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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]
As factors, Vanuxem, Wharton Co. had no title to the consigned goods. The consignor, upon a consignment of goods to be sold on commission, does not part with his title by the consignment, but he continues to be the true owner of the consigned property until sold by the consignee, and the rule is the same whether the consignee is a del credere factor, or is under advances for the principal, or is simply an agent for sale, assuming no responsibility except that usually appertaining to the position of an agent. (Baker v. N.Y. Nat. Ex. Bank,100 N.Y. 31; MELLISH L.J., Ex parte White, 6 L.R. Ch. App. 403.) But a factor under advances for his principal, or who guarantees the sale, has a lien on the goods and their proceeds for his advances, and an interest in the debts arising upon sales, to protect his guaranty. He is entitled to retain possession of the goods and their proceeds, to protect his lien and to collect and sue the debts in his own name, rights of which the principal cannot deprive him except by reimbursing the advances, or in case of a del credere factor, by relieving him from his guaranty. (Hudson
v. Granger, 5 Barn. Ald. 27; Story on Agency, §§ 398, 407, 408, 424.) But such factors are nevertheless agents and cannot deal with the property or proceeds as their own. They cannot pledge the goods for their own debt (Buckley v. Packard, 20 Johns. 421), and an unauthorized pledge by a factor did not, at common law, transfer any right as against the principal, even to the extent of his lien. (McCombie v. Davies, 7 East. 5;Graham v. Dyster, 6 M. S. 1; Leake on Contracts, 515.) A factor, although under advances to his principal, is bound nevertheless to obey the principal's instructions, and cannot dispose of the goods in violation thereof, even to repay advances, until at least he has called upon the principal for reimbursement. (Marfield v. Goodhue, 3 N.Y. 62; Hilton v.Vanderbilt, 82 id. 591.)
The precise question in the present case is whether a factor, having advanced generally on the goods in his hands, can, in the absence of special authority, sell, out and out, a debt existing in open account, arising on a sale of a portion of the consigned goods, so as to transfer a good title to the claim, and this too before the maturity of the debt, and when the principal is not in default and has not been called upon to repay the advances and there are no special circumstances. The question depends, we think, upon the general doctrine of agency. The agent is invested with such authority as his commission confers, and as to third persons, such as he is held out as possessing, and in construing his authority the custom or usage of the business is frequently a material consideration. The transaction between Vanuxem, Wharton Co. and the bank was not a sale of goods or a collection of a debt. By the general rule a factor cannot bind the principal by a disposition of his property out of the ordinary course of business. (Easton v. Clark, 35 N.Y. 225.) We have been referred to no authority holding that a factor possesses the authority exercised by Vanuxem, Wharton Co. in this case. Such a construction of his power would be inconvenient and might lead to great abuses. It would enable the factor to put his principal's property out of his hands before any default on
the part of the principal, thereby depriving the latter of the right to the possession of his property on discharging the factor's claims. Assuming that the transferee would himself be held to account, it subjects the principal to the embarrassment of calling third parties into the settlement of his transactions with his agent. The transaction in this case was out of the ordinary course of business, and has all the ear marks of an irregular proceeding. It was not an assignment to the bank of the factor's lien, accompanied with a delivery of the property of the principal to keep possession for the factor in order to preserve the lien. (Urquhart v. McIver, 4 Johns. 103.) We think a factor's authority does not justify a transaction of this character, and that the bank acquired no title to the claim.
This conclusion leads to a reversal of the judgment.
All concur.
Judgment reversed.