Merrill v. Thomas

Joseph F. Daly, J. The theory of the plaintiff is, that the proceeds of the goods consigned to Thomas & Co. are their property, as against the consignors, because of the advances made by them and their guaranty of sales under their del credere commission. The consignment to them upon an agreement for advances gave them a vested interest in the goods for their protection and as security for their advances and charges; an interest which enabled them to hold the goods against third parties and the consignor himself, but only so far as was necessary for their protection and security, and their title was a qualified one. (Grosvenor v. Phillips, 2 Hill, 147; Francklyn v. Sprague, 10 Hun, 589.) They have the same interest in the proceeds of sales that they had in the property sold, a special interest to the extent of their advances. As guarantors under a del credere commission they had no exclusive right to collect the proceeds of sales; the consignor might collect them, (Sherwood v. Stone, 14 N. Y. 267-270.) Until- their advances were repaid they [396] might have the exclusive right to collect, but if these were repaid, the relation of the consignor to the purchaser of the goods—that of vendor with the right to sue for the price— would be unquestioned. While such a relation exists between the consignor and the purchaser from the factor there can be no such thing as general and exclusive title to goods or proceeds in the factor. Any confusion on this point arises from adjudications upon section 179 of the Code of Procedure as to the alleged fiduciary character of the relation between consignor and factor, and the right of arrest for failure to pay over the proceeds of consignments. Of this nature, or rather on this question only, are the decisions cited by the appellant in support of his claim of absolute title in the factor as against the consignor. (German Bank v. Edwards, 53 N. Y. 541; Farmers' Mech. Bk. v. Sprague, 52 N. Y. 605; Liddell v. Baton, 7 Hun, 195.) In all the cases upon the question of arrest of the factor at suit of the principal, the inquiry is, whether the fiduciary relation, i. e., that of personal trust, exists, and the distinction between such trusts and the ordinary relation between consignors and general commission merchants has been pointed out repeatedly. (Stoll v. King, 8 How. Pr. 298; Sutton v. De Camp, 4 Abb. Pr. N. S 483; Clark v. Pinckney, 50 Barb. 226; Duguid v. Edwards, 32 How. Pr. 254.) If the goods consigned were unsold at the time of the assignment they would not have passed to the assignee. (White v. Blatt, 5 Denio, 269-273.) It might be that moneys collected from sales under such consignments, if in the possession of the assignor at the time of the assignment and mingled with his other funds, would pass to the assignee; but I regard the case to be different where the assignee proceeds to collect the proceeds of such sales and to pay them over to each consignor according to the latter’s separate consignment account. Each consignor might have made such collections himself for sales of his own goods if the factor had not the special property therein for his- advances. The title to the proceeds of the sales is not divested [397] from the consignor, as I understand it, unless the factor, as he may, chooses to mix them with his own funds and to use them as the exigencies of his business require. (White v. Platt, supra.) Had the factor collected the proceeds of sales and deposited them in a separate account for the consignor, they would have been treated as trust funds and would not have passed to the assignee. The assignee has not the power which his assignor had to mix the collections he makes with the other funds of the estate and thus to destroy the character of the title to them and subject them to the payment of the creditors at large. This is the power or privilege of the factor, but not of his assignee. For these reasons I regard the disposition of the moneys collected by the assignee as proposed by the latter eminently proper, and think the order of the special term should be affirmed with costs. Van Hoesen and L arremore, JJ., concurred. Order affirmed with costs.