Page:The American Cyclopædia (1879) Volume VII.djvu/63

FACTOR 55 given to his factor at any time before the fac- tor has made any advances upon the goods; and may then demand them, paying of course whatever legal claims the factor may have, not for his commissions, but for expenses properly incurred about the goods, and for any special services he has been called upon to render. But it is a question whether, if a commission merchant has made advances upon goods, he has not now acquired an interest in them and an authority over them, which his principal cannot defeat by revocation. The prevailing doctrine in the United States is that a factor by advances upon goods acquires an interest in the goods themselves, and that his authority over them is therefore irrevocable. In Eng- land the courts hold otherwise, and a factor who has made advances upon goods is denied the power to sell them or any part of them if positively prohibited by his principal; while in the United States he may sell so much as will cover his advances and charges, the prin- cipal having power over only the surplus or residue after the factor's advances are repaid. The factor is not obliged to sell, but after de- mand and reasonable delay may have his action against his principal for his advances. The question what power a factor has to pledge the goods consigned to him has been much agi- tated. By placing the goods in his possession, the principal may be said to give to his factor the power of acting as an owner, to the injury of others. It is on this ground that in England and in many of the United States such a fac- tor, whether called commission merchant, con- signee, agent, or otherwise, is deemed to be the true owner, so far as to render valid a sale, pledge, or other disposition of the property, while the party with whom he deals acts in good faith. A factor may make a special con- tract with his principal, to guarantee all sales made for him. In continental Europe, some- times in England, more rarely here, such a factor is said to act under a del credere com- mission. With us he is commonly, and per- haps universally, said to act under a guaran- tee commission. The meaning of this is, that in addition to the usual commission (or that agreed upon) for the sale of the goods, he receives a further commission, in considera- tion of which he guarantees the payment by " e purchaser of the price of the goods, and es to pay if the purchaser does not. A ,rantee commission merchant has the same ,im on his principal for his advances as if e made no guarantee. If he takes a note om the purchaser of the goods, this note is e property of his principal, and he guaran- es the note ; and if he takes payment in de- preciated paper, he must make it good. If money be paid, and he remits it in some cus- tomary and proper way, or in such way as may be specially directed by the owner, he is not responsible for its safe arrival, unless he under- takes to guarantee the remittance ; in which case he may charge a commission for his guaran- tee. Without any guarantee commission a factor is liable to his principal, not only for his neglect or default, but for certain acts which seem to assume this liability ; as if he sells the goods of several principals to one pur- chaser, on credit, and takes a note payable or indorsed to himself, and gets it discounted. It has already been remarked that a factor may buy, sell, sue and be sued, demand, col- lect, receive, and receipt for money, all in his own name, and as a principal, while a broker can do all this only in his own name and as an agent. This diiference between them springs from the possession of the goods by the factor (for possession is one of the principal indicia of ownership) and the non-possession of them by the broker. There is a more important dif- ference between them, founded on the same circumstance; this is, that the factor has a lien on the goods for his advances, charges, and commissions, and a broker has not. But if a factor voluntarily transfers the goods to the owner, or to the owner's order, he cannot reclaim them as his security, but retains only his personal right to demand his advances and charges from the owner. If the owner is in- solvent, the factor takes then only his dividend ; whereas if he still holds the possession, the other creditors can have the goods only by dis- charging the factor's claims in full. Therefore the factor and his principal may have claims against a purchaser which may seem to conflict ; for the principal may demand his price, while the factor claims his advances and charges. In general, it may be said that if a purchaser pays in good faith to either, without notice of the other's claim, he will be protected against the other. But if the owner demands his price, the purchaser cannot set off against this, or claim to deduct, a general debt to the pur- chaser from the factor, unless the factor sold the goods as his own, under circumstances which gave him a right so to sell them, and the buyer believed they were his own ; in which case the buyer may charge against the price, or indeed pay the whole price, by the indebted- ness of the factor to him. On the other hand, if the factor has a lien on the goods, and has not lost his lien by parting with the possession of the goods, the buyer cannot set off against this lien any debt due to him from the principal, although the principal be named at the sale as the owner of the goods. An important dis- tinction is made between a foreign factor, or one who transacts business for his principal in a country in which the latter does not reside, and a domestic factor, or one who acts in the same country in which the principal resides. Although every factor may act in his own name, yet in the case of a foreign factor the law goes much further, and considers the factor as in almost all respects a principal. The reason of this is obvious. A person dealing at home with a factor whose principal resides abroad, has no means of knowing who the principal is, or what goods are his, or by what title they