Gould v. Rich

48 Mass. 538

• Court: Massachusetts Supreme Judicial Court
• Decided: March 15, 1844
• Status: Published

Opinion

Hubbard, J.

The facts out of which the difference between the parties arises are simple. A mistake has been made, and in consequence of it a loss has occurred; and the question is, whether the principal or agent shall bear the burden. The loss was not caused by a violation of orders, nor by an error of judgment, but through negligence or accident in the casting up of a column, in order to ascertain the amount which at the time had been drawn against the letter of credit held by the defendant’s intestate for account of the plaintiff. The cause has been elaborately and ingeniously argued, and the law touching principals and agents cited at great length. But we do not think it necessary to review the decisions and treatises cited, nor go minutely into a discussion of all the points which have been raised in the case. The principles upon which the case rests do not require it.

The error, it is said in the argument for the defendant, was made by Paine, Strieker & Co. of Batavia— who are also alleged to be the agents of the plaintiff; and the loss therefore, if to be borne by any persons other than the plaintiff, should be borne by them. The defendant, in pursuance of his instructions, proceeded on his voyage to Batavia, and there, through the house of Paine, Strieker & Co., made sundry purchases of goods, to the amount of £3037 2 10. On the letter of credit was an indorsement of only £2037 2 10, signed “ Paine, Strieker & Co. by W. G. Reed.” Whether this error was made by Paine, Strieker & Co., or their clerk, or whether the mistaken amount was handed to them by the defendant’s intestate, does not appear, nor do we think the fact important to be settled; because, whether Paine, Strieker & Co. were bound to make the indorsement or not, we think the supercargo, the defendant’s intestate, who ordered the purchases and had received the invoices of the goods, and the accounts of the house, and who was also to use the residue of the credit at some other port, was bound to see that the indorsement, which he either required or permitted to be put upon the letter of credit, was correct; not only for his own protection, but as well for those who might receive bills on the faith of the letter of credit, as for the house in London upon whom they would be drawn ; and especially to guard the rights of his employer. It follows, from the facts proved in the case, that the accounts and invoices, as made up at Batavia, were correct; and as the letter of credit was taken away by Captain Rich, the house in Batavia had no means of knowing the mistake in the receipt, and of correcting the error ; while on the other hand, Captain Rich had the means in his power, and it would seem, that if he had examined his accounts with any care, he must have known what was the amount drawn in the island of Java, before having occasion to use the credit again.

It is contended by the defendant’s counsel, that Captain Rich obeyed the plaintiff’s instructions by passing his funds into the hands of Russell & Co., and that they undertook to draw for the balance of the credit without authority, as no accident had happened to Captain Rich; and that by so drawing, Russell & Co. made the overdraft, and therefore they are liable for the loss, and not Captain Rich.

It appears, that at the time when Captain Rich delivered the letter of credit to Russell & Co., he made a pencil memorandum on it, for the purpose of showing what amount remained to be drawn for; and he made the sum remaining £2398 17 2. This fact has been found by the jury, and that he thus caused the mistake, so far as Russell & Co. were affected by it.

It is clear that no “ accident ” happened to Captain Rich within the meaning of that term as used in the letter of credit; and we think the drawing of the bills cannot be justified under that clause in the letter. There occurred no unforeseen event or misfortune, to which the term “ accident ” applies. The progress of the voyage was similar to that of others, and according to the probable expectations of the parties.

The argument is, that Russell & Co. volunteered to draw the bills without authority ; the letter of credit being restricted, so that only “ in case of any accident to Captain Rich, by which he may be prevented from using this credit, thereby authorizing either Messrs. Paine, Strieker & Co. of Batavia, or Messrs. Rus sell & Co. of Canton, to use the same for account of Mr. Gould.’

Whatever objections Messrs. Wiggin & Co. might have raised to accepting bills drawn bj Russell & Co., unless some accident was shown to have happened to Captain Rich, we do not think important to consider, for the purpose of deciding the present case. Captain Rich was the supercargo of the ship Arno, and as such was intrusted with the funds of the owner, to manage as he should think best, under his general instructions, and especially with authority to put his funds into the hands of Russell & Co.; and we think that so far as the defendant’s intestate was concerned, by virtue of the powers intrusted to him by the plaintiff, he could direct Russell &. Co. to draw the bills, if he should think it advantageous, rather than do it himself. It was no more than a fair and liberal construction of the orders under which he acted ; and was doing, by agents he had a right to employ, what they, in his judgment, could do better than himself. Nor was there any breach of trust on his part; for if he had drawn the bills himself, the funds thus obtained he would immediately have passed into their hands. Nor do we think there was any violation of the letter of the instructions ; for the letter of credit, and the bills authorized to be drawn by virtue of it, were funds of the plaintiff. While it is the duty of all masters and supercargoes faithfully to obey their instructions, yet, from their very nature, when given in relation to a foreign voyage, to be prosecuted at different ports and in distant countries, amidst fluctuating markets and changing seasons, such orders are to receive a liberal construction, and the master is to be justified when acting honestly within the spirit and scope of them, although he may seem to violate the letter. Such discretion as a liberal construction allows is a necessary ingredient in the authority conferred, and is required by the interests of commerce.

Whatever was the mercantile usage at Canton, in relation to bills drawn under letters of credit from agency houses in London, if any usage existed, this at least is certain, that the house of Rxissell & Co. made no hesitation in drawing the bills themselves, by virtue of such credit, and of thus rendering themselves liable as drawers in case of their protest. Nor did the house in London demur as to accepting them, on account of their being thus drawn.

But it is argued, that as Russell & Co. made the overdraft, they are responsible for the loss, and not Captain Rich, and that it is to them the plaintiff should look, as his agents, who have been guilty of negligence in the discharge of their duty. If the mistake had originated with them, I see no reason to doubt their liability to make good any loss occasioned by their mistake ; nor do I think that in such an event they could, in answer to a claim on them, deny the agency, and say they were acting solely for Captain Rich, and were accountable only to him. By accepting the trust reposed in them by Captain Rich, under the orders by which he was governed, they became the agents of the plaintiff, and were responsible to him for the manner in which they conducted their agency ; for as Captain Rich had the right to appoint them, they being in good standing as merchants at the time, he was not responsible for their misconduct, nor were they liable to him, the interest being wholly in the plaintiff. But as the mistake originated with Captain Rich, and they had no means of detecting it, and as they drew by his direction, they have been guilty of no neglect in the exe cution of their undertaking; and having incurred no liability, they are under no obligation to the plaintiff to make good his loss.

Again ; if we entertained doubts on this point, we are still of opinion that Captain Rich could not take this objection ; for as he put the funds into the hands of Russell & Co., and authorized them to draw the bills, he should not now set up his own mistake and wrongful act, if it was one, to defend himself against the plaintiff’s claim in the present case ; the injury not arising fiom their drawing the bills, but from his neglect in directing them to draw for too large an amount.

What was the duty of Messrs. Wiggin & Co. in relation to the acceptance and payment of the bills, so far as they extended beyond the letter of credit, we think is not important to consider. But from the views we have already taken of this case, it follows, that if the bills exceeding the £5000 had been protested for non-acceptance, and had been returned to Canton, and taken up by the drawers, Russell & Co., they would have had a good cause of action against the plaintiff for the loss caused by the neglect of Captain Rich, and would not have been compelled to look to him for redress ; his acts, as the agent of the plaintiff, being binding on the plaintiff.

But it is contended, on behalf of the defendant, that the plaintiff was not bound to pay the bills to Messrs. Wiggin & Co. beyond the £5000, and that he had no right to make himself the creditor of the defendant by thus assuming this debt. The principle is indeed well settled, that a man cannot, by paying the debt of another without his request, make himself the creditor of that other. In such a case, the law raises no promise So far, however, as Messrs. Wiggin & Co. were concerned, they were not creditors of Captain Rich. But we think that rule of law is not applicable to the present case. The plaintiff was placed in peculiar circumstances. The goods had been purchased under the authority of his agent; they were bought on his account, were invoiced and shipped in his name, were mixed with goods he was absolutely bound to pay for, and he was assured by Captain Rich, the mistake was Russell & Co.’s. He was called upon to act promptly; either to refuse to pay the bills, and turn Wiggin & Co. round to Russell & Co., and thus greatly increase the expenses, in case, it should prove that he was liable to Russell & Co. for the purchase, or to provide for them as they matured. Without therefore undertaking to decide what the situation of the parties would have been, if he had refused to pay Wiggin & Co., we think, under the circumstances we have mentioned, he was justified in so doing, and did not thereby voluntarily become the creditor of Captain Rich. And surely Captain Rich had no reason to complain of the payment; for, supposing him ultimately liable to pay the bills, it was for his benefit that Mr. Gould should pay them, rather than that a claim should be made by Wiggin & Co. on Russell & Co., and by them on Captain Rich, or that a claim should be made by Wiggin & Co. on Captain Rich.

It is further argued that the plaintiff ratified the transaction, by taking the goods to his own account and paying for them, and therefore he cannot now call on the administrator of Captain Rich But we think the facts, as stated, do not war rant us in drawing such a conclusion. The plaintiff gave immediate notice of the overdraft, and Captain Rich contended that the mistake was made by the house in Canton, and not by himself, and it was determined to send out and ascertain the fact; one of the house here agreeing to make good the loss, if the mistake was theirs. Captain Rich did not, in the event the mistake was his, deny his liability-; nor did he request the plaintiff not to pay the bills; nor did he ask him to sell the goods immediately; nor did he take any step by which he gave the plaintiff to understand that he must assume the transaction. The plaintiff had received the goods mixed with others, as one transaction. Those purchased with the overdraft could not be distinguished from the rest. The master gave no intimation oí the fact, being ignorant of it himself. The retaining of the goods, situated as the plaintiff was, was not an assumption by him of the profit or loss on the purchase, nor a taking of it to his own account. The plaintiff sues for a breach of duty on the part of the supercargo, and the case does not depend upon the doctrine of repudiating or rescinding the contract. See Cunningham v. Bell, 5 Mason, 161.

We also feel warranted in drawing the conclusion, from the facts in evidence, that there was an agreement on the part of Rich, that if the mistake should be found to have been made by him, and not by Russell & Co., he would abide the loss. The voyage terminated in September 1836, and Captain Rich, being out of health, went to Hallowed, Maine, to visit his friends. In October, the plaintiff informed him of having discovered, by the accounts, that the credit had been overdrawn £1000. Captain Rich immediately replied, by expressing his surprise that Russell & Co. should have made such a mistake. He was in Boston prior to April 24th 1837, previous to or about which time Mr. Forbes, one of the house of Russell & Co., had agreed that they would bear the loss, if the mistake was theirs; and in November of that year, the plaintiff, in a letter to Captain Rich, says: “ I am sure you don’t wish me to abide the consequences of this mistake, after the severe and successive losses I have sustained on that and the subsequent voyages to Canton; for you voluntarily said, that if the mistake should prove to be yours, you would abide the consequences ; but presuming it to be the error of the house, their partner here, Mr. J. W. Forbes, consented to make up the deficiency, in case it should prove so.” To which letter Captain Rich replied soon after, and said: “ I have wrote Russell & Co. for the original letter of credit and the list, a true copy of what I had drawn for in the island of Java. Until I can see them, I shan’t considei myself accountable.” If the plaintiff had ratified and adopted this act, these letters would not have been written. On the contrary, they furnish evidence of an agreement that Captain Rich would bear the loss, if the mistake should prove to be his; and we think this was not a promise to pay the debt of another but agreeing merely to bear the consequences of his own neglect and carelessness, by reason of which the plaintiff had suffered ; and, by thus engaging to bear the loss, releasing the plaintiff from the necessity of calling upon Russell & Co. for reimbursement, and turning them round upon himself. But we think the case does not rest on this point, but upon the duty of the supercargo, as the agent of the owner, faithfully to perform the trusts reposed in him, and his consequent liability to make good a loss resulting from a breach or neglect of duty.

In regard to the damages the plaintiff is entitled to recover, we think he is not bound by the account of pro forma sales said to have been rendered by him; the defendant not having agreed to settle according to it. The plaintiff gave Captain Rich all the necessary information with regard to the goods, and he made no objection to the course of proceeding followed by the plaintiff. The plaintiff did by this part of the adventure as by the other goods, and we are of opinion that the actual loss sustained by the plaintiff is the true amount of damages caused by the neglect of the supercargo, and for which his estate is liable; and unless the parties can agree on the amount, an assessor will be appointed to make it up, or the case will be sent to a jury to ascertain it.