Warren, Lane & Co. v. Hewitt

Montgomery, Judge. This was a suit by the defendant in error to recover the amount of a due bill for $2,000, borrowed by the plaintiffs in error. A set-off was filed, which originated as follows: On December 20th, 1869, Hewitt employed Warren, Lane & Company, as factors and cotton brokers, to purchase two hundred bales of cotton for him, to be delivered in April following, “at seller’s option.” He placed $2,000 in their hands as a “margin.” The cotton was purchased in Baltimore, through a commercial house of that city, and the “margin” deposited with that house. The purchase was made December 29th. On December 24th, Hewitt loaned Warren, Lane & Company $2,000 more, for which they gave the due bill sued on. [507] In February, the Baltimore firm notified Warren, Lane & Company that, owing to the decline in cotton, the margin was exhausted, and called for a further margin. Warren, Lane & Company telegraphed that it would be made good, before seeing Hewitt. They afterwards (the next day) saw him and told him what they had done. One of the firm of Warren, Lane & Company testified that Hewitt acquiesced. Hewitt, however, denies this. At all events they sent on $2,000 as a further margin. In March, cotton still declining, they were again telegraphed by their Baltimore correspondents that a further margin was required. They informed Hewitt, and he declined to have anything further to do with the transaction. The cotton was then sold at a loss of about $5,200 — the balance of which, some $1,200, Warren, Lane & Company paid. And this sum, together with the $2,000 sent forward in February, they pleaded as a set-off to the due bill, and seek to recover the balance. The Judge, in his charge to the jury, and in his judgment refusing a new trial, treats Warren, Lane & Company as a principal party to the transaction, and as selling the cotton to Hewitt. This error is fundamental. The evidence shows that they only acted as his agents in effecting the purchase in Baltimore. The transaction for the purchase of the cotton was clearly such as indicated in section 2596 of the Code, and would not have been enforced, as between Hewitt and the seller, in favor of either party. 1. But where that transaction has been completed, and Warren, Lane & Company seek to recover advances made by them, in good faith, as the agents of Hewitt, which advances were authorized or ratified by him, we think they are entitled to do so. Had a profit been made on the transaction, and had such profit come into the hands of Warren, Lane & Company, as it would have done, the authorities are clear, that Hewitt could have compelled them to pay it over to him: 18 Howard, 510; 2 Wallace, 79; Tenant vs. Elliott, 1 Bos. and Pul., 3; Farmer vs. Russell, Ib., 296; Thomson [508] vs. Thomson, 7, Ves., 473; Sharpe vs. Taylor, 2 Phillips Ch., 801. See McBlair vs. Gibbs, 17 Howard, 232; Ingram, vs. Mitchell, 30 Ga., 547. And where money is lenfcfor the payment of a debt originating in a contract, which the laio would not have enforced, it can be recovered back: Alcinbrook vs. Hall, 2 Wils., 309; Barjeau vs. Walmsley, 2 Str., 1249. See Armstrong vs. Toler, 11 Wheaton, 272. If the law refuses to enforce a contract on the ground that it is against public policy, it does not necessarily follow that such contract is illegal. A parol contract for the sale of lands will not be enforced, as against public policy. But no one ever thought of calling such a contract illegal. Money loaned to pay for land so contracted for could certainly be recovered, though the lender knew the purpose for which it was borrowed. It is true, that where a statute makes the payment of money on a certain class of contracts an unlawful act and attaches a penalty thereto, the Court of King’s Bench have decided that money lent to make such payment, with knowledge of the purpose on the part of the lender, cannot be recovered: Cannon vs. Bryce, 3 Barn, and Ald., 179. But the Court is careful to draw the distinction between the statute then under consideration, which “absolutely prohibited the payment of money,” and the statute against gaming, which “contains no prohibition against the payment of money lost at play.” And hence, money loaned to pay a debt of this latter class has been held to be recoverable. The distinction is, perhaps, narrow, but is fully supported by the authorities. It is to be noted that the contract for the purchase of this cotton is not such an one as the Judge, who tried this case, supposes, to-wit: one in which it was at the option of the seller to deliver or not as he pleased. Cotton sold to be delivered in any given month “at seller’s option,” means that the time of delivery, within the month, is at the option of the seller, not that he may deliver or pay the difference between the contract price and the market price at the time of delivery. The witnesses, Russell and Sibley, are explicit on [509] this point, and the meaning here given to the phrase is the known commercial acceptation of the term. Such a contract, as Judge Gibson supposes this one to have been, not being before us, no opinion as to its validity or the validity of any collateral engagements growing out of it is expressed. This contract for the purchase of the cotton, then, not being illegal, but only one which it is not the policy of the law to enforce, Warren, Lane & Company, in our opinion, are entitled to recover all authorized advances made by them as Hewitt’s agents and those made without authority from him, if he after-wards ratified their action in making the advances. The judgment of the Court below is therefore reversed, on the ground that the Court erred in charging the jury that “the sum advanced by defendants, or commissions claimed for the same, cannot be allowed this Court being of opinion that it should be left to the jury to say whether Hewitt authorized or ratified the action of his agents in making the advances, and if he did, they were entitled to have their set-off allowed to the extent of the authority given, and the ratification.