Seth Hapgood & another, Executors vs. Tyler Batcheller & another, 4 Met. 573

Hubbard, J. By the law merchant, it is clearly settled that a factor may sell the goods of his principal on credit, and that if he uses due diligence in regard to the solvency of the purchaser, he is not responsible, in case of loss by reason of the purchaser’s failure before the term of credit expires. 2 Kent Com. (3d ed.) 623. Goodenow v. Tyler, 7 Mass. 36. In the present case, the sales by the defendants were made in the usual manner, and the terms of credit were reasonable. And it is made certain by their account rendered July 15th 1839, that the sales were at the risk of the principals.

The only question which has been raised is, whether the facts, which took place subsequently, made the defendants responsible for the loss incurred on the sale to Shipman & Co. on the 5th of July preceding.

And we are of opinion that the account rendered by the defendants, on the 14th of November 1839, is but a further representation of the previous transactions, with some advances for moneys collected, and in no way alters their then existing relations ; and that the giving of the note on demand, for the balance of that account — which" note is the subject of the present suit—was no assumption to their account of the outstanding debts. No new consideration passed between the parties.

The transaction was in law the same, as if the defendants had advanced the money for the balance of the account, at the request of the principals, which could be recovered back, in whole or in part, if the debts falling due should not be paid. A note given for the balance of an account, though prima facie evidence of payment of the account, may be explained and rebutted by proof as to the nature of the transaction between the original parties. Nor did the taking of a note from Shipman & Co., and including in it other demands, necessarily vary the relations of these parties.

It is a practice well understood among all persons who consign goods for sale, that the commission merchant, for convenience, takes the notes of vendees in his own name, often including the sales for different consignors ; and that he holds such notes in trust for his princi pals. We see nothing in this case to lead to the conclusion that the defendants intended to assume the debt of Shipman & Co., or which altered their situation with their principals from the position in which they stood on the 15th of July, when they rendered their account.

Nor do we see any act of theirs, by which the debt due from Shipman & Co. was put at hazard ; nor any thing to show conclusively that they treated it as paid. The case is substantially the same with that of Robertson v. Livingston, 5 Cow. 473. We think the presiding justice of the court of common pleas erred in directing the jury to return a verdict for the plaintiffs, on the proof of the facts stated in the report of the case. No point was raised at the hearing, in respect to the note of the defendants having been negotiated by the payees shortly after they received it.

The exceptions are sustained and a new trial ordered at the-bar of this court.