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cannot pledge the goods as a security for his own debt, not even though there be the formality of a bill of parcels and a receipt. The principal may recover the goods of the pawnee; and his ignorance that the factor held the goods in the character of factor, is no excuse. The principal is not even obliged to tender to the pawnee the ba lance due from the principal to the factor, for the lien which the factor might have had for such a balance is personal, and cannot be transferred by his tortious act, in pledging the goods for his own debt. Though the motor should barter the goals of his principal, yet no property passes by that act any more than in the case of pledging them, and the owner may sue the innocent purchaser in trover. The doctrine that a factor cannot pledge, is sustained so strictly, that it is admitted that he cannot do it by indorsement and delivery of the bill of lading, any more than by delivery of the goods themselves. pledge the goods of the principal, is beyond the scope of the factor's power; and every attempt to do it under colour of a sale, is tortious and void. If the pawnee will call for the letter of advice, or make due inquiry as to the source from whence the goods came, he can discover, say the cases, that the possessor held the goods as factor, and not as vendee, and he is bound to know, at his peril, the extent of the factor's power. There may be a question, in some instances, whether the res gesta amounted to a sale the part of the factor, or was a mere deposit or pledge

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a Guerreiro v. Peile, 3 Birn. & Ald. 616.

b Martini v. Cules, 1 Maul. & Selw. 140. Shipley v. Kymer, ibid. 484.

c Patterson v. Tash, 2 Str. 1178. Daubigny v. Duval. 5 Term Rep. 604. De Bouchout v. Goldsmid. 5 Vesey, 211. M'Combie v. Davies, 7 East, 5. Martini v. Coles, Maule & Selw. 140. Fielding v. Kymer, 2 Brod. & Bing. 639. Kinder v. Shaw, 2 Mass. Rep 398. Van Amringe v. Peabody, 1 Mason, 440. Bowie v. Napier, 1 M'Cord, 1.

as collateral security for his debt. But when it appears that the goods were really pledged, it is settled, that it is an act beyond the authority of the factor, and the principal may look to the pawnee. There is an exception to the rule in the case of negotiable paper, for there possession and property go together, and carry with them a disposing power. A factor may pledge the negotiable paper of his principal as a security for his own debt, and it will bind the principal, unless he can charge the party with notice of the fraud, or of want of title in the agent.a

So, if a

But though the factor cannot pledge the goods of his principal as his own, he may deliver them to a third person for his own security, with notice of his lien, and, as his agent, to keep possession for him. Such a change of the lien does not devest the factor of his right, for it is, in effect, a continuance of the factor's possession. factor, having goods consigned to him for sale, should put them into the hands of an auctioneer, or commission merchant connected with the auctioneer in business, to be sold, the auctioneer may safely make an advance on the goods for purposes connected with the sale, and as part payment in advance, or in anticipation of the sale, according to the ordinary usage in such cases. But if the goods be put into the hands of an auctioneer to sell, and instead of advancing money upon them in immediate reference to the sale according to usage, the auctioneer should become a pawnbroker, and advance money on the goods by way of loan, and in the character of pawnor, instead of seller, he has no lien on the goods. It may be difficult, perhaps, to discriminate in all cases between the two characters. It will

a Collins v. Martin, 1 Bos. & Pull. 648. Treuttel v. Barandon, 8 Taunton, 100. Goldsmyd v. Garden, in Chancery, and cited in Collins v. Martin.

b M.Combie v. Davies, 7 East, 5. Urquhart v. M'Iver, 4 Johna. Rep. 103.

c Laussatt v. Lippincott, 6 Serg. & Rawle, 386.

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be a matter of evidence, and of fact, under the circumstances. The distinction was declared in Martini v. Cols,a and it was observed in that case, that it would have been as well if the law had been, that where it was equivocal whether the party acted as principal or factor, a pledge in a case free from fraud should be valid. To guard against abuse and fraud, it is admitted, that if the factor be exhibited to the world as owner with the assent of his principal, and by that means obtains credit, the principal will be liable. It was suggested, in the case last mentioned, that perhaps if a consignment of goods to a factor to sell, be accompanied with a bill drawn on the factor for the whole, or part of the price of the consignment, an advance to take up the bill of the consignor, and appropriated to that end, might be considered as an advance under the authority given by the principal, so as to bind him to a pledge by the factor for that purpose. But in Graham v. Dyster, it was decided by the K. B., that though the principal draws upon his factor for the amount of the consignment, and the goods were sent to the factor to be dealt with according to his discretion, the factor could not pledge the goods, even in that case, to raise money to meet the bills. This was a very hard application of the general rule, and the cases go so far as to hold, that though there should be a request of the consignor accompanying the consignment, that his agent, the consignee, would make remittances in anticipation of sales, that circumstance does not give an authority to pledge the goods to raise money for the remittance. In this last case, which was so late as 1824, the judges of the K. B. expressed themselves decidedly in favour of the policy and expediency of

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a Moule & Selw. 140.

b 2 Starkie, 21.

r Queiroz v. Trueman, 3 Barn. & Cress. 342.

the general rule of law, that a factor cannot pledge. They considered it to be one of the greatest safeguards which the foreign merchant had in making consignments of goods to England; and that, as a measure of policy, the rule ought not to be altered. It operated to increase the foreign commerce of the kingdom, and was founded, it was said, upon a very plain reason, viz. that he who gave credit should be vigilant in ascertaining whether the party pledg ing had, or had not, authority so to deal with the goods, and that the knowledge might always be obtained from the bill of lading, and letters of advice.a

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a The rule that a factor cannot pledge the goods consigned to him for sale, even for bona fide advances, in the regular course of commercial dealing, originated in the case of Patterson v. Tash, in 2 Str. 1178. which was a nisi prius decision of Ch. J. Lee; though it has been suggested that the report of that case was inaccurate. In the year 1823, the merits of that rule were discussed in the British Parliament, and a statute passed in July of that year, for the better protection of the property of merchants and others, in their dealings with factors and agents, by which a factor was authorized to pledge, to a certain extent, the goods of his principal. A great deal may be properly said against the principle of the rule; and with the exception of England, it is contrary to the policy of all the commercial nations of Europe. On the European continent, possession constitutes title to moveable property, so far as to secure bona fide purchasers, and persons making advances of money or credit on the pledge of property by the lawful possessor. The late Ch. Justice of Pennsylvania, in Laussatt v. Lippincott, 6 Serg. & Rawl. 386. while he admitted the establishment of the rule that a factor cannot pledge, and that it advanced the commercial credit of the country, declared it to be an extremely hard rule. He said it would seem reasonable, that the loss should fall on him who put it in the power of the factor to deceive innocent persons who dealt with him bona fide; and that there was some inconsistency in the law, which declares that a factor cannot pledge the goods of his principal, and yet permits a purchaser who buys the goods, supposing them to be the property of the factor, to set off a debt due from the factor to himself; for the principle of caveat emptor, which avoids

Every contract made with an agent in relation to the business of the agency, is a contract with the principal, provided the agent acts in the name of his principal./The party so dealing with the agent is bound to his principal; and the principal, and not the agent, is bound to the party. It is a general rule, standing on strong foundations, and pervading every system of jurisprudence, that where an agent is duly constituted, and names his principal, and contracts in his name, the principal is responsible, and not the agent." The agent becomes personally liable, only when the principal is not known, or where there is no responsible principal, or where the agent becomes liable by an undertaking in his own name, or when he exceeds his power. If he makes the contract in behalf of his principal, and discloses his name at the time, he is not personally liable, not even though he should take a note for the goods sold payable to

the pledge, would forbid the set off. An effort was made in this state in the winter of 1825, to relax the rule, to the extent, at least, of the British statute; and though the application was enforced by a memorial from the New-York Chamber of Commerce, and by the strong recommendation of Governor Clinton in his message, it failed of success. There may be something in the commercial policy of the rule alluded to by the English judges; but it would seem to be a conclusion of superior justice and wisdom, that a factor or commercial agent, clothed by his principal with the apparent symbols of ownership of property, should be deemed the true owner in respect to third persons, dealing with him fairly in the course of business, as purchasers or mortgagees, and under an ignorance of his real character.

a Emerigon, Traite des Assurances, tom. 2, 465. Lord Erskine, 12 Vesey, 352. Davis v. M·Arthur, 4 Greenleaf, 82. note.

b Thomas v. Bishop, 2 Str. 955 Leadbitter v. Farrow, 5 Maul. & Selw. 945. Dusenbury v. Ellis, 3 Johns. Cas. 70. Parker, Ch. J. Stackpole v. Arnold, 11 Mass. Rep 29. and Hastings v. Lovering, 2 Pickering, 221. Hampton v. Speckengale, 9 Serg. & Rawl. 212.

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