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But though the factor cannot pledge the goods of his principal as his own, he may deliver them to a third person for his own security, with notice of his lien, and as his agent, to keep possession for him. Such a change of the lien does not divest the factor of his right, for it is, in effect, a continuance of the factor's possession. So, if a
factor, having goods consigned to him for sale, *627 should put them into the hands of an auctioneer,
or commission merchant connected with the auctioneer in business, to be sold, the auctioneer may safely make an advance on the goods for purposes connected with the sale, and as part payment in advance, or in anticipation of the sale, according to the ordinary usage in such cases.b But if the goods be put into the hands of an auctioneer to sell, and, instead of advancing money upon them in immediate reference to the sale according to usage, the auctioneer, should become a pawnbroker, and advance money on the goods by way of loan, and in the character of pawnor instead of seller, he has no lien on the goods. It may be difficult, perhaps, to discriminate in all cases between the two characters. It will be a matter of evidence, and of fact, under the circnmstances. The distinction was declared in Martini v. Coles,c and it was observed in that case, that it would have been as well as if the law had been, that where it was equivocal whether the party acted as principal or
Rep. 100. Goldsmyd v. Gaden, in chancery, and cited in Collins v. Mar. tin. Trover will lie by the principal against the agent, when the latter converts the property to his own use, or disposes of it contrary to his instructions. M'Morris v. Simpson, 21 Wendell, 610.
a M'Combie v. Davies, 7 East's Rep. 5. Urquhart v. M'Iver, 4 Johns. Rep. 103.
• Lausatt v. Lippincott, 6 Serg. & Rawle, 386. If goods be consigned to a commission merchant or factor for sale at a limited price, and he makes advances on them, and they cannot be sold for that price, he may, on reasonable notice to his principal, at a fair market, sell them below that price for his indemnity. Frothingham v. Evertson, 12 N. H. Rep. 239.
• 1 Maule of Selw. 140.
factor, a pledge in a case free from fraud should be valid. To guard against abuse and fraud, it is admitted, that if the factor be exhibited to the world as owner, with the assent of his principal, and by that means obtain credit, the principal will be liable. It was suggested, in the case last mentioned, that perhaps if a consignment of goods to a factor to sell, be accompanied with a bill drawn on the factor for the whole or part of the price of the consignment, an advance to take up the bill of the consignor, and appropriated to that end, might be considered as an advance, under the authority given by the principal, so as to bind him to a pledge by the factor for that purpose. But in Graham v. Dyster, - it was decided *by the K. B., that though the principal *628 drew upon
his factor for the amount of the consignment, and the goods were sent to the factor to be dealt with according to his discretion, the factor could not pledge the goods, even in that case, to raise money to meet the bills. This was a very hard application of the general rule; and the cases go so far as to hold, that though there should be a request of the consignor accompanying the consignment, that his agent, the consignee, will make remittances in anticipation of sales, that circumstance does not give an authority to pledge the goods to raise money for the remittance.b In the last case referred to, the judges of the K. B. expressed themselves decidedly in favour of the policy and expediency of the general rule of law, that a factor cannot pledge. They considered it to be one of the greatest safeguards which the foreign merchant had in making consignments of goods to Eng. land; and that, as a measure of policy, the rule ought not to be altered. It operated to increase the foreign com
• 2 Starkie's Rep. 21. If, however, the owner arms, the factor with such indicia of property, as to enable him to deal with it as his own, and mislead others, the factor in that case can bind the property by pledging it. Boyson v. Coles, 6 Maule g Selw. 14.
• Queiroz v. Trueman, 3 Barnw. Cress. 342.
merce of the kingdom, and was founded, it was said, upa very plain reason, viz. that he who gave credit should be vigilant in ascertaining whether the party pledged had, or had not, authority so to deal with the goods, and that the knowledge might always be obtained from the bill of lading and letters of advice.a
- Ch. J. Best, in Williams v. Barton, 3 Bing. Rep. 139, expressed him. self, on the other hand, strongly in favour of the policy of allowing a pawnee of goods to hold against the real owner, who permitted the paw. nor to deal with the property as if it was his own. He insisted that the old law on this subject was not adapted to the new state of things, and to the alterations in the mode of carrying on commerce. The rule that factor cannot pledge the goods consigned to him for sale, even for bona fide advances, in the regular course of commercial dealing, originated in the case of Patterson v. Tash, in 2 Str. Rep. 1178, which was a nisi prius decision of Ch. J. Lee; though it has been suggested that the report of that case was inaccurate. In the year 1823, the merits of that rule were dis. cussed in the British parliament, and the discussion was followed by the statutes of 6 Geo. IV.ch. 94, and 7 & 8 Geo. IV. ch. 29, for the better protection of the property of merchants and others, in their dealings with fac. tors and agents, by which a factor was authorized to pledge, to a certain extent, the goods of his principal. A great deal may be properly said against the principle of the old rule ; and with the exception of England, it is contrary to the law and policy of all the commercial nations of Europe. See the report of the committee of the English house of commons which led to the statute of 4 Geo. IV. On the European continent, possession constitutes title to moveable property, so far as to secure bona fide purchasers, and persons making advances of money or credit on the pledge of property by the lawful possessor. There may be something in the commercial policy of the rule alluded to by the English judges ; but it would seem
be a conclusion of superior justice and wisdom, that a factor or commercial agent, clothed by his principal with the apparent symbols of ownership of property, should be deemed the true owner in respect of third persons, dealing with him fairly in the course of business, as purchasers or mortgagees, and under an ignorance of his real character. See 1 Bell's Com. 483-489.
By the statute of 5 & 6 Vict. c. 39, in amendment of the law relating to advances bona fide made to agents intrusted with goods, any agent in. trusted with the possession of goods, or of the documents of title to goods, is to be deemed owner of such goods and documents so far as to give validity to any contract or agreement by way of pledge, lion or security bona fide made by any person with such agent so intrusted, as well for any original loan, advance, or payment made upon the security of such goods or docu
“Every contract made with an agent in relation to the business of the agency, is a contract with the
ments, as also for any further or continuing advance in respect thereof, and such contract shall be binding upon and against the owner of such goods and others interested therein, notwithstanding the person claiming such pledge or lien may have had notice that the person with whom such contract is made, is only an agent.
The statute law of New-York has changed the former rule of the English courts on this subject. By the act of April 16th, 1830, it was enacted, (and an act of the state of Rhode Island, passed since the session of January, 1831, and of Pennsylvania in 1834, Purdon's Dig. 402, are to the same effect,) that the person in whose name goods were shipped should be deemed the owner, so far as to entitle the consignee to a lien thereon for his advances and liabilities for the use of the consignor, and for moneys or securities received by the consignor to his use. Bnt the lien is not to exist, if the consignee had previous notice, by the bill of lading or otherwise, that the consignor was not the actual and bona fide owner. Every factor intrusted with the possession of any bill of lading, custom-house permit, or warehouse keeper's receipt for the delivery of the goods, or with the possession of goods for sale, or as security for advances, shall be deem. ed the owner, so far as to render valid any contract by him for the sale or disposition thereof in whole or in part for moneys advanced, or any responsibility in writing assumed upon the faith thereof. The true owner will be entitled to the goods on repayment of the advances, or restoration of the security given on the deposit of the goods, and on satisfying any lien that the agent may have thereon. The act does not go to authorize a common carrier, warehouse keeper, or other person to whom goods may be committed for transportation or storage, to sell or hypothecate the same. Acts of fraud committed by factors or agents, in breach of their duty in that character, are punishable as misdemeanors. It has been held under this act that a contract of sale by a factor agent, intrusted with goods for sale, will protect the purchaser, though no money be advanced, or negotiable instrument, or other obligation be given at the time of the sale. Jennings v. Merrill, 20 Wendell, 1.
This act is founded chiefly upon the provisions of the British statute of 6 Geo. IV. ch. 94, passed in 1825, in pursuance of the recommendation contained in the report of a select committee of the British house of commons, of January, 1823. So, by the Civil Code of Louisiana, art. 3214, overy consignee or commission agent, who has made advances on goods consigned to him, or placed in his hands to be sold for account of the consignor, has a privilege for the amount of those advances, with interest and charges, on the value of the goods, if they are at his disposal, in his stores, or in a public warehouse, or if, before their arrival, he can show by a bill of lading or letter of advice, that they have been despatched to him.
principal entered into through the instrumentality of the agent, provided the agent acts in the name of his princi
pal. The party so dealing with the agent is bound *630 to his principal ; *and the principal, and not the
agent, is bound to the party. It is a general rule, standing no strong foundations, and pervading every system of jurisprudence, that where an agent is duly constituted and names his principal, and contracts in his name, and. does not exeeed his authority the principal is responsible, and not the agent. The agent becomes personally liable only when the principal is not known, or where there is no responsible principal, or where the agent becomes liable by an undertaking in his own name, or when he exceeds his power. If he makes the contract in behalf
• Emerigon, Traité des Ass. tom. ii. p. 465. Lord Erskine, 12 Vesey, 352. Davis v. M‘Arthur, 4 Greenleaf': Rep. 82, note. Owen v. Gooch, 2 Esp. N. P. R. 567. Ware, J., in the case of the Rebecca, Ware's Rep. 205. Roberts v. Austin, 5 Wharton, 313.
b Thomas v. Bishop, 2 Str. Rep. 955. Leadbitter v. Farrow, 5 Maule of Selw. 345. Dusenbury v. Ellis, 3 Johns. Cas. 70. Parker, Ch. J., Stackpole v. Arnold, 11 Mass. R. 29, and Hastings v. Lovering, 2 Pick. R 221. Hampton v. Speckenagle, 9 Serg. of Rawle, 212. Lazarus v. Shearer, 2 Ala. Rep. N. S. 718. Woodes v. Dennett, 9 N. H. Rep. 55. When the agent becomes personally bound by his own assumption, bis principal is not liable. Taber v. Cannon, 8 Metcalf, 456. Ch. J. Shaw says that the case in Stackpole v. Arnold, establishing this doctrine, is of the highest authority. Where an agent voluntarily disobeys the instructions of his principal, and converts to his own use monies belonging to his principal, to which a definite and specific destination was given, and the article he was directed to buy subsequently acquires additional value, the agent has been held responsible, not merely for the money with interest, but for the article. Short v. Skipwith, 1 Brockenbrough's Rep. 103. It is likewise a general rule that the omission of an agent to keep his principal regularly informed of the state of the interests intrusted to him, renders him responsible for the damages his principal may sustain by such neglect; and if the principal be injuriously misled by the information given so as to place reliance un an outstanding debt, the agent will be deemed to have made the debt his own. Harvey v. Turner, 4 Rawle Rep. 223. Arrot v. Brown, 6 Wharton Rep. 1. It is also a general rule that notice to an agent is notice to his principal. So notice to one of the directors of a bank, while engaged in the business of the bank, is notice to the bank. Bank U. S. v. Davis, 2 Hill's Rep. 451. 461. It is not con