Leverich v. Richards

The judgment of the court was pronounced by Eustis, C. J.* After the death of James H. Leverich his former commission house was continued in his name by his executor, for the purpose of liquidating its concerns. The immediate charge of the business appears to have been entrusted to the former clerks ofthe deceased. The executor, being otherwise actively employed, exercised only a general supervision over it. The plaintiff in this suit charges, that Richards, pretending to act as a broker for the defendant Spence, under certain false pretences, fraudulently obtained possession of two hundred and fifty-three bales of cotton, which the house of J. H. Leverich held as factors for sale, without paying the price. He makes Richards and Spence defendants, and prays for judgment for a restitution ofthecotton adversely to the claims of Spence, who, he alleges, has obtained the control of the cotton, under an advance made by him to Richards; he alleges that the cotton had been shipped immediately, and the marks changed. He also prays in the alternative for judgment against Richards and Spence, in solido, for the price, the sum of $7155 70. A. A. Gower, Nephews & Go. intervene, and make themselves parties defendant. Judgment is prayed for by the plaintiff against them, as well as against the original defendants. The two hundred and fifty-three bales of cotton having been sequestered, were bonded by Spence and the intervenors. Richards had absconded, and no service was made on him. Spence answered, but his answer is merged in the petition of intervention, in which he united himself as a party. The intervention changes in no respect the issue between Spence and the plaintiff, and is a mere addition of the parties as defendants. The intervenors allege that, they are the principals in the transaction; that the advance was made on their account, on the shipment to them; and it charges in general terms their superior — 357 — rights to the two hundred and fifty-three bales of cotton, and the regularity and good faith of themselves, and of the conduct of their agent, Spence. They deny all the allegations of the petition, except those 'expressly admitted by them. Spence charges that he was the agent of A. A. Gower, Nephews & Co-, and it is alleged that they are the principals, and are solely interested in the event of the suit. He was discharged by the court below as a party defendant, and, under a full release from the intervenors and the cancelling of the bond given under the sequestration, by the deposit of the amount in court, was examined as a witness for his principals, the intervenors. On the propriety of this act of the court in discharging him as a party against the consent of the plaintiff, we wish to be understood as giving no opinion. We had at one time almost come to the conclusion to remand this case for a new trial, before a special jury of merchants ; but a further examination of the facts has satisfied us that, it is our duty definitely to determine it. The case is fully stated in the opinion of the judge of the Commercial Court. The evidence is in some respects contradictory, but there are certain points which we consider to be established beyond a reasonable doubt, and upon which we base an opinion. Richards was a cotton-broker, known generally, and doing business as such, and having no credit except that which he derived from being entrusted with the business of other persons. Spence, up to the time of Richards’ absconding, had extensive dealings with him on his own account, and on account of others, Richards sometimes trading in cotton in his own name. The sale of cotton, which is the subject of the present suit, was made to Richards as a broker, and would not have been made to him on his own account, by reason of his want of credit. The sale was made on account of Spence, as the vendor believed, or of some principal whose name was not disclosed. The pretended purchase, and obtaining possession of the cotton on behalf of Richards, was a fraud. The delivery on behalf of the vendor of the cotton to Richards, under these circumstahces, was not a delivery to the principal, (supposing him to have been employed by one,) under the contract of sale; but created in Richards merely a possession as a broker, and nothing else, for and on account of the vendor, which possession as a broker he was bound to part with in favor of his principal on the payment of the price, and on no other condition. If, on the hypothesis of the defendants and intervenors, Richards had no principal, he had no possession but that based on fraud; and, being known publicly as a broker, every one traded with him for the article at his peril, unless he put himself in communication with its owner. Admitting that, having possession of the cotton in his own name, was a proof of some authority on the part of the owner of the cotton, it could only be considered as indicating the assent of the latter to a’sale for cash, in the usual course of business. If a broker do not disclose the name of the purchaser, the seller assents to a sale for cash, and possession is given to the broker, to deliver the article to the purchaser, whoever he be, for cash. This is the limit of the power of the broker. But Spence did not purchase the cotton; he made an advance on it, and took it in pledge. We look in vain for any pretence for any such authority on the part of the broker, thus to dispose of property committed to his charge for a special purpose. There is no evidence that, it is in the usual course of trade for shippers to employ brokers for the purpose of obtaining advances on their shipments, and that the custody of merchandize and produce is entrusted to them for that object. — 358 — We then have the naked fact, of Spence making this advance to this broker on the cotton, and obtaining from him the article in pledge for the amount. Did he acquire thereby only the rights of Richards, the broker, or extinguish all the claims of the owners of the cotton, and thus enable Richards to complete the fraud under which he had obtained the possession of the cotton, is the question we have to determine.' The broker is considered in law as the mandatary of the two parties to the the contract which he undertakes to make for them ; he owes fidelity to both. Commercial brokers, we understand, are governed in their duties by the laws and usages of commerce. When a merchant treats with a broker, acting in his ordinary line of business, in his relations with the intermediary are involved the interests of other persons. The law on this subject we understand to be established by numerous decisions. When a broker sells goods without disclosing the name of his principal, he acts beyond the scope of his authority; his principal is not bound by the consequences of such a sale, and hence he cannot be affected by any claim of set-off which may exist between the broker and the vendee. It will be sufficient, it appears, to deprive the purchaser of this right, if he knew that the seller was a broker, even without knowing that he acted as a broker in the particular instance ; and where it is doubtful whether a party sells as a broker or not, it is the duty of the buyer to make inquiry in order to satisfy himself of the fact. If however the principal enables the broker to mislead the purchaser, as by delivering to him either the possession of, or the indicia of property in, the goods to be sold, it will be otherwise. Baring v. Corrie, 2 B. & Ald. 137. Russell on Factors and Brokers, p. 108. Now, on this principle, the possession of the cotton by a cotton broker, could only induce a purchaser to believe that he had authority to sell. Nothing else could be inferred from his being entrusted with it by the owner. Had Spence purchased, and paid for this cotton in the usual course of business, a very different case would have been presented. He did not do it; but made a contract with the broker, which he had no reason to believe the broker had any authority to make. The reasoning of chief justice Abbot, in the case above cited of Baring v. Corrie, is applicable to every part of this case. He says : “ The plaintiffs in this case have only reposed the usual confidence which any merchant must place in his broker; and it will not be safe hereafter for any merchant to employ a broker, if the defendants should succeed, for the broker might, by delivering to the buyer a false note, defeat the rights of his principal altogether.” In the present case we can perceive no want of caution on the part of the seller, and no false credit given to the broker, by entrusting him with the custody of the cotton to be delivered to the purchaser, be he known or unknown, 6a the payment of the price. Persons engaged in mercantile transactions must be presumed to know what contracts are within the authority of a broker. “ It would be well,” says Lord Ellenborough, “ if traders, when they deal with brokers, would make themselves secure, by first inquiring whether they will be borne out in dealing with them in that character. It would save a great deal of risk and litigation.” 6 Maulé and Selwyn, 4. Where the payment by a purchaser to a .broker, was not made in the way authorized in the original contract, it was held that it was not available as a defence to the claim of the principal. 1 Starkie, 233. Russel on Factors, 105. — 359 — There are some facts in this affair which ought not to be overlooked, inasmuch as they tend to show a degree of looseness and levity in the transaction of important business, which ought to be discountenanced by men of business. By the testimony of Carroll and of Crenshaw it appears that Richards was not only without credit and pressed with debt, but unprincipled, and entirely unscrupulous in his means of raising money. - A knowledge of the transaction with Crenshaw, was brought home to Spence early on Saturday, the day of the sale to Richards, after which he made a payment to Crenshaw’s house on Richards’ account, and on monday Carroll apprized him of a fact which ought to have arrested all business between them. It did not produce that result; but, on the day following, tuesday, the balance due Richards, $2956 26, was paid to his clerk; and the day before, on monday, after Crenshaw’s affair had been closed, he paid the same clerk $3700. It is utterly impossible to permit the vendor to be deprived of his property and the price, by means of this kind. They can receive no countenance from us. Being satisfied that this sale of cotton was made to Richards as a broker for Spence, or for some principal unknown, and not to him personally, what claims can Spence urge to receive it ? Richards was publicly known as a broker, and Spence well knew that he had not credit or means enough to purchase the cotton on his own account. Spence made an advance on the cotton for shipment to the intervenors, but he could not believe that Richards had been entrusted with the cotton for the purpose of obtaining an advance. Even the first sum that Spence advanced, $4500, was paid by him to meet a flagrant defalcation on the part of Richards, in his transaction with Crenshaw — not to the owners of this cotton, but to Crenshaw’s house. This was on Saturday, and after notice of the deficit from Crenshaw himself. The whole affair originated and was carried through in the confidence which Spence thought proper to place in Richards, and if it is thought that such transactions are in the usual course of business, and can be supported by courts of justice, it is time that such an error should be dispelled. It is therefore ordered that, the judgment of the Commercial Court be reversed, and the plaintiff recover from the intervenors, A. A, Gower, Nephews & Co., in solido, the sum of $7155 70, with interest from judicial demand and costs in both courts; and it is further ordered that, there be judgment in favor of Behan and Freeland called in warranty.* Footnotes [*] Slidell, J., having been of counsel in this case, did not sit on its trial. [*] T. A. Clarke and E. A. Bradford, for a rehearing. Richards, when he obtained the possession of the cotton, with every apparent right of ownership, was invested with full power over it, to sell it, or to pledge it for advances. The plaintiff, by giving him the possession, with all the indicia of property, put him in a position to hold himself out to the world as the owner, and all persons dealing with him in good faith are entitled to protection. If Richards abused his possession of the cotton for a fraudulent purpose, the loss must be borne by the party, whose misplaced confidence in entrusting him with the possession of the cotton, onabled him to commit the fraud, and not by the party who dealt with him upon the faith of that possession. The general rule of law, established in the jurisprudence of all the leading commercial nations of the world, in reference to moveables, is, that ‘‘ possession constitutes title.” This rule, it is said, was introduced on grounds of public expediency, and from favor to commerce and to the free transfer of goods. The doctrine of the civil law was, “ Nemo plus juris ad alium transferre potest, quam ipse haberet." But a relaxation of this principle has been introduced into modern jurisprudence, “ to the effect of allowing the possessors of goods, and others in the apparent right of commodities, not only to sell, but to pledge them.” 1 Bell’s Commentaries, 485. The common law of England contained a remarkable exception to this general rule, in respect to factors, who, though vested with an undoubted right to sell the goods in their possession, were held to have no right to pledge them. The propriety of this exception was often questioned upon principle, as the — 360 — factor is always enabled to hold himself out to the world as owner, and its bad effects upon trade were so much felt that the House of Commons named a committee of inquiry upon the subject. The committee reported that, in foreign countries, the rule, as applied to moveable property, was, “that ‘possession constitutes title,’ and that persons making advances of money on such property are not required to inquire to whom it belongs, and are fully protected for the advances they make. This,” the committee stated, “may bo taken to be the law of France, Portugal, Spain, Sardinia, Italy, Austria, Holland, the Hanse Towns, Prussia, Denmark, Sweden and Russia.” It was also the law of Scotland. The committee recommended that the rule of the foreign laws should be adopted in England. They were of opinion, that “ though some frauds would bo the consequence of such an alteration of the law, yet the great and almost universal benefit to be derived by trade from the removal of injurious restrictions, would so enormously overbalance the disadvantage as to render it of comparatively little importance.” Accordingly, a gradual change was made in the rule of the common law, by successive acts of Parliament, till the act of 5 and 6 Victoria placed the law of England, in this respect, on essentially the samo footing with the laws of the other states of Europe. A strong and familiar application of the principle above stated, has been made in the case of goods purchased under false pretences. A sale founded on fraudulent representations is wholly null and void, ab initio, and operates no transfer whatever of title between the parties. The possession of the fraudulent purchaser is a more naked possession, which gives him no right of property, and which he is bound to surrender to his vendor. But if the purchaser, while in possession of the property, sells or pledges it to a third person, acting in good faith, such third person will hold the property, in preference to tho original owner. “ The reason is, that the original ownor, by putting his goods in the hands of the fraudulent vendor, has reposed confidence in him, and has enabled him to commit a fraud; therefore the equity of the original owner is not equal to that of the person who has, bona, fide, parted with his money or property in the purchase of such goods. The original vendor, by his imprudence, onabled the fraudulent vendee to defraud some one, and should himself be the sufferer, rather than a third person, who must otherwise be defrauded.” Russell v. Favier, 18 La. 589. The counsel for the plaintiff in this case assumed the position, that Richards obtained possession of the cotton by fraud, and therefore that the plaintiff was entitled to recover it back, even from the intorvenors, whose rights to it were acquired in good faith, and without notice of the character of the possession by Richards ; but the law on this point seems to be too well settled in this State to be shaken. The court appear to concede this, for they go further, and place their opinion on the special ground that, as Richards was “known publicly as a broker, every ono traded with him for the article at his peril, unless he put himself in communication with its owner. Admitting,” it is said, “ that having possession of the cotton in his own name was a proof of some authority on the part of the owner of the cotton, it could only be considered as indicating the assent of the latter to a sale for cash,' in the usual course of business.” The only question in the case, then, is this: Was the known character of Richards, as a cotton broker, notice to the world, that the cotton in his possession was not his property, that his possession of it, though accompanied with all the indicia of property, was only the possession of a broker, and that his authority over it was limited to a sale of it for cash? All the writers on commercial law are agreed in then definition of a broker. He is an agent employed to make bargains and contracts between other persons, in matters of trado, commerce, or navigation, for a compensation commonly called brokerage. He is a mere negotiator between other parties, and never acts in his own name, but in the names of those who employ him. Where he is employed to buy or sell goods, he is not entrusted with the custody or possession of them, and is not authorised to buy or sell them in his own name. Story on Agency, 28. Russoll on Factors, 4. Bell, in his Commentaries, says: “Brokers are employed merely in the negotiation of contracts relative to property, with the custody of which they have no concern.” 1 Bell’s Com., 477. The articles of the Civil Code of this State, in respect to brokers, are in accordance with these definitions. C. C., arts. 2985-89. It results, therefore, that the office of a broker is of a known and limited character. He is an intermediate negotiator between other parties, and nothing more. So long as his employment is confined within the limits which the law and the usages of merchants have affixed to his office, his known character, as a broker, is notice to all the world of the nature and extent of his authority; but if either party entrusts him beyond those limits, he does so at his peril. A broker, on the one hand, has nothing to do with the possession of property ; consequently, if the vendor delivers to him the property, and he absconds with it, the loss must be borne by the vendor. He has nothing to do, on the other hand, with the receipt of the price ; therefore, if the vendee pays the purchase money to him, and ho absconds with it, the loss must be borne by the vendee. Whenover a broker is employed heyond the recognised limits of his office, or out of his proper sphere, his character as a broker ceases to be notice to the world of the nature and extent of his employment, or that he is employed, in the particular instance, as a broker at all. — 361 — "What consequences follow from the application of these principles to tho case before the court ? The sale, it is said, was made to Richards, as a broker. Then he had nothing to do with the possession of the property. If the plaintiff considered Richards as merely a broker in the transaction, he knew that, in delivering the property into his possession, he was departing from the usages of merchants; that he was placing a trust in him which did not belong to his character as a broker, and which he might use to mislead third persons. He took the risk, therefore, of all such consequences upon himself. It is admitted that, if Richards, having possession of the cotton, had sold it to any purchaser in good faith, and absconded with its price, the loss would have fallen on the plaintiff. The intervenors contend that, this is only true on tho broad principle heretofore stated, that as the plaintiff had given his property into the possession of Richards, and thereby enabled him to hold himself out to the world as its owner, the loss, if he made a fraudulent disposition of it, must fall on the plaintiff, rather than on an innocent third person. Such is the doctrine of the case of Baring v. Corrie, 4 B. & Ald., 137, cited by the court. It was held that, “ if a broker sells goods without disclosing the name of his principal, it will be sufficient to deprive the purchaser of the right of set-off, if he knew that the seller was a broker, without knowing that he acted as broker in the particular instance; and that where it is doubtful whether a party sells as a broker or not, it is tho duty of the buyer to make inquiry to satisfy himself of the fact. If, however, tho principal enables the broker to mislead the purchaser, as by delivering to him either the possession of, or the indicia of property in the goods to be sold, it will be otherwise.” According to this case, then, where a broker has possession of the property to be sold, his known character as broker, so far-from being notice that he holds tho property in that capacity, is not sufficient even to put a purchaser on inquiry ; and where such possession misleads a purchaser, the loss must be borne by the seller. It is said that, on the principle of the authority cited by the court, “ the possession of the cotton by a cotton-broker could only induce a purchaser to believe that ho had authority to sell; nothing else could be inferred from his being entrusted with it by the owner.” Certainly such is not the full force and meaning of the authority cited. The inference necessarily suggested by a broker’s possession of the property to be sold, does not relate to the extent of his authority, but to the character in which he acts. The authority of a broker to sell is not evidenced by the possession of tho property; on the contrary, it was expressly held, that such possession was calculated to mislead the purchaser, and that, if the broker had held possession of the property, or the indicia of its ownership, the case would have been otherwise. The importance which the court attach to the case of Baring v. Corrie, warrants a brief examination of it. The Barings employed Coles Co, as brokers, in the usual course of business, to sell a quantity of sugars. Coles Co. sold tho sugars to Corrie <$• Co. in their own names, and without disclosing that they acted as brokers. The sugars appeared to have been sold on a credit of sixty days. In London, when a broker negotiates a sale, he gives to the buyer a note of the sale, called a “ sold note," and to the seller a like note, called a “ bought note,” in his own name, as the agent of each, and by which they are respectively bound; but when no broker is employed, the parties are required to give their own notes. In this case Coles Co. sent a “ bought note,” in tho usual form, to the Barings, but gave a “ sold note” in their own names to Corrie Sf Co., without, however, requiring from them a “ bought note” in return. Coles Co. kept, as by law they were required to do, a memorandum book of all their contracts as brokers, in which the sale of the sugars was regularly entered. Coles §- Co. never had possession of the sugars, but the order for their delivery was drawn directly in favor of Corrie fy Co. Coles fy Co. failed soon after, and were largely indebted to Corrie Co. AYhen the price of the sugars became due, Corrie Co. attempted to sot-off the amount against the debt of Coles Co., and the Barings consequently brought suit against them. It was held that the plaintiffs should recover, because they had employed the broker strictly according to the usual course of trade, without giving him the possession of the property, or the muni-ments of title, or contributing in any way to enable him to mislead the purchaser. It was held that the defendants, on the other hand, had shown a want of due care and diligence to avoid the fraud which had been practised on them. Tho known character of the broker, who had no possession of the property which he offered to sell, and who stood towards it only in the usual relation of a broker, was thought sufficient to put the purchasers on inquiry. The fact that the defendants recoived a “sold note,” and were not required to give a “ bought note” in return, was considered almost equivalent to direct notice that Coles Co. were brokers, and not the owners of the property; and lastly, it was insisted, that if the defendants had asked to see the book in which the brokers wero bound to keep the account of their sales in that capacity, they would instantly have discovered whether Coles Co. were acting as brokers, or not. The decision was placod on tho ground that the plaintiffs had not been guilty of'any negligence, and that the defendants had been guilty of great negligence. It appears, however, that if the plaintiffs had given to the broker the possession of the property, or the indicia of title, and thus enabled him to prac-tise a fraud on the defendants, the decision would have been different, and the plea of set-off would have been allowed. It seems, therefore, that when a broker has possession of — 362 — the property to be sold, a third person, acting in good faith, may not only buy for cash, but may buy and set-off an old debt against the price; that is, he may take the property from the broker in payment of an antecedent debt. This is entirely inconsistent with the deduction which the court make from the case, that a broker’s possession of property “ could only induce a purchaser to believe that he had authority to sell.” It can only be supported on the ground, that a broker’s possession warrants the belief that he holds the property as owner, and not as a broker. In the caso now before the court Richards did have possession of the property, with all the indicia of its ownership. It is coneedod that Spence might have bought the cotton from Richards, and paid him for it, with safety. This admission must rest upon the principle, that the possession of property by a broker will protect the world in dealing with him as its owner. Tho court proceed to take the distinction, that “ Spence did not purchase tho cotton, but made a contract with the broker, which he had no reason to believe the broker had any authority to make.” The ready, and, it would seem, sufficient answer, is, that Spence neither knew, nor had any reason to believe, that Richards was acting as a broker in the caso. His possession of the cotton was inconsistent with that character. It is not pretended that Spence had any other notice that Richards was so acting, than that which his known character, as a broker, carried with it; and such notice was destroyed by his possession of tho property. It has already been seen that, where a broker has possession of property, his known character as a broker is not sufficient even to put a purchaser on inquiry. The same principle is applicable to the ease of a party making advances. The position which the court assume is thus stated: “ Spence did not purchase the cotton; he made an advance on it, and took it in pledge. We look in vain for any pretence for any such authority on the part of the broker thus to dispose of property committed to his charge for a special purpose. There is no evidence that it is in the usual course of trade for shippers to employ brokers for the purpose of obtaining advances on their shipments, and that the custody of merchandise and produce is entrusted to them for that purpose.” It is assumed hero, that the known character of Richards as a broker, notwithstanding he had the possession of the cotton, was notice to the world that he had only the authority of a broker in regard so it. Such an assumption is against all the authorities, and against all the commercial usages which regulate the employment of a broker. The plaintiff violated all commercial usages when he committed the cotton to the chargo of a broker at all. It is not in the usual course of trade for shippers to employ brokers to obtain advances upon their shipments,'and the custody of merchandize and produce is not entrusted to them for that purpose. The necessary inference, therefore, from the possession of the cotton by Richards, was, that he did not hold it as a broker, but as the owner of it. Certainly, it is in vain to look for any usage of trade to ascertain tho authority of a broker over property of which he has the possession, and which he offers for shipment under advances, for the simple reason that, in the usual course of trade, brokers are never so employed. It must be in vain to look for a usage to govern those cases which only arise from the violation of all usages. It is held that, “ where a broker sells goods without disclosing the name of his principal, he acts boyond the scope of his authority.” The converse of the proposition is equally true, that where a broker buys goods without disclosing the name of his principal he acts beyond the scope of his authority. On the hypothesis that the plaintiff regarded Richards as a broker, he must have known that Richards exceeded his authority in buying the property in his own name. He should have insisted, therefore, on the disclosure of the name of his principal, before ha delivered the property. He neglected to do it. He did not inquire, even, of Richards, the name of his principal, or if he had any principal at all. He dealt with him as if he were himself the principal, and, by delivering the property to him, enabled him so to hold himself out to the world. He thus forfeited the protection which, according to the usages of trade, the known chai-actor of Richards as a broker might otherwise have afforded him, and placed his reliance upon his personal integrity and good faith. He, therefore, must be the party to suffer by his fraud. He cannot invoke the usages of trade, because his own violation of those usages was the sole occasion of the loss. In the words of the case of Baring v Corrie, before cited, as tho general principle is there stated by the court, the plaintiff, “ by improper conduct on his part, enabled another person to appear as proprietor of the goods, and, by that means, to impose on a third person, without any fault on the part of that person.” If this reasoning be correct, there is no foundation for the distinction between a sale and a pledge of the property by Richards. A pledge is in the nature of an alienation — it is an alienation pro tanto. Both are acts of ownership ; and if third persons, who dealt in good faith with Richards, as the owner of the property, are to be protected, it can make no difference whether they claim as purchasers or as pledgees. The same principle which applies to tile one case, is applicable to the other. Such is the well-established law in the case of a conflict between tho original owner and a third person, in regard to property sold upon fraudulent representations. There is no equitable ground for any such distinction, and no authority is cited for it. The distinction made in the case of a factor, between his — 363 — power to sell and his power to pledge, does not apply. No analogy holds between the two cases. A factor has the possession of property — a broker has not. The possession of a factor, therefore, does not enable him to mislead third persons — the possession of a broker does enable him to mislead them; and the intervenors rest their claim on the ground that Richards was thus enabled by the plaintiff to mislead them, without any fault on their part. So far, this case has been examined according to the strict principles of law, in relation to the office of a broker, as established by the English authorities to which the court refer, and by the elementary writers. It is impossible, however, to overlook the consideration, that the case has arisen in a country where the state of society and the usages of trade aro widely different from those of England. Here, the same sub-division of labor, and distinction of employments and professions, does not exist, which is there established. The ease of Baring v. Corrie occurred in the city of London. Brokers are there subject to strict regulations, established by the mayor and aldermen, in pursuance of the act of William III. Among those regulations are the following: “ That every person, upon his admission, shall take an oath, truly and faithfully to execute and perform the office of broker between party and party, in all things pertaining to the duty of the said office, without fraud or collusion, to the best and utmost of his skill and knowledge; that he shall, in all cases, reveal the name of his principal, and neither deal in goods on his own account, nor barter and sell again, nor make any gain in goods beyond the usual brokerage, and that he shall regularly register all the contracts into which he enters.” Brokers also give a bond for the faithful performance of their duties as set forth in their oath of admission, and receive a medal, as evidence of their qualification. In New Orleans, on the other hand, brokers are subject to no regulations or restrictions whatever. Many persons, as appeal's to have been the ease with Richards, adopt the employment only as a temporary resource. Having been previously engaged in other business, they still continue, notwithstanding their employment as brokers, to do business, to a greater or less extent, on their own account. They deal, not only in the article with which they are connected as brokers, but in every variety of commodity to be found in the market, They are speculators as well as brokers. ■ Sometimes, too, they lend their names to cover the speculations of others. The operations of Richards, as they appear in evidence upon the record, furnish proof of the justice of these remarks. During the season in which this case occurred, he made shipments to the intervenors, through their agent, on which he received $60,000, or thereabouts, for advances. In all these shipments Richards had the sole, or a joint interest. The fact that he had dealt in cotton on his own account to such an extent, seems a sufficient answer to the objection that he could not have purchased the cotton in the present instance on his own account, “ by reason of his want of credit.” The court say that, “ Richards sometimes traded in cotton on his own account.” In all the transactions to which the court refer Richards was interested on his own account and in his own name, and never had any transactions of any other kind with the agent of the intervenors. The very extent of these previous transactions, and the regularity with which they had always been conducted, contributed to the facility with which Richards was enabled to effect the shipment of the cotton which ho had obtained from the plaintiff, and to procure an advance upon it. It is evident from these facts that, the implied notice, which the known character of a broker carries with it, is not the same in London and in New Orleans, and that it is impossible to reason from cases in the one place to cases in the other, without great caution, or great injustice. ' If, however, the intervenors do not receive the assent of the court, so far as to induce them to affirm the judgment of the court below, thoy would still suggest that the case presents aproper occasion for the exercise of the discretion of the court, in remanding it for a new trial before a special jury of merchants. Such is stated to have been the first impulse of the court, and the novelty and importance of the questions involved would well warrant that disposition of the case. These questions were not agitated in the court below, and there is no evidence in the record to assist the court in the decision of them. They involve, however, the usages of trade in New Orleans, in refereneo to the most important article of its commerce, and upon which interests of vast magnitude depend. The intervenors believe that the court have mistaken these usages, and that their judgment, as it now stands, not only deprives them of rights which they acquired in the regular course of business, and with perfect good faith, but tends to establish a principle which will disturb the free course of trade, obstruct the transfer of property, and retard the improvement of our commercial jurisprudence. The court conclude their judgment with some animadversions on the “ levity and looseness” with which business was conducted in this case. They seem, however, to overlook repeated acts of the grossest irregularity and negligence on the part of the plaintiff, and which, weighed in an even scale, must overbalance all other considerations. His first and fatal error, if, as is now alleged, he considered Richards as merely a broker in the purchase of the cotton, was in giving him an order for the possession of the cotton, instead of requiring the disclosure of the name of his principal. But even after that order was given, the whole loss is plainly traceable to the negligence and misconduct of Boon, the — 364 — clerk, to whom the business of the plaintiff was entrusted. On Sunday, 30th Juno, Brown received an ambiguous caution from a third person, to be on his guard against Richards in the transaction. On monday, the 1st July, Brown, acting in a prompt and upright manner, called on Boon, at the office of the plaintiff, and inquired of him if he had obtained payment for the cotton from Richards, and communicated to him the caution, such as he had received it. He repeated his caution to Boon ontuesday, the 2d July, asecond, a third, and, he thinks, a fourth time. Boon’s reply to these repeated cautions, as Brown statos, was, that “ he was not afraid; that he had claims on the cotton until it went on hoard tho ship.” Such a reply seems hardly consistent with tho pretension, that Boon regarded Spence, well known to be a responsible party, and not Richards, as the actual purchaser of the cotton. Boon’s explanation is, that the reason he felt no alarm was, that “ news had been received between Saturday and monday that made a depression in the market, and he thought that purchasers were going to throw up the cotton.” This statement is not quite correct. The English advices to which he refers were received in New Orleans on friday morning, the 28th June, and had had their effect on the market before tho sale; for the plaintiff effected the sale to Richards by lowering the rates at which he had previously held the cotton. Boon proceeds to state that, when the caution was repeated on tuesday, he “ went to Richard’s office to get the (weigher’s) book and sales. Richards told him that he would bring it to their office by 11 o’clock. Richards did not bring the sales round, and witness (Boon) went after some other business, and forgot all about it till afternoon, when Mr. Brown met witness in the street, and told him he had heard that Richards had run away.” It is clear, from this testimony, that if Boon had attended to the caution of Brown on monday, when he first received it, he might have arrested, at the press, the delivery and shipment of the cotton, or, by calling on Spence, might have ascertained the fact that Richards was not purchasing the cotton for him, and have stopped the advances in his hands. By either course, the fraud would have been avoided; and can it be said that, hi the words of the case of Baring v. Corrie, the plaintiff “ used due care and diligence to avoid such fraud” 1 On tho other hand, the actual good faith with which the advances to Richards were made, on the behalf of the intorvenors, is not questioned. The convincing proof of that good faith is found in the fact, that those advances were made to the full extent which the value of the cotton at that time warranted, and even beyond what the sales of the cotton eventually justified, and that the wholo amount of those advances was actually disbursed, in cash, after the contract for the shipmont of the property was concluded.