Reguera v. Calderon

Rabin, J. In September of 1959 plaintiff’s assignor Aceites Roig, S. A., a Spanish distributor of olive oil, engaged Jose M. Calderon, Inc., a New York food broker, as its agent in the sale of a quantity of Spanish edible olive oil. Jose M. Calderon, Inc., acting as .such agent for Roig, entered into a contract for the sale of the olive oil to Pompeian Olive Oil Corporation of Baltimore, Maryland. Pursuant to the contract, an irrevocable letter of credit was opened by the purchaser in favor of Roig. The letter of credit contained a provision that the olive oil was to be shipped no later than October 31, 1959. The olive oil was shipped at a later date and in consequence the purchaser refused to accept delivery and revoked the letter of credit. As a result of Pompeian’s failure to accept delivery, these perishable goods remained in a warehouse in Baltimore, with costs and charges accruing daily. Roig, thereupon, contacted Jose M. Calderon, Inc., and authorized that agent to sell the olive oil at the best price possible. In order to effect the sale it was necessary to have all the costs paid, including the cost of shipment to Maryland, customs duties, demurrage, warehouse freight and insurance. The agent, after deducting 3% of the sales price as his commission, and after deducting the various charges above mentioned, was to remit the net proceeds to Roig. To accomplish the ultimate sale of the olive oil, Roig advised its bank in Spain to send a cablegram to the First National Bank of Baltimore, instructing that bank to transmit title documents to the olive oil to Jose M. Calderon, Inc. On December 15, 1959, the Baltimore bank did transfer the title documents to William H. Masson, Inc., of Maryland, who acted as customs broker for the Jose Calderon Corp. The title documents were made subject to the order of Jose M. Calderon, Inc., and thus the goods were placed within the agent’s complete control. Jose M. Calderon, Inc. did not possess the necessary funds to .pay the various charges above mentioned and, therefore, found it necessary to enter into an agreement with defendant, Victor M. Calderon, Inc., in order to raise the necessary funds. That arrangement provided that Victor M. Calderon, Inc. was to pay the various charges on condition that it be allowed to invoice the sales, collect the proceeds, and after deducting the [373] necessary charges advanced, and a commission, transmit the balance to Jose M. Calderon, Inc. To enable the Victor Calderon Corp. to consummate a sale, if it found a buyer, the customs broker Masson was instructed by Jose M. Calderon, Inc. to hold the goods for the account of Victor M. Calderon, Inc. It is the contention of the plaintiff that the agent, Jose M. Calderon, Inc. acted beyond the scope of its authority in making the aforesaid arrangement with the defendant corporation, because it asserts that the arrangement in effect constituted a pledge which the agent was unauthorized to make. With this we cannot agree. Under all the circumstances, the agent acted well within the scope of its authority and merely took the reasonable and necessary steps to effectuate the ultimate sale of the goods involved, as authorized by its principal. In reaching our conclusion we need not rely upon the Factors’ Act. (Personal Property Law, § 43, repealed Sept. 27, 1964.) That act deals with the apparent authority of an agent. Here, as already indicated, the agent acted pursuant to the authority necessarily implied. We recognize that the general rule is that an agent who is authorized to sell is not also authorized to pledge. However, basically, the cases which have so held involved situations where the pledge was not in furtherance of the agency. (See Shaw v. Saranac Horse Nail Co., 144 N. Y. 220; Porges v. United States Mtge. & Trust Co., 203 N. Y. 181.) But, at any rate, the facts of this case present a situation, the exigencies of which point to the conclusion that the parties contemplated that the Jose M. Calderon Corp. do exactly what it did. Perishable goods had been shipped from Spain to Maryland, and there they remained in storage without a buyer, with charges against them mounting daily. Indeed, the record indicates that the market price on these goods was in a state of flux. The parties had to act quickly. The owner of the goods had to salvage whatever it could from the shipment. To effectuate the sale of the goods and to allow for expedition, documents of title were transferred to the control of the agent. Indeed, this transfer of documents was contrary to the form that the prior rejected sale had taken, for in that case documents of title were shipped to the bank to be delivered only against the letter of credit. Here the agent had to be placed in a position of control over the goods so that it could act quickly in order that the goods might be salvaged. The necessary charges which the agent had to pay in order that the goods might be sold, were approximately $6,000, a very considerable amount when com [374] pared to the sum of $30,000, which was approximately the amount for which the goods were ultimately sold. In the light of the circumstances, the authority conferred upon the agent included the authority to do all the things necessary to effect the sale of the goods and make delivery thereof possible. (See 2 N. Y. Jur., Agency, § 84.) Of course, the payment of the various charges being a condition precedent to the consummation of the sale and delivery of the goods, it can be inferred that the agent did in fact have the authority to pledge the goods in order to raise the necessary funds to effectuate the ultimate sale of the goods. Therefore, when the agent paid off the obligations, which were liens against the property, effectuated the ultimate sale of the goods, and received the proceeds of the sales, he did exactly what he was authorized to do. The arrangement made between the agent and the defendant corporation, looking towards the sale of the goods, did not constitute a conversion. There is no doubt that the defendant corporation turned over all the net proceeds of the sales to the Jose Calderon Corp., the agent of Roig. The loss to Roig occurred as the result of the defalcation of the agent who was chosen by Roig, itself. What is lost sight of here by the plaintiff is that the agent was not only empowered to effectuate the sale of the goods involved, but was also an agent to receive the proceeds of the sale. If the agent had sold the goods directly to the defendant corporation or to a third party and then upon receipt of the funds had failed to turn over, there could be no claim as against the defendant or the third party. In that situation it would be entirely clear to all concerned that the agent acted within the scope of its actual authority. That the agent did not directly sell to the defendant corporation, but instead used the defendant corporation as a conduit to sell to a third party, does not alter the situation. It cannot be said that any loss occurred as a result of the form in which the transaction was arranged. Accordingly, the judgment entered December 2, 1965 should be affirmed with one bill of costs and disbursements to the defendants.