Lawrence Gas Co. v. Hawkeye Oil Co.
| Decision Date | 18 December 1917 |
| Docket Number | 31272 |
| Citation | 165 N.W. 445,182 Iowa 179 |
| Parties | LAWRENCE GAS COMPANY, Appellant, v. HAWKEYE OIL COMPANY, Appellee |
| Court | Iowa Supreme Court |
Appeal from Black Hawk District Court.--H. B. BOIES, Judge.
ACTION to recover the amount due on a shipment of oil. Defense, plea of payment. Opinion states the facts. Judgment for defendant in the court below. Plaintiff appeals.
Reversed.
W. T Frame and Edwards, Longley, Ransier & Smith, for appellant.
Mears & Lovejoy, for appellee.
The plaintiff, Lawrence Gas Company, is an Illinois corporation, with its principal place of business at Indianapolis, Indiana. The defendant, Hawkeye Oil Company, is also a corporation, and its principal place of business is at Waterloo, Iowa. A. T. Stewart Company is a brokerage firm, and its principal place of business is at Chicago, Illinois.
On January 6, 1914, the defendant, Hawkeye Oil Company, sent the following order to the brokerage firm of A. T. Stewart Company:
This order was received at the A. T. Stewart Company in due course of mail. A. T. Stewart Company were merchant oil brokers, and soon after the receipt of this order, placed the same with the plaintiff, the Lawrence Gas Company, and the Lawrence Gas Company shipped the gasoline therein ordered to the Hawkeye Oil Company, and it was received by it at its home place.
It appears that there had been some prior arrangements between the A. T. Stewart Company and the plaintiff, Lawrence Gas Company, for the handling of the output of the plaintiff company by the A. T. Stewart Company, on a basis of one-quarter cent per gallon commission, A. T. Stewart Company to act as brokers in all transactions, with power to procure orders for plaintiff's product, send the orders to the plaintiff company, and upon receipt of such orders, the goods to be billed directly to the purchaser. The A. T. Stewart Company never had possession of, or control of, any of the products of the plaintiff company.
The president of the Hawkeye Oil Company testified:
The original invoice received is in the following words and figures:
LAWRENCE GAS COMPANY.
High-Grade Gasoline.
Bridgeport, Illinois, December 26, 1913.
Sold to Hawkeye Oil Co. Waterloo, Iowa.
Terms: 30 days Net 1% 10 days. f. o. b. Waterloo.
One tank car 72-74 Straight Run Gasoline G A T X 4170.
8,000
Gallons
$ 1,092.00
Shortage
432
.50
7,568
13.15
8,000 gals. at 6.6, 52, 800 # at 24c Less Frt.
A. T. S. Order # 854
H. O. Co. Order # 5082
$ 868.47
15440
1%
8.68
127.69
Recd. 1-7-14
Jan. 7, 1914
859.79
# 15251
P J 24
He further testified:
The president of the plaintiff, Lawrence Gas Company, testified that, when he made his arrangements with the Stewart Company to handle the product of the plaintiff, he told Mr. Stewart that the company was simply to sell the goods as a broker that it, the plaintiff, would make its own collections.
This action is brought by the Lawrence Gas Company against the Hawkeye Oil Company, to recover the amount of the shipment. The defense plea is payment. The plea of payment relied on has its support in the fact only that, on the 6th day of January, 1914, the defendant, Hawkeye Oil Company, sent to the A. T. Stewart Company a check in the following form, which was received by the A. T. Stewart Company, cashed by it, and the proceeds retained:
THE HAWKEYE OIL COMPANY, No. 15251.
Waterloo, Iowa, Jan. 6, 1914.
Pay to the order of Lawrence Gas Co. $ 859.79, Eight Hundred Fifty-nine and 79-100 Dollars.
WATERLOO, IOWA.
THE HAWKEYE OIL Co.,
BY H. S. CAWARD, Treas.
The question here presented is whether or not this is a payment to the plaintiff company that binds the plaintiff company and makes a good defense to the plaintiff company's claim to recover from the defendant company the amount due for said oil.
We think it must be conceded from this record that A. T. Stewart & Company were simply merchant brokers. The business of a broker is to serve as a connecting link between the parties to the real transaction. Every person whose business it is to negotiate purchases and sales of property with the custody of which he has no concern, neither with the original possession nor the delivery, is a broker. He is strictly a middleman, or an intermediate negotiator between the parties. He is distinguished from a commission merchant or a factor in that he has no possession of the property affected by the negotiation. He has neither the possession, management, nor control of the property to be sold or bought. The general holding is that a broker is one who is not entitled to the possession of the property which is the subject of sale or purchase, and, unless specially authorized to do so, has no right, as broker, to receive payment for the property sold. The distinguishing feature which differentiates a broker from a factor or commission merchant is that he is not intrusted with the custody or possession of the property, and is not authorized to buy or sell it in his own name. See Morgan v. Jaudon, 40 How. Practice (N.Y.) 366, 378; City of Little Rock v. Barton, 33 Ark. 436, 437, 444; Gast v. Buckley, (Ky.) 64 S.W. 632; Braun v. City of Chicago, 110 Ill. 186, 194.
It is apparent from this record that, when the defendant, Hawkeye Oil Company, mailed to the A. T. Stewart Company the order hereinbefore set out, it knew that A. T. Stewart Company was a broker only; that it did not have the commodity ordered for delivery; that, to fill the order, it would be required to place it with some company that could fill it and ship according to the order. When the defendant, Hawkeye Oil Company, received the oil, they knew that A. T. Stewart Company had placed their order with the Lawrence Gas Company; that the Lawrence Gas Company had filled and shipped the oil in pursuance of the order. The original invoice received by the defendant, Hawkeye Oil Company, told them that the Lawrence Gas Company had shipped the oil on terms "30 days net, 1 per cent ten days, F. O. B. Waterloo." They knew that the A. T. Stewart Company did not own the oil they had received, and had no right to receive payment for the same unless authorized by the Lawrence Gas Company to receive payment. They were charged with knowledge that the A. T. Stewart Company, as brokers, had no interest in the property received, and were only interested in so far as receiving a commission for bringing about and effectuating the sale was concerned. Therefore, there is no presumption that the A. T. Stewart Company had a right to receive payment for the oil so received by the defendant. There is no plea of estoppel, and no plea of ratification in this case. Defendant, in its answer, places itself squarely upon the proposition that the A. T. Stewart Company was the agent of the plaintiff, and was authorized to collect and receive the money on behalf of the plaintiff, and that a payment to the A. T. Stewart Company discharged its obligation to the plaintiff for the oil received.
Agency is a broader term than broker,--more comprehensive in its legal scope. A broker is an agent, but with limited authority. Ordinarily, they are not in any way connected with either the buyer or the seller of the property involved in any transaction. They are agents, it is true; but their powers are limited, and, when they have no charge or control over the property, but act only as go-betweens in effectuating a sale, they cannot be said to be agents, in the larger sense, in effectuating the sale. They place the order with one who may or may not fill the order,--is not bound to fill the order. If the order is filled by the one with whom it is placed, a commission is paid to the broker for the order. If it is not filled, the broker gets no commission. Ordinarily, the broker's relationship to the transaction ceases when he places the order with his principal. In no sense does he sell the goods of his principal. He accepts orders and submits them to his principal, who accepts or rejects. Ordinarily, he has many principals, and he may place the order with any of them, and they approve or reject as their judgment suggests. If they reject, the matter is at an end. He may then place it with others of his principals, or with anyone having goods of the character ordered, with which to supply the demand. He earns his commission only in the event that the order is accepted and the shipment made. He enters into no contract with either the buyer or the seller for the sale or delivery of the property ordered. He is not entitled to receive payment for the goods delivered, unless especially authorized by the owner of the goods to receive payment. Therefore, it follows that one who pays to one of these brokers assumes the burden of establishing by a preponderance of the evidence that the broker was authorized by his principal to receive payment for the particular goods shipped. The general rule is that an agent who sells goods on sample, a...
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