Two or

the case is put upon the ground, that there was not negligence injurious to the defendant. Rogers v. White, 6 Greenleaf, 193, is still stronger. In this case, factors had sold goods for their principal, on July 12th, 1825, and taken a note for the amount, payable to themselves, at the usual credit of three months: and upon this sale they credited the net proceeds to the principal, in an account settled with him on August 31st, 1825, and carried the balance to a new account. three weeks before the purchaser's note fell due, he failed. On November 30th, 1825, another account was settled between the factors and their principal, no notice being taken of the note in this account, and a large balance due the principals was carried to a new account: and on June 27th, 1826, another account was settled between them, in which the amount of the note was charged to the principal: and there was no evidence of notice to the plaintiff of the failure of the purchaser, except what arose from the settlement of the account of June, 1826. The agents had used all due *dilligence to obtain payment of the [*667 note, and had been unable to do so. The court decided, that as the loss was not attributable to the fault of the agent, and it did not appear that the want of earlier notice had been, or could have been, productive of injury or inconvenience to any one, the agents had a right to make this charge, in the account of June, 1826, and that the principal was bound to pay it. In Forrestier v. Bordman, 1 Story, 44, 56, it was decided, that the measure of damages for negligence in giving notice of the insolvency of a debtor, was the actual damage or loss. which it was proved that the principal had suffered.

Notwithstanding the distinction suggested in Arrott v. Brown, 6 Wharton, 9, for the support of Harvey v. Turner, the latter seems to be effectively overruled by Arrott v. Brown; for the distinction between a customary annual account current, in the one, and a special account of sales, in the other, is not a substantial one. The rule, at all events, is to be considered as modified, so as merely to place the burden of proof upon the agent, and make him primâ facie liable for the whole debt, unless he proves that the principal sustained no loss by not having received notice; see Brown v. Arrott, 6 Watts & Sergeant, 402, 422; and even that seems to be too rigorous.

Except where the agent really intended to assume outstanding debts, or his conduct has been such, that the principal might suppose that such was his intention, the cases must be very few, indeed, in which he ought to be charged, for any fault, with the whole nominal amount of a debt, without regard to the actual loss occasioned by his fault. See the question of the measure of damages for negligence, discussed infra. The contract created by a del credere commission, is an independent contract between the principal and agent, separate from the sale, and not affecting the relations between the principal and the buyer, or those

between the agent and the buyer. It is an absolute engagement by the factor, private between himself and the principal, and distinct from the sale which he makes, that the debts to which it refers shall be paid at the time they are due, or, in other words, that they shall be cash in the principal's account, at the time they are due. (1) Being an original and absolute engagement, it is not within the statute of frauds, and need not be in writing; (2) and being an independent contract between the principal and agent, and in its legal effect a direct responsibility for the money due upon the sales, there need be no previous proceed. ings or recourse by the principal against the buyer before he can charge the factor; (3) but the principal, if he sues the factor upon it, ought regularly to declare specially upon the contract del credere, which is a contract sui generis, that when the goods are sold the price shall be paid (4) though there is some variety and perhaps laxity of practice on this subject.(5) Being an arrangement between the principal and factor, only, intended as a cumulative security to the former, *to *668] which the purchaser is not privy, it does not affect the relations between the purchaser and either the principal or factor upon the contract of sale (6) the rights of set-off between the purchaser and factor are the same as where the contract del credere does not exist :(7) the principal's direct right of action against the buyer on the sale remains unaltered ;(8) the notes taken by the factor from the buyer belong to the principal, and in case of the factor's insolvency, the principal may follow them and the proceeds of them, into the hands of the assignee, as if the del credere contract did not exist ;(9) and the debt created by a sale under such commission cannot be attached as a debt due to the factor, for it is a debt to the principal, and the factor has no interest in it beyond the lien for his commissions (10) The contract del credere relates only to the payment of the debts due for sales, and does not extend to a remittance of the funds after payment is made; in respect to which a factor receiving a del credere commission is not bound to

(1) See Mackenzie v. Scott, 6 Tomlin's Brown's Cases, 280.

(2) Swan v. Nesmith, 7 Pickering, 220, 224; Wolff v. Koppel, 5 Hill's N. Y. 458; S. C. on error, 2 Denio, 368.

(3) Grove v. Dubois, 1 Term, 112, 115; Leverick v. Meigs, 1 Cowen, 645, 664; though some doubts to the contrary are thrown out by Lord Ellenborough in Morris &. Cleasby, 4 Maule & Selwyn, 566, 575.

(4) Gall v. Comber, 7 Taunton, 558.

(5) See Swan v. Nesmith; Wolff v. Koppel; and Morris v. Cleasby, 575.

(6) Leverick v. Meigs, 1 Cowen, 645.

(7) See Cumming v. Forester, 1 Maule & Selwyn, 494; Koster v. Eason, 2 Id. 112; Morris v. Cleasby, 4 Id. 566; Baker v. Langhorn, 6 Taunton, 519; Peele v. Northcote, 7 Id. 478.

(8) Hornby v. Lacy, 6 Maule & Selwyn, 166.

(3) Thompson v. Perkins et al., 3 Mason, 232.

(10) Titcomb et al. v. Seaver and Trustee, 4 Greenleaf, 542.

greater diligence than one who does not receive such commission. (1) The dicta thrown out, in some of the later cases, chiefly by Lord Ellenborough, have tended to perplex the subject of the liability created by a del credere commission: but if the points adjudged are attended to, it will be seen that the principles declared in Grove v. Dubois, 1 Term, 112, have not only not been overthrown, but have been sustained and strengthened.

A FACTOR CANNOT PLEDGE THE GOODS OF HIS PRINCIPAL.

LAUSSATT v. LIPPINCOTT AND ANOTHER.

In the Supreme Court of Pennsylvania.

MARCH TERM, 1821.

[REPORTED, 6 SERGEANT AND RAWLE, 386-394.]

A factor cannot pledge the goods of his principal for his own debt; but if a merchandise-broker, to whom goods are delivered by his principal with power to sell, deliver, and receive payment, deposit them, in the usual course of business, with a commission merchant, connected in business with a licensed auctioneer, who advances his notes thereon, the deposit binds the principal, who cannot recover the value of the goods in an action of trover.

UPON the trial of this cause before DUNCAN, J., at nisi prius, in *April, 1820, it appeared to be an action of trover for a [*669 quantity of coffee, which it was agreed was the property of the plaintiff, who, in the month of March, 1816, employed William Harlan, a merchandise-broker, to sell it. The coffee was placed in stores, the keys of which were in the power of Harlan. The plaintiff's orders were not to sell at less than 27 cents a pound. This was the only restriction. The authority of Harlan was to sell, deliver, and receive payment. The defendants were commission merchants, connected in business with John Humes, a licensed auctioneer. On the 15th of April, 1816, Harlan delivered 45 bags of the plaintiff's coffee to the defendants to be sold at auction, without limitation of price, and at the same time received from

(1) Heubach, Brothers, v. Mollman, 2 Duer, 228; Leverick v. Meigs, 1 Cowen, 645, 665; Sharp v. Emmet, 5 Wharton, 288, 299; Muller v. Bohlens, 2 Washington, C. C. 378.

them their note for $1300, payable in sixty days. On the 17th of April, he delivered to them more of the same coffee, on the same terms, and received their note for $1300, at sixty days. On the 20th April, he delivered to them 45 bags more on the same terms, and took their note at sixty days for $1700; and on the 18th May, he delivered to them another parcel of the same coffee, on the same terms, and received their note at sixty days for $1300. Harlan did not inform the defendants to whom the coffee belonged, nor did they ask him. He had been accustomed to deal with them in this way for four or five years to a very considerable amount. The plaintiff understood from Harlan that he had sold his coffee; he paid him seven or eight hundred dollars, and made excuses for not paying more. Part of the coffee delivered to the defendants was sold by them for less than 27 cents a pound; part remained unsold, and was demanded by the plaintiff after it was discovered that it was in the possession of the defendants, and that Harlan had failed. The defendants refused to deliver it, saying that they knew no other owner than Harlan.

On the trial of the cause, evidence was given by the defendants, tending to prove a usage of merchandise-brokers to sell the goods of their principals at public auction, and to receive part of the price in advance in cash or notes at the time of depositing the goods. The plaintiff gave evidence in contradiction of this usage, and the judge gave it in charge to the jury, that if they should be of opinion that the usage existed, and that in this case the coffee was not pledged, but sold, the verdict should be for the defendants. The jury found for the defendants, and the case now came before the court on a motion by the plaintiff for a new trial.

Kittera and C. J. Ingersoll, in support of the motion for a new trial.

This is the case of a factor who has pledged the goods of his principal, *which, by law he cannot do. Harlan was a *670] merchandise-broker, and the only authority he received was, to sell, deliver, and receive payment. In this character, alone, he was known as well to the defendants as to the plaintiff, which is proved by the whole course of the transaction. The limited and qualified possession which he had of the goods, was in his capacity of broker. They were not in his store, and though he had access to that in which they were deposited, and had a right to remove them when sold, he did not even keep the key of it.

The weighmaster's charge was against the plaintiff, and was paid by him. There was not a single circumstance to make Harlan the apparent owner of the property. The defendants knew that he was a broker, and that the coffee did not belong to him. Whether, therefore, the transaction between them was a sale or a pledge, is of no consequence, because they had no right to purchase goods which they knew did not belong to the seller, or with respect to which, there was at least enough to put them on inquiry. But, in fact, the coffee was not sold to the defendants; it was pledged to them, and they made advances on the deposit. A pledge is the delivery of goods in security for money lent.(1) This is exactly what took place with respect to the goods in question. There was no contract for sale; no price stipulated. The receipts given by Harlan to the defendants speak of goods deposited for sale, and there cannot be a doubt that Harlan would have had a right to redeem them on paying the amount of the notes and the defendants' commissions. What is the law in relation to this subject? It is clear, that a factor cannot pledge the goods of his principal. In D'Aubigny v. Duval, 5 Term, 604, a factor deposited the goods of his principal with A., as a security for his own debt. It was held that the principal might recover the value of them in trover against the pawnee; and Buller, J., stated the general rule to be, that a factor cannot pawn the goods of his principal at all. And in Newsom v. Thornton, 6 East, 17, Lord Ellenborough holds similar language. This established principle forms the basis of a great multitude of decisions.(2)

But whether the act of Harlan was a pledge or not, it was a breach of instructions, and, therefore, vested no property in the defendants. An authority to sell, and delivery of possession by the principal to the factor, confer no right on the [*671

factor to act as owner of the goods. To the defendants he did not appear in the light of owner, for he had no indicium of property about him. He was an agent for a special purpose, and a special agency like this does not admit of substitution. Harlan, therefore, could not delegate to the defendants his power to sell the goods, nor were they placed with them for that purpose. A

(1) 1 Bacon's Abridgment, 369.

(2) Skinner v. Dodge, 4 Henning & Munford, 432; Martini v. Coles, 1 Maule & Selwyn, 140; Solly v. Rathbone, in note to Cockran v. Irlam, 2 Id. 301; Van Amringe v. Peabody, 1 Mason, 440; De Bouchout v. Goldsmid, 5 Vesey, Jr. 211; Baring & Corrie, 2 Barnewall & Alderson, 137; Whitehead v. Tuckett, 15 East, 407; Whitaker on Liens, 136, 7; per Ld. Mansfield, in Wright v. Campbell, 4 Burrow, 2050.