239 F. 631 | 2d Cir. | 1917
(after stating the facts as above). Appellants herein urge that four propositions be resolved in their favor: (1). That the custom or usage of selling commercial paper with option
In this instance Hathaway was employed as a note broker to sell Claflin paper, and such brokerage is a well-known and independent occupation, quite capable of developing, sustaining, and enforcing its own customary business methods. A majority of this court consider the evidence submitted as fairly establishing (within the rules above laid down) that during the whole time of Hathaway’s business
It is not denied that the rather modern occupation of note or bill broking seems to respond to old definitions of the word “factor.” He is (if notes are goods) “a person to whom goods are consigned for sale by a merchant * * * at a distance from the place of sale.” Baring v. Corrie, 2 B. & A. 143. He is a mercantile agent (if notes are merchandise) to whom in the ordinary course of business is intrusted the possession of goods; and it is the fact of possession, which has always especially distinguished a factor from a broker. See In re Rabenau, 118 Fed. 471; Howland v. Woodruff, 60 N. Y. 80; United State v. Villalonga, 23 Wall. 42, 23 L. Ed. 64; Ommen v. Talcott, 188 Fed. 403, 112 C. C. A. 239; Jenks, English Civil Law, § 536. This resemblance is superficial and misleading, and the argument rests upon a hasty identification with the “goods, wares and merchandise” of historic law (always chattels) of what are evidences of indebtedness, actual or inchoate, and mere choses in action.
It is to be observed that a special lien upon the notes received back by Hathaway from the bank does not advance the matter. It may be assumed that any agent has a lien on movable property in his possession and belonging to his principal in respect of expenses incurred in relation to that particular property. Hammonds v. Barclay, 2 East, 227; Houghton v. Matthews, 3 Bos. & P. 494; Muller v. Pondir, 55
The claim is that virtute officii, or by legal implication from their employment, note brokers have that general lien upon all their principal’s property, on hand for a general balance of account, which is the essential and peculiar characteristic of a factor. Upon authority there is nothing shown, or known to us, holding that a note broker is a factor; and it is both old and recent law that where a lien is claimed on a general account “it is to be taken strictly” (Houghton v. Matthews, supra), and where such lien is asserted under circumstances not previously recognized as conferring the same “we should be anxious to tread cautiously and on sure grounds before we extend beyond the limits of decided cases” (Matter of Heinsheimer, 214 N. Y. 368, 108 N. E. 636, Ann. Cas. 1916E, 384, and cases cited). The business of such brokers has not “a character known to. the law with certain prescribed duties, but the employment is one which deperids entirely on the course of dealing.” Foster v. Pierson, 4 L. J. Exch. N. S. 125. The privilege now contended for has been demanded in Grant v. Taylor, 35 N. Y. Super. Ct. 351; but the court said:
“If there be a usage giving to persons engaged in * * * selling bills or notes, a lien for a general balance against their customer, such usage should be proved. It will not be presumed to exist in the absence of an express agreement.”
And in this case there was no express agreement, and no established usage is proven.
It is urged upon us that Bank v. Levy, 1 McMullen (Law) 431, and Hodgson v. Payson, 3 Har. & J. (Md.) 339, contain expressions which recognize a factor’s lien under circumstances said to be analogous to the present. In both cases a lien was granted, but in each the person asserting the same had at the request of his principal indorsed paper belonging to tire principal, and (from somewhat imperfect reports) we are of opinion that the lien accorded was based, not upon the character of employment, but upon the fact of indorsement by request. See as to general lien, and the hostility of the law thereto, Mechem on Agency (2d Ed.) vol. 2, p. 1276; Jones on Liens (3d Ed.) § 422; Kent’s Commentaries, vol. 2, pp. 634-636.
Considering the reason and history of the matter, a lien was not granted for the primary purpose of benefiting the agent who came to be known as a factor, but of assisting the principal, who, being at a distance, was obliged to confide the sale of his goods to some one upon the ground. The owner did not part with title, but he could not exercise immediate supervision of sales, and he ordinarily preferred to let the goods stand responsible for expenses and advances rather than to deposit with his factor agent cash in advance. The practice was thought to promote confidence in and liberality on the part of factors (Story on Agency [9th Ed.] § 378), and what most merchants
It was for the advantage, not of the principal alone, but of commerce generally, that the factor’s lien should be recognized, as it long has been. ' But every improvement in communications, each advance in business ease, has rendered less necessary and desirable the creation of liens which nowadays are commonly useful to the agent alone, and then upon the insolvency of his principal, and are obviously detrimental to that class, always the largest and most to be regarded, who can and do deal with the principal only in the relation of debtor and creditor.
It is never more necessary to go behind titles, to get at substance, than when a new claim of right is made under an ancient name. It rather befogs the matter to dwell upon the similarities or differences between bill brokers and commission merchants — between dealers in commercial paper and mercantile factors. The name is nothing; what appellants want is not to be dubbed factors, but to have the right to a general lien annexed to one part of their business. Therefore the vital inquiry is whether that business, as the evidence shows it, was so conducted, in accordance with the rules of agency (of which factor-age is but a subdivision), as to impose a lien under'judgments of authority, or merit one by analogy thereto.
The circumstances under which agents generally may demand reimbursement from principals were summarized in Frixione v. Tagliaferro, 10 Moo. P. C. 196; it must be shown that the agent’s loss arose from the fact of agency, that the act productive of loss was within the scope of the agency, and was not attributable to the agent’s default or laches. The scope of even a factor’s authority has its limits (Commercial, etc., Bank v. Heilbronner, 108 N. Y. 439, 15 N. E. 701); those limits are the accomplishment of the principal’s wishes, by means explicitly or impliedly agreed upon beforehand. Nothing explicit being pretended, the implication here demanded is of an act commer
As appellants’ asserted lien is in our opinion unsupported by authority, possesses merely a specious resemblance to a factor’s lien, would be of doubtful validity if claimed for one employed by the name of “factor,” and if allowed here would tend to confer on note brokers as a class privileges injurious to the business community as a whole, the order under review is affirmed, with costs.
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