Urquhart v. M'Iver

Spencer, J. The plaintiff in this case claims from the defendants ; 1. The damages, interest and costs on the pro — 111 — test of a bill of exchange for 450/. sterling, drawn by the plaintiff, at Wilmington, in North-Carolina, upon the defendants, residing at Liverpool, in England, and which bill the defendants, by their letter to the plaintiff, had agreed to accept, in consideration of the plaintiff’s having consigned to them a ship and cargo. 2d. The price for which the defendants sold the ship Nancy; and 3d, to be exempted from the premium of insurance made on the ship, goods, and freight from Liverpool to New-York, as also the amount paid by the defendants for the return cargo, being salt and coals, and also the amount of repairs and other expenses, subsequent to the sale of the ship by the defendants to Lenox & Maitland. The defendants’ liability to the damages, interest and costs' attending the protest for non-acceptance of the bill for 450/. sterling, is very properly admitted, and it is, therefore, unnecessary to examine the facts, or the law, as applicable to that point. That the defendants had a lien on the cargo consigned to them, and its proceeds, with a lien also on the proceeds of the ship, when sold under the authority conferred by the plaintiff, to the extent of their acceptances and disbursements on the plaintiff’s account, cannot be questioned. The only question is, whether the defendants have pursued such a course as the general duties of factors require, in relation to the sale of the ship, and so as to preserve their lien on the actual proceeds of the sale of the ship by their agents, Lenox v. Maitland. If the line of conduct they have observed, made the ship their own, after the transfer of her to Lenox & Maitland=, it will then necessarily follow, that they have no right to charge the plaintiff with the premium of insurance on the voyage from Liverpool to New-York, with the amount of the return cargo, or for the repairs and disbursements incurred, after the sale to Lenox & Maitland. It is a rule which has been repeatedly recognised in this court, that a factor cannot pawn the goods of his principal. It is a principle so well settled in the English courts, and so firmly esta — 112 — blished with us, as to render it wholly unnecessary to cite authorities in support of it. A lien appears, by all the cases, to be a personal right, and can endure no longer than the possession of the party hold" ing it continues. The authority given by the plaintiff to the defendants, to sell, did not divest the plaintiff’s right of property; at most, it was an authority coupled with an interest in the proceeds, and this authority was exerted by the sale to Lenox & Maitland. It has been urged, ,on the part of the defendants, that this was merely a mode adopted to preserve their lien on the proceeds of the sale, and was not incompatible with the authority vested in them to sell the ship, by way of securing themselves for the responsibilities they had incurred. It seems to be a controverted point in the English courts, “ whether or not a lien might follow goods in the hands of a third person to whom it was delivered by the party having the lien, purporting to transfer his right of lien to the other as his servant, and in his name, and as a continuance, in effect, of his own possession.”* In the present case, the lien was to be acquired by the act of sale only; for until a sale took place, the right of the defendants was merely potential. It has been supposed that the ship itself was put into the possession of the defendants, as a security for their accepting the drafts ; this, in my opinion, is neither warranted by the case, nor is it reconcilable with some of the defendants’ acts. In the plaintiff’s letter of the 17th of May, 1803, he says, “ the ship will be dispatched to your port to your address again, “ I shall send you a power of attorney to make sale of her, as I mean at all events to make you safe in the acceptance and payment of the bills and again, “ thus, I flatter myself, the ship and cargo will be in your possession before you are called on for acceptance.” The possession of the ship here spoken of, evidently means such a possession only as would arise from her being addressed to the defendants with a power to sell, and so the plaintiff must have intended, when, he makes the possession in the defendants to be the consequence of these two acts. The actual possession never was — 113 — in the defendants prior to their sale: and until the power Was executed by a sale, the defendants could have had no legal right to take possession of or to detain the ship. The defendants’ refusal to accept one of the bills, can be imputed to nothing else than an apprehension on their part, that the funds in their hands were not an adequate security, but if the ship unsold was in their possession, and they had a lien on her, there can be no pretence of a want of security. The power to sell did not admit of a mere formal transfer, for the express purpose of gaining a lien on the proceeds, but was alone to be fulfilled by a real, actual, and substantial sale. The sale, therefore, completely divested the plaintiff’s right of property, and from that moment he had a right to debit the defendants with die price specified in the bill of sale. The defendants are not chargeable with any mala fides. Their conduct appears to be fair; but if they are not to be considered as the real owners of the ship, through the medium of their trustees, Lenox & Maitland., they have grossly disobeyed their orders in respect to the return cargo. The property of the ship being, as I conceive, changed by the act of sale, there exists no right to charge die plaintiff for the premium, the return cargo, or the repairs, nor for any thing on, or towards die ship, after the plaintiff’s interest in her ceased. In my judgment, a liquidation must take place on the principles resulting from this opinion. Yates, J. was of the same opinion. Kent, Ch. J. Upon the facts contained in the case, the court are called upon to ascertain and prescribe the principles, upon which the accounts and claims between the parties are to be liquidated or adjusted. 1. The plaintiff claims compensation for the injury he received by the non-acceptance and payment of the bill of exchange for 450/. sterling. By his first letter of the 17th May, he informed the defendants that the ship and cargo114 would be consigned to them, and that he should anticipate, the avails of the cargo and freight, by drawing upon them to the amount of the three bills. The defendants received this letter, together with the invoice and bill of lading, and ' agreed to accept the bills. This acceptance of the consignment bound them to pay the bills. This point seems to be well understood and settled; (Buller, J. in 6 East, 34.) and the counsel for the defendants admitted, upon the argument, their responsibility to indemnify the plaintiff for the nonacceptance and non-payment of the third bill. This indemnity consists in refunding to the plaintiff the 20 per cent. damages which he paid on the return of the bill, the costs attending the same, including the costs of the protest, and interest upon the damages and costs so paid from the time they were paid. 2. As to the return cargo from Liverpool to New-York. The coals were never ordered. In shipping them, the defendants clearly exceeded their special and limited powers, and the plaintiff was not bound to accept of them. The salt was ordered by the letter of the 31st of May; but the defendants consigned it to their agents at New-York, with unqualified orders to sell it. This was exercising ownership ‘ over it, inconsistent with their powers and duty, as factors ; and the plaintiff had his election not to accept of the proceeds of the salt,.so placed-and disposed of without his consent or controul. He did refuse to have any thing to do with the proceeds of the cargo', and, consequently, the cargo and the premium paid at Liverpool for insuring it, are not to be charged to him. 3. The next and most important point respects the ship. By the first letter of the 17th of May, 1803, the plaintiff gave notice to the defendants, in general terms, that he should send them a power of attorney to make sale of the ship, because, he said, that he meant, at all events, to make them safe in the acceptance and payment of the bills. By his next letter of the 31st of May, the plaintiff directed the defendants to cause insurance to be made upon the ship for the return voyage, and this insurance was effected accordingly, — 115 — on the 12th of September following. The plaintiff did, indeed, by his letter of the 9th of July, countermand those orders, for the insurance in England, and gave notice that he intended that the insurance on the return voyage should be made at New-York. But we have no evidence that this letter was received, prior to the 12th of September ; and, from the correspondence, I think it is fairly to be inferred, that it was not received. It was incumbent upon the plaintiff to make out, affirmatively, the fact, that these subsequent orders were received in time by the defendants. From the omission of the plaintiffs to do this, we are bound to conclude, that the insurance at Liverpool upon the homeward voyage, was duly and authoritatively made. The defendants had a lien upon the ship, for their advances and responsibilities. The ship was dispatched to their address, and by the letter of the 17th of May, the plaintiff said, he flattered himself the ship and cargo would be in possession of the defendants, before they were called upon for acceptance. The plaintiff, therefore, intended that the ship should be placed in their possession, as a pledge of their indemnity, or, as the plaintiff said, to make them safe in the acceptance and payment of the bills ; and from the terms of the first letter, we have reason to conclude, that the power was general, and not restricted to any particular place, though the subsequent letters do, undoubtedly, contemplate, that the sale, if made at all, was to be made at Liverpool. But the letter of the 31st of May supposes a power in the defendants to sell the ship to return to New-York ; for it says, “ if the ship be sold, to return to America.” Here was then a sale contemplated for the American market, if not a sale to a person residing in America. Considering the object of the power to sell, and the probable generality of the terms in which it was expressed, the exercise of it, if made in good faith, ought to be construed very liberally in favour of the defendants. But the sale to Lenox & Maitland was not an absolute sale. It was, in effect, only a transfer of the lien to Lenox & Maitland, as agents of the defendants, and with an intent to facilitate a settlement with the plaintiff. Whatever might be the form — 116 — of the sale, it was understood and declared, both by the defendants and their agents, to be a mere deposit of the lien in their hands, on behalf of the defendants. Under such circumstances, I do not consider this as a tortious conversion of die subject, nor a parting with the possession of the lien. This appears to be the real intent and obvious meaning of the transaction ; and in the opinion of Lord Ellenborough, which seems to have been the opinion of the whole court of K. B. in the case of M'Combie v. Davies, (7 East, 5.) such a change of the lien does not divest the factor of his right. Here was no credit or imposition held out, as in the case of Kruger v. Wilcox, (Amb. 252.) on which Lord Hardwicke laid stress. A factor may deliver the possession of goods, on which he has a lien, to a third person, with notice of the lien, and with a declaration that the transfer is to such person as agent of the factor, and for his benefit. This is a continuance, in effect, of the factor’s possession, and this was precisely the object of the transfer in the case before us, which is much stronger than the one supposed by the K. B. for here the factor had a general power to sell, and a power given him avowedly for his own indemnity, I see nothing tortious, nor any thing unreasonable in the manner in which the power was exercised in the present instance. What would have been the effect of an absolute sale by Lenox & Maitland, is a question not before us, for the one which they made was by consent of the plaintiff, without prejudice to the prior rights of the parties. We are, tiierefore, to consider the question, as if Lenox & Maitland still held the vessel, as agents for the defendants, and as ready to surrender the possession and formal title to the plaintiff, on his giving to the defendants their just indemnity. I think, therefore, that the plaintiff is bound to take the avails of the ship, and to pay the premium of insurance, advanced by the defendants for the insurance of the ship and freight, for the homeward voyage. On the other hand, the defendants must assign over to the plaintiff the policy on the ship and freight, and account for any monies which — 117 — they have received thereon, and they must, likewise, pay for the freight of their cargo to New-York. As to the expenses and disbursements of the defendants, in fitting out the ship in September, and in repairing the damages, and fitting her out again in November, they are entitled to have them refunded by the plaintiff; and upon these principles, as to the points in contest between the parties, the accounts must be liquidated. Thompson, J. and Van Ness, J. were of the same opinion. Judgment accordingly. Footnotes [*] 7 East, 6.