note within a reasonable time after it was protested, and if they
had failed to do so, whether they had not assumed the debt. He
instructed the jury, that in point of law the plaintiffs were bound
by the implied contract of their agency to give such notice. He
added, that this rule would be of easy and ready application if
the exceptions to it were matter of law and not questions of fact,
but the principle of the decisions of our Supreme Court was, that
the jury are to determine whether the defendant has suffered
damage from want of notice : That if he has sustained no damage
the plaintiffs might recover notwithstanding their default : That
it did not follow because nothing could have been recovered from
Hastings at law, that the defendant had suffered no damage :
That the jury were to determine whether anything could have
been obtained in any way, from his wife, from his friends, by
compromise, or more broadly still, whether the defendant had
been in any way damnified by the want of notice : That if the
defendant was in precisely the same situation without notice, that
he would have been in if he had received it, he had not been in-
jured by the plaintiffs' neglect, and consequently the default of
the plaintiffs in this particular was no defense to the action :
That if, as has been contended on the part of the defendant, the
plaintiffs were bound in case they omitted to give notice to pur-
251
225 SUPREME COURT [Philadelphia,
[Harvey v. Turner & Co ]
sue the course of the law against Hastings, still the question
would be whether the defendant had suffered loss : That if noth-
ing could have been recovered by a suit at law, a suit \vas un-
necessary, and if anything could have been recovered, then the
defendant had been damnified by not having received reasonable
notice of the non-payment of the note: That if tlje plaintiffs led
the defendant to believe that the note was paid at maturity, and
the defendant drew for that specific sum, or thereabouts, dis-
tinctly in consequence of a belief so produced, and the plaintiffs
accepted the draft knowing that it was so drawn, then the plain-
tiffs had assumed the debt due from Hastings, and could not re-
cover back the money.
The counsel for the defendant excepted to the charge, and the
jury having found a verdict in favour of the plaintiffs, the pres-
ent writ of error was taken out.
r*oop~i *T. Sergeant and Chauncey for the plaintiffs in error,
J argued, that the court below had erred in laying down
for the government of the jury a principle not sanctioned by au-
thority, and dangerous in its character, as respects the relation
of principal and agent, because it is calculated to deprive the
principal of the power of defending himself against the acts of
his agent. That principle was, that a jury could only give such
damages as the principal could prove he had actually sustained.
It is true that the general rule is, that an agent is responsible
only for the loss he has actually occasioned, and that it lies on
him who claims damages, to show the injury he has sustained.
But there are cases in which a more rigid rule is applied, par-
ticularly for the benefit of commerce, and to insure the fidelity
of those who must necessarily be employed to a great extent in
the business of others. If the law were- otherwise, the principal
would be entirely at the mercy of the agent, who would have it
in his power to cover negligence and fraud. That rule of law
which calls for the performance of a known and admitted duty
cannot be called hard or unjust. He \vho is visited with a pen-
alty which is the consequence of his own act or omission, has no
cause of complaint. This rule is in accordance with the princi-
ples which regulate agency, and with those of commercial law
in general. The principal commits everything to the agent, and
therefore the law holds the latter to a faithful performance of
the trust. He must pursue his instructions, and if he departs
from them the principal may either affirm or disaffirm his acts.
It is an established rule, that where so important an event has
occurred as the insolvency of a person to whom the agent has
sold the goods of his principal, notice shall be given within a
reasonable time. This rule is not difficult in its application.
252
March 14, 1833.] OF PENNSYLVANIA. 226
[Harvey v. Turner & Co.]
It may be necessary to leave to the jury the determination of
the question as to what amounts to reasonable notice, but this
Is a matter well understood and perfectly familiar. In the
case under consideration, the agents were in correspondence
with their principal from the time of the maturity and non-
payment of the note of the vendee, until the arrival of the
principal in Philadelphia, a period of more than six months,
and yet not a word is said about a matter so important to his
interests. If notice had been given and proper measures had
been taken, the whole or the greater part of the debt might per-
haps have been secured. But the conduct of the agents was
such as to lull the principal into security and make him believe
that the debt was paid. Credit for the amount was given in
account, the principal drew upon it, and nothing occurred for a
long time to countervail the credit thus given. By this conduct
the agents assumed the debt as their own, and rendered them-
selves responsible to their principal for the whole amount. There
can be no objection to the rule contended for on behalf of the
plaintiff in error, on the ground of policy, for it was always the
policy of the law, to keep agents within bounds and make them
attend to their duty. For the benefit of trade, it is necessary to
hold commercial agents by stricter rules than those by r*o97-i
*which other agents are governed. The principal can- L
not follow the course of his agent, or know what he is doing,
except from information derived from the agent himself. It is
impossible for him to show that by active measures more could
have been obtained. The proof therefore ought not to be thrown
on him. It would be to reverse settled principles, to decide that
the agent is not bound to give notice of all occurrences import-
ant to the interests of his principal, and the principal can recover
nothing but damages for the loss he can prove he has sustained
by tracing the agent through all his windings. Malyne (Con.
et Lex. Mer. 82) lays it down, that notice of sale is necessary,
and surely it is of much more importance that notice should be
given of the insolvency of the vendee. The rule for which the
plaintiff in error insists, is analogous to that which governs
many other cases arising under the commercial law. It is the
law of bills of exchange and promissory notes. An indorsement
is an engagement of guaranty, and if notice be not given within
a reasonable time of the occurrence of the event on which the
responsibility of the indorser is to arise, it is gone. This is a
severe penalty, but if it were left to a jury to determine whether
damage has accrued from want of notice, there would be neither
certainty nor safety in the law. The law imposes the penalty
on neglect of duty and presumes that injury has been the con-
sequence of it. Formerly it was held that damage from the
253
227 SUPREME COURT [Philadelphia,
[Harvey v. Turner & Co.]
laches of the holder must be proved, but it is now settled other-
wise. A case very seldom occurs in which loss is actually sus-
tained in consequence of want of notice to the indorser, and yet
the law strictly requires it. The rule as to abandonment for a
total loss is of a similar character. If the insured means to
abandon and claim for a total loss he must give early notice of
his intention. All that is asked for on the present occasion is,
that where the agent has treated the debt as his own, and cred-
ited his principal with the amount of it, he shall give reasona-
ble notice of a change of intention. It is not only for the
benefit of the principal that such rules prevail. The agent also
has the benefit of them. If an account -current be sent to the
principal and not objected to within a reasonable time, it can-
not afterwards be objected to. So if the agent exceeds his au-
thority, and informs his principal who makes no objection, he is
considered as having adopted the act of the agent. Here the
agent gives notice that the credit will become absolute in a given
time gives no notice of the insolvency of the vendee and asks no
allowance on account of his insolvency. The law regards him
as having taken the solvency upon himself. They cited Paley
on Agency, 5; Clark v. Moody, 17 Mass.' R. 145; Chitty on
Bills, 237 ; Jameson v. Swainston, 2 Camp. 546, note.
Scott, for the defendants in. error, said, that the court below
had charged directly in favour of the plaintiff in error as to the
position that it was the duty of the agent to give notice to the
principal of the insolvency of the vendee, but they added, that
r*99on if n o injury ensued *from such neglect of duty, no dam-
J ages could be recovered, which implied that if any in-
jury had been the consequence, damages might be recovered.
No authority has been produced to show the existence of such a
rule as has been contended for by the counsel for the plaintiff in
error, that where a factor neglects to give notice of the insol-
vency of the purchaser of his principal's goods, he is to be
amerced in the whole amount of the debt. Paley (on Agency,
37,) lays it down as a question depending on the circumstances
of each case, whether injury has been sustained by the principal
in consequence of the culpable neglect of the agent. Hammon
v. Cottle, 6 Serg. & Rawle, 290, sustains the principle that the
agent is not responsible for an omission of duty, where the loss
would have been the same if that duty had been performed ; and
Gibbs v. Cannon, 9 Serg. & Rawle, 199, decides the analogous
point, that on a guaranty of a promissory note, drawn and in-
dorsed by others, it is not necessary to give notice of non-pay-
ment to the guarantor where the drawer and indorser are in-
solvent when the note becomes due, their insolvency being pima
254
March 14, 1833.] OF PENNSYLVANIA. 228
[Harvey v. Turner & Co.]
facie evidence that the guarantor was not prejudiced by the
want of notice. He also cited Child v. Corpe, 1 Payne, C. C.
R. 289; Murray v. King, 5 Barn. & Aid. 165; Co. Litt. 198, a.
The opinion of the court was delivered by
ROGERS, J. This was an action of indebitatus assumpsit,
brought to recpver certain advances made by the plaintiffs to
the defendant under the following circumstances : The plaintiffs,
who reside in the city of Philadelphia, were the factors or con-
signees of the defendant, who resides in North Carolina, and by
orders of the defendant, on the 13th of November, 1822, sold
twenty-six bags of cotton, to a.certain John Hastings at a credit
of four months. The 17th of November the plaintiffs advised
the defendant of the sale, and on the 31st of December trans-
mitted their account to the defendant, debiting him with their
advances, and crediting him with the amount of sales. The
whole amount was paid to the defendant. The debt due from
Hastings was ascertained to be bad, on the 15th of March fol-
lowing, at which time Hastings' note was protested for non-
payment. Although several letters passed between the parties,
no claim is made on account of non-payment, nor is there advice
given or notice of the fact of protest, for upwards of six months
The defendant alleges that the factors were guilty of negligent-
in making sale of the cotton ; that they were negligent in giving
notice of the insolvency of Hastings, and also, in their endeav-
ours to obtain payment after the sale.
It is admitted that the first point was properly left by the
court as a fact for the decision of the jury. But the defendant
complains of the charge of the court which in effect was, that
the defendant shall repay the money advanced unless the de-
fendant can show that he had suffered damage by the negli-
gence of the plaintiff's. By the charge of the court, the onus is
thrown upon the principal, whereas *the defendant con- r^^on
tends, that the factors in giving credit, and neglecting L
to give notice of the non-payment of the note, assumed the debt
to themselves. It is a rule of law which does not admit of dis-
pute, that an agent is bound to keep his principal informed of
all material occurrences in the agency. If he fails to do so, it
is negligence and a palpable violation of duty for which the
factor is clearly liable to suit. It was, then, the duty of the
plaintiffs, to inform the defendant in a reasonable time, and
particularly after having credited him in account, of the non-
payment of the note. For this the defendant had a right of
action, but, according to the charge, he could not recover even
nominal damages, unless he could make it appear, that he had
sustained some damage by the want of notice. We cannot ac-
255
229 SUPREME COURT [Philadelphia,
[Harvey v. Turner & Co ]
cede to this view of the case, for a strict adherence to the rule,
is in our opinion necessary to insure a faithful performance of
the trust. If a factor sells, and credits the principal with
the amount of sales, of which he advises his principal, and fails
within a reasonable time to give notice that the debt is bad, he
becomes an insurer for the whole amount. And this rule is re-
quired by a due regard for the security of the principal, for
otherwise, such is the power necessarily intrusted to an agent,
that he may be guilty of any degree of negligence or of fraud
with impunity, unless the principal is able (which is frequently
impracticable) to prove special damage, and the extent of it. A
merchant in Philadelphia, makes a shipment to his factor in
London. The factor advises him of the sale of the goods at a
credit of three or six months, and at the same time credits him
with the amount of sales, in his account-current. The factor
neglects to inform him of the non-payment of the note at ma-
turity. Surely he has a right to conclude that the bills were
paid when due. He acts on this natural supposition ; carries
on his business as usual ; draws bills on the faith of the funds
which he fancies he has in the hands of his factor in London,
and is afterwards informed at the end of six or twelve months
(for there is no limit) that he has been under an entire mistake,
that although he, the factor, neglected to inform him of it, yet
the vendees of the goods were insolvent, and not one cent of
the amount has been received. If this be allowed it is obviously
a power which may be used either negligently or by design, to
the utter destruction of the principal. His whole operations
may be destroyed by the failure of the agent to perform an ad-
mitted duty, in a manner which it may be difficult if not impos-
sible to show to a court and jury. It is a beneficial principle
which visits such neglect with a strict penalty. Time is of con-
sequence to the commercial world, and it is important to them
to be regularly and early advised of all material circumstances
in relation to business intrusted to foreign factors and agents.
Nor does the rule impose any unnecessary hardship. It calls
merely for the strict performance of a well known and acknowl-
edged duty. A party who negligently or wilfully omits to do
that which the law requires, and with which it is so easy to
comply, has no right to complain. There was no other rational
r*9^m mo( ^ e f accounting *for the silence of the plaintiffs, but
I on the supposition that the money had been paid, or
that the agent had assumed the responsibility on himself. Har-
vey had a right to believe, and act under the belief, that Hast-
ings' note had been paid, or that such arrangement had been
made, as to assure the payment of the debt. In most cases of
agencies, it is true, that the measure of damages is the injury
256
Ifan5ftl4,1833.] OF PENNSYLVANIA. 230
[Harvey v. Turner & Co.]
which the principal can show he has sustained, and this has
been abundantly shown by the cases cited in the argument.
But there are cases, of which we conceive this to be one, where
it has been found wise, and indeed necessary, in the due trans-
action of commercial business, to establish rules somewhat ar-
bitrary in their nature, and partaking in some degree of strict-
ness and severity in their operation. Some of these provide for
the benefit of the agent, others for the security of the principal.
If an agent forward his accounts to his principal, who does not
in a reasonable time object to them, he thereby consents, and is
bound by them. If he transcends his authority, and the prin-
cipal fails, within a reasonable time after knowledge, to disaffirm
the transaction, he ratifies the act of the agent. If a principal
directs his agent to make insurance, and he omits to do so, the
agent becomes the insurer. When there is an abandonment the
insurer pays for a total loss. To make a drawer liable on a bill
of exchange or promissory note, it is requisite to give him due
and seasonable notice of their non-acceptance or non-payment.
These are acknowledged principles of commercial law, for
which it is needless to cite authority. So iu Malyne, 82, it is
said, " If a factor do sell unto a man certain goods of another
man's account, either by itself, or among other parcels, and this
factor giving not advice unto the owner or proprietary of the
sale of the said goods, but afterwards (having had more dealings
with that man in selling of goods and receiving of moneys) this
man becometh insolvent ; the factor is to make good that debt
for the said goods so sold, because he gave no advice to the
owner of the sale of the said goods, at convenient time, even as
if he had sold those goods unto a man contrary to the commis-
sion given uuto the man ; for the sale of factorage binds him
hereunto." Further, it has been decided, that after a loss has
happened, an agent is bound to give his principal the earliest
notice of the insolvency of the underwriters, with whom he has
effected policies of insurance on behalf of his principal, iu order
that the latter may enforce his claim, and take such steps as he
may think proper for his own security. Afailure to do so
makes the agent liable for the whole amount of the insurance.
Jameson v. Swainston, 2 Camp. 546, n. In many of their cir-
cumstances, the cases are precisely alike, and many of the re-
marks of Mansfield, C. J., are strictly applicable here. As in
Jameson v. Swainston, we are of the opinion, that after so
great a lapse of time, between the time of ascertaining the in-
solvency of Hastings, and rendering the last account, the factors,
as between themselves and the principal, must be presumed
either to have received actual payment of the note, or *to r*ooi -i
have settled with him in account. For the purpose of ^
VOL. iv. 17 257
231 SUPREME COURT [Philadelphia,
[Harvey v. Turner & Co.]
recovering from the defendant, the plaintiffs should, in a rea-
sonable time after the protest of the note, have apprised him of
the inability of Hastings to pay, whom he was naturally led to
believe by the plaintiffs, had settled with the factors. Their
silence deprived him of all opportunity through the instrumen-
tality of others, or by himself, of endeavouring to obtain pay-
ment of the note. The silence of the factors is an answer to
their demand against the principal, and they must look for
indemnity to Hastings, whom they have trusted. The steps
afterwards taken to recover the money, it is unnecessary to ex-
amine, for they cannot avail the plaintiffs, inasmuch as they have
neglected to give notice of a fact so material for the security of
the principal. It may be proper further to state, that I have
examined the testimony with care, and cannot discover that the
defendant at any time affirmed the conduct of the plaintiffs.
HUSTON, J. This case presents a single point. Harvey, who
lived in North Carolina, sent cotton, rosin, &c., to Turner & Co.,
and drew on them for the price, or received merchandise. About
once a year Harvey came to this city, and a settlement of the
previous year took place.
In the autumn of 1822, he sent some cotton to Turner & Co.,
who sold it to J. Hastings at four months, and took his note to
J. Harvey, and informed Harvey of this.
Before the note fell due, J. Hastings was unable to pay.
Turner & Co. pressed him much ; obtained a mortgage on his
property and his wife's estate, and then a bond and warrant to
confess judgment, and entered judgment in Delaware county,
where Hastings lived.
Harvey came to this place in August or September, 1823, and
received an account-current from Turner & Co., by which he was
indebted to them about one thousand dollars. To this, for some
time, he made no objection. In it he had no credit for the
amount of Hastings' bond and judgment, which, as well as the
previous note, were in the name of J. Harvey. After some
time, Turner & Co. brought suit. The defence was, that from
their conduct they were liable to J. Harvey for the price of the
cotton sold to Hastings.
The judge left it to the jury to ascertain whether, as Hastings
was unknown to Turner & Co., they made the proper inquiries,
and received such answers as to his character and standing, as
justified them in selling to him on credit, and the jury found for
the plaintiffs on this point. There was an allegation of negli-
gence against the plaintiffs, in not informing Harvey that Hast-
ings' note was not paid at maturity, and that he was likely to
fail ; or, in fact, was hopelessly insolvent. And the court told
258
March U, ISM.] OF PENNSYLVANIA. 231
[Harvey v. Turner & Co.]
the jury, that if from this neglect of information Harvey sup-
posed the note was paid at maturity, and on that supposition
drew for the amount, or thereabouts, distinctly on this sup-
position, and the plaintiffs accepted the draft, knowing it
*was so drawn, they made the debt their own, and could r*oQoi
not recover. The jury on this point also found for the "-
plaintiffs.
The court also told the jury, that it was the duty of the plain-
tiffs to inform Harvey promptly, that the note was not paid at
maturity, and was in danger of being lost, and for not giving
such information the plaintiffs might be liable. And further,
that it was the duty of the plaintiffs to commence suit against
Hastings if the note was not paid, and no orders were received
from Harvey, and for not doing this, the plaintiffs might be
liable ; but that if the jury found from the evidence, that Harvey
sustained no loss from want of notice, or from no suit being
commenced (as a mortgage and judgment were obtained, in less
time than they would have been had by adverse suit), that the
plaintiffs were not liable. The court put it strongly to the jury,
that if Harvey by coming on could have used any means not
resorted to by Turner & Co., could, from Hastings or his friends,
by suit or compromise, have recovered the debt or part of it, in
short, if Harvey was in any way damnified, by want of notice,
the plaintiffs were liable ; but if, from the evidence, everything
was done by Turner & Co. which could have been done, if
Harvey is as. well off as he could have been if he had received
notice, then he has not been injured by want of notice, and must
bear the loss. Here the jury found for the plaintiffs, and the
only error assigned is, that the court erred on this last point,
and ought to have instructed the jury, that for neglecting to
give notice of non-payment of the note, Turner & Co. were
absolutely bound to make it good to Harvey. Although this
was the only point which arose in this cause, in which error is
assigned, yet much was said on the other points ; and perhaps
if on those points the jury had found differently, it would have
been as satisfactory to the judge who tried the cause ; but as he
did not grant a new tria ; we cannot legally even take that mat-
ter into consideration. The counsel for the plaintiffs have not
cited any authority to show that the judge charged contrary to
law. For although an old writer, Malyne, was cited to prove
that a factor or agent ought to keep his principal informed of
the state of his business, yet neither that author, nor any other
cited, or which I have seen, states the broad position, that
neglect to write or give information of every occurrence, of
itself and without other proof, will make a factor liable in every
case, and to any amount. The case cited" from 17 Mass. Rep.