Brent v. Miller & Co. , 81 Ala. 309 ( 1886 )

CLOPTON, J.

— The suit was instituted by appellees, who are bankers in the city of Mobile, to recover against appellant, who is a banker, doing business in Pensacola, Florida, a balance due on general account. The defendant admitted the correctness of plaintiffs’ demand, but set up in answer, by plea of set-off, that the plaintiffs.were indebted to him in a sum exceeding their demand, on account of the proceeds of a cargo of timber, shipped from Pensacola by L. M. Merritt & Son to Withers Furst of Arendal, Norway. The contention arises on the following facts, and others hereinafter stated:

In October, 1881, Merritt & Son, by their agents, S. Vaughn & Oo., of Liverpool, who acted by James Smith & Oo,, wood brokers, made a contract with Furst for the sale of specified kinds and quantities of pine timber at the stipulated and aggregate price of ¿£1,750 — the timber to be shipped from Pensacola, and payment to be made by approved acceptance of sellers’ or their agent’s draft, payable in London at four months from date of bill of lading on presenting the invoice and bill of the cargo. On May 31, 1882, Merritt & Son drew against the shipment a draft on Vaughn & Oo. for ¿£1,500, payable to their own order and endorsed by them. The draft, with the bill of lading attached as security for its acceptance by Vaughn & Co., was sold by defendant to the plaintiffs, the defendant also guaranteeing its acceptance. A written instrument, signed by Merritt & Son, in blank as to the name of the person to whom addressed, and of the person to whom the draft was sold, was • delivered to the plaintiffs with the draft and bill of lading. The instrument recites the sale of the draft against the shipment of the timber as per bill of lading, with the understanding that the bill of lading is lodged as collateral security for its acceptance, and contains authority, if deemed advisable or necessary for the payment of the draft, to place the goods at any time in the hands of their brokers for sale, and to charge all expenses, including commissions, for sale and guarantee, and to apply the proceeds to the payment of the draft for account of “whom it may concern.” The plaintiffs sent the draft, with the bill of lading attached, and the accompanying blank instrument, without endorsement, or filling the blanks, or any alteration whatever, to Morton, Bliss & Oo., of New York, who forwarded them to Morton, Bose & Co., of London. On reception of the proceeds of the cargo, Morton, Rose & Co. appropriated the surplus, after payment of the draft and incidental expenses and commissions, to their general account against Merritt & Son. The contestation is, whether the plaintiffs, on the foregoing facts and others herein mentioned, are personally liable to account to the defendant for this surplus; or stating the question more accurately, whether the jury could have reasonably inferred from the evidence a state of facts, which charged a personal liability on the plaintiffs; the court having affirmatively charged the jury in their favor on the effect of the evidence ?

The plaintiffs insist that Morton, Rose & Co., if any one, are exclusively responsible to the defendant for the surplus of the proceeds of the cargo; and that the only question really before the court is, whether or not the blank power of attorney authorized the holder of the draft and bill of lading to fill or not to fill the blanks as he should see fit, and to dispose of the cargo. In other words, that the blank power of attorney, accompanying the draft and bill of lading, constituted Morton, Rose & Co., the holders of the draft, agents of Merritt & Son, or of the defendant, and operated to release the plaintiffs from liability for the misappropriation of the surplus, if there was a misappropriation. We do not consider the blank power of attorney as having any material bearing, under the facts of the case, on the question of the personal liability of the plaintiffs, and, therefore, do not propose to consider its legal effect, If it be conceded that the holders of the draft were authorized to place the goods in the hands of their brokers for sale, whenever deemed advisable or necessary for its payment, and if it be further conceded, as to which we express no opinion, that the holders, in thus placing the goods for sale, act as the agents of Merritt & Son — before the plaintiffs can effectually assert any release or discharge thereby, the authority conferred must be exercised. Without such exercise the blank power of attorney can have no effect, either to confer rights or to release from liability, if a liability would otherwise exist. It constituted a security for the payment of the draft, additional to the security for its acceptance, created by attaching the bill of lading, and was intended to meet any circumstances or contingency that might arise, rendering a sale advisable or necessary for its payment —such as the failure or refusal of Yaughn & Co. to accept, or their intervening insolvency. Had Yaughn & Co. continued solvent, and accepted the draft, they would have been entitled to the bill of lading, and the cargo’ released from the pledge, so that they could deliver it to Furst and indemnify themselves against loss by reason of their acceptance of the draft. The authority is not to perform the original contract of sale between Merritt & Son and Furst. A sale, other, distinct, and for a different purpose, was contemplated and authorized. It is not shown that such sale was made. By some arrangement, not appearing, but presumably with Morton, Rose & Co., James Smith & Co. delivered the bill of lading and invoice to Furst, and received in payment his acceptance of their draft, payable in London at four months from the date of the invoice, as provided by the original contract of sale. The blank power of attorney did not itself, without an execution of the power, operate to create a relation between the parties, other and different from what would have been the legal effect of the transaction, in the absence of such power of attorney, whatever might have been its subsequent effect had the authority been exercised.

It is further contended that the plaintiffs purchased the draft as agents and on joint account of Morton, Bliss & Co. and Morton, Rose & Co. Such is the evidence of two of the plaintiffs, and one member of the firm of Morton, Bliss & Co.; and there being no contradiction, we will assume such to be the fact. A disputed question of fact is, whether the defendant knew that the plaintiffs were in the habit of purchasing exchange as the agents of the firms mentioned. As to this, the evidence is in conflict. The plaintiffs were engaged in purchasing exchange, both on their individual account, and on account of others. Though it may be true that the plaintiffs purchased the drafts as agents, there is evidence tending to show that the names of their principals were not disclosed. In fact, one of the plaintiffs testifies that no notice was given to the defendant that the draft was being purchased on account of Morton, Bliss & Co. and Morton, Rose & Co. If this be true, the case presented is that of a person really acting as agent, but ostensibly'in his own name, on his own responsibility, and inviting credit to himself. “An agent, who contracts in his own name, without disclosing that he is acting for a principal, incurs a personal liability, which is primary in its character.” And such agent is not relieved from liability on transactions, when his principal is undisclosed, and credit is given to him personally, because he generally acts as agent for disclosed principals in other transactions.— Wood v. Brewer, 73 Ala. 259 ; Whar. on Agency, §§ 490, 496, 497. There ai’e sufficient reasons requiring a stringent application of the rule in cases where one of the undisclosed principals resides in another State, and the other in a foreign country.

The delivery of a bill of lading is a constructive or symbolical delivery of the cargo, which it represents, to the same extent and for the same purposes, as if the goods were corporeally delivered. The sale, delivery, and purchase of the draft, with the bill of lading attached, as security for its acceptance, constituted a pledge of the goods for the acceptance of the draft, and created the relation of pledgor and pledgee between Merritt & Son and the plaintiffs, unless it is shown that Merritt & Son, through the defendant, dealt with the plaintiffs, as agents and on the credit of their principals. The plaintiffs acquired the rights of a pledgee of the property, and nothing more. Having a special property, they could sell or assign it without impairing the lien, subject to the rights of the pledgors, but could not alienate it absolutely, or beyond the title possessed, and the pledgors may transfer the property subject to the pledge. The principals being undisclosed, the plaintiffs became trustees as to the proceeds of the cargo in excess of the payment of the draft, and primarily liable to account to Merritt & Son. Jones on Pledges, §§ 242, 364; 5 Wait’s Ac. & Def. 172, 174.

While the draft was in transit from New York to London, Morton, Bliss & Co. informed the plaintiffs of the failure of Yaughn & Co. Thereupon, the plaintiffs called defendant’s attention to the. rumored failure, and to the fact, that he had guaranteed the acceptance of the draft, but not its payment. The defendant afterwards procured from Merritt & Son a draft drawn directly on the purchaser, first, for ¿61,750, the full price of the cargo, for which amount he gave Merritt & Son credit in his account with them; and thereby became the owner of, and entitled to the surplus of the proceeds of the cargo after payment of the draft for ¿61,500. The draft for ¿61,750 was delivered to the plaintiffs, June 8, 1882, by the defendant, with a guarantee of its acceptance, and a proposition to substitute it for the former draft, the account of the defendant to be credited with the additional ¿6250. The plaintiffs acknowledged the receipt of the draft, and agreed to credit defendant’s account as required, if Morton, Bliss & Oo. would credit them. The draft was immediately forwarded to Morton, Bliss & Co. by mail. They were informed of the proposed substitution, and that defendant required the excess, when paid, to be held for his account. Morton, Bliss & Co. acknowledged, June 12,1882, the receipt of the letter inclosing the draft, and replied : “ We will forward for collection the bill of L. M. Merritt & Son to Withers Eurst for ¿61,750, and will ask our London friends to hold as security for it the documents of the bill on S. Yaughn & Co. for ¿61,500. We will credit Mr. Brent for the ¿£-250 excess of the bill endorsed by him, less interest charges on the latter bill and collection charges on the ¿61,750.” If these facts be found by the jury, and there is evidence tending to establish them, after plaintiffs had notice, that defendant had acquired the rights of Merritt & Son, a new and substituted contract was made, founded on a sufficient consideration — the altered position of defendant, and the assumption of another and different liability — which became complete on the consent of Morton, Bliss & Co. to give the required credit.' It is true the draft was never presented for acceptance, the excuse being, as testified by the witness, Cross, a member of the firm of Morton, Bliss & Co., that before the draft reached London the cargo had been delivered to Furst and paid for by him. Furst testifies, that he received the cargo in July, but that he had received the bill of lading previously, and paid for the cargo by the acceptance, June 29, 1882, of the draft of James Smith & Co., dated May 31, 1882, and payable at four months. The draft of Merritt & Son on Furst was retained by Morton, Bliss <fc Co., or the plaintiffs, until its delivery to the defendant during the progress of the trial.

So far as appears from the record, Morton, Bose & Co. never acquired from Merritt & Son, or the defendant, any right to the proceeds of the cargo, other than an appropriation of so much as was requisite to pay the draft for ¿61,500. Neither by the purchase of the first draft, nor by the subsequent agreement, did they acquire any authority to apply or dispose of the excess. Its application, in September, 1882, to their general account against Merritt & Son, arising from the deficiencies on other bills drawn by them, if not guaranteed bv the defendant, was in violation of intervening rights, and unauthorized. The record contains no evidence tending to show any privity of coutract, as to such excess, between Morton, Bose & Co. and the defendant. In making the agreement to credit the defendant with the additional ¿6250, the plaintiffs did not profess to act for, or as the agents of Morton, Bliss & Co., or Morton, Bose & Go. They undertook in their own names and on their personal responsibility to credit the defendant with the excess, in their account, the only condition prescribed being that Morton, Bliss & Co. would credit them. As to such excess, after payment of the draft for ¿61,500, and proper charges, Morton, Bose & Co. were not agents of the defendant. As the defendant acquired title to such excess, and as the plaintiffs, by a valid contract, agreed to credit him with the additional ¿6250, thereby incurring a personal and primary liability, its subsequent misapplication by Morton, Rose & Co. does not defeat his right, nor operate to discharge the plaintiffs from such liability. Though Morton, Rose & Co. may be foreign principals as to the draft for ¿61,500, the defendant will not be remitted to recourse on them for the excess, in the absence of an agreement to look to them fora proper accounting.

The demurrer to the second replication was properly overruled. It alleges, that the plaintiffs acted as the agents of Morton, Bliss & Co., who were doing business in New York, and that the defendant knew that they were dealing with him in the particular transactions as such agents. On the principles of this opinion, the averments of the third replication are insufficient, and the demurrer thereto should have been sustained. On the undisputed facts and the conflicting evidence, the jury could have legally found a verdict in favor of the defendant. The court therefore erred in giving an affirmative charge in favor of the plaintiffs.

Reversed and remanded.