Brander v. Phillips
Annotate this Case
41 U.S. 121 (1842)
U.S. Supreme Court
Brander v. Phillips, 41 U.S. 16 Pet. 121 121 (1842)
Brander v. Phillips
41 U.S. (16 Pet.) 121
B. & M'K., merchants at New Orleans, were the factors of P. & Company of Huntsville, Alabama, and made advances on cotton shipped to them. In August, 1834, P. & Company were indebted to B. & M'K. one thousand three hundred and fifteen dollars, and Williams, the agent of B. & M'K., agreed with P. & Company, that B. & M'K. would advance eight thousand dollars on bills to be drawn between 20 April and 31 July, 1835, by P. & Company and any two of six persons named, among whom were Horton & Terry, two of the defendants in this suit. Before July 31, 1835, several shipments of cotton were made to B. & M'K., by P. & Company, and several bills were drawn by them jointly with Horton & Terry, and by others without them, all of which were accepted by B. & M'K. These bills, with the advances before made, amounted to twenty-nine thousand seven hundred and ninety-five dollars, and the proceeds of the shipments were twenty-two thousand four hundred and sixty dollars. B. & M'K. applied these proceeds to the liquidation of the bills drawn by P. & Company, to the exclusion of those drawn by them jointly with Horton & Terry, and as these bills exceeded the proceeds of the cotton, they brought an action on a bill drawn June 4, 1835, by P. & Company and Horton & Terry, amounting to three thousand dollars. The circuit court instructed the jury that if they believed from the evidence that at the maturity of the bill, B. & M'K. had sufficient funds of P. & Company to pay the bill, and Horton & Terry to be accommodation drawers, and securities only, then, in the absence of any instructions from P. & Company in regard to the application of the funds, B. & M'K. were bound to apply them to pay the bill, and could not hold them to pay a bill drawn on them by P. & Company only, which had been accepted by them, and was not then due. Held that the instructions of the circuit court were correct.
When a factor makes advances, or incurs liability on a consignment of goods, if there be no special agreement, he may sell the property in the exercise of a sound discretion, according to general usage, and reimburse himself out of the proceeds of the sale, and the consignor has no right to interfere. The lien of the factor for advances and liabilities incurred extends not only to the property consigned, but, when sold, to the proceeds in the hands of the vendee, and the securities therefor in the hands of the factor.
The acceptors of the bill of exchange having, when the bill became due, funds of the drawers in their hands sufficient to pay the same, the liability of the accommodation drawers was as completely discharged on the payment of the bill as that of the principals.
The case, as stated in the opinion of the Court, was as follows:
Brander & McKenna, in 1833, 1834, 1835, were commission merchants at New Orleans, and acted as factors and agents for William E. Phillips & Company, of Huntsville, Alabama, in the sale of cotton, and made advances thereon. On all sales they were to receive two and a half percent for commission, and the same amount for advances. In August 1834, Phillips & Company were indebted to Brander & McKenna in the sum of $1,315.57 for advances. On the 15th of the same month, John Williams, agent for Brander & McKenna, agreed to advance Phillips & Company the sum of $8,000, on bills to be drawn between 20 April and 31 July 1835 by the them and any two of six persons named, among whom were R. Horton and N. Terry, two of the defendants in error. Between 15 August, 1834 and 31 July, 1835, several shipments of cotton were made to the plaintiffs by the defendants, and several bills were drawn by them, some jointly with Horton & Terry and others, without them, all of which were accepted by the plaintiffs. These bills, including the advances previously made, amounted to the sum of $29,795.65. The proceeds of the shipments of cotton to meet these advances amounted to the sum of $22,460.43. The plaintiffs applied the proceeds of the cotton to the liquidation of the bills drawn by Phillips & Company, to the exclusion of those drawn by them jointly with Horton & Terry, and as the acceptances exceeded the proceeds of the cotton, this action was commenced on a bill due 4 June 1835, for $3,000 drawn, by the defendants.
On the trial, the court instructed the jury that if they believed from the evidence that at the maturity of this bill, Brander & McKenna had sufficient funds of Phillips & Company in their hands to pay it, and believed Horton & Terry to be accommodation
drawers and sureties only, and knew this at the maturity of this bill, then, in the absence of any instructions from Phillips & Company in regard to the application of the funds, Brander & McKenna were bound to apply them to pay this bill, and could not hold them to meet the payment of a bill drawn on them by Phillips & Company, which had been accepted, but was not then due. And that if, when this bill became due, the funds of Phillips & Company in the hands of the acceptors were sufficient to pay it, the bill was extinguished and recovery could not be had on it. To this instruction, an exception was taken, and the jury having given a verdict for the defendants, the plaintiffs prosecuted this writ of error.
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