throw the plaintiffs on the security of their acceptance. They had an undoubted right to stop in transitu, when the consignees executed their assignment: have they lost it by the transfer: if not, has it been effectually exercised!
The right of stoppage in transitu is said to be an equity; and the defendants, being invested with a prima facie title, it is said are entitled to claim as purchasers for a valuable consideration, and without notice: no part of which is founded. Though first of all sanctioned by a court of equity, it has grown by commercial usage into a legal privilege, annexed to a contract of sale ; and it is equally, but much more frequently, enforced by a Court of law. Neither are the defendants, as assignees in trust, purchasers for a valuable consideration. That proposition has been settled by Williams v. Twelves and Knowles v. Lord. Nor could the consignors, by this species of transfer, whatever they might have done by an assignment of the bill of lading, convey an unencumbered ownership, be the consideration what it might. It is a general principle of the common law, that he who has not property in a chattel, or a right to present possession of it, cannot transfer it absolutely; to which a transfer by endorsement of a bill of lading is an exception, depending on the *206commercial qualities of that document, which, as evidence of an unconditional title, passes by endorsement like a promissory note or bill of exchange, and, like it, cannot be challenged in the hands of a bona fide holder who has received it in a course of regular dealing, for want of consideration betwixt the consignor and consignee. Craven v. Ryder, (6 Taunt. 433; S. C. 1 Eng. Com. Law Rep. 439,) is an authority in point, that a resale by the consignee does not bar the consignor’s right.
The objection that a special authority was necessary to empower their general agent to act in the plaintiff’s behalf, is also unfounded. Not even such a power, but a transfer of the ownership, which is usually effected by an endorsement and transmission of the bill of lading, is requisite to enable an agent to claim by action in his own name; and it seems to have been doubted in Cox v. Harden, (4 East, 211,) whether even an endorsement, without valuable consideration, were sufficient. But it is not necessary to invest an agent with the ownership, in order to invest him with the right of stoppage. Nor does it seem necessary that he should have an authority for it adapted to the particular transaction. To constitute a commercial agency, I should be inclined to think, requires not a writing under seal: and where it is general, acts done by the agent wfithin the scope of the principal’s business, bind him as effectually, or operate to his benefit as extensively, as if they were done by himself. They are treated as acts of a servant done in his master’s employment.
The remaining point is the only one which induces the judgment to pause. The countermand of the original order to deliver to the consignee, which is the usual act of stoppage, is so invariably communicated to the master, or other person in possession, that I have seen but one case in which it was communicated to any one else. It has not however been adjudged, that a countermand is the only means by which the consignor can assert his right; and it is not perceived why any other notorious act of reclamation should not have the same effect. The object of a demand is not merely to implicate the master, but chiefly to affect the consignee with notice through his person ; and to accomplish that, an open and notorious assertion of the right in any form, would seem to be equally potent and pr’oper. The consignee is bound to notice a demand on the master ; but he surely cannot complain of a demand made on himself, that it gave him direct, instead of circuitous information of the consignor’s attachment of the property by virtue of his lien. A delivery subsequent to demand on the carrier, does not defeat it; and on what ground is the consignee’s possession inoperative, in such a case, but that of surreption 1 A demand of the carrier is a countermand of the previous order to deliver; and where he is not accessible at the time, there is no reason why an equivalent for it should not be found in a countermand of the consignee’s authority to receive. If there were a specific object to be accomplished by a demand on the *207carrier, it would be to make him liable; but his responsibility is seldom looked to; the object being to prevent the consignee’s ownership from becoming absolute; for which purpose, any act that warns him of an enforcement of the lien, ought to be taken for a sufficient protest against his possession. It is stated by Chancellor Kent, (2 Comm. 543,) that no specific form of stoppage is necessary; and in Ex parte Walker and Woodbridge, (1 Cooke's B. L. 149)—the case to which I have alluded — it was deemed sufficient to defeat the title of the bankrupt’s assignees, who had taken possession of the property by force, that the consignors had previously entered the goods at the custom-house. Now what are the circumstances here? The Messieurs Phillips, the consignees, became insolvent about the twenty-second of March, and the ship arrived on the ninth of May. Mr. Derby, the plaintiffs’ general agent, wrote to the defendants, the assignees, on the sixth of May, informing them that they had not acquired an absolute title in consequence of the protest, for non-acceptance of the bills drawn on F. De Lizardi & Co., and proposing that the goods should either be delivered to him on deposit to await the fate of the bills, or that the assignees should keep a separate account of sales; and in. the event of their acceptance of the latter alternative, prospectively demandéd the proceeds as the property of the plaintiffs. There could not be a more distinct annunciation of their right under their lien, or a more direct assertion of their intention to urge it. In consequence of this, the parties agreed that the goods should remain without being sold till the question of title should be determined by a competent tribunal, should the bills not be paid in the meantime; and that the rights of the parties should not be varied by the agreement. The bills were not paid; and the plaintiffs, having brought this action of trover, stand as they did when their agent asserted their claim. The assertion, it is said, was accompanied with proposals, and not a demand; but the proposals themselves were a substantive demand;' and it is sufficient, in either aspect, that the agent not only pointed to the existence of the plaintiffs’ lien, but gave a notice of their determination to prosecute their, right. After that, the defendants could gain no advantage by taking possession of the goods.
Judgment for the plaintiffs.

 Ante, p. 89.