Sheldon v. Raveret

Clerke, J. If I understand this case correctly, the only question involved in it is, whether the plaintiff had a right to appropriate the proceeds of sales which he made as factor, first for the payment of his commissions, before any of the proceeds could be accredited to the payment of advances made to the husband, the principal debtor, to secure which, one of the defendants, the wife, mortgaged her real estate. The property was sold by the plaintiff as factor for the husband, and consisted of brushes ; and at the expiration of the time fixed for the continuance of the agency and advances, they were sold; and they failed to realize a sufficient sum to satisfy the advances ; leaving a deficiency of $1870.67. The referee found, however, that as this balance in favor of the plaintiff was caused hy deducting commissions on the sales, the mortgaged property was not liable for this balance, and directed that it should be reconveyed to Mrs. Eaveret; it having been conveyed to the plaintiff by a deed absolute on its face, although, as we have seen, given as collateral security for money to be advanced to her husband by the plaintiff. In my opinion the referee was clearly in error. The plaintiff having stood in the two relations of pledgee and factor to the principal debtor before any of the proceeds could be made available for the satisfaction of the advances, the commis [216] sions must be first deducted. These- commissions include charges not only for selling the goods, but for holding, storing and insuring. These are indispensable preliminary expenses, before a fund can be realized out of the goods, for the payment of the advances. It is scarcely-necessary to urge that the proper charges and expenses of converting a security into money are first to be deducted from the gross proceeds, and that it is the balance, only, which is applicable to the discharge of the debt. [New York General Term, June 3, 1867. This is especially so, when the creditor is also the factor of the goods ; for he has a lien for all these charges, which cannot be divested without his consent. The factor is accountable only for the balance, after deducting his charges and expenses. The judgment should be reversed, and a new trial ordered; costs to abide the event. Leonard, J. The agreement of August 15, 1861, is not an extension of the time of payment. The plaintiff owed no obligation to Mrs. Eaveret, as surety for her husband, to sell the brushes. The plaintiff could, without interference with her rights, agree to hold the brushes. Ho defense is set up by Mrs. Eaveret of an extension of the time of payment to her husband, or injury from delay in selling the brushes. Brother Clebke is clearly right on the question of the amount of the proceeds of sales applicable to the payment of the advances. • Welles, J. also concurred. Hew trial granted. Leonard, Clerke and Welles, Justices,]