Patterson v. Samuel B. Keys & Co.

Hagans, J. There is substantially but one issue made-by the pleadings, and one question made on the argument, as follows: Did the defendants in fact make the several purchases of gold for the plaintiff? . If so, we understand it to be conceded that the judgment is right. Some objections to the competency'of certain evidence admitted by the judge at the trial were made; but these, we understand, are not now insisted upon. "Was then the contract executed ? "We have been unable to find" a case involving similar transactions in which the precise question at bar has been raised; but the cause assimilates its'elf to cases involving the same principles. The question- makes it necessary to notice briefly the nature of the transaction. ' It is apparent that, the plaintiff "knew the method of these transactions, as carried out in -this city, and that the gold was not to be bought here. . The plaintiff' bought no gold of the defendants. The defendants sold no gold to the plaintiff But both parties- understood that the gold was to be bought from a third person in New York, and that the defendants would pay to that person the market value of the gold with the margin of ten per cent, furnished by the plaintiff, and ninety per cent, of their own [98] money. In the transaction it was not expected by either party that the plaintiff would purchase for the purpose of personally holding the gold, hut solely for the chances of gain by a sale when the market price should have risen. For this purpose he agreed to keep the defendants indemnified from all loss upon the gold by keeping in their hands, at all times, ten per cent., in case gold depreciated in the market. What then was, among other' things, the result of the agreement ? The defendants agreed on their part to buy the gold, to advance the ninety per cent., to hold it subject to plaintiff’s order, and if there were a gain, it would be the plaintiff’s and not the defendants’, to have actually in their name or under their control the gold purchased, and to deliver it upon request to the plaintiff when paid for by him, or to sell upon his order. The plaintiff agreed to pay the ten per cent, as a margin, to keep that margin good according to the fluctuations of the market, and to take the gold whenever required by the defendants, and pay the difference between the amount paid for it by them and expenses, and his margin. Horton v. Morgan, 19 N. Y. 170; Markham v. Jaudon, 41 N. Y. 239. These two cases are well considered and embody all the law of this case, and settle, to our minds satisfactorily, the principles we have enumerated which lie at the foundation of legitimate dealing in this class of business. The case in 41 N. Y. 239, expressly overrules Hanks v. Drake, 49 Barb. 186, and Sterling v. Jaudon, 48 Barb. 459. These transactions have substantially the nature and attributes of pledges. The mere fact that the gold, when purchased, was not manually delivered to the plaintiff and redelivered by him to the defendants, by way of security for advances, does not change the actual character of the transaction. Though the ultimate property of this gold vested in the plaintiff the moment it was purchased, yet by directing those purchases to be made in the mode designated, he must be understood as consenting that the business should be done [99] in the usual manner — among other things, that the title' and possession of the property should- remain in the defendants, after bping purchased by them in their own name.. “No breach of dirty,” says the court, in 19 N. Y. 170, speaking of shares of stock, “was committed by the defendant in purchasing in his own name. As he was to hold the stock as. security for the balance of purchase money which he had advanced, it was proper and entirely consistent with the natpre of the transaction, that he should take the title ,in his own. name. If default were made, he would have a right to sell to reimburse himself, and he would be obliged, in that event, to give a title to the purchaser.” But it1 is urged that this gold should have been kept separate, so that the plaintiff could have had the identical gold in case he paid' for. it. Besides the fact that the transaction shows that he never intended or expected to have any gold actually, it is enough to say, quoting again the language of the court in 19 N. Y. 170, and substituting “gold” for “shares,” that “the plaintiff had no interest in having his shares kept separate from the mass of defendant’s stock. One share was precisely equal to eyéry other share. Chancellor- Kent said, in a case precisely similar in principle, that if was sufficient if the defendant "always had the requisite quantity of shares on hand, -and that the law would .presume that the shares so on hand from time to time were the shares deposited, because the parties had not reduced them to any more certainty.” Nourse v. Prime, 4 Johns. Ch. 490. See also 7 Johns. Ch. 69. But it is finally said that the plaintiff knew nothing about Lockwood & Co., who made these purchases in their own name; that they made the purchases on account of Keys & Co.; that Keys & Co. had in fact no control over the-gokRand that, therefore,'the contract was not executed according to its terms. The plaintiff knew that the gold was not to be bought [100] here, but in New York, where it was to be kept for the purposes of the contract. Both Keys & Co. and Lockwood & Co. are shown to have been at the time abundantly solvent. In the business 'of the defendants, it was proved that they always employed a subagent in New York to execute their orders. This wTas the usual course of business here, with full knowledge of which the plaintiff is chargeable. In fact, the purchases made by Lockwood & Co. were purchases made by the defendants; and the evidence showed that Keys & Co. could have had the amount of gold at any time, when the plaintiff- upon paying for it might have desired it. [Leave to file a petition in error in the Supreme Court refused. — Eds.] In general, an agent has no right to -delegate his authority to a subagent without the assent of his principal. But where, from the nature of the agency, a subagent must necessarily be employed, the assent of the principal is implied. The Dorchester and Milton Bank v. The New England Bank, 1 Cush. 177. Still more, where it is understood, as here, by both parties to be the mode in which the business would or might be transacted. Story on Agency, sec. 14. Judgment affirmed.