Milbank et al. v. Dennistoun et al.

Milbank et al. v. Dennistoun et al. Responsibility of Factors.—Discretionary Orders. A factor is only chargeable, in the absence of specific instructions, with good faith and proper diligence and skill in the sale of the merchandise intrusted to him; under instructions giving him a discretion as to the time of sale, he is not liable for an error in judgment, though a loss ensue. The burden of showing a breach of instructions, in such case, resting upon the plaintiff, it is error, to submit the question to the jury, where there is no contradictory evidence on the subject. Milbank Dennistoun, 1 Bos. 346, reversed. Appeal from the Superior Court of the city of New York, where a judgment entered in favor of the plaintiffs upon a verdict for $7829.62, had been affirmed. (Reported below, 1 Bos. 246.) This was an action brought by Milbank & Co., merchants at New York, against Dennistoun & Co., then-factors at Liverpool, to recover damages for selling, as was alleged, contrary to the plaintiffs’ instructions, and without due care, a cargo of flour, consigned to the defendants by the ship Nicholas Biddle, shortly before a sudden and great rise in the price of the article. On the trial, it appeared, that the plaintiffs, who had a branch house at New Orleans, on the 25th of June 1846, wrote to the defendants, who had a branch at New York, announcing two shipments of flour; one of 5000 barrels, by the ship Nicholas Biddle, and 3000 barrels by the Georgiana, both then on their voyage from New Orleans to Liverpool. Referring to arrangements intended by them with the defendants’ New York house, the plaintiffs wrote:—“You will please make no disposition of the flour, until we give you our wishes per Caledonia, unless 22s. in bond is attainable; in which case, if, in your judgment, you deem it our interest to accept, that figure, please do so. Our R. W. Milbank designs visiting your city soon, and we trust our correspondence may be extended.” The plaintiff's obtained from the defendants’ house in New York, an advance of $2.25 per barrel on the flour, on indorsing to them the bills of lading/ i *The Caledonia, which sailed soon afterwards, took out another letter from the plaintiffs to the defendants, dated the 27th of June; in which, inclosing invoices of the two shipments, and alluding to the good quality and condition of the flour, the plaintiffs said:—“We fear, the first introduction for consumption may tend to continue low prices, as tliey will probably be large, immediately on the passage of the new bill. Believing that after the stocks now in bond shall have been reduced by consumption, &c., an improvement may ensue, we would express our desire that these parcels may be withheld from the market, until the operation of the Corn Law shall have produced its results. We hope, we may not err, in assuming its passage. Though, if 22s. in bond is attainable, on arrival, and you think our interest dictates such sale, please so dispose of it. Our R. W. Milbank designs visiting your city, by steamer of the 16tli July, and will confer with you. ” This letter referred to a bill which had been introduced into Parliament, greatly reducing the duties on breadstuff's imported into the .United Kingdom, which received the royal assent on the 27th June, and went into effect on the 30th of the same month. R. W. Milbank was detained until the middle of August, and did not reach Liverpool, until the 4th of September, after the sale of the cargo of the Nicholas Biddle. flefenckmte, on the 18th of July, acknowledged the receipt of the plaintiffs’ letters, and that the Nicholas Biddle, with 5000 barrels, had arrived, and said: “You seem to think, that 22s. per barrel should be taken for it in bond; but this is 25s. free, at present,, and this figure is not obtainable for New Orleans flour.. If of good quality, and sweet, 24s. might be obtained. In ten days, we hope to get a sample, and have it valued • but as we have little expectation of getting an offer at tlioprice you allude to, we shall likely store the flour, and await the arrival of Mr. R W. Milbank, with whom we can confer as to the future proceedings.” On the 3d of' August, the defendants notified the plaintiffs of the arrival of the Georgiana, with the 3000 barrels, and proceed- - ed:—“We much fear that this shipment, as well as that per Nicholas Biddle, will disappoint you; as, in common: with almost all the flour from the Gulf, this year, if not sour, it will only bring the price of sour. Our market has. been at a stand for some days; but as the last two or three ■ days have been unsettled, there may probably be some-activity to-morrow.” Accompanying this" letter Avas. a circular, in Avhich, after stating the dullness of the grain market, the commencement and favorable appearance of' the harvest in England, they say, that “ Indian corn had risen in price, in consequence of very alarming accounts ■ of a blight of the potatoe .crop in Ireland.” The cargo of the Nicholas Biddle was put in charge of' a broker at Liverpool, on the 21st July; the ship began: discharging on the 27th, and the flour Avas put in store.. On the 4th, 5th and 7th of August, the entire cargo was sold at 21s. per barrel, duty paid. On the 18th of August, the defendants announced the sale, but stated that, in ' consequence of a rise in the market, OA\dng to the harvest in England turning out badly, and the continued information, both from England and Ireland, of the blight of the potatoe, they regretted the sale, and should hold the Georgiana’» cargo, Avhich they hoped Avould make up the-deficiency. "The plaintiffs, on receiving neAVS of the sale, repudiated it, and complained that their orders had not been conformed to. Previously, however, on the 31st of July, the plaintiffs had Avritten to the de~ fendants:—“We suppose, that, ere this, the crop of wheat has been ascertained as to its probable yield, and the grain and flour conformed to such results; we, therefore, ask you to exercise your discretion in effecting sales for us.” This letter was received about the 12th of August, during’ an excitement produced by bad weather and the potatoe blight. *Tlie cargo of the Georgiana was proved to be same condition and of the same quality as that of the Nicholas Biddle; it was kept in store until the end of September, and then, and in October, was sold at 29s., and 29s. 6d. per barrel. The witnesses all expressed the opinion, that the improvement in the flour market, after the middle of August, was not owing to the passage of the new corn law, but was principally attributable to the potatoe blight, and in some measure, to the bad weather, and an unusual foreign demand for bread-stuffs. ' The b.ad weather was only temporary—the English wheat harvest eventually proving good. The defendants moved for a nonsuit, which was denied, and an exception taken. *The learned judge, Bosworth, J., submitted to the jury the question whether the defendants had violated their instructions, or had been guilty of negligence in making the sale, and instructed them, as to .the measure of damages, in case they should find a verdict for the plaintiff. He also submitted to, them the two following interrogatories to be answered in their verdict: 1. Did the defendants sell the 5000 barrels of flour, before the stock of grain in bond, at the time referred to in the letter of the 27th of June, had been introduced into the'market, and had been reduced by consumption? Did the defendants, in selling the flour, at the time they did, fail to exercise that care and diligence which prudent consignees, having the information the defendants then had, and acting ■ on their own account, would exercise? The defendants excepted to such portions of the charge as were adverse to them. The jury answered the questions submitted to them in the affirmative, and found a general verdict for the plaintiffs for $7829.62. The defendants moved for a new trial, on the ground, among others, that the verdict was against evidence; and their motion having been denied, and judgment entered upon the verdict, they appealed from the order denying a new trial, and from the judgment. The judgment was affirmed at general term, and the defendants thereupon appealed to this court. Gutting, for the appellants. Brady, for the respondents. On a former trial of the case, in October 1849, before Sandford, J., the plaintiffs had a verdict for §11,136.37. See 1 U. S. Law Mag. 24. [MAJORITY — Denio, J.] Denio, J. The case turns very much upon what is to be considered the true meaning of the letter of June 27th, 1846. In that letter, the defendants expressed their desire that the cargo of flour in question should be withheld from the market, until the operation of the new corn law should have produced its results. The direct effect of the law was greatly to reduce the duty upon wheat and flour imported into the United Kingdom; its operation upon the owners of flour then lying in bond at the British ports, and of such as should thereafter arrive, would be, to give them a more advantageous competition with the holders of domestic flour, by the amount of reduction of’the duty. If they sold their flour, free of duty, or, in other words, if they paid the duty themselves, they could sell at a smaller nominal price, in consequence of the reduction of the duties, and yet realize larger profits on the sales. The price of domestic flour, must always be a material element in determining the market of the imported article, as the two classes of produce immediately come into competition in the English markets. The revenue duties may be looked upon as parcel of the expenses of the foreign shipper of flour, and are of the same character, so far as this question is concerned, as freight or insurance. It is for his interest to have them fixed at the lowest rate; hence, the plaintiffs regarded the new law for the *reduction of the duties as a marked advantage in their favor, which they were desirous of realizing the benefit of. But they saw also, what was sufficiently obvious, that this advantage might be neutralized, at least, if not more than balanced, by the great accumulation of imported flour remaining in bond and awaiting the new parliamentary measure, which, in the event of its passage, would be released at the anticipated low duties, and thrown upon the market in competition with their own flour, taken out by the Nicholas Biddle, and producing what is termed a glut in the market. The object of the instructions of the 27th June plainly was, to guard against that state of things. The plaintiffs said to the defendants, in effect, we desire to have the benefit of the new law, which we trust will pass, but we fear that if our flour is sold, when the first introductions for consumption take place, immediately upon the passage of the bill, we shall lose the advantage. We desire, therefore, that it may be withheld from the market, until the operation of the new law shall have produced its results; in other words, we wish to have the benefit of the new law, unqualified by the consequences of the glut in the market which we foresee will take place immediately after its passage. But there were other circumstances, which it was foreseen would enter into the state of the market, the most material of which was the approaching, harvest in the United Kingdom, which must always have a material influence upon the price of breadstuffs in the market of that country; as, it is well known, it has, for the same reasons, in the markets of countries which export grain. The plaintiffs, therefore, did not direct the defendants to withhold their flour from market for any definite period, which, if they had done, the defendants must have obeyed the direction at their peril, nor did they require that it should be kept' out of market, until any particular amount of diminution of the stock released from bond should have been realized; but they chose to express their desire in very general terms. They wished their flour to be held, until the operation of the new law should have produced its results. This, of course, cast upon the defendants the duty of determining, under all the *circumstances bearing upon the question, when the period referred to should arrive. This would not depend wholly upon the degree to "which the old stock of imported flour should have been reduced, but also upon the prospects of the domestic crop. It was, no doubt, implied, that the flour was not to be sold, until the stock of imported flour existing when the law should pass should have been materially reduced by consumption, though the direction is not to that effect in terms. It is recited as the belief of the defendants, that a reduction would cause an improvement in the market, as it obviously would, if not met by counteracting circumstances. We are to determine, therefore, whether, upon the construction which has been given to the letter, the defendants departed from the instructions contained in it, by selling the flour on the 4th August, supposing it had all been sold on that day. The act took effect as a law, June 30th, and immediately all the flour then in bond was released by the payment of the reduced duties; and that subsequently arriving was entered and the' duties at once paid. The holders immediately became free, sellers; the demand from consumers was large, and was freely met; the sales Avere for consumption, not on speculation; they were, therefore, the kind of sales Avhieli Avere referred to in the plaintiffs’ instructions. They operated to reduce the stock in bond at the time the act passed; but the evidence does not furnish the means of ascertaining positively the amount of such reduction, or Iioav far it Avas balanced by fresh importations; though it appears that the quantity on hand continued to-he large. While this state of things aams going on, the plaintiffs’ letter Avas received on the 12th of July, and about a week aftenvards, on the 18th, the vessel A\dth the flour arrived. It should be remembered, that when the letter Avas written, it was not known in Nbav York that the act had passed; in fact, it received the sanction of Parliament, on the same day on which the letter Avas dated. The letter looked to the- passage of the act, and not to the arrival of the flour, as the time when the reduction referred to would commence. So far as the plaintiffs kneAv, it might not become a laAv until after the flour should have arr*vet^ > ^indeed, they Avere not certain that it Avould become a" laAv at any time. What they chose to forbid (if the letter is to be looked upon as peremptory) was, that their flour should he throAvn upon the market in competition Avith the mass which Avould be on sale immediately upon the passage of the act. Noav, the .sale of the first parcel of the flour Avas made five weeks after that point of time, during all of Avhieli interval, sales Avere Avere being constantly made for consumption. In the opinion'of the superior court at general term, the letter is construed as though the defendants were forbidden to sell, until the stock of flour should he reduced by consumption, after the arrival of the Nicholas Biddle; and it is reasoned, that as it was sold, soon after that time, it Avas not Avithheld from market for any period; the charge, I think, contains the same idea as to the construction of tlxe letter. Brit, upon that construction, the defendants would be obliged to withhold the flour from market, though, when it arrived, the effect of the law had been fully ascertained. The meaning of the letter plainly is, that the plaintiffs did not wish the flour sold, during the existence of the glut which, it was anticipated would prevail upon 'the passage of the act. In my opinion, the defendants were not, ón the 4th of August, restrained from selling the flour by the instructions contained in the plaintiffs’ letter. The market had been working for five weeks, under the influence of the law; the letter had fixed no period for the continuance of the experiment, and the defendants were left to determine whether the time had arrived, when it would be for the plaintiffs’ intetest to have the property disposed of, in the view of all the circumstances of the case. They were, nevertheless, bound to the exercise of good faith and of the prudence and skill which agents to whom the property of others is intrusted are always obliged to employ; and that was the extent of their obligation. That this view is correct, is apparent from the plaintiffs’ own letter of July 31st. This was written, it will be remembered four days before the first parcel of flour was sold. In that communication, the plaintiffs say: “We suppose, that ere this the crop-of wheat has been ascertained as to its probable yield, '""and the grain and flour conformed to such result; we, therefore, ask you to exercise your discretion in effecting sales for us.” As this letter was not received, until after the last sales of flour, it cannot be used to. dispense with any instructions binding upon the defendants when the sales were made; but it affords evidence that the plaintiffs considered that the result, of the English harvest was a material element in determining when the market would have attained the equilibrium, which it was supposed would be temporarily disturbed by the large entries for consumption immediately upon the passage of the act. This was precisely the view which the defendants appear to have taken of the case, when they made the sales. The grain circular of the 3d of August, which the plaintiffs gave in evidence, described the harvest as progressing favorably, and the weather as remarkably fine. Then, it was proved affirmatively, on the part of the defendants, that no improvement in the price of flour resulted from the passage of the corn law, at any time during the year 1846. Upon the question whether the defendants had violated their instructions, the burden of proof was upon the plaintiffs. All the material testimony bearing upon the subject was produced by them; there was no question of credibility to be determined by the jury, for the evidence was not in any respect contradictory. Thinking, as I do, that there was no evidence tending to show that the defendants sold the plaintiffs’ flour, prior to the time when the operation of the new corn law had produced its results, so far as those results affected the price of flour, I think, the judge erred in submitting it to the jury to deter-' mine whether there had been a breach of instructions. Upon the second question, whether, laying out of view the alleged instructions, there was evidence upon which the defendants could be charged with a breach of duty in selling the flour at the time they did, and for the price which was obtained, I think, there was an equal defect in the evidence. In the first place, it was proved, that all the large holders of flour were freely selling at the price which then prevailed, and that the defendants themselves were am0no the sellers. On the 6th of ^August, they sold three thousand barrels of their own flour, at a less price than that which they obtained for the plaintiffs’. It was shown, that all the indications were in favor of an abundant domestic harvest, and that no immediate improvement in prices was looked for among the dealers in breadstuff’s in that market; the prices obtained were the market prices prevailing at the time of the sales, and for some time afterwards. The plaintiffs’ flour' was a damaged article, and liable to further depreciation, if kept on hand. The subsequent extraordinary rise was owing to causes wholly exceptional in their character, which were not so far developed, when the sales took place, as at all to influence the market, and could not have been anticipated with any degree of sagacity. In looking at the case, after the event, we can see that, if the defendants had refrained from selling, the adventure would have resulted quite differently as regards the plaintiffs; they would have realized large gains, instead of having suffered a loss, but it would not have been owing in any degree to the corn law. It seems plain to me, that there was not the slightest reason, on the evidence, to impute blame to the defendants, and that there was nothing for the jury to deliberate upon. If these views prevail with my brethren, the judgment must be reversed and a new trial ordered. Judgment reversed, and new trial ordered. Though a principal express a wish to have a certain thing done, yet, if the matter be left to the discretion of the factor, it is not a breach of orders, to disregard it. Harper v. Kean, 11 S. & R 280. See Geyer v. Decker, 1 Yeates 486. On a subsequent trial, with some additional evidence, which, however, did not materially vary the facts, the court" ordered a nonsuit, in accordance with this opinion, which was affirmed at general term. 10 Bos. 382.