T. D. Downing Co. v. Shawmut Corp.

Rugg, C.J. This is an action of contract by a custom house broker to recover certain duties paid by it and expenses and commissions due it. The defendant is a banking corporation engaged in financing the importation of foreign goods. An importer, G. J. Tsivoglou, Inc., applied to the defendant for credit for the purchase of nuts from the Asia Banking Corporation. Credit was given as requested and on its faith the owner of the nuts, the Asia Banking Corporation, drew a time sight draft on the defendant which it accepted and paid at maturity. The draft, when sent to the defendant for acceptance, was accompanied by the invoice, negotiable warehouse receipts and customs withdrawal entries covering the goods purchased. The defendant turned over the warehouse receipts and the customs withdrawal entries to the importer, who gave therefor a trust receipt describing and acknowledging receipt of the papers thus coming into its possession and the goods thereby rep-presented. The trust receipt contained an agreement by the importer to hold “ said goods in trust ” for delivery to any purchaser and to collect from the purchaser proceeds of sale and immediately deliver same to the defendant to be applied to payment of amount due on its acceptance pursuant to credit given and any other indebtedness due it, with right in the defendant at any time to cancel the trust and repossess itself of the merchandise until the same shall have been delivered to purchasers. The goods at this time were in a storage warehouse in the State of New York. Goods imported into this country may be placed in bonded warehouses, so called, by a customs broker without the payment of duties, and withdrawn from time to time as desired only on consent of the customs broker expressed by “ customs [112] withdrawal entries ” and on payment of duties. It is a custom of the business that, where a customs broker is requested by an importer to withdraw a part of merchandise in bond, he will not hesitate to pay the duties and give delivery on that part if sufficient merchandise is left in his control under customs withdrawal entries to protect him for duties already paid. The plaintiff had had large dealings with the importer in the case at bar. Relying on its credit and at its request and influenced by the fact that it had possession of all the indicia of title, the plaintiff paid the customs duties and permitted the importer to remove a considerable part of the merchandise from the bonded warehouse, in ignorance of the defendant’s relations thereto. Thereafter the defendant demanded of the plaintiff all the merchandise remaining in its possession or under its control by reason of customs withdrawal receipts, paying duties, charges and commissions on such remaining merchandise. The defendant refused to pay the duties, charges and commissions on the merchandise withdrawn by the importer. The importer has failed to reimburse the plaintiff. Hence this action. The trust receipt, given to the defendant by the importer with the negotiable warehouse receipts and the customs withdrawal entries, is a well known instrument in common use between bankers and importers. The nature of the transaction is that the banker advancing the money for the merchandise imported takes title directly to himself and retaining title in himself until the price of the merchandise is paid to him delivers possession to the importer or merchant in order that the latter may carry out his own commercial plans respecting the importation. The validity of such a trust receipt has been established by many decisions. In general the relation between the banker and the importer is that the former takes title as security for his advances and is under obligation to transfer title to the latter or to his order when the purchase price as represented by the advances has been paid. The banker is owner under contract to sell and deliver when paid the price agreed upon. The banker has no part in the commercial adventure of the importer. The [113] banker expects and is entitled to receive only the advances, while the profit belongs wholly to the importer. Peoples National Bank v. Mulholland, 224 Mass. 448, 451; S. C. 228 Mass. 152, 155 and cases collected. Brown v. Green & Hickey Leather Co. 244 Mass. 168. The plaintiff does not rest its claim on any direct contact with the defendant. It contends that the importer was the agent for the defendant as undisclosed principal in incurring the obligations here in suit. The importer was in no proper sense the agent of the banker. They were dealing with each other as distinct parties. The risks of the importation under the contracts between the two were wholly with the importer to whom alone the profits would accrue. There is nothing on the face of the papers, embodying the legal relations of the two, to afford indication of principal and agent. The case at bar is distinguishable from Moors v. Wyman, 146 Mass. 60, 63, where the trust receipt itself expressly stated that the custodian of the merchandise held it as agent for the banker. This factor is not decisive because the relation of principal and agent may arise wholly by implication from the conduct of the parties and the circumstances of the particular case; and the scope of the agency may also be determined in the same way. That principle does not control on the facts here disclosed. The essential elements of principal and agent are lacking. The defendant had no interest in getting-the merchandise out of the bonded warehouse. The expenses connected therewith were not named as a part of the contract between the defendant and the importer. They were no more essential to the success of the business of the importer than their insurance or storage after release from the bonded warehouse and before their ultimate sale. The trial judge rested his conclusion apparently on Moors v. Wyman, 146 Mass. 60. That case is distinguishable. An examination of the original papers in that case shows that the trust receipt expressly created the relation of agency. The trust receipt here in issue is essentially different in tenor and in legal effect. It is not necessary to determine the extent of the plain [114] tiff’s lien because that was lost by delivery of the merchandise to the defendant. The defendant has done nothing by which it is estopped to deny its liability to the plaintiff. It stands in no different position from the ordinary owner of personal property who entrusts its custody to a third person without making such custodian his agent. Royle v. Worcester Buick Co. 243 Mass. 143, 146. It simply has engaged in an ordinary business transaction. Estoppel is not applicable. Boston & Albany Railroad v. Reardon, 226 Mass. 286. If follows that the defendant’s first request should have been granted to the effect that the plaintiff could not recover on any count of its declaration. Exceptions sustained.