Howatt & Company v. Davis & Chalmers.
February 9, 1816.
i.Principal and Agent — Stoppage in Transitu — Security to Agent. — In case of a sale of personal property not executed by delivery, but to be consummated by delivery at another place; although, in consequence of earnest paid, or otherwise, the property be so vested in the buyer, that, on complying or offering to comply with the contract on his part, he may recover the same from the seller or his agent; yet, until delivery, and while the goods are (in legal phrase,) in transitu, the seller may, on- the buyers becoming bankrupt, or being likely to be so, arrest the goods, or order his agent to arrest them; which order, operating as an indemnity to the agent in addition to that arising from his possession of the goods, will be his guarantee for refusing to deliver them; and, perhaps, under circumstances, the agent wouW also have a right to demand other security from his principal, which it would be incumbent on him forthwith to give, under pain of a right in the agent to go on, and execute the contract by a delivery.
2. Same — Same—Rights of Principal. — If a factor, or agent, having sold goods belonging to his principal, be ordered by him while they are yet in transitu, not to deliver them to the buyer, of whose solvency doubts are entertained, and he deliver them notwithstanding such order, and without demanding security for his indemnity; the principal is entitled to an action against him, in case the buyer should prove insolvent.
3. Same — Same—Same—Waiver of. — And such right of action is not waived or abandoned by expressions used in letters from the principal after the delivery of the goods, seeming to import an agreement to look to the buyer for payment, and not to the factor; nor by the principal’s permitting considerable time to elapse before heinforms the factor, categorically, that he will look to him, and not to the buyer for satisfaction: provided such expressions and such delay, on the part of the principal, may have been occasioned by the factors failing to make a full and fair disclosure of all facts and circumstances necessary to enable the principal to decide upon the subject, and which it was the duty, and in the power, of the factor to have given.
The appellees brought a special action on the case against the appellants in the District Court of Suffolk. The declaration was in the following words : “District composed of the counties of Norfolk, Isle of Wight, Princess Ann, Nansemond, and Southampton, to wit, John G. Davis and John Chal-mers, merchants, trading as partners under the firm of Davis & *Chalmers, complain of James Howatt, James Thorburn and-Donaldson, trading under the firm of James Howatt & Company, in custody, &c, of a plea of trespass on the case, for that, whereas, on the 30th day of July, in the year of our Lord 1802, and from that time to the present day, tlje said plaintiffs were merchants trading as partners, and residing in the town of Petersburg, in the state of Virginia, and the said defendants, on the said 30th day of July, in the year of our Lord 1802, and from that period, ’till the present day, were commission merchants and partners, residing in the borough of Norfolk, in the state of Virginia, there carrying on business as agents and factors, for a reasonable and accustomed commission or compensation to be paid to them by those who employed them as factors or agents to sell and dispose of the property of those principals or constituents ; and, by the law of the land, persons acting as factors and agents aforesaid, are bound to obey all the legal and proper orders and instructions of their principals and constituents; and whereas the said plaintiffs, on the said 30th day of July, being possessed of 50 hogsheads of tobacco, of Petersburg inspection, on the same day and year, in the borough of Norfolk, within the county of Norfolk aforesaid, delivered the said 50 hogsheads of tobacco into the hands and possession of the said defendants, as their agents and factors, to be disposed of by them for a reasonable and accustomed commission and compensation, to be paid to them by the plaintiffs, and in conformity with certain legal and proper orders and instructions given by the plaintiffs to the defendants ; yet the said defendants, acting as agents and factors. *333aforesaid, afterwards, to wit, on the 6tfa day of August, in the year of our Lord 1802, at Norfolk aforesaid, contrary to the legal and proper orders and instiuctions of the plaintiffs, did dispose of the said SO hogsheads of. tobacco ; — and whereas, by the law of the land, an agent and factor is bound to obey every legal and proper order and instruction of his principal; and whereas the said plaintiffs, on the 30th day of July, in the year of our Lord 1802, being merchants residing in Petersburg, did constitute and appoint the said defendants (who then were and still are merchants residing in Norfolk,) their agents and factors to sell and dispose of SO other hogsheads of tobacco of the Petersburg ^inspection, for the benefit of the said plaintiffs ; and the said defendants, acting as agents and factors aforesaid, for a reasonable and accustomed commission and compensation, on the 10th day of Augustin the same year, at Norfolk, within the county of Norfolk aforesaid, and the jurisdiction of the court, did contract with John Cowper & Company, (then merchants in good credit residing in Norfolk,)to sell to the said John Cowper & Co. the said SO hogsheads of tobacco, at the price of 29 shillings per hundred weight, for 'which the said defendants were to receive of the said John Cowper & Co., SO barrels of pork, at the rate of $15 per barrel, and to accept the promissory note of said John Cowper & Co. payable at three and four months after the delivery of the tobacco, for the residue of the purchase money of the tobacco ; and, afterwards, on the same day and year at Norfolk aforesaid, the said defendants received of the said John Cowper & Co. the said SO barrels of pork ; and whereas, afterwards, to wit, on the 31st day of August, in the year of our Lord 1802, at which time the said SO hogsheads of tobacco had not been delivered to or come into the possession of the said John Cowper & Co., but were still in the possession of the defendants, as agents and factors of the plaintiffs, the said Chalmers & Davis, having, after the contract made as aforesaid, ascertained that the said John Cowper & Co. subsequent to the said contract, were injured in their mercantile credit, and in fact had become insolvent, did order and direct the said defendants not to deliver the said tobacco to the said John Cowper & Co., unless the said Cowper 6 Co. would give approved endorsers on their notes for the balance of the purchase money of the tobacco ; — yet the said defendants, notwithstanding the instructions and orders aforesaid, and in opposition thereto, did deliver the said 50 hogsheads of tobacco to the said John Cowper & Co., afterwards to wit, on the 6th day of September, in the year of our Lord 1802, at Norfolk aforesaid, in the said county of Norfolk, although the said John Cowper & Co. did not give an in-dorser on their notes, or otherwise secure the payment of the balance of the purchase money of the tobacco ; and although, as the plaintiffs aver, the said John Cowper & Co. were insolvent on the 6th day of September, in the year 1802; by reason of which ^premises, the plaintiffs have sustained damage to the value of four thousand dollars, and therefore they produce the suit.”
The defendants pleaded “non assump-serunt,” and issue was joined. After.which, the parties, by their counsel, agreed a case, in lieu of a special verdict, stating the facts in such manner as, in substance, corresponded with the allegations in the second count of the declaration ; and with what is said in the following opinion of this court ; and consenting that, if, upon the whole matter, the court should be of opinion that the law was for the plaintiff, judgment should be entered for him for three thousand seven hundred and three dollars and ninety cents, damages; —if not, then for the defendant.
The District Court pronounced judgment, accordingly, for the plaintiff; — from which the defendant appealed.
The cause was argued in January, 1815, by Wickham for the appellants, and Call and George K. Taylor for the appellees.
February 9th, 1816.
JUDGE ROANE
pronounced the court’s opinion.
The court is of opinion, that, by the general principles of law, a factor or agent is bound to pursue the lawful instructions of his principal; and that, by his agent, a principal can do any act, in relation to the subject delegated, which he might lawfully do by himself. The court is farther of opinion that, in case of a sale of personal property not executed by delivery, and to be consummated by a delivery at another place, although in consequence of earnest paid, or otherwise, the property is so vested in the vendee, that, on complying or offering to comply with the contract on his part, he may recover the same from the vendor, or his agent; yet that, until delivery, and while the goods are, in legal phrase, in tran-situ, the seller may, on the vendee’s becoming bankrupt, or being likely to become so, arrest the goods, or order his agent to arrest them; which order, operating as an indemnity to the agent, in addition to that arising from his possession of the goods, will be his guarantee for refusing to deliver them ; and that the agent would also have a right, perhaps, under circumstances, to demand other security from his principal, which it would be incumbent on him forthwith to give, under pain of a right in the agent to go on, and execute (he contract by a delivery. *Under the infiuence of these principles, the court is ,of opinion, that it was the duty of the appellants to have complied with the order of the appellees in this case, by refusing to deliver the tobacco to John Cowper & Co., which is stated and referred to in the case agreed.
The court is farther of opinion, that the appellants not having done this, but, on the contrary, having violated the said order by a delivery of the tobacco to Cowper & Co., they were liable to the action of the appel-lees, in the event of Cowper’s insolvency, to make them reparation in damages; which right of action, however, might be waived and abandoned by the appellees, after a full and fair disclosure of all facts and circumstances necessary for their decision upon the subject, which it was the duty and in the power of the appellants to have given. The court, referring to the facts agreed in the case in relation to this point, is of opinion that, although, standing singly, there may be some expressions, seeming to import *334an agreement by the appellees to look to Cowper & Co., and not to the appellants, for payment, used in their letters written after the delivery of the tobacco by the appellants to Cowper & Co.; and although a considerable time elapsed before the appellees stated, categorically, to the appellants, that they should look to them, and not to Cowper & Co. for satisfaction ; these circumstances are not strong enough to induce the court to infer such waiver and abandonment in the present instance.
The case states that, at the time of the delivery of the tobacco, John Cowper & Co. were “in fact insolvent, though this was not then certainly known to the appellants.” Although this was not certainly known to them, we are authorised to infer from the case, that the appellants had, on the 6th, (when the tobacco was delivered,) good reason to believe that such insolvency existed ; and if so, while it formed an additional reason for the appellants to decline a delivery of the tobacco, they ought also, even then, to have given this information to the appel-lees. This is a stronger degree of evidence, in relation to a bankruptcy, than a mere protest of bills, which may happen sometimes to men of the best mercantile credit. The last circumstance, however, only, and not the other and stronger evidence from which the appellants knew, though they did not certainly know, that Cowper & Co. were then insolvent, was communicated *by the appellants .to the appellees ; and that, too, accompanied by some expressions indicating a hope that Cowper’s affairs might not be so bad as was apprehended. It was under this decree of information that the appellees acted in using the expressions now referred to. But, at any rate, after the 8th of September, when it is agreed that Cowper & Co.’s, insolvency was ascertained, and that they had stopped payment, it was the duty of the appellants to have given instant information thereof to the appellees. Bor want of such information, and from the character of the appellants’ letters, the appellees may have been lured into a belief that they might get payment from Cowper & Co. Hence the expressions in their letters now referred to may have arisen ; and hence, also, the delay in stating to the appellants that they looked only to them in this business. Both this delay, and these expressions, may therefore have arisen from the conduct of the appellants, in withholding or palliating the actual circumstances of the case; and therefore ought not to avail them in the present instance. There has not been such a prompt, frank, and explicit communication on their part, as should, on the ground of these expressions and this delay, absolve them from a right of action which had previously' attached against them.
On these grounds, the court is of opinion to affirm the judgment.