Parsons v. Armor and Oakey - 28 U.S. 413 (1830)

U.S. Supreme Court

Parsons v. Armor and Oakey, 28 U.S. 3 Pet. 413 413 (1830)

Parsons v. Armor and Oakey

28 U.S. (3 Pet.) 413


Error from the District Court of Louisiana. The record consisted of the petition, the answer, the whole testimony, as well depositions as documents introduced by either party and the fiat of the judge that Armor, the plaintiff below, recover the debt as demanded. The difficulty is to decide under what character we shall consider this reference to the revising power of this Court. If treated strictly as a writ of error, it is certainly not an attribute of that writ, according to the common, law doctrine, to submit the testimony as well as the law of the case to the revision of this Court, and then there is no mode in which the Court can treat this case but in the nature of a bill of exceptions. The Court is not at liberty to treat this case as an appeal in a court of equity jurisdiction under the act of 1803, because the party has not brought up his cause by appeal, but by writ of error.

F., at New Orleans, was the correspondent of P., at Boston, received goods from him on consignment, and was from time to time directed to purchase produce and ship the same to P., and was instructed to draw on P. for the funds to pay for the same. When he made purchases, "the bills of parcels were made out in the name of F., and the accounts assured in the books of the different merchants in his name." The general course of the business was that P. sent out, in his own vessels, merchandise to F., which was sold by F., and F., at the request of P., purchased from merchants in New Orleans produce, and shipped the same as ordered by P., and to put himself in funds for the same when necessary, drew bills of exchange on P., who had always, until the presentation of the bills on which the suit was brought, accepted and paid the same; but he did not in his purchases act under the idea that he was restricted in his purchases to the drawing of bills for the payment of the articles purchased for P. F. purchased a quantity of tobacco to be shipped to P., and payment for the same in bills on P. made a particular part of the contract for the purchase. At the time of the purchase, F. showed to the vendor of the tobacco, the letters from P., ordering the purchase and shipment of the same. Some of the bills drawn by F. on P., and which were delivered to the vendor of the tobacco in payment for the same, were refused acceptance and payment, and this suit was instituted for the recovery of the amount of the bills from P. Held that P. was not liable to pay the bills.

The general rule is that a principal is bound by the act of his agent no further than he authorizes that agent to bind him, but the extent of the power given to an agent is decided as well from facts as from express delegation. In the estimate or application of such facts, the law has regard to public security, and often applies the rule "that he who trusts must pay." So also, collusion with an agent to get a debt paid through the intervention of one in failing circumstances has been held to make the principal liable on the ground of immoral dealing.

A bill of exchange is the substitute for the actual transmission of money by sea or land. Power therefore to draw on a house in good credit, and to throw the

Page 28 U. S. 414

bills upon the market is equivalent to a deposit of cash in the vaults of the agent. There is not the least tittle of evidence in this cause to show that P. meant to use the credit of the drawer of the bills on which the suit is brought, or to authorize him to pledge his credit in anything but the negotiation of the bills. This depended on the confidence which merchants of New Orleans who wished to remit would place in the solvency and integrity of the drawer and drawee, and had no connection whatever with the application of the money thus raised to the purchases ordered by the principal. As to those purchases, the agent was authorized to go no further than to apply the funds deposited with him.

Of the general power to protest the bills of one who has overdrawn there can be no question, for it is the only security which one who gives a power to draw bills and throw them on the market has against the bad faith of his correspondent. He takes the risk of paying the damages, if in fault, or of throwing them on the other if he has actually abused his trust. It is a question between him and his correspondent.

The currency which a merchant may give to bills drawn on him by a correspondent by payment of such bills does not deprive him of the security he has a right to by refusing his acceptance of other bills so drawn.

It does not affect the merits of this cause that the original contract was made for a payment in bills. Such was not the negotiation to which P. had limited F.; it was no more between P. and the vendor of the tobacco than a purchase of bills with the cash received for the tobacco.

James Armor, a merchant of New Orleans, sued William Parsons, a merchant of Boston in the Parish Court of New Orleans by petition setting forth that in June, 1825, he sold to one Eben Fiske, acting as the agent of Parsons, tobacco to the amount of $17,311 99, in consideration whereof Fiske drew sundry bills of exchange on Parsons, all which were honored and paid, except two, one for $1,443.29 and the other for $4,123.71, which were not accepted or paid, and charging that Parsons owes him the amount of the two bills, viz., $5,567. Certain merchants of New Orleans were sued as garnishees of Parsons. The cause was duly removed into the circuit court of the United States, and James Armor having failed, he himself and Oakey were appointed syndics of his creditors.

Some objection to the jurisdiction was taken and overruled, and a general answer put in by Parsons denying his liability.

The bills of exchange were dated July 2, 1825; one was

Page 28 U. S. 415

for $,1443.29 at 60 days, the other for $4,123.71. The drawing, presentment, and protest of these bills were proved.

When the cause came to be heard, both parties waived the trial by jury and agreed that the court should decide whether the defendant was responsible to the plaintiffs upon the facts as they appear disclosed in writing and filed in the case.

The papers filed in the case and brought up with the record contained admissions that by the laws of Massachusetts, the rate of interest is six percentum per annum and ten percent damages on protested bills of exchange, and that, by the laws of Louisiana, the interest is five percent per annum on bills protested from the date of protest, and the like damages of ten percentum.

The depositions and the evidence in the cause were also in the record, set out at large. The depositions proved the course and nature of the business carried on by Eben Fiske at New Orleans, and also the particulars of some of the transactions between Mr. Parsons and Mr. Fiske. The deposition of Mr. Fiske states these transactions and their character more fully. The deposition is as follows:

"Eben Fiske, a commission merchant in New Orleans in 1825, a witness for plaintiffs, states that in the fall of the year 1821, he commenced transacting business for the defendant, Mr. Parsons of Boston, in the City of New Orleans, and so continued up to the latter end of the summer of 1825. That during this period, between 1821 up to 1825, witness was the only person transacting business for said William Parsons in the City of New Orleans. That the general course of the transactions between them was that the said Parsons sent out to New Orleans iron, steel, nails, brads, &c., consigned to witness, which he, witness, would sell as occasion offered, most frequently on credit. That the vessels of said Parsons visited New Orleans every year, when witness, on account of said Parsons, purchased from the merchants of New Orleans tobacco, cotton, logwood, and such articles as Mr. Parsons would request, which were put on board the vessels of said Parsons and on his account transported to different ports in Europe and America. To put himself in

Page 28 U. S. 416

funds for these purchases so made, witness drew his bills of exchange on said Parsons of Boston, which had always been duly accepted and paid up to the month of August, 1825, when the first bill so drawn by witness on said Parsons was protested. The purchases so made by witness each year in the business season for the articles required by Mr. Parsons were to a large amount, from $50,000 to $100,000 annually; that accounts current were kept between them, witness and said Parsons; that witness would charge said Parsons with purchases made for him, as well as for the disbursements of his vessels and other expenses and charges, and would credit said Parsons with bills drawn on him from time to time, and the proceeds of nails, iron, steel, &c., as sold. The nature of transactions between witness and said Parsons will appear from the accounts."

"In June, 1825, witness purchased on account of said Parsons from James Armor, a merchant of New Orleans, 180 hogsheads of tobacco, the net amount of which (after deducting, as customary, one-half of the expenses of cooperage) was $17,311.92, for which witness drew bills of exchange at sixty days' sight, on William Parsons at Boston, all of which were paid, except two, to-wit, one bill for $1,443.29 and the other for $4,123.71, which said two last bills were protested for nonacceptance and nonpayment by the said Parsons. At the time witness went to said Armor to purchase said tobacco, he stated to said Armor that he was about to purchase the same on account of William Parsons, and that he would give bills on the said Parsons. Witness then showed said Armor the letters of said Parsons which refer to the order for purchasing tobacco for loading the Mary and Betsey; witness on some occasions would show letters of said Parsons to merchants in New Orleans from whom he was about making purchases, but did not show all said letters."

"From the course of business between witness and said Parsons for the several years that he had been transacting business for said Parsons in New Orleans, their business had become generally known in said city, and from the great

Page 28 U. S. 417

number of bills which witness had annually drawn on said Parsons, these bills had gained currency in the market of New Orleans, and he has no doubt that they were received by the several merchants who took them under the firm conviction that Parsons would accept; at the time the purchase was made from Mr. Armor in 1825, two vessels, the Mary and Betsey, belonging to said Parsons, were lying in the port of New Orleans waiting for cargoes of tobacco which witness had been instructed by said Parsons to purchase for him; witness purchased, in 1824, tobacco from James Armor for William Parsons, and which was paid for by drawing bills on said Parsons by witness, all of which were duly paid by William Parsons. The 180 hogsheads of tobacco referred to were, after they were so purchased from James Armor, shipped on William Parson's account on board his vessels aforesaid to Europe. At the time, in August, 1825, when William Parsons began to protest the bills of witness, he, witness, had on hand a quantity of steel belonging to said Parsons unsold, and had also sold iron, nails, &c., to a considerable amount, which was not then due, and which could not be applied to the purchases."

"In the balance of $11,631.23 against witness, as per account current in November, 1824, were included some of witness' exchange on Mr. Parsons, as witness had overdrawn the amount of purchases, having sustained a very heavy loss by the failure of A. Fiske in 1822."

"In the season of 1825, the purchases of witness for Mr. Parsons, and the disbursements of his vessels, and the amount of drafts drawn after the rendition of accounts in November, 1824, up to the close of operations in purchasing and drawing in 1825, will appear from correspondence and accounts. The amount of bills drawn in 1825, and which were protested by Mr. Parsons, was about $39,137.79; witness, from his declarations, and the course of his business, must have been known as acting for Mr. Parsons in these purchases of the merchants of New Orleans. The vessels of Mr. Parsons had left the port of Orleans previous to any

Page 28 U. S. 418

intelligence having been received at New Orleans of his protesting witness' bills."

"Witness states that when he made purchases, the bills of parcels were made out in witness' own name, and the accounts assured in the books of the different merchants in his name; that this is the usual manner in which bills of parcels are made out and accounts kept in New Orleans, although it may be well known between the parties that the merchant who sells is selling the property of others on commission and that he who buys is buying as the agent of another."

"Witness had been instructed, as appears by the letters of Mr. Parsons, to resell any tobacco not suited to the market to which Mr. P. was shipping when, in purchasing a lot, he, witness, should be obliged to take some of such quality; witness did accordingly resell a few hogsheads, which had been principally purchased from Bedford, Breedlove, and Robeson. Captain Mayo was then here with the Mary. Witness, by his letters of 1 July, 1825, informed Mr. Parsons that he had purchased 140 hogsheads, which was stowed on the 7th of the same month, previous to which the tobacco had been weighed, and found to be only 132 hogsheads. No reference was made to that of 1 July, as witness wrote in haste, being about dispatching the Betsey and Mary. The information of Captain Mayo as given to Mr. Parsons, as appears from Mr. Parsons' letters, that he, witness, was selling tobacco to the extent it was construed by Mr. Parsons, as he states in his letters, was incorrect, as witness had only resold as before stated."

"Cross-examined. Fiske was a commission merchant in New Orleans, and was the correspondent of Parsons, from whom he received goods on consignment for sale, and transacted his business exclusively in New Orleans, from the year 1821 to the month of July, 1825, and in all purchases made by Fiske for Parsons, he, Fiske, received the accounts and transacted the business in his own name, and never signed his name as agent for Parsons."


Page 28 U. S. 419

The whole correspondence between Mr. Parsons and Eben Fiske was set forth at large in the record, commencing on 19 October, 1821, and terminating on 19 November, 1825.

The first letter from the plaintiff in error to Eben Fiske was dated October 1, 1821, and the letter under the authority in which their transactions commenced was dated October 19, 1821. Those letters were as follows:

"Boston, October 1, 1821"


"Sir: I am sorry at any time, especially at the commencement of a correspondence with you, to request a favor which you may think unpleasant, but hope you may be induced to comply with. My request is that you would call on Messrs. William and Nathaniel Wyer for advice respecting a balance I have in their hands, but at my risk. You have above a copy of part of their letter to me, dated 27 February, 1819; from that to the present day, I have not been able to get any reply from them to my letters on that subject. I wish you to call on them for an explanation; if they have received the money, please to receive it from them; if they have not, presuming you must know the person who purchased the steel, you can determine if it can ever be collected. I wish you to pursue such measures to have the debt collected as if it was your own."

"I enclose you a letter for Messrs. Wyer; after reading, please to seal and hand it to them."

"I am, very respectfully, your humble servant,"


"Boston, October 19, 1821"


"Sir: I am sorry I had not the pleasure of a personal interview with you, when you were in Boston; I received your letter. I have concluded to send the brig Betsey, John Virgin, Master, for New Orleans. She will probably sail next week; if you can purchase 150 hogsheads of very good old tobacco, should there be any at market, one

Page 28 U. S. 420

hundred bales of clean white Tennessee or Alabama cotton, and to fill up with good Campeachy logwood, the tobacco not to cost more than 4 or 4 1/2 dollars, the logwood from 18 to 22 dollars; if higher than that, take only as much as will stow in breakage and fill up with tobacco and cotton, one-half each. If these articles can be procured, I wish it done at once; if the tobacco cannot be procured by the brig, I will give Captain Virgin instructions to communicate to you what to load the vessel with. You will please draw on me for the funds to pay for the cargo."

"I am, &c."


"October 20th. You will please to supply Captain Virgin with his adventure, and take his draft on me for the amount, say ten or twelve hundred dollars, which shall be duly honored, or charge me with the amount, in account; also furnish Captain Virgin with the adventures for some others, and charge to account as above."

"I am, respectfully, your humble servant,"


On the 9 June and on 8 August, 1825, the plaintiff in error wrote to Eben Fiske as follows:

"Boston, June 9, 1825"


Dear Sir: I have your favors of the 30 April and 5 May. I wish that your opinion may prove correct, and that tobacco may be at such a price that you may be able to load the Mary and Betsey. The Mary, from my letters to Captain Mayo and yourself, I think you will load, but fear the market in Gibraltar will not rise in proportion. From my last accounts, Mr. Sprague was selling at $7 1/2 per cwt. The article in Gottenburg, late in April, was very dull, and had risen but a very trifle. If the Betsey cannot be loaded for Gottenburg, get a freight for her for New York or Boston or any northern port. Apply all the funds you have and which you say will be convenient for you to

Page 28 U. S. 421

invest to load the Mary. It will not answer to purchase for the Gibraltar and Gottenburg markets for another voyage, to stand at a higher rate than my limits. You may possibly be able to purchase two hundred hogsheads of very fine, not to go higher than 6 1/2. By purchasing late, you will be able to apply the proceeds of nails sold, which will then be due. As you have given me assurances that you will apply all my funds in your hands at that period, I cannot have any doubt on the subject.

"The Betsey is insured in this city. The papers must be clear and regular to recover from the underwriters. I enclose a letter for Captain Wallis, should he be with you, in conformity with what I write you. Your draft of 6 April to John Clark, sixty days, for $372.18, without advice, has been paid."

"I am respectfully, your humble servant,"


"Boston, August 8, 1825"


"Dear Sir: I wrote you on 26 July and 4th instant. I now enclose you an abstract of my account with you. From my letters to you the past season, you will readily perceive my determination to have my account settled with you this season. The payment for the 132 hogsheads of tobacco you purchased to ship to Boston I shall not accept for until I receive it myself or by my agents. If from any cause it should not be shipped before you receive this, I request you to deliver it to Messrs. Howard and Merry; also any nails or steel you may have unsold, or the notes received for any nails or steel which are not paid for: also, Mrs. Richards' note, a bad debt, for $673.23. Their receipt shall be evidence for me to pay any balance that may be due on settlement of the account. Your drafts not come to hand, to a larger amount than the last of the 132 hogsheads of tobacco, will give you time to comply with the foregoing requisition from me."

"I am, respectfully, your humble servant,"


Page 28 U. S. 422

The letter advising of the drafts which were the subject of the suit was this following:

"New Orleans, 2 July, 1825"


"Sir: I have drawn on you this date for three drafts, as follows, favor John Clark,"

"No. 42, for $4,123.71, 60 days, three percent discount, net $4,000."

"No. 43, for $1,443.29, 60 days, three percent discount, net $1,400."

"No. 44, for $1,631.75, 60 days, three percent discount, net $1,583."

"The above are in place of exchange, advised under dates of yesterday of the same numbers and which by mistake were drawn for the net amount, instead of the gross. The same are destroyed."

"I am, respectfully, your obedient servant,"


Judgment was given for the plaintiffs in the circuit court, whereupon the defendant brought this writ of error.

Such of the facts and correspondence as were considered important, and which have been omitted in this statement, are referred to in the opinion of the Court.

The errors assigned were:

1. Fiske was not the agent of Parsons, nor was he authorized to purchase on Parsons' account.

2. The merchandise was not in fact sold on the credit of Parsons, but on the credit of Fiske, or on the belief that Parsons would accept his bills.

3. The facts and correspondence do not show that Parsons was bound to accept the bills.

Page 28 U. S. 424

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