2 Denio 368 | N.Y. Sup. Ct. | 1845
This writ of error seems to have been brought to determine whether the agreement of a factor to guaranty the sales made by him is a contract within the statute of frauds, requiring an agreement in writing to prove its existence. This necessarily involves an inquiry into the nature of the contract which the factor makes in such a case. The plaintiff insists that one acting under a del credere commission is a guarantor or surety for the debt which the purchaser of the goods contracts; while the defendants, on the other hand, maintain that the factor contracts an original absolute obligation, to pay the principal the amount of the sales, at the expiration of the term of credit. It depends upon the character of the contract in this respect, whether the promise of the factor is to pay the debt of another, or his own proper debt, and consequently whether it can be proved by parol.
I find no case decided prior to the year 1816 which favors the position taken by the defendants. Previous to that time there are many cases directly hostile to that position. In 1786 in the case of Grove v. Dubois, (1 T. R. 112,) Lord Mansfield, C. J. held that the engagement of a broker acting under a del credere commission was absolute; and that he was liable in the first instance, and at all events. Buffer, J. agreed with him fully, and said he had never heard the inquiry made, whether a demand had been made upon the purchaser. We find these two very distinguished judges speaking of this as a familiar principle, and one universally acknowledged and practised upon. The case of Scott v. Mackenzie, decided in Scotland in 1795, involved the same principle. The defendant, a factor, acting
Here we have a whole current of decisions and a coincidence of opinions among eminent authors, in favor of the absolute liability of the factor to pay the price for which goods are sold under such a commission, when the credit has expired. This should, I think, settle the question. But the doctrine has been questioned, and finally overruled in England. It was first doubted in Morris v. Cleasby, (4 Maule & Selw. 566,) decided in 1816; and Chancellor Kent, in the fourth edition of his commentaries, modifies what he had before stated, and treats the point as a vexata queslio, while in a note to his last edition, he says, it is now settled in England, that the factor is only a surety for the solvency of the purchaser. I do not find, however, that the recent innovation in England has been adopted in this country, except in Thompson v. Perkins, (3 Mason’s Rep. 232,) where Mr. Justice Story has followed the case of Morris v. Cleasby. We are now asked to give the new rule the sanction of this court. .But in my judgment we should not follow the courts in England in their departure from the former rule. This is a class of contracts that have existed in this country as long as commerce has flourished, and under which business is daily transacting to a large amount. The understanding of the mercantile community has," I apprehend, been general and uniform, that the agreement between the principal and factor was original and absolute to pay the price of the sale, deducting the commission, at the time the credit expired. Doubtless the factor expected the fund would be received from the purchaser; but whether received or not, he charges himself with the amount in his account with his principal. A contrary rule would require the principal to exhaust his remedy against the purchaser, in order to determine his insolvency, before he could charge the factor as surety.
The supreme court of Massachusetts have had this question before them, and have adhered to the law as it was understood in England prior to 1816. In Swan v. Nesmith,(7 Pick. 220.) decided in 1828, Parker, Ch. J. in giving the opinion of the court,
Senator Folsom also delivered a written opinion in favor of affirming the judgment of the supreme court.
Hand, Senator. The question in this case is whether the undertaking of a factor under a del credere commission should be in writing to make it valid within the statute of frauds. It is certainly very important to the commercial world that the principle should be finally settled/ Perhaps it is not so material how it is settled, though it would probably be sometimes more convenient for a consignor to be able to send goods with del credere instructions and to rely on the receiving and selling them as sufficient evidence of the contract, without waiting for a formal written answer to his proposals. But if it is found that the statute is imperative, no reasoning ah inconvenienti should prevail. The remedy is by an alteration of that statute.
Several elementary writers have started with the bold assertion that the factor on a del credere commission, renders himself liable in the first instance, although he never is in receipt of the money; and that he may be sued for goods sold, as if he had himself purchased the goods, and that his liability is not
Let us turn for a moment to the cases on the other side. The great abilities and weight of character of Ld. Mansfield, caused the doctrine in Grove v. Dubois to be adopted by all the writers immediately succeeding the decision of that case. But after that eminent judge had passed away, and less shining, but perhaps not less sound, thorough-bred common law jurists were elevated to the bench, this doctrine of primary liability was discarded, and the del credere factor was pronounced a guarantor of the buyer. This principle has been acted upon in several well considered cases in England thus completely overthrowing the doctrine in Grove v. Dubios. (Morris v. Cleasby, 4 Maule & Sel. 566, 574; Gall v. Comber, 1 B. Moore, 279, 8 Taunt. 558, S. C.; Hornby v. Lacy, 6 Maule & Sel. 166; Peale v. Northcote, 7 Taunt. 478, 1 B. Moore, 178, S. C.; Leverick v. Meigs, 1 Cowen, 645; Thompson v. Perkins, 3 Mason, 232.) It is also laid down as the settled doctrine on this subject by sevetal respectable writers on commercial and other contracts
Then upon principle, is it not clear that the factor only guaranties the debt? Bell says the principal may resume his character and recover of the principal debtor. (P. 378.) Chitty lays it down that the sale creates a contract between the owner and the buyer, (p. 201,) and that if the owner gives notice to the buyer, the latter must pay him, not the factor; and Mr. Justice Story, after collecting all the authorities, is clear that he is a mere guarantor; and so indeed with one exception are all the modern cases that I have been able trt find. It is true that in Swan v. Nesmith. (7 Pick. 220,) the supreme court of Massachusetts adopted the other side of the question, and held that the contract was not affected by the statute of frauds. It however seems indisputable, that the debt, even if nominally payable to the factor, belongs to the owner, and may be wholly controlled by him, and that the factor cannot be sued, until a failure of payment by the purchaser. Now the contract of the factor is either an original or a collateral undertaking. If the latter, it is within the statute. Can it be original when there is full privity of contract between the owner and the vendee, and when the liability of the agent depends upon the default of the purchaser? There is no middle ground upon which the contract can be satisfactorily placed. The factor is primarily liable, as decided by Ld. Mansfield, and then all the natural consequences flow; or he is conditionally liable, according to the later and settled doctrine, and then his liability is for the “ debt and default of another and the evidence of the contract must be in writing, with a consideration expressed. I think his undertaking is collateral, and that upon principle and authority it comes within the statute. I am therefore in favor of reversing the judgment of the supreme court.
For reversal: Senators Hand and Mitchell—2.
For affirmance: Senators Backus, Beekman, Beers, Bocicee, Corning, Deyo, Emmons, Folsom, Johnson, Jones, Lott, Porter, Sedgwick, Smith, Talcott and Wright—■ 16.
Judgment affirmed.