Whenever, by express agreement of the parties, a sub-agent is to
be employed by an agent to receive money for the principal, or
where an authority to do so may fairly be implied from the usual
course of trade, or the nature of the transaction; the principal
may treat the sub-agent as his agent, and when he has received the
money, may recover it in an action for money had and received.
If, in such case, the sub-agent has made no advances and given
no new credit to the anent on account of the remittance of the
bill, the sub-agent cannot protect himself against such an action
by passing the amount of the bill to the general credit of the
agent, although the agent may be his debtor.
The record, being very short, it will be inserted entire.
"This was an action of assumpsit brought in this Court by the
plaintiffs, to recover from the defendant the sum of eight hundred
dollars and interest, being the amount of a draft or bill of
exchange drawn by one Henry B. Holcombe, of Augusta, in the State
of Georgia, upon one Charles F. Mills, of Savannah, in said state,
and accepted by him, and paid to the defendant. The declaration
contained two counts. The first was for money collected and
received by the defendant to and for the use of the plaintiffs,
upon the particular bill of exchange set out and described in the
declaration; the second count was generally for money had and
received. The plea of nonassumpsit was pleaded by the defendant in
bar of the action, 'it being proved that the draft or bill of
exchange upon which the money was collected and received by the
defendant was the property of the plaintiffs;' that it had been by
them placed in the hands of their agent, David W. St. John, at
Augusta, Georgia, for
Page 44 U. S. 764
collection, and by him, St. John, forwarded to the defendant,
St. John's agent, at Savannah, Georgia, for acceptance and
collection; that it was accepted and paid to the defendant, by whom
the proceeds were received and credited to the account of St. John,
from whom the defendant received the draft or bill for collection,
and who was indebted to the defendant at the time. That at the time
the said bill was so paid to the defendant, and by him credited to
the account of St. John, he, St. John, had failed in business, and
had departed this life; that he failed, and had not recovered his
affairs at the time of his death, and was insolvent; that the
credit for the amount of the bill, carried by the defendant to St.
John's account, was made in payment of a previously existing debt
due by St. John to the defendant, no new transaction having arisen
between the defendant and St. John after the payment of the said
bill to the defendant;"
"that to secure the payment of his debt to the defendant, St.
John had transferred to the defendant three hundred shares of the
capital stock of the Augusta Insurance and Banking Company, upon
which $100 per share had been paid; that the defendant appeared
satisfied with this security, and that St. John would then have
given additional security had the defendant required it."
That the draft or bill of exchange was made payable to the order
of Henry B. Holcombe, the drawer, and by him endorsed in blank, and
endorsed by St. John to H. Smith, Esq. (the defendant), or order.
That when the draft was sent to the defendant for collection he was
not apprised to whom it belonged, nor were any instructions or
directions given to him as to the disposition of the money when
collected.
"The following point was presented, during the progress of the
trial, for the opinion of the judges, on which the judges were
opposed in opinion,
viz., whether there was such privity
of contract between the plaintiffs and defendant, either express or
implied, as would enable the plaintiffs to maintain the action for
money had and received."
"Which said point, upon which the disagreement has happened, is
stated above, under the direction of the judges of the said court,
at the request of the counsel for the parties in the cause, and
ordered to be certified into the Supreme Court of the United States
at the next session, pursuant to the act of Congress in such case
made and provided. "
Page 44 U. S. 769
MR. CHIEF JUSTICE TANEY delivered the opinion of the Court.
We think the question certified has been settled by the decision
of this Court, and that it is unnecessary to go into an examination
of the English laws which were cited in the argument. It is
admitted that the bill was the property of the plaintiff, and was
transmitted to St. John, at Augusta, for collection, and by him
transmitted to the defendant, at Savannah, where the drawer
resided, and that no consideration was paid for the bill, either by
the defendant or St. John. According to the usual course of dealing
among merchants, the transmission of the paper to St. John gave him
an implied authority to send it for collection to a sub-agent at
Savannah, for it could not have been expected by the plaintiff that
St. John was to go there in person, either to procure the
acceptance of the bill, or to receive the money, nor could St. John
have so understood it. So far, therefore, as the question of
privity is concerned, the case before us is precisely the same with
that of
Bank of the Metropolis v. New
England Bank, 1 How. 234. In that case, the bills
upon which the money had been received by the plaintiff in error
were the property of the New England Bank, and had been placed by
it in the hands of the Commonwealth Bank for collection, and were
transmitted by the last mentioned bank to the Bank of the
Metropolis, in Washington, where the bills were payable. And upon
referring to the case, it will be seen that the court entertained
no doubt of the right of the New England Bank to maintain the
action
Page 44 U. S. 770
for money had and received, against the Bank of the Metropolis,
and the difficulty in the way of its recovery in the action was not
a want of privity, but arose from the right of the Bank of the
Metropolis to retain, under the circumstances stated in the case,
for its general balance against the Commonwealth Bank. In that
case, as in the present, the agent transmitting the paper appeared,
by the endorsements upon it, to be the real owner, and the party to
whom it was transmitted had no notice to the contrary, and the
money received was credited to the Commonwealth Bank. We think the
rule very clearly established, that whenever, by express agreement
between the parties, a sub-agent is to be employed by the agent to
receive money for the principal, or where an authority to do so may
fairly be implied from the usual course of trade, or the nature of
the transaction, the principal may treat the sub-agent as his
agent, and when he has received the money, may recover it in an
action for money had and received.
Another question has been raised in the argument -- that is
whether the defendant has a right to retain on account of the money
due to him from St. John? As this point has not been certified, it
is not regularly before the court, yet as it has been fully argued
on both sides, and evidently arises in the case, it seems proper to
express our opinion upon it, as it may save the parties from
further litigation and expense.
Upon this part of the case, as well as upon the question
certified, we think the case of
Bank of the Metropolis v. New
England Bank, decisive against the defendant. It appears from
the statement that he made no advances, and gave no new credit to
St. John on account of this bill. He merely passed it to his credit
in account. Now if St. John had owed him nothing, upon the
principles we have already stated, the plaintiff would be entitled
to recover the money, and we see no reason why he should be barred
of his action because St. John was debtor to the defendant, since
the case shows that he incurred no new responsibility upon the
faith of this bill, and his transactions with St. John remained in
all respects the same as they would have been if this bill had
never been transmitted to him. In the case of the Bank of the
Metropolis and the New England Bank, it appeared in evidence that
there had for a long time been mutual dealings between these two
banks, in the collection of money for each other, and that balances
were suffered to remain and credit given upon the faith of the
paper transmitted or expected to be received, according to the
usual course of their business with one another. And the court held
that if credit had been so given, the party giving it had the same
right to retain as if he had made an advance of money; the hazard
he ran by the extension of the credit giving him as just and
equitable a right to retain, as if he had incurred responsibility
by an advance of money. The right to retain, in that case, depended
upon the fact that credit was given. But in
Page 44 U. S. 771
the case at bar this fact is expressly negatived, and there is
no ground, therefore, upon which he can retain, according to the
principles decided in the case referred to.
As this point, however, is not in strictness regularly before
this Court, we shall confine our answer to the question sent here
for decision, and shall direct it to be certified to the circuit
court, that there was such a privity of contract between the
plaintiffs and defendant as would enable the former to maintain the
action for money had and received.
