Opinion
December Term, 1849
W.C. Noyes G. Wood, for appellant.
F.B. Cutting D. Lord, for respondents.
Two questions are to be determined: 1st. Did the chief justice commit any error in the charge given to the jury? 2d. Ought he to have given to the jury all or any of the instructions which he was requested to give by the plaintiff's counsel?
To determine whether the charge was such as the law required, the facts in the case must all be taken into consideration. These parties lived so near to each other, that letters could pass from one to the other in five or six days; and they could, without any inconvenient delay, consult each other and inform each other of their intentions, views and wishes. If the defendants had believed it necessary that they should sell the plaintiff's pork to secure the repayment of their advances, it would have been a very easy matter for them to have informed the plaintiff, that unless their advances were repaid, they should sell his pork to reimburse themselves. In two weeks from the time they had mailed such notice in New-York, the plaintiff might have been in that city and paid them, or sent them a draft on a responsible house or bank. But the law as given in charge to the jury would apply to all cases indiscriminately, whether the parties lived in the same house in the same city, or on opposite sides of the globe. According to the charge, the fact that the plaintiff had directed the defendants not to sell the pork, was wholly immaterial, because the defendants had a perfect right to disregard the directions. The jury were in effect told, that if a consignor has received any advances upon goods consigned, the factor has a perfect right to disregard any directions which the consignor may give in relation to the goods, and may rightfully sell without giving notice to his principal, or asking for a repayment of his advances, although he may give such notice without an hour's delay, and has good reason to believe that the consignor would repay the advances on an hour's notice. Can the interests of commerce require, that a factor should have such an unrestrained power over the goods of his principal? The charge given by the chief justice was reviewed and affirmed by the superior court, and that court were of opinion that the charge was fully warranted by the judgment of the supreme court of the United States in the case of Brown Co. v. McGran, (14 Peters, 479.) The decisions of that court are entitled to great consideration; and in all cases which can be reviewed in that court, its judgments must be regarded as binding on all other judicial tribunals in our country; but in other cases the opinions of that court are entitled to the same respect, and no other, that is due to the opinions of any other court composed of judges of equal learning and ability.
There were facts in the case of Brown Co. v. McGran, not to be found in this, which probably had an influence on the decision. The parties in that case lived in different countries, and they could not, in 1833, when the cause of action arose, have corresponded with each other in less than about seven or eight weeks. The consignor had become insolvent, and notice to him of an intended sale would have been useless. The factor could not delay a sale without taking on himself all the hazard of a fall in the market. It was insisted that the wish expressed by McGran to his factor, was not to be regarded as an order. In this case the superior court when speaking of the letters of the plaintiff to the defendants, say: "They contain a plain direction to withdraw the plaintiff's pork from the market;" and the parties lived so near each other, that letters passed from one to the other in five or six days. There is no presence that the plaintiff was insolvent and could not, if he had received notice of the defendants' intention to sell, have repaid their advances by the return mail. The defendants, therefore, could have incurred no hazard by ten or twelve days' delay. The facts in the two cases are so dissimilar, that in one the defendants might be entitled to judgment; while in the other the plaintiff would be, unless it be law in all cases between principal and factor, that if the factor has made any advances he can sell at his discretion, without notice to his principal, and without any demand of repayment, although the principal has ordered the factor not to sell. I have found no case other than that of Brown Co. v. McGran in which the principle has been thus broadly stated and acted upon, nor do I believe that the rule adopted in that case ought to be regarded of such high authority as to be applied in all cases. The two cases to which Justice Story refers in support of the main point decided, are Pothonier v. Dawson, (1 Holt's R. 383,) and Graham v. Dyster, (6 M. Sel. 1, 4, 5.) The former was a case of a pledge, and the question whether a pledgee was bound to give notice of a sale was not raised. The question was whether a pledgee could sell at all; not whether he was bound to give notice before he sold. The question in the latter case was whether a factor could pledge the goods of his principal; not whether he could sell them without notice, contrary to the orders of his principal.
Where goods are sent to a factor for sale, without any limitation or instructions as to the terms or time of sale, he is at liberty to sell as in the exercise of a sound discretion he shall deem proper for the interest of his principal. The factor in such a case is intrusted with the exercise of a discretion for the benefit of his principal and not for his own advantage, and that discretion the principal has a right to control. But after the factor has this authority, to be exercised exclusively for the benefit of his principal, he makes advances, and then his principal becomes satisfied that his interest will be promoted if the sale be delayed and he orders his factor not to sell. The chief justice instructed the jury that such an order was powerless, and in no respect limited the authority of the factor. Can this be so? The authority when given to the factor was given for the exclusive benefit of the principal. The interest of the factor was not to be regarded at all in the exercise of the authority. Then the factor makes an advance upon the credit of the goods, and of his principal; is he not, after that, as much bound as he was before, to have solely in view the interest of his principal when he sells, or is he at liberty, afterwards, to consult his own interest instead of that of this principal? After the advance, the principal has good reason to believe that a delay in selling will be advantageous to him, and he so informs his factor; is there any hardship in requiring of the factor, if he is unwilling to obey the order of his principal, to say to him — "as you have revoked my authority to sell at my discretion for your benefit, I shall sell at my discretion for my own benefit, unless you forthwith repay my advances."
When the principal has revoked the authority so far as it was to be exercised for him, he by no means impairs the power to sell which the factor has as a pledgee. A pledgee may sell on giving reasonable notice. (4 Kent's Com . 139, 140.) If I employ a man to purchase goods for me, he is my factor; but if I revoke his authority, he ceases to be my factor. So, if being employed to sell goods for me, I order him not to sell, he ceases to be my factor; but if he has made advances upon the goods which I direct him to sell, he has the right of a pledgee to sell on giving me reasonable notice, and he is under no obligation after that to consult me as to the time and manner of sale. All he need do, is to act in good faith.
See Wilson v. Little, ( ante, vol . 2, p. 443.)
In the case of Parker v. Brunker, (22 Pick. 40,) the consignor had directed his goods not to be sold under a certain price. The factor made advances upon them, but could not sell the goods at the price limited, and therefore he could not sell without disobeying the orders of his principal; and the court held that he had a right to sell, against the orders of his principal, to repay his advances after the consignor had refused upon application and after a reasonable time to repay advances. It may be said that in that case, the factor accepted the consignment knowing of the limitation as to the price at which the goods should be sold. How far that circumstance might have been urged as evidence of an implied agreement on his part, not to ask for a repayment of his advances until the goods could be sold for the price limited, it is not necessary now to inquire. In this case, the defendants made no advances when they received the pork except to pay the charges thereon. The implied contract on their part, was, that they would obey the plaintiff's directions as to the time and terms of sale of the pork. Such, too, was the implied contract on the part of the factor, in the case of Parker v. Brunker; and it appears to me, that it is most reasonable that when a factor wishes to sell for his own benefit, and in violation of the orders of his principal, he should give notice of his intention to do so, unless his advances were repaid. There may be cases in which the factor might not be bound to give such notice; but this is not such a case.
In the case of Bell v. Palmer, (6 Cowen, 128,) it was held that a factor, making advances on the goods of his principal even beyond their value, is bound to obey the instructions of the latter, as to the time of sale, and if being instructed to sell immediately, he refuse the first offer, in the expectation of a more favorable market, and afterwards sell at less than the first offer, he is liable, although he acted in perfect good faith. In that case the offer refused was not equal to the advances and expenses. Chief Justice Savage, in delivering the opinion of the court says: "It is the duty of the factor to manage the affairs of his principal in the same manner and with that care and diligence which a prudent and discreet merchant would exercise in relation to his own affairs, but he still must obey his instructions, because it is the principal who bears the loss." He also says, "the plaintiffs having advanced money on the goods gave them a lien for the amount of their advance; but I do not find any authority for saying that the lien thus created alters the rights of the parties in any respect, so far as relates to the duty of the factor in making sale of the goods. Nor is there any reason why it should. The principals are liable for the money advanced; and the goods being at their risk are subject to their order and control in every respect not inconsistent with the lien of the factor."
In the case cited, the factor was held liable for not selling as soon as he was directed to sell. In the case before the court, it is sought to make the defendants liable because they sold when they were ordered not to sell. In both cases, the factor disregarded the orders of his principal, and the principal thereby sustained a great loss. As a general rule the principal has a right to revoke the authority which the law implies from the fact that the goods were delivered to the factor for sale; but that revocation will leave untouched the authority to sell which the factor, if he has made advances, has to sell as pledgee; and the plaintiff in this case, although he had received advances, had a right by subsequent instructions so far to control the sale that the defendants could not legally sell without giving notice to the plaintiff of their intentions; and in this respect, I think the jury were misdirected. Whenever a person's property is to be sold against his wishes, justice demands that he should have notice why it is to be sold, especially when such notice can conviently be given. If the defendants could have shown, that by delaying the sale, they would have been exposed to a loss, they might probably have excused their disobedience to the orders of their principal. They were not only instructed by him to take his pork out of the market, but promised to do so. And do the interests of commerce require, that factors and commission merchants should be allowed to make promises and violate them, without incurring any responsibility, although their principals may suffer great loss thereby? What is the excuse made by the defendants, for not performing their promise? It is said that it was a promise without consideration; and the superior court held that that was a sufficient and legal excuse. That same excuse was urged in the case of Brown Co. v. McGran; but Justice Story, in giving the opinion of the court, took no notice of it; he neither sanctioned nor rejected it. A consideration from which the law will imply a promise, must he sufficient to uphold an express promise. What promise did the law imply when the plaintiff delivered his pork to the defendants? The law implied a promise on the part of the plaintiff, that the defendants should be paid a reasonable compensation for the care they should bestow in relation to the pork; and the defendants' account shows that they were to have interest on their advances and two and a half per cent on the amount of their sales; and the law implied a promise on their part, that they would take care of the plaintiff's pork, and in the absence of any instructions from him, as to the time and terms of the sale, they would seek his interest exclusively in the sale thereof, and would obey such instructions as he should give. It is not questioned, but there was a sufficient consideration to uphold this agreement between the parties, whether it be regarded as an implied or express agreement. The law however, does not imply an agreement without a consideration. After the pork was delivered to the defendants, and the parties had made an agreement as above stated, the defendants made large advances for and on account of the plaintiff, and after such advances, the plaintiff directed the defendants to take his pork out of the market, or in other words, directed them not to sell it; and they promised to obey that order; but they immediately sold it in violation of that promise; and the chief justice, on the trial, and the superior court on reviewing his opinion, held, that the promise required a new consideration, and was void, because no such consideration was shown. But it is certainly very important to ascertain whether it was a promise which required a new consideration. It was a mere reiteration of the implied or express promise which the defendants made when they received the pork, that they would obey the plaintiff's instructions as to the sale of it; and the original consideration would uphold the second as well as the first promise, unless the evidence in the cause was such as clearly proved that the defendants had been discharged from the performance of their first promise. What better evidence could be given, that nothing which had been done between the parties, had, in their opinion, discharged the defendants from their promise to obey the plaintiff's instructions, than that the plaintiff gave instructions, and the defendants promised to obey? When the plaintiff gave directions to the defendants to take their pork out of the market, the defendants must have understood him as claiming the right to give such instructions, and by promising to obey, they admitted such right; they admitted that nothing had occurred between them which had weakened their original promise to obey his instructions. Suppose the defendants, when the plaintiff instructed them not to sell, had answered, "you have a right to give instructions," would it have been any better evidence of such right than their promise to obey?
When the plaintiff directed the defendants to take his pork out of the market, if they did not intend to admit his right to give and their obligation to obey, what did good faith require of them? They ought promptly to have put him on his guard, by replying to his order, that he, by accepting advances, had discharged them from all obligations to obey his instructions, and that they claimed and intended to exert the right to sell when they pleased unless their advances were repaid. Why did the defendants withhold this reply, and instead of it promise to obey the order? Will the law allow the defendants to answer that inquiry by saying, "we gave the promise in order to mislead the plaintiff; we wanted to secure to ourselves a commission of two and a half per cent on the sale of the pork, and we anticipated, that if we informed him that we would not obey his instructions and would sell at our pleasure, unless our advances were repaid, he would have repaid our advances, taken his pork out of our hands, and we would not in that case have received a commission on the amount of sales?" If the defendants made the promise to take the pork out of market with a view to secure a commission of two and a half per cent on the amount of the sales, that might be regarded as a sufficient consideration for the promise, if any new consideration was necessary. It can hardly be necessary to say that the jury ought, in my opinion, to have been instructed that the defendants were at all events liable for the damages which the plaintiff sustained by the defendants' sale of the pork, "after their agreement to hold on to it for the present." For this reason as well as the misdirection before noticed, the judgment of the superior court ought to be reversed, and a new trial ought to be granted.
Ordered accordingly.