Cushman v. Snow , 186 Mass. 169 ( 1904 )

Bbaley, J.

If the relation of debtor and creditor existed between the defendant’s assignors and the plaintiffs the defendant invokes the aid of the general rule relating to the appropriation of payments where this relation is shown, namely, that when money is paid, if no direction is given by the debtor the creditor may apply it as he chooses, but if no appropriation is made by either the law makes such application as justice between the parties may require. Parker v. Green, 8 Met. 137, 144. Crompton v. Pratt, 105 Mass. 255. Worthley v. Emerson, 116 Mass. 374. National Mahaiwe Bank v. Peck, 127 Mass. 298. Swett v. Boyce, 134 Mass. 381.

There was no contract in writing, but the general course of dealing between the plaintiffs and their agents seems to have been that the latter sold the goods consigned either for cash or on credit to such customers as they pleased, whose names were not disclosed to the principals, but when they were sold the plaintiffs were credited with the amount notwithstanding the proceeds of the sales on credit had not been received.

As the sales were made the agents after taking out commissions and other charges remitted the remainder, and also an account of the goods sold to the plaintiffs, and such remittances were credited generally without reference to any particular consignment, or any single sale, and beyond rendering monthly accounts of sales, and quarterly statements in which interest on the account also was adjusted between them, no final balance was struck or adjustment made in the general account, and it ran continuously from month to month and year to year.

It cannot be inferred from the meagre statement of the custom of the firm not tó disclose the names of customers to their principals that they thus rendered themselves liable for the purchase price of all goods sold through their agency, for if they undertook to guarantee the sales and solvency of purchasers it should have appeared in the contract. Swan v. Nesmith, 7 Pick. 220, 223. Upham v. Lefavour, 11 Met. 174.

But if it is true that the firm can be considered del credere factors and became debtors as argued by the defendant, the title to the property did not pass to them but remained in the plaintiffs, who still retained the right to resort to the original purchasers for payment, and this rests on the ground of the right of the principals to enforce a contract made by an agent even if at the time of sale they were undisclosed to the purchaser, while any defence which the latter could have raised against the agent is open in such a suit. Kelley v. Munson, 7 Mass. 319, 323. Barry v. Page, 10 Gray, 398, 399. Locke v. Lewis, 124 Mass. 1, 7. Foster v. Graham, 166 Mass. 202. See Pub. Sts. c. 71, § 1.

In such a ease moreover the guaranty does not transform the essential character of the relation, for the principal retains title to the goods until sold, and then to their proceeds at least until paid to the agent, and may pursue both agent and purchaser until he has obtained satisfaction of his debt. Denston v. Perkins, 2 Pick. 86. Chesterfield Manuf. Co. v. Dehon, 5 Pick. 7. Merrill v. Bank of Norfolk, 19 Pick. 32, 34. Vail v. Durant, 7 Allen, 408. Rhoades v. Blackiston, 106 Mass. 334. Robinson v. Talbot, 121 Mass. 513. Titcomb v. Seaver, 4 Greenl. 542, 544. Thompson v. Perkins, 3 Mason, 232. See Roosevelt v. Doherty, 129 Mass. 301, 302.

And where the factors become: insolvent their agency is thereby terminated, and an assignee, and here the defendant as trustee, stands in their place and tabes the estate of his assignors subject to all the equities in favor of third parties that may attach to it, with the further liability that if he collects money from purchasers who dealt with the agents as principals he must account for it to the consignors unless he can show that it is a part of the assets of the insolvent estate. Audenried v. Betteley, 8 Allen, 302, 308. Chace v. Chapin, 130 Mass. 128, 131.

For the purposes of this defence the defendant selects November 30, 1897, from a period covering nearly four years, as a date when in the books of account kept by the agents from the entries made by them of transactions with the plaintiffs, it appeared they owed $29,617.10. Subsequently, and before their failure they paid $35,409.51, and if this amount is applied in payment of the account as it stood on that date, the sum of $5,792.41 remains as money apparently advanced on goods sold but not paid for by customers'from November 30, 1897, to December 24, 1897, or a payment to this extent in excess of the actual indebtedness; and when this amount was collected by him he contends that it lawfully can be retained because the plaintiffs were required to apply the overpayment until it was exhausted on the next succeeding consignments of goods, and if they did not the law should now make such an appropriation.

But the entries on their books created no agreement between the parties, and .were in the nature of private writings for the use of themselves; they never were brought to the knowledge of the plaintiffs nor assented to by .them, and cannot modify the terms of the contract. Swift v. Pierce, 13 Allen, 136, 137.

Moreover, the difficulty in maintaining this position is that the general course of dealing between the parties was continuous, as all the goods were consigned and remittances made under one agreement without any reference to whether payments for sales by the agents had matured, or were still outstanding, and when payments between the parties were received they were not accepted, nor remitted in liquidation of a specific part of the business transactions between them, but in part satisfaction of an open arid running account, and during the entire time in which this adjustment of payments and advances is interposed, and up to that of their failure, the factors themselves were largely indebted to the plaintiffs if a balance had been struck of the full account, including the credit of alleged overpayment. Hill v. McLaughlin, 158 Mass. 307, 309. Sercombe-Bolte Manuf. Co. v. Lovell Arms Co. 171 Mass. 175, 176. Gass v. Stinson, 3 Sumn. 98, 112.

It also is clear that such an artificial distinction was not contemplated by the parties, for the consignments of goods and remittances therefor followed in the usual way between the dates selected, and no request was made by the firm for any change in the application of payments. If the factors had brought an action against the plaintiffs to recover the amount as an advance in excess of sales they must have been defeated, for a full statement of the account taken at any time during the period covered would have shown that “ the balance on the entire account was uniformly against ” them. Upham v. Lefavour, 11 Met. 174.

Indeed it would seem a novel proposition for a debtor who is liable to Ms creditor for a final balance due on a general account, extending through a series of years with an intermingling of charges and payments, to select a date when by his system of bookkeeping he had made payments sufficient to show an indebtedness to him to claim they are to be applied to show a surplus to his credit, where if they are applied as received by his creditor the balance is constantly against him.

So here, to prove a balance in his favor the defendant is obliged to accumulate all the payments made after November 30, and apparently up to the date of his appointment, and apply them to produce this result; but to do this he ignores the fact that during the whole time, for aught that appears to the contrary, goods were being consigned and sold, the proceeds of which when remitted if appropriated in the usual manner could not be used for such purpose.

No sufficient reason is now shown why the application of these payments should not follow the usual course pursued by the plaintiffs and their agents ; and as the latter never suggested that the money remitted was in excess of the proceeds of sales that had been received, the plaintiffs were at liberty to assume they were receiving funds which by the contract rightfully belonged to them, and when a proper credit was given in the order of their receipt it must be treated as appropriated to a partial discharge of the account, and is conclusive. Parker v. Green, 8 Met. 137, 144. Upham v. Lefavour, ubi supra.

Judgment affirmed.