Standard Sugar Refinery v. . Dayton

Rapallo, J. The appellant caused the plaintiffs to ship the lots of sugar in question to the several purchasers to whom he had sold them, and to forward the invoices and bills of lading to him, by representing that he had contracted for the sale of the sugars on the terms authorized by the plaintiff; and he undertook to collect the proceeds of sale from the purchasers, and pay them over to the plaintiffs. This was the substance of the transaction. By inducing the plaintiffs to intrust him with the invoices and bills of lading, he obtained from them the power of making an effectual delivery of the sugars, and collecting the purchase money, and that was the obvious purpose for which they were entrusted to him; for in his reports of sales requesting the bills of lading and invoices to be sent to his office, he stated that payment for the sugar was to be collected there. This was the same in substance as entrusting the appellant with the possession of the sugars, with authority to sell and collect the price, and the appellant occupied the position of factor, and not of broker. The appellant did receive the invoices and bills of lading, *489 and deliver them to the purchasers, and did collect from them the proceeds of the sales, and has failed to pay them over. This clearly brings him within the provision of the Code. His defense is, that he made the sales on different terms from those upon which he was authorized to make, and represented that he had made them. Such a defense is inadmissible. He cannot set up his own fraud to shield him from responsibility as factor." The purchasers were not bound by the secret instructions of the plaintiffs to their agent, and the sales and payments were therefore valid. Neither can the arrangements between the appellant .and purchasers, which were unknown to the plaintiffs, affect their rights. Although the sales were made on different terms from those authorized by the plaintiffs, this does not affect their rights against the appellant. They may waive the variance, and adopt the sales and claim the proceeds. It is an extraordinary defense on the part of a factor, to set up that he is not liable as such to his principal for proceeds of sales collected, because in making the sales he varied from the terms on which he was authorized to sell, and falsely reported that he had conformed to them. The order can also be sustained on the ground, that the debt was fraudulently contracted. . The appellant obtained possession of the invoices and bills of lading by falsely rep- • resenting that he had sold the sugars on the terms authorized by his principals. If he had told the truth, they would not have shipped the sugars or sent him the papers which enabled him to collect the money. And this the appellant knew, because they had informed him that they would not contract on those terms. By this means he collected the proceeds fifteen days before the time, when, according to his reports to the plaintiffs, they would be payable, and in the interim misapplied them by employing them in their own business. The attempted denial, that the bills of lading were sent by plaintiffs to the appellant, as requested by him, and the attempted denial of such request, are too feeble in the face *490 of the positive evidence on the part of the plaintiff, to require comment. It is difficult to see how the appellant could have collected the price without those documents. On both grounds the order should be affirmed with costs. All concur. Order affirmed.