Brown v. M'Gran/Opinion of the Court

by Joseph Story

United States Supreme Court

39 U.S. 479

Brown  v.  M'Gran

This is a writ of error to a judgment of the Circuit Court of the District of Georgia, rendered in an action in which M'Gran, the defendant in error, was originally plaintiff.

In the spring of 1833, M'Gran, a merchant in Georgia, shipped two hundred bales of cotton, consigned to the plaintiffs in error, a house of trade in Liverpool, England, there doing business under the firm of William and James Brown and Company, for sale on his account. The shipment was made under an arrangement with the house of Brown, Brothers, and Company, of New York, composed (as seems admitted) either wholly or in part of the partners in the Liverpool house, by which the New York house accepted a draft drawn upon them by M'Gran for nine thousand dollars, the invoice value of the cotton being only nine thousand one hundred and fifty-one dollars and seventy-seven cents; and were to reimburse themselves by a draft on the Liverpool house. Accordingly, the New York house on the 12th of March, 1833, addressed a letter to the Liverpool house, in which they state: 'We enclose a bill of lading for two hundred bales of cotton, shipped by M'Loskey, Hagar, and Company, of Mobile, per ship Mary and Harriet, on account of Mr. Thomas M'Gran of Augusta, on which you will please effect insurance. This cotton cost, per invoice, nine thousand one hundred and fifty-one dollars and seventy-seven cents. We have accepted Mr. M'Gran's draft against this cotton, for nine thousand dollars, for which we shall draw on you for our reimbursement when it matures. In handing this draft for acceptance, Mr. M'Gran says, he would not have drawn for so large an advance, were it not that there is a balance at his credit with you, which has accumulated within the past two years; so that if this should not produce enough to meet the advance, it will be covered by what is at his credit.' The existence of any such balance was utterly denied at the trial; and the Liverpool house contended that there was a balance the other way.

The cotton duly arrived at Liverpool on or about the 9th of April, 1833. The New York house drew on the Liverpool house for their reimbursement, a bill dated the 7th of May, 1833, for one thousand eight hundred and seventy-one pounds and nine pence, at sixty days' sight, being the amount of the advance; and that bill was accepted by the Liverpool house, on the 3d of June, 1833, and became payable, and was paid on the 5th of August following. On the 3d of June, 1833, the very day of the acceptance, the Liverpool house sold the two hundred bales of cotton, (the market then being on the rise,) on a credit, for the nett sum of two thousand and seventy-three pounds four shillings and sixpence. After deducting the charges (which amounted to nearly twenty-five per cent.) which became due and payable on the 16th of September, 1833; and according to an account current rendered to M'Gran, by the Liverpool house on the 29th of June, 1833, the whole transactions between the parties, including the sale of this cotton, left a balance of three hundred and ninety-two pounds fifteen shillings and eight pence, due to M'Gran.

At the time when the shipment was made, and the advance arranged therefor, no instructions were given by M'Gran, touching the sale of the cotton. It accordingly went to the consignees, as factors for sale, the advances having been as above mentioned without any other contract than that implied by law as between a principal and a factor, making advances; that is to say, that the factor is to make sale of the goods, consigned to him, according to his own judgment, in the exercise of a sound discretion as to the time and mode of sale, having regard to the usages of trade at the place of sale; and to reimburse himself out of the proceeds for his advances, and other balance due him.

After the shipment and advance were so made, viz., on the 20th of April, 1833, M'Gran addressed a letter to the Liverpool house, in which, after acknowledging the receipt of letters of the 4th and 5th of March, from them, he added: 'If you have any cottons on hand when this reaches you, in which I am interested, I wish you to hold them until you hear from me again.' The Liverpool house, in a reply to this letter on the 24th of May, 1833, used the following language: 'We are in possession of your esteemed favour of the 20th ultimo, and your wishes in respect to the cotton we now hold on your account, are noted accordingly.' At this time by advices received from other correspondents, the Liverpool house were in possession of information that, at least as early as the 8th of April, 1833, M'Gran had failed in business.

On the 22d of July, 1833, M'Gran wrote a letter to the Liverpool house, acknowledging the receipt of their letter of the 24th of May, in which he says: 'I have your favour of the 31st (the 24th) of May, and note the contents. You will please sell my two hundred bales of cotton soon after the receipt of this, unless you are of opinion you can do better by holding a little longer.' This letter was received by the Liverpool house on or about the 23d day of August, 1833.

On the 7th of June, 1833, the Liverpool house informed M'Gran of the sale of the cotton: and in a letter under date of the 30th of July, 1833, in reply thereto, M'Gran expressed his surprise at the sale; and added: 'I beg leave to refer you to my letter of the 20th of April last, the receipt of which you have acknowledged, instructing you not to sell any cottons you had on hand, in which I am interested until you heard from me again. Why did you sacrifice my cottons, as the draft drawn by Brown, Brothers, and Company at sixty days on account of these cottons, could not have been accepted more than a day or two before, as it went forward by the packet of the 8th of May. Therefore, you had sixty days before you had any money to pay for me.' And after some other remarks in the style of complaint, he adds: 'You will please take notice, that I do not recognise the sale, and do not consider you authorized to sell the cotton before the time the draft drawn on you by Brown, Brothers, and Company against this cotton, falls due. If the price is higher on that day than the day you sold it, I will expect you to allow the difference; and if it is lower, I will be prepared to pay you any balance I may owe you.' To this letter the Liverpool house replied by a letter dated the 4th of September, 1833, in which they vindicated their conduct, and among other things, said: 'We beg you to bear in mind, that there was a balance due us from you, on joint transaction from Mr. Clarke; that the two hundred bales in question were sold after the market had advanced one-half penny per pound, and that it barely squares the account. You had, unfortunately, been obliged to stop payment. We had the opportunity of paying ourselves by selling your cotton in a brisk market to a profit of ten per cent.; and we ask whether it was reasonable, under such circumstances, to expect us to hold the cotton for the chance of further profit, when the loss, if any, was certain to fall on us, and the profit not likely to go to you, but to your creditors, as was supposed, of whom we knew nothing. This would have been the extreme of injustice toward ourselves and our absent partners, without being any advantage to you.' And after some other remarks vindicating their conduct, they farther said: 'We think you must admit, that situated as you then were you could not reasonably have expected us to hold the cotton, without pointing out in what manner we should be indemnified in event of loss thereby. That Brown, Brothers, and Company's draft was not due, does not alter the case. We had become responsible some months before by Brown, Brothers, and Company's acceptance of the draft of the shippers.'

Here the correspondence between the parties seems to have closed. The present action was brought to recover damages against the Liverpool house, for a supposed breach of orders, and of their duty as factors. At the trial there was an account current between the parties, and other evidence before the jury; the whole evidence in the case, however, was introduced by M'Gran. Among other questions before the jury, were the following: whether the advance made by the New York house, was, in effect, an advance by the Liverpool house, either as agents, or as partners in the latter; whether there was any balance due to the Liverpool house upon the former transactions; whether M'Gran was insolvent or not, according to the advices received by the Liverpool house; and whether, under the circumstances disclosed in the evidence, the Liverpool house had a right to sell the two hundred bales of cotton for their reimbursement, notwithstanding the wishes or orders contained in the letter of the 20th of April.

The jury at the trial found a verdict for the plaintiff, (M'Gran,) for four thousand nine hundred and seventy-eight dollars and fifty-seven cents, under certain instructions given by the Court, upon which verdict judgment was accordingly rendered: and a bill of exceptions having been taken by the original defendants; the cause now comes before us for revision, upon the points made and instructions given at the trial.

The counsel for the defendants asked the Court to instruct the jury, 1. That the advance by the house of Brown, in New York, was, in effect, an advance by the house in Liverpool; and after the advance so made, the shipper had no right to alter the instructions which were given at the time of such advance. 2. That the house in Liverpool having advanced so large an amount on this cotton, having a previous unsettled claim against the shipper, and the shipper having afterwards and before the sale of the cotton, become insolvent, the house in Liverpool had a right to sell for their reimbursement, notwithstanding the subsequent orders of the shipper.

The Court refused to give these instructions; and, in our judgment, with great propriety; as each of them involved matters of fact in controversy before the jury upon which it was exclusively their province to decide. If the defendants meant to draw from the Court an opinion in point of law upon the assumed facts, the proper mode would have been to have asked the Court to instruct the jury, that if they found the facts to be as thus assumed, then that the law was as these instructions stated.

The Court then proceeded to instruct the jury, that if they found from the evidence in the cause that the plaintiff had given instructions to the defendants, by his letter of the 20th of April, 1833, not to sell any cottons which the defendants might have no hand when that letter reached them, in which the plaintiff was interested, until the defendants heard from him again; and that such instructions were received and recognised by the defendants, by the evidence in the cause, and particularly by a letter given in evidence as one from the defendants to the plaintiff, dated the 24th of May, 1833, in reply to the plaintiff's letter to them of the 20th of April, 1833; that then the defendants were not justifiable in law in the sale of the 3d of June, 1833, on account of the defendants having on that day accepted Brown, Brothers, and Company's draft for one thousand eight hundred and seventy-one pounds and nine pence, dated the 7th of May, 1833, at sixty days' sight.

It is observable that this instruction is given in absolute terms, without reference to any other facts in the cause which might be found by the jury upon the evidence before them; and therefore must be deemed to apply to every posture of the facts which the evidence might warrant. It must, therefore, be deemed to apply to the case, although the advance was originally made by the New York house for and on account of the Liverpool house, as agents or partners thereof; or the Liverpool house had entered into engagements prior to the advance, to become responsible for the reimbursement thereof to the New York house, in the manner stated in the evidence; and although the plaintiff was, before the writing of the letters, actually insolvent, and had failed in business; and that fact was known to the defendants.

One objection taken to this instruction is, that it leaves to the jury the construction of the language of the letters of the 20th of April, and 24th of May. It is certainly true, as a general rule, that the interpretation of written instruments properly belongs to the Court, and not to the jury. But there certainly are cases, in which, from the different senses of the words used, or their obscure and indeterminate reference to unexplained circumstances, the true interpretation of the language may be left to the consideration of the jury for the purpose of carrying into effect the real intention of the parties. This is especially applicable to cases of commercial correspondence, where the real objects, and intentions, and agreements of the parties, are often to be arrived at only by allusions to circumstances which are but imperfectly developed. The present case sufficiently illustrates the distinction. M'Gran, in the letter of the 20th of April, says, that he wishes the defendants to hold any cottons on hand until they hear from him again. Now, this language, certainly, ordinarily imports only a desire, and not an order; and yet there can be no reasonable doubt, that under particular circumstances a wish expressed by a consignor to a factor may amount to a positive command. So, in the reply of the 24th of May, the defendants say, 'your wishes in respect to the cotton we now hold on your account, are noted accordingly.'

Here again the point is open, whether the language imports that the defendants construed the wishes of the plaintiff to be simply a strong expression of desire or opinion, or a positive order; and also, whether the words 'noted accordingly' import that the defendants took notice thereof, or took notice of, and assented to obey, the wishes or order of the plaintiff. The language is susceptible of either interpretation, according to circumstances. If the case had been one of simple consignment, without any interest in the consignee, or any advance or liability incurred on account thereof, the wishes might fairly be presumed to be orders; and the noting the wishes, accordingly, an assent to follow them. But very different considerations might apply where the consignment should be, as the present is, one clothed with a special interest and a special property, founded upon advances and liabilities. We think, therefore, that this objection is not, under the circumstances of the case, maintainable. It would be quite another question, whether the Court might not in its discretion have assumed upon itself the right and duty of construing these letters. There is no novelty in this doctrine. It will be found recognised in Ekins vs. Macklish, Ambler Rep. 184, 185. Lucas vs. Groning, 7 Taunt. Rep. 164; and Rees vs. Warwick, 2 Barn. and Ald. 113. 115.

But the main objection to the instruction is of a more broad and comprehensive character. The instruction in effect decides that in the case of a general consignment of goods to a factor for sale, in the exercise of his own discretion, as to the time and manner of sale, the consignor has a right, by subsequent orders, to suspend or postpone the sale at his pleasure; notwithstanding the factor has, in consideration of such general consignment, already made advances, or incurred liabilities for the consignor, at his request, trusting to the fund for his due reimbursement. We are of opinion that this doctrine is not maintainable in point of law. We understand the true doctrine on this subject to be this: Wherever a consignment is made to a factor for sale, the consignor has a right, generally, to control the sale thereof, according to his own pleasure, from time to time, if no advances have been made or liabilities incurred on account thereof; and the factor is bound to obey his orders. This arises from the ordinary relation of principal and agent. If, however, the factor makes advances, or incurs liabilities on account of the consignment, by which he acquires a special property therein; then the factor has a right to sell so much of the consignment as may be necessary to reimburse such advances or meet such liabilities; unless there is some existing agreement between himself and the consignor, which controls or varies this right. Thus, for example, if contemporaneous with the consignment and advances or liabilities there are orders given by the consignor which are assented to by the factor, that the goods shall not be sold until a fixed time, in such a case, the consignment is presumed to be received by the factor subject to such orders; and he is not at liberty to sell the goods to reimburse his advances or liabilities, until after that time has elapsed. The same rule will apply to orders not to sell below a fixed price; unless, indeed, the consignor shall, after due notice and request, refuse to provide any other means to reimburse the factors. And in no case will the factor be at liberty to sell the consignment contrary to the orders of the consignor, although he has made advances, or incurred liabilities thereon; if the consignor stands ready, and offers to reimburse and discharge such advances and liabilities.

On the other hand, where the consignment is made generally, without any specific orders as to the time or mode of sale, and the factor makes advances or incurs liabilities on the footing of such consignment, there the legal presumption is, that the factor is intended to be clothed with the ordinary rights of factors to sell in the exercise of a sound discretion, at such time and in such mode as the usage of trade and his general duty require; and to reimburse himself for his advances and liabilities, out of the proceeds of the sale: and the consignor has no right, by any subsequent orders, given after advances have been made or liabilities incurred by the factor, to suspend or control this right of sale, except so far as respects the surplus of the consignment, not necessary for the reimbursement of such advances or liabilities. Of course, this right of the factor to sell to reimburse himself for his advances and liabilities, applies with stronger force to cases where the consignor is insolvent, and where, therefore, the consignment constitutes the only fund for indemnity.

Such then being the relative rights and duties of the parties, we are of opinion that the instruction given to the jury by the learned judge in the Circuit Court, is not maintainable in point of law. The consignment was general to the Liverpool house, for sale; and advances and liabilities were contemporaneous with the consignment; there were no contemporaneous orders limiting or qualifying the general rights of the factors resulting from these circumstances; the consignor, subsequently, either failed in business, or was believed to have failed; the wishes subsequently expressed by the letter of the 20th of April, even admitting them to have the force of orders, were unaccompanied with any other means of indemnity, or even with any offer of reimbursement of the advances or liabilities. Unless, then, upon the established principles of law, the consignor had a clear right to control the sale of the consignment, by any orders which he might in his discretion choose to give, notwithstanding such advances and liabilities; which we are of opinion he had not; the instruction was erroneous.

We have not thought it necessary to enter upon any general examination of the authorities which support the doctrines which have been thus stated by us. But the opinion of Lord Chief Justice Gibbs, in Pothonier vs. Dawson, 1 Holt's Rep. 383, and the opinions of the judges in Graham vs. Dyster, 6 Maule and Selw. 1. 4, 5, will be found fully to recognise some of the leading principles.

Another instruction was given by the Court to the jury upon the question of damages, supposing the Liverpool house, by the sale, had violated their proper duty. It was, that if the jury found, from the evidence in the cause, that cottns were selling for a higher price from the 3d of June, 1833, when the draft was accepted, and when the cotton was sold, until the time when the said draft was mature and payable, and if the evidence in the cause ascertain at any time before the maturity of the draft, what such higher price was, and that the cotton belonging to the plaintiff could have been sold for such higher price; then the plaintiff was entitled to recover from the defendants the difference in price between the sum for which the defendants sold the cotton, and the sum at which it might have been sold before or at the maturity of the draft. This instruction was doubtless framed upon the ground that this was the claim of damages which the plaintiff asserted by his letter of the 30th of July, 1833. But as that letter was not assented to, or the claim recognised by the defendants, this claim could, in no just sense, be obligatory upon them; and as a general rule of law, applicable to damages under like circumstances, we think that it cannot be maintained.

Supposing the sale made by the defendants on the 3d of June to have been tortious, and in violation of orders, the plaintiff had his election either to claim damages for the value of the cotton on that day, as a case of tortious conversion, or for the value of the cotton on the 23d of August following, when the letter of the plaintiff of the 22d of July was received, which authorized a sale. If the price of cotton was higher on that day than at any intermediate period, he was entitled to the benefit thereof. If, on the other hand, the price was then lower, he could not justly be said to be damnified to any extent beyond what he would lose by the difference of the price of cotton on the 3d of June, and the price on the 23d of August.

For these reasons, we are of opinion, that both the instructions given by the Circuit Court to the jury were erroneous; and therefore the judgment ought to be reversed, and the cause remanded, with instructions to that Court to award a venire facias de novo.

Mr. Justice WAYNE, and Mr. Justice CATRON dissented.

Notes