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of the rubber company deducted from the amount of merchan-
dise in the hands of the complainants the amount ^^^ of said ad-
Tances thereon, and treated the balance, with other personal es-
tate of the rubber company, as the aggregate amount of its per-
sonal assets, the complainants further asserting, and the defend-
ants for the purpose of this hearing admitting, that mode to be
the usual mode pursued by the officers of said company and the
mode usually pursued by corporations in said state of Rhode Is-
land.

"Said allegations of the respondents in the answer as to said
returns, however made up, are not deemed material by the com-
plainants, and it is understood that said allegations as set forth
in said answer, and said assertions and explanations made by said
complainants, as hereinabove set forth, are admitted by the par-
ties hereto only for the purpose of this hearing, and for no other
purpose, and without prejudice to proving to the contrary in the
later stages of this case if material.

"And all further questions, including the state of accounts
between parties, shall be reserved until the above questions of
law have been heard and determined.**

The agreement above referred to is as follows:



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774 Baldbbston v. National Rubber Co. [R. L

'Memorandum of an agreement between the National Rubber
Co., and Balderston & Daggett, made this eecond day of April,
A. D. eighteen hundred and eighty-four.

'Tirsfc. * The National Rubber Company are to consign all
their production of boots and shoes to Balderston & Daggett for
sale and returns, with the following exceptions: 1. Said National
Rubber Co. are to have the liberty to sell or consign goods to
foreign countries, except to the British proyinces of North
America. 2. They are to haye the liberty to retail boots and
shoes from their factory at Bristol.

^'Second. The National Rubber Co. are to pay Balderston &
Daggett fiye per cent upon the net amount of their sales as a
commission and guaranty, and also interest upon any sums which
they may owe them, at the rate of six per cent per annum, or
such other rate as may, from time to time, in writing be agreed
upon to be a fair rate, taking the market yalue of money into
consideration.

''Third. The National Rubber Co. agree to deliyer the goods
■** at the warehouse of Balderston & Daggett in Boston, or in
New York (if it is agreed that a branch shall be established there),
free of expense to Balderston & Daggett.

*Tourth. Balderston & Daggett agree to receiye on consign-
ment the production of the National Rubber Co. in boots and
shoes, as contemplated in the first article, and to use their best
exertion to sell the same to the best advantage and to account to
the National Rubber Co. for the same at the price that thej
shall obtain for them, and to charge as commission and guaranty
five per cent, and from time to time to advise what kinds and
styles of goods are necessary to be made in order to have the stock
well assorted.

*Tifth. Balderston & Daggett agree to advance to tiie Na-
tional Rubber Co. at least fifty thousand dollars per month, upon
the basis of eighty per cent of the market value of the boots and
shoes consigned by them to Balderston & Daggett at the rate of
interest hereinbefore named.

"Sixth. It is understood that such goods as are usually sold as
clothing and placed on the clothing list, as for instance lumber-
men's pants with boots, and TSaptismal pants,' are not consigned
exclusively to Balderston & Daggett.

"Seventh. This agreement is to continue in force for the term
of five years from the first day of April, 1884, unless sooner ter-
minated by the dissolution of the firm of Balderston & Daggett,
or by the long continued incapability of both of said general



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July, 1893.] Baldbbston v. National Rubber Co. 776

partners to attend to the business thereof. It is also proyided
that this contract shall terminate on the first day of April or
first day of October^ whicheyer shall first occur next after the
death of either general partner in said firm, whether said firm
be then dissolved or not.

'Eighth. The prices for which the boots and shoes consigned
to Balderston & Daggett by the National Bubber Go. are to be
sold are to be fixed by the National Bubber Co.^ from time to time,
upon consultation with Balderston & Daggett, and having due
regard to the prices at which other leading manufacturers are
selling their boots and shoes of equal quality.

'^n witness whereof the parties hereto have set their hands
Ml und affixed their seals the day and year first herein men-
tioned.

NATIONAL BUBBER CO., [L. 8.]

A. 0. Bourn, ^ A committee appointed
Nahum Chapin, ( for the purpose of making
By Thos. G. Carson, ) this agreement

BALDERSTON ft DAGGETT. [L. S.]''

The first question which logically presents itself for our con-
sideration under the stipulation of the parties to the suit is this,
viz: What was the legal effect of the memorandum agreement
above recited? In order to intelligently determine this question
it will be useful to inquire: 1. What sort of an agreement it was;
2. What were the objects sought to be accomplished thereby;
and 3. What were the respective rights of the parties there-
under.

L What sort of an agreement was it? It was an agreement
to sell goods for the defendant corporation, under a del credere
commission.

2. What were the objects sought to be accomplished thereby?
On the part of the defendant corporation they evidently were:
1. To secure a reliable market for its goods; and 2. To provide
for a definite and steady income therefrom by way of advances
thereon, to enable it to successfully carry on its operations and
meet its current expenses; while on the part of the plaintiffs the
object evidently was to secure the control and sale of the defend-
ant's product, and thereby obtain the commissions agreed upon.

3. What were the respective rights of the parties thereunder?
The plaintiffs were entitled on the one hand: 1. To have con-
signed to them the entire product of said corporation, with certain
specified exceptions, with the right to sell and diapose of the



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776 Baldbrbton v. National Rubbsb Oa [R. L

tame at the prices to be fixed^ from time to time, hj tliB add
corporation upon consiiltation with the plaintiffs, and to receiTe
therefor a commission of five per cent on the net amount of suck
sales; and 2. To receive interest on any sums which the said cor-
poration might owe *** them, at the rate of six per cent per an-
num, or such other rate as might from time to time be agreed
upon.

The said corporation, on the other hand, was entitled to re-
ceive from the plaintiffs, by way of advances, at least fifty thou-
sand dollars per month, upon the basis of eighty per cent of the
market value of the boots and shoes consigned, to fix the prices at
which the same should be sold, upon consultation as aforesaid,,
and to hold said plaintiffs personally liable for all goods sold by
them. The relations which the parties sustained to each other
under this agreement were those of principal and factor, and the
law applicable to such relations must therefore control in the
interpretation thereof. As to the general rules which obtain,
and the general rights of the parties which arise under an agree-
ment of this sort, there is but little divergence of judicial author-
ity, said rules and rights, from the great importance of the sub-
ject matter involved, having long since become firmly imbedded
in the conmiercial law of the land. But as to particular rights^
and obligations growing out of the relations aforesaid, and no-
tably as to the rights of the factor regarding advances made by
him, the authorities are not entirely harmonious, one line of
cases holding substantially that an advance creates a debt eo in-
stanti on the part of the consignor, as for so much money lent to
him at his request, while another line holds that an advance doe»
not create a debt in the first instance, it being the duty of the
factor to first look to the goods consigned for his advancements
and commissions, and, if they are insufficient, that then he may
have recourse to the consignor to make up the deficiency. In
short, the authorities are at issue upon the simple question as to
whether the factor may enfor( e his lien for advances, etc., against
the property in his hands before looking to the consignor therefor,
or whether he must enforce it before so doing. Amongst the
cases which maintain the former doctrine are Beckwith v. Sibley,.
11 Pick. 482; TTpham v. Lefavour, 11 Met. 174; Dolan v.
Thompson, 126 Mass. 183; Burrill v. Phillips, 1 Gall. 360; Peisch
T. Dickson, 1 Mason, 9; Mertens v. Nottebohms, 4 Gratt. 163;
while amonsrst those which maintain the latter are Gihon v. •*•*
Stanton, 9 N. Y. 476; Hoy v. Reade, 1 Sweeny, 626; Corlies v.
Gumming, 6 Cow. 181; Prothingham v. Everton, 12 N. H. 239;:



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July, 1893.] Balderbton v. National Bubbeb Co. 777

Kraft T. Fancher, 44 Md. 204. See, also, Edwards on Bafl-
ments, aec. 366; Edwards on Factors and Brokers, sees. 18, 86,
and caaea cited. We are strongly inclined to the opinion that the
better reason, if not indeed the weight of authority, is with the
last-named cases. It is not reasonable to suppose that the parties
to the agreement before us contemplated that the advances made
in pursuance thereof should constitute a present indebtedness
on the part of the consignors, for which an action might at once
be maintained. What are "advances"? They are moneys paid
by the factor to his principal on the credit of the goods consigned,
and in anticipation of the debt which will become due to the prin-
cipal upon the sale of such goods. The ordinary use of the term
indicates moneys paid before, or in advance of, tlie proper time of
payment. To "advance** is to "supply beforehand,** "to loan be-
fore the work is done or the goods are made": Powder Co. v.
Burkhardt, 97 U. S. 110. As well stated in Gihon v. Stanton,
9 N. Y. 476, "an advance is something which precedes; and, of
course, there is something to follow. As applied to the payment
of money, the term implies that the parties look forward to a time
when the money will be due to the recipient. A debtor who
voluntarily pays his debt before it is due is said to advance it.
Can he recover it back? An advance by a factor is a transaction
somewhat similar. It is a prepayment; a mere anticipation of
the avails of the goods consigned; and no more creates a debt,
in the first instance, than an advancement of a father to his son
in anticipation of his expected inheritance, creates a debt. It
is true, that if the property proves insuflBcient to reimburse the
factor for his advances, the law, in the absence of any agreement
to the contrary, implies an undertaking to make up the defi-
ciency**: In Hoy V. Eeade, 1 Sweeny, 626, the court, in speaking
of an advance, said: "It is, in fact, a prepayment on account of
a debt anticipated by both parties to arise to that or a ^eater
amount from the consignor to the consignee, out of the perform-
ance by the consignee of a *•* contract existing between them.
It necessarily results that, before the consignee can call on the
consijrnor to pay back any portion of this prepayment, he must
show the performance of this contract, and that his indebtedness
arising thereout did not, as was anticipated, amount to the pre-
payment.** That the law as thus stated is well founded in rea-
son, and, indeed, well-nigh indispensable to the successful prose-
cution of manufacturing and commercial enterprises, is evident
from the results which might follow from the adoption of the
rule contended for by the plaintiffs. For^ if an advance by a



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778 Baldbrston v. National Rubbbb Ca [B. L

factor has the effect of creating a present indebtednesB against
the consignor, the latter is liable at any moment to be called upon
to repay the amount advanced, and, failing so to do, to render
his property liable to be attached, and his whole business stopped,
if not destroyed, while, at the same time, the goods which have
been probably produced in part by virtue of the advances are
in the hands of the factor, and presumably entirely sufficient to
compensate him for all his advances. Take the case in hand.
The plaintiffs agreed to advance fifty thousand dollars per month
upon the basis of eighty per cent of the market value of the boots
and shoes consigned to them. Before they could be called upon
to make the first advance of said sum, the defendant corporation
must have placed in their hands and possession goods of the value
of sixty-two thousand five hundred dollars. The plaintiffs, on
the one hand, by such transaction took a vested interest in all
of said goods to the amount of fifty thousand dollars, while the
defendant corporation on the other received fifty thousand dollars,
practically by way of prepayment thereon. Now is there any
sense or justice in saying that, notwithstanding the fact that the
plaintiffs were thus secured for said advance, they could immedi-
ately turn around and sue the defendant corporation therefor?
Wc think not. For, as stated in the defendant's brief: "To treat
such advances as a present debt which could be recovered back
immediately would be an absurdity, for the anomalous condition
would then be presented that, while the factor could sue for the
advances and recover them back, he would thereby at once render
himself liable under his contract for the advances therein agreed
to ^® be made in the proportion indicated. If he were in ad-
vance, he could sue for such advances; if he recovered them
he could be sued for not being in advance.*' But even
resting the case solely on the manifest construction of the agree-
ment the plaintiffs have no claim to recover their advances; and for
the simple reason that, in the making thereof, they only fulfilled
their part of the contract in this respect. And now to allow
them to recover for said advances, before performinff the remain-
der of said contract devolved upon them, viz., to sell said goods,
would be to permit them to undo what, under said contract, they
not only did, but were legally bound to do.

Again, the plaintiffs were selling said goods under a del
credere commission. And while the nature and extent of a
factor's obligation under such a commission have been much dis-
puted, the later Eno:lish, together with some American, authori-
ties, holding that he is liable as a surety merely, yet the decided



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July, 1898.] Baldkrston v. National Rubber Ca 779

preponderance of authority in the United States is to the effect
that one who sells under such a commission ''is liable absolutely
as a principal^ and that if the debt be not paid when due, in-
debitatus assumpsit will lie against him at once for the amount^':
Mechem on Agency, sec. 1014, and cases cited in note 1; Wolff
V. Koppel, 2 Denio, 368, 370; 43 Am. Dea 761; Lewis t.
Brehme, 33 Md. 426-433; 3 Am. Eep. 190. In a note to section
278 of Edwards on Bailments, the law is thus clearly stated: ''The
effect of a commission del credere is, in several particulars^ to
place the factor in new relation as to his principaL It is true he
is the debtor, but the principal still retains the right, at any time
before payment, to resort to the purchaser as collateral security.
It is a rule for the protection of the principaL A general factor
may wait to receive instructions as to the mode of remitting the
net proceeds, and is not liable to an action until a default on his
part in remitting or paying the proceeds according to the orders
of his principal: Ferris v. Paris, 10 Johns. 285. The only dif-
ference between a factor acting under a del credere commission or
without one is as to the sales made. In the former case he it
absolutely liable and may ^^'^ correctly be said to become the
debtor of his principal; but it is not strictly correct to say that he
is placed in the same situation as if he had become the purchaser
himself; for, as we have seen, the principal, notwithstanding this
liability, may exercise a control not allowable between creditor
and debtor. " When the principal appears, the right of the factor
to receive payment ceases. The effect of the commission is not
to extinguish the relation between principal and factor, but ap-
plies solely to a guaranty that the purchaser shall pay. The lia-
bility is not contingent, so as to require legal measures to be ex-
hausted against the purchaser before the factor is bound, but an
engagement to pay on the day the purchase money becomes due.
Although the factor is absolutely liable, he is not bound to pay
imtil the money becomes due from the purchaser. Subject to
the limitations above mentioned, the factor, under a commission,
becomes a debtor to his principal.*' This being the law, and the
plaintiffs having continued to sell and dispose of the goods in
question in the same manner since as before the failure of the de-
fendant corporation, they certainly would have no cause of action
in any event, except for the balance that upon an accounting
should now be found due to them.

But the plaintiffs argue that said agreement shows that the
advances were to be treated as indebtedness, as appears by the sec-
ond, fifth, and eighth clauses thereof. The second clause speaks



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780 Baldebstoh v. National Rubber Ca [R. L

of Bttms which the consignors may ^owe'^ the plaintiffs, and' pro*
Tides that interest shall be computed thereon; the fifth clause
obligates the plaintiffs to make certain fixed advances; and the
eighth clause allows the consignors to fix the prices of the goods to
be sold. It is doubtless true that, in a certain qualified sense, the
consignors would "owe** the plaintiffs for the advances which
they should make under said contract, and for the simple reason
that said advances, as already stated, were payments made in
anticipation of a debt not due at the time. And as the consign-
ors were to be accommodated in this way, it was natural that they
should treat an advance as a temporan^ indebtedness so far as to
call for the payment of interest *** thereon. This was no more^
in effect, than the making of a discount for money paid before
it was due — a thing which is of every day occurrence in commer-
cial transactions. As to the fifth and eighth clauses, we fail to
discover wherein they indicate an intention to create a debt, ex-
cept as aforesaid. Under the former the plaintiffs were to make
certain fixed advances; but, as already said, these were mere pre-
payments on account of goods received, while, as to the latter, it
simply shows that the consignors treated said goods as belonging
to them, which they undoubtedly did, subject to the plaintiffs*
lien thereon. That is, the consignors retained the general own-
ership of said goods until sold, with the right to fix the prices
at which they should be sold. But this in no wise militates
against the claim of the consignors that said advances did not
create a present unqualified indebtedness. Moreover, we may
add that, so far as we are aware, the custom and understanding
amongst merchants and factors in this state are in harmony with
the views which we have herein expressed regarding advances.

It is clear, therefore, that in no event can the plaintiffs claim »
dividend from the assignee upon the whole amount of the ad-
vances made by them and unpaid from the proceeds of goods sold
at the time of said assignment.

But, as before intimated, we think the better doctrine is, that
where advances are made upon the faith of the goods consigned,
and especially under an agreement like the one before us, the
proceeds are to be deemed as the primary fund to which the factor
must look for reimbursement, and that it must be made to appear
that this fund is insufficient before he can recover his advances
from the consignor.

From what has thus been said it will be apparent that the re-
lations of the parties to this suit are radically different from those
which existed in Allen v. Danielson, 15 B. I. 480^ which is relied



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July, 1893.] Balderbton v. National Rubbsb C$a 781

<m by the plaintiffs, and hence that said case does not control the
present one. In that case the question was, whether the cred-
itors whose claims were secured by mortgage were entitled to
diyidends on their full claims pro rata with the other creditors.
The court held that they were, *^® on the groimd that the cred-
itors were severally creditors to the ^fuU amount of their
claims, the security being regarded as something collateral,
which did not reduce the debt. In the present case, how-
ever, as already intimated, the security was the primary fund
to which the plaintiffs must look, and hence they held
no claim, except a contingent one against said corpora-
tion, and in no event to a greater amount than the bal-
ance, if any, that should be found due after exhausting their
security- In other words, the plaintiffs were not entitled to
double security in the first instance, as were the plaintiffs in the
case cit^d, nor did they have any claim on which a suit could be
based at the time of the assignment, or which they could prove,
inflependently of the goods consigned to them and then on
hand and unsold. The security which they held not only re-
duced the debt so far, indeed, as it was such, but, if sufficient^
entirely canceled it. We therefore decide that the plaintiffs are
not entitled to receive from the assignee of the defendant corpora-
tion a dividend upon the whole amount of the advances made by
them and unpaid from the proceeds of goods sold at the time of
said assignment, but only on the balance, if any, that shall be
found to be due after crediting the net proceeds, when sold, of
the goods on hand at the date of said assignment.

This conclusion renders it unnecessary for us to consider the
second question submitted to us.

FACTORS — DEL CREDERE AGENTS.— A factor under a del
credere commission has a lien for advances made on goods consigned to
him: Holhrook v. Wight, 24 Wend. 169; 85 Am. Dec. 607; and may
protect himself to the extent of bis advances by selling his principars
goods: Benny v. Rhodes, 18 Mo. 147 j 59 Am. Dec. 293. A commisflion
del credere is the premium or price given by the principal to the factor
for a guaranty. A del credere factor, therefore, when he sells on credit,
warrants the solvency of the purchaser. He is liable as principal. He
mnf»t pay the price for which the goods were sold, when the credit has
expired; See monographic note to Amidown ▼• Osgood, 68 Am. Deo*
171, on factors.



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782 Mathbwson v. Mathewsoh. [R. L



Mathewson v. Mathewsoit.

[18 RHODI l8LAin>, 466.]

MARRIAOB AND DIVORCB — RECRIMINATION. — A »
▼oroe will not be granted, when it appears that the petitioner,
although otherwise entitled to a decree, has been guilty of con-
duct that is cause for \ divorce. Hence, if a man deserts his wife
and enlists in the' military service, writing bat once or twice soon
afterward to her, after which she hears nothing more from him for
twenty-seven years, and she, in the mean time, believing him to be
dead by reason of common report that he has been killed in war,
marries again, after which the first husband appears with a wife and
several children, but she continues to live with her second husband
for over two years, when she ceases to cohabit with him, and prefers
a petition for a divorce from her first husband, she is not entitled to
such a divorce, because she was guilty of conduct authorizing a di«
vorce in continuing to live with her second husband after she knew
that her first husband was alive.

Stephen 0. Edwards, for the petitioner.

Nathan W. Littlefield and Walter R. Stiness, for the reqK>nd-

ent.

^'^ TILLINGHAST, J. This is a petition for divorxie from
bed and board and for separate maintenance, on the grounds of
desertion, neglect to support, and adultery. The parties were
.married October 2, 1853, and lived together until 1861, when the
respondent deserted the petitioner, telling her he was going away
on business, and entered the service of the United States as a
soldier. He wrote to her once or twice shortly after leaving,
after which she heard nothing from him directly for twenty-seven
years, but it was commonly reported that he was killed in the
army during the late Civil War, and the petitioner, supposing



Online LibraryAbraham Clark FreemanThe American state reports: containing the cases of general value and ... → online text (page 89 of 121)