Brown & Company v. McGran,
39 U.S. 479 (1840)

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U.S. Supreme Court

Brown & Company v. McGran, 39 U.S. 14 Pet. 479 479 (1840)

Brown & Company v. McGran

39 U.S. (14 Pet.) 479


An action was instituted against the consignees of two hundred bales of cotton, shipped by the direction of the owner to Liverpool, on which the owner had received an advance by an acceptance of his bills on New York, which acceptance was paid out by bills drawn on the consignees of the cotton in Liverpool. Sometime after the shipment of the cotton, the owner wrote to the consignees in Liverpool, expressing his "wishes" that the cotton should not be sold until they should hear further from him. In answer to this letter, the consignees said "Your wishes in respect to the cotton are noted accordingly." No other provision than from the sale of the cotton for the payment of the advance was made by the consignor when the same was shipped, and no instructions for its reservation from sale were given when the shipment was made.

Immediately after the acceptance of the bill drawn against the cotton on the consignees in Liverpool, they sold the same for a profit of about ten percent on the shipment. Cotton rose in price in Liverpool to more than fifty percent profit on the invoice between the acceptance of the bill

of exchange and the arrival of the same at maturity. The shipper instituted an action against the consignees for the recovery of the difference between the actual sales and the sum the same would have brought had it been sold at the subsequent high prices at Liverpool.

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.

There can be no reasonable doubt that in particular circumstances, a wish expressed by a consignor to a factor may amount to a positive command.

In the case of a simple consignment of goods without any interest in the consignee or any advance or liability incurred on account thereof, the wishes of the consignor may fairly be presumed to be orders, and the "noting the wishes accordingly" by the consignees an assent to follow them. But very different considerations might apply where the consignee should be one clothed with a special interest and a special property founded upon advances and liabilities.

Whenever 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 in the goods, 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 agreement between himself and the consignor which contracts or varies this right.

If, cotemporaneous 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 before a fixed time, in such a case the consignment is presumed to be received subject to such order, and the factor is not at liberty to sell the goods to reimburse his advances until after that time has elapsed. So when orders are given not to sell below a fixed price unless the consignor shall, after due notice and request, refuse to provide other means to

reimburse the factor. 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.

When the consignment is made generally, without any specific orders as to the time and mode of sales, and the factor makes advances or incurs liabilities on the footing of such

Page 39 U. S. 480

consignment, 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 manner as the usage of trade and his general duty require, and to reimburse himself for his 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.

If a sale of cotton in Liverpool by a factor has been made on a particular day tortiously and against the orders of the owner, the owner has a right to claim damages for the value of the cotton on the day the sale was made, as for a tortious conversion. If the sale of the cotton by the factor was authorized on a subsequent day, and the cotton had been sold against orders before that day, the damages to which the owner would be entitled would be regulated by the price of cotton on that day. But the rate of damages should not be obtained from the prices of cotton at any time between the day when the cotton was sold against the orders of the owner and the day on which the sale was authorized by him.

In the Inferior Court of Richmond County in the State of Georgia, Thomas McGran, the defendant, instituted a suit by attachment against the plaintiffs in error to recover damages for the sale of two hundred bales of cotton shipped by him to the plaintiffs in error as his factors, the cotton having been sold for a less price than the same would have produced had the sales been made according to the instructions of the shipper.

The declaration contained three counts, all upon the shipment of the two hundred bales of cotton by Thomas McGran to William and James Brown & Company, at Liverpool, as the factors of the shipper.

The first count alleges that while the cotton remained in the hands of the consignees, the shipper ordered him to hold the cotton until they should hear from him again, but the same was sold in violation of the order and to the damage of the shipper.

The second count charges the consignees with not having exercised reasonable diligence in keeping and selling the cotton, but that they dealt with the same so negligently and carelessly, so that it was sold at a loss to the shipper.

The third count alleges that the consignees did not sell the cotton to the best interests of the shipper, nor did they obey his instructions, but on the contrary managed the same carelessly and negligently and sold the same contrary to orders, with a reasonable prospect of rise of the article, for $3,000 less than the value of the cotton at the time the same was sold.

The case was removed under the provisions of the Judiciary Act of 1789 to the Circuit Court of the United States for the District of Georgia, the defendants below not being citizens of the State of Georgia and not residing in that state.

The defendants pleaded the general issue, and the cause having been tried in the circuit court, the jury gave a verdict for the plaintiff, Thomas McGran, under the directions of the court, for $4,975.57.

Page 39 U. S. 481

The defendants excepted to the ruling of the circuit court on questions submitted during the trial of this cause, and they prosecuted this writ of error.

On the trial it was given in evidence that two hundred bales of cotton were shipped by defendant in error from Mobile to the plaintiffs in error, at Liverpool, as his factors, to be sold by them under a del credere commission. That this cotton was received by them about 9 April, 1833, and cost, per invoice, $9,151.77. That the plaintiffs in error, through Brown, Brothers & Company, their house in New York, accepted, early in March, 1833, a draft of defendant in error, for $9,000, drawn against said cotton upon their said house in New York; that when this draft arrived at maturity, the said house in New York paid the same, and in order to reimburse themselves, and in pursuance of an arrangement between plaintiffs in error and defendant in error, drew upon the plaintiffs in error, at Liverpool at sixty days' sight, for �1,871, 9 p. This draft was dated May 7, 1833, was accepted by plaintiffs in error, at Liverpool, June 3, 1833, and fell due and was paid by them on 5 August following. That by the contract between the plaintiffs in error and the defendant in error, the cotton in question became pledged by the defendant in error to the plaintiffs in error to enable them to meet their acceptances and repay their advance thereon.

After shipping the cotton and drawing against it as aforesaid, the defendant in error became insolvent.

On June 3, 1833, plaintiffs in error sold said two hundred bales of cotton for �2,073 4s, 6p,, cash, September 16, 1833, being a profit of about ten percent. On the same day on which they sold this cotton, they sold six hundred and seventy-seven bales in which their Baltimore house was interested, and in a week previous had sold two hundred and sixteen bales in which their Baltimore house was also interested.

At the time of the sale of the two hundred bales of cotton, the defendant in error was indebted to plaintiffs in error in a large sum.

During the week in which the two hundred bales were sold, the sales of cotton amounted to forty-seven thousand two hundred and fifty bales, a larger amount than in any previous week for about eight years.

On April 20, 1833, the defendant in error wrote to plaintiffs in error: "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."

This letter was received by William and James Brown & Company on 23 May, 1833, and on the day following, 24 May, 1833, they wrote to Thomas McGran:

"We are in possession

Page 39 U. S. 482

of your esteemed favor of the 20th ultimo, and your wishes in respect to the cotton we now hold on your account, are noted accordingly."

On June 9 following, the plaintiffs in error wrote to defendant, annexing a circular showing the extensive business done in cotton during the week and a material improvement in prices, and informed him that, believing this advance would probably equal the expectations he had formed when he last wrote, and thinking it desirable to close his cotton in their hands, as they had then been drawn upon for the advance on it, they had taken advantage of this brisk demand to dispose of the two hundred bales at an advance of one-half to five-eights of a penny per pound upon its value when first landed.

On July 30, 1833, the defendant in error replied to the last letter, referring to his previous letter of April 20, and asked of plaintiffs in error

"Why did you sacrifice my cottons as the draft drawn by Brown, Brothers & Company, at sixty days, on account of these cottons, could not have been accepted more than a day or two before? Therefore, you had sixty days before you had any money to pay for me."

He adds:

"I do not recognize the sale, and do not consider you authorized to sell the cotton before the time the draft drawn on you by Brown, Brothers & 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 me the difference, and if it is lower, I will be prepared to pay you any balance I may owe you."

On September 4, 1833, the plaintiffs in error replied that there had been a balance due to them from defendant; that the two hundred bales were sold at an advance, and barely squared the accounts. That defendant had been obliged to stop payment, that any loss would be certain to fall on them, and profit not likely to go to him, but to his creditors. That the cotton was not sacrificed, but sold at a profit such as is not frequently realized on that article; that they sold some on account of their Baltimore house, and some immediately before, and immediately after, in which their said Baltimore house was interested. That near fifty thousand bales changed hands in the same week. That, situated as the defendant in error then was, he could not reasonably have expected them to hold the cotton without pointing out in what manner they should be indemnified in event of loss thereby. That the fact that Brown, Brothers & Company's draft was not due did not alter the case, as they had become responsible some months before, by Brown, Brothers & Company's acceptance of the draft of the shippers.

On July 22, 1833, the defendant in error wrote to plaintiffs that he had received their favor of 24 May and noted the contents. That they would please to sell the two hundred bales soon after the receipt of the letter unless they were of opinion they could do better by holding a little longer. This letter was received by the plaintiffs in error August 23, 1833.

Page 39 U. S. 483

The counsel for the defendant below, prayed the court to instruct the jury, that the matters given in evidence on the part of the defendants were sufficient, and ought to be admitted to bar the plaintiff's action, which instruction the court refused to give.

And the court further refused to instruct the jury:

1. That the advance by the house of Browns, in New York, was in effect an advance by the house in Liverpool, and after 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 large previous unsettled claim against the shipper, and the said 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.

And the court instructed the jury that it was their exclusive province to decide from the evidence in the cause, whether the defendants had advanced any money to the plaintiff on the cotton shipped by the Mary and Harriet. Whether, when the defendants sold said cotton, the plaintiff was indebted to them upon a previous unsettled claim, and whether the plaintiff had become insolvent before the sale of said cotton, and also further instructed 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 29 April, 1833, not to sell any cottons which the defendants might have on 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 recognized 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 24 May, 1833, in reply to the plaintiff's letter to them of 20 April, 1833; that then the defendants were not justifiable in law in the sale of 3 June, 1833, on account of the defendants' having on that day accepted Brown, Brothers & Company's draft for �1,871, 9p., dated 7 May, 1833, at sixty days' sight.

And the court further instructed the jury that if they found from the evidence in the cause that cottons were selling for a higher price from 3 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 ascertains 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; that then the plaintiff was entitled to recover from the defendants the difference in price between the sum for which the defendants sold the plaintiff's cotton, and the sum at which it might have been sold before or at the maturity of the draft.

The defendants in the circuit court, excepted to these instructions.

Page 39 U. S. 489

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