Greely v. Bartlett

• Decision Date: 01 May 1821
• Citation: 1 Me. 172
• Parties: GREELY v. BARTLETT
• Court: Maine Supreme Court

1 Me. 172

GREELY v. BARTLETT

Supreme Judicial Court of Maine, Cumberland

May, 1821

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Assumpsit, brought to recover the balance of an account annexed to the plaintiff's writ. A verdict was taken for the plaintiff, by consent of the defendant, subject to the opinion of the whole Court upon the facts stated in the report of the Judge who presided at the trial, which were as follows.

The plaintiff, being a ship and merchandize broker in Portland, on the tenth day of March 1819, by order of the defendant, sold one quarter part of the defendant's ship called the Jewel.

The sale was made to John P. Thurston for 1000 dollars, on a credit of six months,--Thurston to have the benefit of the insurance which had been previously ordered by the defendant to be procured on the ship by the plaintiff; --and being at that time a merchant of good credit. The sale was considered as a good sale, it being for the full value of the property sold; --and the plaintiff, in payment of the purchase-money, took Thurston's two several promissory notes for 500 dollars each payable to himself or order in six months after date.

The defendant's instructions to the plaintiff as to the sale of the ship were,--" sell my part as you think proper" :--and--" I hope you can sell the ship after loaded. If the accounts are all fairly settled, and her freight is good, and you can depend on the new captain, I shall not be so anxious, but still wish to get clear of her. Use your own Judgment."

Previous to the sale of the ship, viz. November 23, 1818, the defendant drew a bill of exchange of that date on the plaintiff for 550 dollars, payable in ninety days after sight, which the plaintiff accepted December 8, following. And on the 27th day of November 1818, the defendant drew another bill of that date on the plaintiff for 471 dollars and 70 cents, payable in ninety days after sight, which the plaintiff accepted December 4, following. When these bills became due, the plaintiff, having no funds of the defendant in his hands, and having received the abovementioned notes from Thurston, indorsed and sold them in the market; and having thus raised the necessary funds, paid and took up the bills of exchange which he had accepted. The notes were sold for 940 dollars which was their fair market value; the usual discount on such securities being one per cent. per month. And the defendant was afterwards heard to say that he would rather have suffered a loss of twenty per cent. than that the bills should be protested.

On the 3d day of August 1819, before the notes became due, Thurston stopped payment: in consequence of which, the plaintiff, being duly called upon as indorser of the notes, paid the amount to the holder, and took them up.

It did not appear that the plaintiff did or was to derive any benefit whatever from the entire transaction, excepting his ordinary commission as a commission-merchant of one and a quarter per cent. on the amount of sales of the defendant's part of the ship. It was also proved that the premium and commission paid by the plaintiff for the insurance on the ship ordered by the defendant was twenty-five dollars, with one dollar more for the policy.

The first notice which the plaintiff gave to the defendant of the sale of the ship was by letter dated April 3, 1819, in which, after informing the defendant that his two drafts were duly paid, he states that he had sold the defendant's quarter of the ship for 915 dollars, and thought it a good sale; --that the accounts of the former captain of the ship were not settled; --promises to forward the defendant's account as soon as possible; --but gives no notice whatever that the ship was sold on credit, nor to whom it was sold:--nor did it appear that the plaintiff ever notified the defendant that the sale was made on credit, nor who was the purchaser till August 19, 1819, sixteen days after the failure of Thurston, and about three weeks before the notes aforesaid became due; at which time he wrote him a letter stating that the sale was made on credit, to Thurston, who had stopped payment, and whose notes he had sold to raise money to pay the defendant's drafts; --and requesting the defendant to make provision to meet those notes when they should become due.

It further appeared by an account current stated by the plaintiff between him and the defendant, and forwarded to the latter May 11, 1819, that the defendant was therein credited " By sale of one fourth part ship Jewel, $ 915," and no charge was therein made of the 60 dollars discount on the sale of Thurston's notes, or of the 25 dollars for premium and commissions for making insurance, the benefit of which was transferred with the ship to Thurston. So also in the same account the defendant was credited with the nett proceeds of a bill of exchange on Bristol sold by the plaintiff for the defendant's benefit, no charges being made of discount or expense of sale, or other deduction. And in the same account the defendant was charged with " commissions on sale one fourth ship Jewel at one and one fourth per cent. twelve dollars and fifty cents." It was also proved by inspection of the plaintiff's books that he credited the defendant March 10, 1819, with " sale one fourth ship Jewel to J. P. Thurston, at 6 mo. 1000 dollars," and charged him with " discount on sale of Thurston's notes 60 dollars" ; --but there was no charge in said books at that date for the premium and commission for insurance effected on the ship; and it farther appeared by referring to the bill of the broker, that this bill was not paid by the plaintiff till April 27th, then following, though the insurance was made February 22d, preceding.

It also appeared that on the 3d day of August 1819, Thurston transferred all his visible property to two of his sureties to secure them, and others, of whom the plaintiff was one, against their liabilities on bonds for duties at the custom-house, and as endorsers for him on notes where they had lent him their names as friends, for his accommodation only, and expressly excluding all business-notes, whether due to the assignees aforesaid, or to others; to which transfer the plaintiff was knowing and consenting; --and from the proceeds of this property, thus transferred, the plaintiff and others had realized a dividend of seventy-two per cent. on the amount of the sums for which they stood accountable as the friendly endorsers and sureties of Thurston:--the assignees, with respect to all notes taken or indorsed by them in the way of business, standing on the same footing with all other business-creditors.

Accompanying the letter of August 19, 1819, the plaintiff transmitted to the defendant a corrected account current; by which it appeared that the plaintiff, on the 3d day of June, 1819, had remitted to Dorr, an agent for the defendant, the balance of the account as then stated by the plaintiff.

The verdict was for the amount of Thurston's notes, and interest thereon from the time of making the payment.

Judgment on the verdict.

Emery, for the defendant.

1. The plaintiff having assumed the demand against Thurston as his own, or at least become a guarantor of its payment; if a loss has arisen, he alone must bear it. The agreement made between Thurston and his creditors, of whom the plaintiff was one, was, that his property assigned to them should be applied to the payment of their respective demands against him " by reason of suretyship as indorsers or joint obligors at the Custom-House, or as sureties in any manner." The plaintiff had taken the notes of Mr. Thurston, and put them into the market with his own indorsement; thus becoming his surety for the payment of the debt; --and having, as the case states, received at least 72 per cent of the general amount for which he was liable, he is indemnified for at least so much of this debt; --or, if he is not, it is because he has neglected to bring this claim into the composition; --the fault is his own, and the loss is justly chargeable on him only.

It is not competent for the plaintiff to avoid his liability as factor by the want of funds. Having voluntarily assumed to act, if a loss ensues, it is the loss of the factor, Wallis v. Telfair cited in Smith v. Lascelles, 2 D. & E. 188. Tickell v. Short, 2 Ves. 239.

2. If the plaintiff be not liable to the loss as guarantor, he is culpable to the same extent for negligence of his duty as factor.

If any respect is to be had to the principle of law laid down as to a factor, that when he has bought or sold goods pursuant to orders, he must give notice forthwith to his principal, lest the former orders be contradicted, and so the reputation of the party suffer; --it cannot be less necessary to advise his principal of a sale on credit. The same reason holds in both cases. Jacob's Law Dic. tit. " Factor." sec. 4. Yet here no notice whatever was given of the facts most material for the defendant to know, until more than five months after the sale. Until then, he had every reason to believe the sale to have been for cash. Had he been advised of the facts without delay, as he ought to have been, he might have sold the notes without his own liability as indorser; --or otherwise have converted them into money. Simpson v. Swan, 3 Campb. 292.

The case where a factor may compel his principal to refund money is where he has advanced cash before the sale. Here no mistake is made by the principal. He is advised of all the facts. But if after a sale on credit, and a payment by the factor, he may reclaim the money, because the sale was on credit and the vendee is become insolvent, it may be in his power to ruin the principal with impunity; --and this too, by means of his own...