Martin v. Pope

6 Ala. 532

• Court: Supreme Court of Alabama
• Decided: January 15, 1844
• Status: Published

Opinion

COLLIER, C. J.

It is not pretended that there was a special contract between the plaintiffs and Moffitt, in respect to their transactions, which would vary the duties and liabilities of the former as the factors of the latter. We must then consider the case in reference to the principles of law applicable to such agents when dealing with their principals.

The engagement of a factor who undertakes the sale of goods or merchandize, for a compensation, is, that he will faithfully dispose of the same, with a proper regard to the advices of his principal, and honestly account for the proceeds. He is entitled to a lien, not only upon the goods themselves, for advances, and for commissions consequent upon their proceeds, and for what may be due him upon a general balance of accounts growing out of similar dealings. This lien arises upon an agreement which the law implies in the absence of any express stipulation upon the subject. [Paley’s Ag. 127-8-9, 142-7; Story’s Ag. 421, 435.]

In Houghton, et al. v. Matthews, et al. [3 Bos. & Pul. Rep. 485,] it was decided that the demand for which the factor claimed a lien, must be connected with, and constitute a part of his dealings as such, with his principal; for if it was a species of debt foreign to that relation, or accruing before its commencement, the lien would not be enforced. [Paley’s Ag. 135-6-7; Story’s Ag. 387-8-9.]

The correctness of these principles is conceded by both parties, but it is argued for the defendant, that the plaintiffs had a lien upon the cotton consigned to them by Moffitt, and since its sale upon the proceeds; that they cannot relinquish their lien and resort to an action against the sureties of their principal, but must appropriate the money received by them to the payment of their account as factors, in the order in which the advances were made, or in which the respective sums charged, became payable.

The general lien of factors does not depend upon any express contract, but rests upon its manifest tendency to aid the interests of trade and commerce, and to promote confidence and a liberal spirit on the part of factors in respect to advances to their principals. It is deemed to exist in all cases, until the contrary presumption is clearly established. [Story’s Ag. 388-9; Paley’s Ag, 127-8.] And where a factor makes advances, independent of an actual agreement to that effect, the legal inference is, that they were made upon the joint credit of the personal security of the principal, and of his goods and money that might come to hand. This being the case, the factor may relinquish his lien on the latter without at all affecting his personal remedy; so he may re-* nounce his right to resort to the person, and look alone to his lien for reimbursement. [Burrell v. Phillips, 1 Gall. Rep. 380; Piesch v, Dickson, 1 Mason’s Rep. 9.] It is then a right of which the factor or his representatives may avail themselves; but where there is no contract other than that which is implied, one who has become a surety of the principal to refund advances made to him, cannot elect for the factor, and force him (at least at law,) to assert his lien upon the goods or money of the principal.

The case of Brander & McKenna v. Phillips, et al. [16 Peter’s Rep. 121,] which was cited for the plaintiff in error, bears but little resemblace to that now before the court." In that case the plaintiffs were the factors of Phillips & Co., sold 'cotton for them for two and a half per cent, commissions, and charged the same for advances. In August, 1834, Phillips & Co. were indebted to the plaintiffs in the sum of $1315 57, for advances. On the 15th of the same month, the agent of the plaintiffs agreed to advance Phillips the sum of $8,000 on bills to be drawn between the 20th of April and31stJuly, 1835, by them, and any two of six persons named; among whom were R. H. & N. T., two of the defendants. Between the 15th of August, 1834, and the 31st July, 1835, several shipm'ents'of cotton were made to the plaintiffs by Phillips & Co., and several bills were drawn by them, some jointly with R. H. and N. T., and others without them; all of which were accepted by the plaintiffs. The bills and advances amounted to $29,795 65: and the proceeds of the cotton amounted to $22,-460 43. The proceeds of the cotton were applied to the bills drawn by Phillips & Co. to the exclusion of those drawn by them jointly with R. H. and N. T.; and the question was, whether if the plaintiffs had. sufficient funds of Phillips & Co. in their hands, when these latter bills became due to pay them, they were not bound to pay them, instead of retaining it for the payment of those which subsequently matured. The court said, “the application of payments by the creditor, where'no direction is given by the debtor, has no relation to the present case. Had the bills become payable at the same time, on acceptances made on the same day, the plaintiffs might have insisted on applying the funds in their hands to the payment of the notes without securities. But this would have been a very different case from the one now before us. After having accepted the bill under consideration, payable at a time stated, the plaintiffs accepted other bills, payable at a more remote period.

Now, the contract by the acceptors was, that they would pay these bills as they respectively became due. And this they were bound to do so long as the funds of the, consignors in their hands remained unexhausted. A bill became extinguished as soon as it was paid by the plaintiffs with the funds of Phillips and company. And this principle applies as strongly to those bills signed by the accommodation drawers, as others.”

Again: .“'The plaintiffs, by appropriating the proceeds of the cotton to the payment of future liabilities, have violated their contract,-endeavored to defeat the just reliance of the sureties, and charge them with the payment of the bills which they guarantied. This the plaintiffs cannot do. It would be a great hardship, if not a fraud on the sureties. No lien can be regarded or enforced under such circumstances. The lien of a factor depends upon legal principles, founded on equitable considerations, and can be held valid on no other grounds.”

This case merely determines, that the acceptor of bills is bound to pay them at maturity; that if in funds of the drawer, he should use them for that purpose; and where they became payable at different times, he cannot use his own'funds to pay those that first mature, and pay those subsequently falling, with the money of the drawers, so as to entitle him to recover the amount of the former, of persons who joined as sureties in drawing them. There, the factors, by their acceptance, came hnder obligations to pay money at an appointed day,-and being in funds of the persons for whom they had undertaken, it was their duty to appropriate'them.' Here, they had entered into no such engagement. They had merely advanced money to, and had allowed one of their customers to become indebted to them, by furnishing him goods, &c.; and this without any contract, though dpubtless in the expectation that he would send them cotton. The several sums in which he was indebted, must be considered as constituting his liability to them, and stand upon an equal footing so far as the present case is concerned. This conclusion, as it respects the note in question, results from the absence of any contract varying the rights and obligations of the sureties; and in regard to the charge for negro hire, it is immaterial whether it arises out of the plaintiffs’ dealings, as factors, yrith MofBtt, and could only be material, if they were asserting a lien upon the cotton or its proceeds. But the question of the right of lien, or the duty pf the factors to exert it, cannot be raised in this case. Moffitt’s cotton has been sold by them, and its proceeds appropriated pro tanto to extinguish his indebtedness, without any objection, of which the l’ecord informs us, either by himself or his representatives. It is, then, the case of a creditor paying money to his debtor without any specific direction as to its application.

It is laid down generally, that where money is paid by a debt- or to a creditor, who has several demands against him, without directing how it shall be applied, the creditor may apply it as he pleases. [Smith v. Scriven, 1 McC. Rep. —; Goddard v. Cox, 2 Strange’s Rep. 1195. See also 2 East’s Rep. 242.] In The Mayor, &c., of Alexandria, v. Pattern, et al., [4 Cranch’s Rep. 317,] the court say, “It is a clear principle of law, that a person owing money on two several accounts, as upon bond and simple contract, may elect to apply his payments to which accounts he pleases; but if he fails to make the application, the election passes from him to the creditor. No principle is recollected which obliges the creditor to make this election immediately. After having made it, he is bound by it, but until he makes it, he is free to credit either the bond, or simple contract.” To the same effect is The United States v. January & Patterson, [7 Cranch’s Rep. 471.]

In Gwin, et ux. v. Whitaker, adm’r, [1 Har. & Johns. Rep. 754,] it was determined, that where one is indebted upon several accounts, and makes a payment, without directing its application, if both the securities carry interest, or neither bear interest, the creditor may apply it. So, if one is indebted on bond or mortgage, and simple contract, the law, in the absence of direction from the debtor, will apply a payment to the bond and mortgage. Further, it was said, that sometimes the fund, out of which the money arose, will direct the application; as where one, indebted on bond and on judgment, sells his land, and the purchaser pays a sum of money to the creditor without applying it, the law will apply it to the judgment, so as to exonerate the land.

In Alston’s adm’r v. Contee’s ex’r, [4 H. & Johns. Rep. 351,] a debtor made a payment to a creditor, who had two claims on open account, without directing its application: under the circumstances, the court thought the money should go in extinguishment of the oldest account. And in Bacon v. Brown, [1 Bibb’s Rep. 334,] it was decided, that if the debtor does not apply a payment, the creditor may direct its application to any one of several demands where they are of equal dignity, parallel in their consequences, and charge upon the debtor. That equity would direct a payment to be applied to debts bearing interest; but the creditor cannot apply it to a demand not yet payable. [See also Heyward v. Lomax, 1 Vern. Rep. 24.] The inference from the facts recited in the record, is, that all the items composing the plaintiffs’ account, were for money due them before they had sold all the cotton consigned them by Moffitt;. as the last charge is dated'on the 21st March, 1840, and the cotton was sold on the 17th of that month and-in April following. Again; they are all of equal dignity as it respects priority of payment; and from the time the plaintiffs were entitled to be paid, they drew interest in the same' manner, whether evidenced by writing or not.

As it respects the sum of one hundred and twenty-four 50-100 dollars, paid Moffitt by the plaintiffs; defendant cannot object that it should have been credited to Moffitt’s account. And whether iffhad been thus previously credited or not, is wholly immaterial; for, they subsequently sold for Moffitt between six and seven hundred dollars’ worth of cotton,-that Was placed to his-credit, which ■v e have seen the plaintiffs might have paid over to him without affecting their claim against the defendant; The form in which the account is stated cannot prejudice either party: courts of'justice will look at the substance of the thing.

The facts do not show that there was á valid agreement between the plaintiffs and Moffitt, by which the former was to extend the day of payment of the note in controversy; what the plaintiffs said to .him was entirely gratuitous, and they could have put the note in suit at any time after its maturity.

Without extending this opinion, by a particular examination of the-charges given and refused, it will be readily ppreeived from what has been said, that no error has been committed which is available for the defendant below. The judgment is consequently’affirmed.