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Of the Nature of the Employment of a Factor Power and
Authority-Lien-Liability of Principal. Stat. 4 Geo. 4. c. 83. 6 Geo. 4. c. 94.-Evidence.
Of the Nature of the Employment of a Factor.-A Factor is an agent, who is commissioned by a merchant or other person to sell goods for him, and to receive the produce. Foreign factors are agents residing here, commissioned by merchants resident abroad, or the contrary. Home factors are agents resident in England, commissioned by merchants also resident in England. A factor is usually paid for his trouble by a commission of so much per cent. on the goods sold. But sometimes he acts under a del credere commission (1), in which case, for an additional premium beyond
(1) Del*credere is an Italian mercantile phrase, which has the same signification as the Scotch word warrandice, or the English word guarantee. A factor who has general orders to dispose of goods for his principal to the best advantage, is bound to exercise that degree of diligence which a prudent man exercises in his own affairs, and consequently the factor is authorized to dispose of the goods according to the best terms which can be obtained at the time; and if it shall appear that he has done so, and that he has sold the goods to persons in reputed good circumstances at the time, and to whom at that time he would have given credit in his own affairs, he will not be liable to his principal, although some of these should fail; and for such trouble the factor is generally paid by a commission of so much per cent. upon the goods sold. According to the above practice, the principal runs all the risk, and the factor is sure of his commission whether the event be favourable or not. Many merchants do not choose to run this risk, and to trust so implicitly to the prudence and discretion of their factor; and, therefore, the agreement called del credere was invented, by which the factor, for an additional premium beyond the usual commission,
the usual commission, he undertakes for the credit of the persons to whom he sells the goods consigned to him by his principal.
Power and Authority:-By the common law, a factor, as such, had not any authority to pledge, so as to transfer his lien to the pawnee, or to bartera, but only to sell the goods of his principalb. Hence, if a factor pledged the goods of his principal, the latter might recover the value of them in trover, against the pawnee, on tendering to the factor what was due to him, without making any tender to the pawnee (2). The same rule held with respect to a bill of lading which had been indorsed to a factor by his principal: for the bill of lading, which is the symbol of the delivery of possession, cannot give a factor a greater authority than the actual possession of the goods themselves. Hence, as a factor could not pledge the goods of his principald, by a delivery of the goods, so neither could he do it by an indorsement and delivery of the bill of
a Guerreiro v. Peile, 3 B. & A, 616. But see stat. 4 Geo. 4. c. 83, post, p. Paterson y. Tash, Str. 1178, per Lee,
829. and stat. 6 Geo. 4. c. 94. post, C. J. Martini v. Coles, 1 M. and S. 140. Shipley v. Kymer, 1 M. and S. c Daubigny v. Duval, 5 T. R. 604. 484. Boyson v. Coles, 6 M. and S. 14, d Newson v. Thornton, 6 East, 17.
when he sells his goods on credit, becomes bound to warrant the solvency of the purchasers.” Arg. Mackenzie v. Scott, 6 Bro. P. C. 287. Tomlin's ed. In Grove v. Dubois, 1 T. R. 112, the effect of a commission del credere was discussed in the Court of King's Bench, and that court decided that it was not merely a conditional undertaking and guarantee from the person taking it, that he would pay if some other person did not, but that it was an absolute engagement from him, and made him liable in the first instance; and the same doctrine was acquiesced in, and acted upon in Bize v. Dickason, 1 T. R. 285, cited in Koster v. Eason, 2 M. & S. 112. Hence, where a factor, under a commission del credøre, sold goods, and took accepted bills from the purchasers, which he indorsed to a banker at the place of sale, and having received the banker's bill (payable to the factor's order) on a house in London, indorsed and transmitted it to his principal, who got it accepted; it was holden, that on the failure of the acceptor and drawer of this bill, the factor was answerable for the amount. Mackenzie v, Scott, 6 Bro. P. C. 280. Tomlin's ed. But see further as to the effect of of a del credere commission, Morris v. Cleasby, 4 M. & S. 574. Hornby v. Lacy, 6 M. and S. 171.
(2) Where a factor pledges the goods of his principal as his own, the pawnee cannot claim to retain against the principal for the amount of the factor's general lien at the time of the pledge. M'Combie v. Davis, 7 East, 5.
lading; for, although the indorsement of a bill of lading gave the indorsee an irrevocable right to receive the goods, where it was intended as an assignment of the property in the goods, yet it would not have that operation, where it was intended as a deposit only, by a person who was not authorized to make such deposit. Nor did the factor acquire an authority to pledge, where bills were drawn by the principal in advance of a consignment made to the factor for sale. Where plaintiffs, at Liverpool, having a consignment of goods coming from abroad, transmitted the bill of lading which was to deliver to their order, to B. their brokers in London, instructing them to sell, and on the arrival of the consignment drew on B., as on former occasions, in anticipation of the proceeds, authorizing B. to deal with the consignment at their discretion, which bills B. accepted, and placed the consignment in the hands of defendant, their factor, for sale, not disclosing to him that it was not their property, and drew on him on account, which bill he accepted and paid; and sold the goods, and rendered his account, including the sale therein to B, who, before their acceptances became due, failed, and the same were dishonoured; it was holdene, that the plaintiffs were entitled to recover the proceeds of such sale from the defendant. A quantity of oats having been consigned by a merchant abroad, to be sold by I. S. who was a merchant as well as factor, he placed them in the hands of A. a cornfactor, as a security for advances made by him ; but the oats were not to be sold, without the consent of I. S.: they remained in A.'s possession, upon these terms, for nine months, when they were transferred to A. by a sale at the market price. No money actually passed, nor were any account of sales rendered; but the amount of the price was allowed in account between I. S. and A. leaving a balance in favour of the latter; it was holden', that this was in substance a pledge and not a sale by the factor; and that no property passed to A., although the jury had found it to be a bonâ fide transaction. The circumstances of the merchant drawing bills upon the factor to whom the goods are consigned, against the consignment, does not raise an authority in the factor to raise money to meet the bills by pledging the goods. A. a merchant at Rio Janeiro consigned cottons to B. in this country for sale, and sent bills of lading which shewed that the cottons were sent on account, and at the risk of the consignor. B. employed C. a broker at Liverpool, to effect the sales, which C. did, some at a credit of ten days, and bills at three months; others for cash in one month. C. made large advances to B. and received the proceeds of the cottons when due.
e Graham v. Dyster, 6 M. and S. 1.
g Fielding v. Kymer, 2 Brod. and B.
(C. P.) 639.
Before that time B. had become bankrupt. In an action by A. against C. for money had and received; it was holdenh, that C. was not entitled to retain for the advances made by him to B.: for that B. was a factor for sale only, and had not any authority to pledge the goods; and that A. was entitled to recover the net proceeds, deducting such sums only as B. could have retained. A. when he consigned the cottons to B., requested him to make remittances in anticipation of sales, it was holden, that such request did not give B. any special authority to pledge. Where the goods are permitted to remain at a wharf in the name of a broker, who is accustomed to deal in the article, and the broker sells them, the principal will be bound by such sale, although he did not expressly authorize the broker to selli. A factor may sell on creditk, although not particularly authorized by the terms of his commission so to do.
“An agent employed generally, to do any act, is authorized to do it only in the usual way of business. Hence, as stock is sold usually for ready money only, a broker employed to sell stock cannot sell it upon credit, without a special authority, although acting bonâ fide, and with a view to the benefit of his principal.” Lord Ellenborough, C. J. Wiltshire v. Sims, i Campb. 258.
Where plaintiffs consigned goods to their factors, who not having funds to pay the freight and duties, agreed with the defendants that they should take charge of the consignment, pay the freight and duties, and sell the goods, and have one half the usual commission on such sale; and the defendants accordingly paid the freight and duties, and received the goods, after which the factors became bankrupt, having before informed defendants that the goods were the plaintiff's; but defendants notwithstanding sold the goods: held that, on trover by the plaintiffs, the defendants had not a right to retain for the freight and duties after deducting the balance due from the factors to the plaintiffs at the time of the bankruptcy? Where C. consigned goods to M., their broker, upon a del credere commission for sale, and drew bills on him in advance, which M. accepted but never paid, and afterwards, without the knowledge of C., placed the goods with H. another broker, upon a del credere commission, and upon an agreement to divide the commission with him, and obtained his acceptances for the amount, and H. sold the goods and afterwards became bankrupt, and his assignees received the proceeds of those sales, and the acceptances of H. were proved under his commission, and a dividend received upon them: held that the assignees of H. were liable to the assignee of C. who had also become bankrupt, for the amount of the proceeds, in an action for money had and receivedm. Factors may be bankrupts". By stat. 31 Geo. 2, c. 40, s. 11. factors, employed to buy or sell cattle by commission, are prohibited from buying either directly or indirectly, on their own account (except for the necessary use of their families,) live cattle, sheep, or swine, in London, or within the bills of mortality, or at any place whilst the cattle are on the road to London for sale ; and, by the same clause, such factors are prohibited from selling, either by themselves or their agents, such cattle, &c., in London, or within the bills of mortality. Penalty, double the value of the cattle sold ; to be recovered by application to J. P., one moiety to prosecutor, and the other to the poor of the parish where the offence was committed. When goods are consigned to joint factors', they are in the nature of co-obligors, and are answerable for one another for the whole.
h Queiroz v. Trueman, 3 B. and C. k Per Willes, C. J. Willes, 406. Per 342.
Chambre, J. 3 Bos. & Pul. 489. i Pickering v. Busk, 15 East, 38. See 1 Solly v Rathbone, 2 M. and S. 298.
also Whitehead v. Tuckett, 15 East, See Bailey v. Culverwell, 8 B. and 400.
According to the general rule of law, a sale by a factor creates a contract between the owner and buyerP; and this rule holds even in cases where the factor acts upon a del credere commission. Hence, if a factor sells goods, and the owner gives notice to the buyer to pay the price to him and not to the factor, the buyer will not be justified in afterwards paying the factor; and the owner will be entitled to recover the price in an action against the buyer, unless the factor has a lien on such price. If a factor sells goods in his own name, the purchaser has a right to set off's a debt due from him in an action by the principal for the price of the goods. Where a contract, not under seal, is made with an agent in
m Cockran v. Irlam, 2 M. & S. 301.
derton, London Sittings, Str. 1182.
judge. See also exp. Murray, Co.
B. L. 379. 5th ed. q Hornby v. Lacy, 6 M. and S. 166. r See Drinkwater v. Goodwin, Cowp.
251. s Per Lord Tenterden, C. J. deliver
ing judgment, Taylor y. Kymer, 3 B. and Ad. 334.