Thomas Wilson and Company, Plaintiffs v. Horace Smith, Defendant

• Citation: 44 U.S. 763,3 How. 763,11 L.Ed. 820
• Parties: THOMAS WILSON AND COMPANY, PLAINTIFFS, v. HORACE SMITH, DEFENDANT
• Decision Date: 01 January 1845
• Court: U.S. Supreme Court

44 U.S. 763

3 How. 763

11 L.Ed. 820

THOMAS WILSON AND COMPANY, PLAINTIFFS, v. HORACE SMITH, DEFENDANT.

January Term, 1845

THIS case camp up on a certificate of division in opinion between the judges of the Circuit Court of the United States for the district of Georiga.

The record being very short, it will be inserted entire.

'This was an action of assumpsit brought in this court by the plaintiffs, to recover from the defendant the sum of eight hundred dollars and interest, being the amount of a draft or bill of exchange drawn by one Henry B. Holcombe, of Augusta, in the state of Georiga, upon one Charles F. Mills, of Savannah, in said state, and accepted by him, and paid to the defendant. The declaration contained two counts. The first was for money collected and received by the defendant to and for the use of the plaintiffs, upon the particular bill of exchange set out and described in the declaration; the second count was generally for money had and received. The plea of non-assumpsit was pleaded by the defendant in bar of the action, 'it being proved that the draft or bill of exchange upon which the money was collected and received by the defendant was the property of the plaintiffs;' that it had been by them placed in the hands of their agent, David W. St. John, at Augusta, Georgia, for collection, and by him, St. John, forwarded to the defendant, St. John's agent, at Savannah, Georgia, for acceptance and collection; that it was accepted and paid to the defendant, by whom the proceeds were received and credited to the account of St. John, from whom the defendant received the draft or bill for collection, and who was indebted to the defendant at the time. That at the time the said bill was so paid to the defendant, and by him credited to the account of St. John, he, St. John, had failed in business, and had departed this life; that he failed, and had not recovered his affairs at the time of his death, and was insolvent; that the credit for the amount of the bill, carried by the defendant to St. John's account, was made in payment of a previously existing debt due by St. John to the defendant, no new transaction having arisen between the defendant and St. John after the payment of the said bill to the defendant; 'that to secure the payment of his debt to the defendant, St. John had transferred to the defendant three hundred shares of the capital stock of the Augusta Insurance and Banking Company, upon which $100 per share had been paid; that the defendant appeared satisfied with this security, and that St. John would then have given additional security had the defendant required it.' That the draft or bill of exchange was made payable to the order of Henry B. Holcombe, the drawer, and by him endorsed in blank, and endorsed by St. John to H. Smith, Esq., (the defendant,) or order. That when the draft was sent to the defendant for collection he was not apprized to whom it belonged, nor were any instructions or directions given to him as to the disposition of the money when collected.

'The following point was presented, during the progress of the trial, for the opinion of the judges, on which the judges were opposed in opinion, viz.: Whether there was such privity of contract between the plaintiffs and defendant, either express or implied, as would enable the plaintiffs to maintain the action for money had and received.

'Which said point, upon which the disagreement has happened, is stated above, under the direction of the judges of the said court, at the request of the counsel for the parties in the cause, and ordered to be certified into the Supreme Court of the United States at the next session, pursuant to the act of Congress in such case made and provided.'

Berrien, for the plaintiffs.

Nelson, (attorney-general,) for the defendant.

Berrien. The question is, whether there is such a privity of contract between the plaintiff and defendant, either express or implied, as will enable the plaintiff to sustain the action for money had and received.

It is not necessary that the relations of contract should exist between the parties.

There are many cases in which the defendant has received the money of plaintiff, under circumstances which would render him liable ex delicto, in which plaintiff is permitted to waive the tort, and sue in this action. 1 Leigh, N. P., 45, 46. Wherever defendant has received money, the property of plaintiffs, which defendant is bound ex aequo et bono to refund, it may be recovered in this action. Moses v. McFarlane, 2 Burr., 1012. The true question is the right of plaintiff to receive, or of defendant to retain the money.

In the eye of the law, there is always such privity of contract as is necessary to sustain this action, between a person who holds the money of another, which in equity and good conscience he is bound to refund, and the person whose money is thus withheld. Camp v. Tompkins, 9 Conn., 553.

Again. Where one has received the money of another, and has not the right to retain it, the law will imply privity of contract. Mason v. Waite, 17 Mass., 560; Hall v. Marston, Id., 575.

Two propositions may be laid down.

1. On the facts stated, Smith, defendant, was the agent of plaintiffs, bound to account to them on notice of their claim; and, therefore, the amount collected by him was money had and received to their use.

2. That his ignorance of the real owner of the bill cannot affect the right of plaintiffs to recover in this action, on notice and proof of their title, so long as defendant stands in his original situation, and until there has been a change of circumstances, by his having paid over the money to his immediate employer, or done something equivalent to it.

1. Smith, the defendant, was the agent of plaintiffs. The case states,——

1st. That the bill was the property of plaintiffs.

2d. That it was collected by defendant, who received it from St. John, the agent of plaintiffs.

On this state of facts, did the necessary privity exist? or, in other words, had defendant the right to retain after notice of plaintiffs' claim?

It is objected that delegated power cannot be delegated without authority for that purpose, because it implies trust and confidence, which cannot be assigned to a stranger. That the sub-agent has no claim upon the principal, for commissions, advances, &c., therefore is under no responsibility to him, his sole remedy being against his immediate employer, and therefore that his sole responsibility is to him. For qualifications of the rule, see Story on Agency, § 14, p. 16.

Authority implied.

Licensed auctioneer.—1. When indispensable by the laws to accomplish the end.

Ship-broker.—2. Ordinary usage of trade.

Factor.—3. Where understood by parties as the mode in which the business would or might be done.

The authority exclusively personal, unless from express provision, legal necessity, usage of trade, or fair presumptions growing out of particular transactions, a broader power was intended to be conferred. Story on Agency, § 14, p. 17.

Test the present case, by this rule, thus qualified.

A foreign house, holding a bill drawn on a citizen of Savannah, in Georgia, has a correspondent at Augusta, in the same state, to whom he remits it for collection, and by whom it is sent to his correspondent in Savannah, where the drawee resides.

Is this not conformable to the usual course of such transactions? Could plaintiffs have expected that St. John, abandoning his own place of business, should have repaired to the distant residence of the drawee, to present this bill personally? Would not the nemittance of it there, to his correspondent, by 'understood by the parties to be the mode in which this particular business would or might be done?' Was St. John bound to do more than select a competent and trust-worthy agent to receive the contents of the bill? If with the bill he had stated plaintiffs'interest, would any have doubted that defendant would have been the agent of plaintiffs in this matter? and does this not settle the right to delegate his authority? What effect withholding that information would have, will be considered hereafter.

It suffices at present, in order to sustain the first position, to show that this bill was dealt with according to the usual mode of transacting such business. That in appointing a sub-agent, St. John did no more than plaintiffs designed and intended. If so, defendant was agent of plaintiffs, by an authorized substitution; an authority implied from the circumstances, and as strong as if expressly given; and, as their agent, is, therefore, directly accountable to them for the money received under that agency, as money had and received to their use.

2. Defendant's ignorance of the real owner of the bill, and St. John's prior indebtedness to him, cannot affect plaintiffs' right to recover, unless, before notice of their claim, defendant had made advances to St. John, or delayed his prior claim against him, relying for reimbursement or payment on this fund.

St. John, in remitting the bill, did not state that plaintiffs were owners of it. He was indebted to defendant, who, on receiving its contents, credited him in account, and now claims to retain the money of plaintiffs, in payment of the debt due to him by St. John.

The defendant's having passed the money, in account, cannot affect this question; Buller v. Harrison, Cowp., 565; Coxe v. Prentice, 3 Mau. & Sel., 348. Lord Ellenborough says, 'I take it that an agent who receives money for his principal, is liable as a principal so long as he stands in his original situation, and until there has been a change of circumstances,' &c. &c.

This money is, therefore, to be considered as in the hands of defendant, without any disposition having been made of it. Defendant's want of knowledge that the money belonged to the plaintiffs, cannot affect their right after notice and proof of their title. De Valengin's Adm'r. v. Duffy, 14 Pet., 282, 290. This was a case...