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Decisions of the Superior Courts of New South Wales, 1788-1899

Yuille v. Graham [1847] NSWSupC 62

insolvency, Port Phillip

Supreme Court of New South Wales

Resident Judge, 8 March 1847

Source: Port Phillip Herald, 11 March 1847, in Supreme Court Collection, Vol. 1, pp 95-96


Monday, March 8, 1847

Between Archibald Buchanan Yuille, plaintiff, and James Graham, defendant.

This was an action of assumpsit to recover the sum of £59 4s.1d., as money had and received by the defendant for the use of the plaintiff; the declaration also contained a count on an account stated.

The defendant pleaded the general issue.

The cause came on to be tried before his Honor the Resident Judge, and a jury of twelve persons, during the fourth term in the year of our Lord 1846, when a verdict was found for the plaintiff for £59 4s. 1d. damages, and costs of suit, subject to the opinion of the court, upon the following case:-

During the year 1843, a Mr. Alexander Thomson carried on business in Geelong, in the district of Port Phillip, as general merchant, agent, factor, and shipper of goods. In the month of November in that year, Alexander Thomson was employed by the plaintiff to ship certain bales of wool to London, for sale on his account, and at the same time he (Thomson) agreed to make an advance to the plaintiff of one shilling per pound on the wool to be so shipped and sold by him.

Accordingly, during that month of November, thirty bales of wool, marked with the plaintiff's distinguishing brand (D Y within diamond) and numbered from one to thirty, were delivered by the plaintiff to Alexander Thomson, for shipment and sale. These bales, together with several other bales of wool belonging to other persons, and differently marked, were shipped in the end of the year 1843, by Alexander Thomson to London, in his own name, but without any knowledge or acquiescence on the part of the plaintiff, and consigned to Robert Brooks, his (Alexander Thomson's) agent, there for sale. The advance of one shilling per pound to the plaintiff was made by Thomson in the following manner:- Alexander Thomson drew a bill of exchange for the sum of £446 12s. (the amount of the advance) on Robert Brooks, payable to the Plaintiff's order; the plaintiff endorsed this draft to Alexander Thomson, who thereupon discounted it at the branch of the Union Bank of Australia, at Geelong, and paid the proceeds of the draft so discounted, to the plaintiff.

On the sixth day of March, A.D., 1844,Alexander Thomson voluntarily surrendered his estate as insolvent, and by an order of that date it was placed under sequestration, in compliance with the provisions of the Acts 5th Victoria, No. 17, and 7th Victoria. No. 19. The defendant was duly appointed official assignee of the insolvent estate and effects, under the provisions of those Acts.

The draft for £446 12s. was accepted and paid by Robert Brooks. The wool arrived in due course at the port of London, and on the first of August, 1844, was sold by Robert Brooks, and realized £623 19s. 5d. sterling. Account sales of these thirty bales, so marked and numbered, were sent in due course by Robert Brooks to Alexander Thomson, and by him delivered to the plaintiff on the 22nd March, 1845.

Intelligence having reached Robert Brooks in London, of the insolvency of Alexander Thomson, a delay occurred in the remittance of the wool branded D Y within diamond, before mentioned, as well as of the proceeds of the other wool sent to England to Robert Brooks by Alexander Thomson, and the defendant transmitted to England a certified copy of his appointment by the Resident Judge of the Supreme Court of New South Wales for the District of Port Phillip, as Official Assignee of the estate and effects of the said Alexander Thomson, whereupon Robert Brooks prepared and sent to the defendant account sales of all the wool consigned to him by Alexander Thomson and amongst others, of that branded D Y within diamond, and also a summary or an account current between him and Alexander Thomson. The balance of £1492 5s. 4d. on this account was duly remitted to the defendant.

The balance on the sale of the thirty bales branded D Y within diamond, after deducting the draft for £446 12s. and the expenses, amounted to £59 4s. 1d., and was remitted to the defendant by Robert Brooks, with the other monies forming the balance of £1462 5s. 4d., and is now in the hands of the defendant, which he has refused to pay to the plaintiff.

The Question for the opinion of the court is, whether the plaintiff is entitled to recover in this action the said sum of £59 4s 1d., and if the court shall be of opinion that, under the circumstances herein detailed, he is entitled to recover that sum, then the verdict is to be entered for the plaintiff for £59 4s. 1d. damages, and costs of suit as aforesaid, but if the court shall be of a contrary opinion, then a nonsuit is to be entered.



His Honor judgment as follows:-

This case was argued before me on Saturday last by Mr. Stawell for the plaintiff, and Mr. Barry for the defendant. Mr. Stawell contended that the insolvent having received the goods as factor, and the money being in the hands of his assignee, expressly representing the proceeds, the plaintiff was entitled to recover. Mr.Barry claimed to retain them for the general creditors under the reputed ownership clause, and also on the ground that the money claimed was not sufficiently distinguished so as to entitle the plaintiff to any specific sum. For the plaintiff was cited Taylor v. Plummer, 3 M. and S., 562; Hodgson v. Granger, 5. and A., 27; Archbold's B.L., 250; Paley, P. and Agent, 283-4. For the defendant - Ryall v. Rolle, 2 Ves. Sen., 582; and Jombart v. Woollett, 2 M. and Cr., 389 p. I am of opinion that the plaintiff is entitled to a verdict upon the facts stated. The law upon the point is clear. A variety of decisions have established that the clause relative to reputed ownership in bankruptcy, "does not extend to the case of factors, who have the possession of other men's goods merely as trustees, or under a bare authority to sell for the use of their principal." That was the language of Lord Mansfield in Mace v. Cadell, Cowper 233, and the cases show that the exemption equally applies where the factor has exchanged the goods for others, or sold them for money, which has not been mixed up and confounded with the general assets of his estate. "The case of a factor," says Lord Kenyon in Tooke v. Hollingworth, 5 T.R., 225, " has been so frequently decided, and so much taken for granted for a series of years past, that it must now be considered to be at rest. If goods be sent to a factor to be disposed of, who afterwards becomes a bankrupt, and the goods remain distinguishable from the general mass of his property, the principal may recover the goods in specie, and is not driven to the necessity of proving his debt under the commission of bankrupt; nay, if the goods be sold and reduced to money, provided that money be in separate bags and distinguishable from the factor's other property, the law is the same." The same doctrine is stated by Lord Hardwicke, in exparte Dumas, 2 Ves, Sen., 585. But the leading case on the subject is that of Taylor v. Plummer, 3 M & S., 562, where Lord Ellenborough takes a review of all the authorities up tothat time. The cases were cited of Whitcombe v. Jacob, 1 Salk. 161, and Scott v. Surman, Willes 400, mistakenly cited as Salmon v. Scott, establish these three propositions:- 1st . That if goods are consigned to a factor, who sells them, and breaks, the merchant for the money must come in as a creditor under the commission; but if the money is laid out in other goods, these goods will be subject to the bankruptcy. 2ndly. That if, instead of selling the goods for ready money payable at a future day, and breaks before the day if the assignees receive the money, it will be for the use of the merchant; and 3rdly. That if the factor had taken notes for the goods, and the assignee received the money upon these notes, it will be to the merchant's use. Now what are the facts here? The insolvent Thomson, before his insolvency, receives goods from the plaintiff in the character of the factor, to be shipped and sold by him, on account of the plaintiff. After receiving the goods, he advances to the plaintiff a sum of £446 12s. 0d., and then sends them in his own name, to his agent in England, Brooks, by whom they were sold, for an amount exceeding the advance, after deducting all expenses, by £59 4s. 1d., which together with other sums due by Brooks, was transmitted to the defendant, as assignee of Thomson, and is now in his hands. Let us look at the date of these transactions, and there can be no difficulty in applying the law. The goods were delivered to Thomson in November 1843, and were shipped by him shortly afterwards to England, where they were sold by Brooks in August, 1844. On the 6th March, in the same year, Thomson had been declared insolvent, and it was not till 1846, that the defendant, his assignee, receives the amount now sought to be recovered. - Now, two things are clear from these facts: First, - That Thomson became insolvent before the goods of the plaintiff had been sold; and secondly, that the proceeds came to the hands of his assignee after his insolvency. There is no pretence, therefore, for saying that the money now claimed was ever part of his estate, for at the time of his bankruptcy, it had not been realized, and when it was realized, it came into the hands of the assignee, as an express payment on the part of the vendee. Now the second proposition cited as deducible from, Whitcomb v. Jacob and Scott v. Surman, shows that such a payment, was a payment as regards the sum now claimed, to the use of the plaintiff; for the money coming to the assignee's hand after the insolvency of the factor, puts an end to all question about the confusion of assets. Under such circumstances no "ear mark" as it is called, is wanting; it is immaterial that it is mixed up in a remittance with other monies due to the insolvent's estate; for the proceeds claimed are included in that remittance, and so distinguished. If I transmit to my agent £100, to be appropriated to the payment of five creditors whose names and amount of debt I specify, say £20 each: can it be said, in the event of the agent's insolvency, none of these creditors could claim the money from his assignee, because the particular sum of £20 had not been each specifically set apart, although the money was still lying in the insolvent's chest, and had never been mixed up with his other assets? I apprehend no such defence could be made; and a fortiori can no such defence be made by an assignee, to whom money is remitted direct, not as the agent of a principal to pay certain creditors of the former, but as the proceeds of goods sold by the insolvent he represents, on behalf of a person whom the law declares to be the true owner. It is not necessary to consider whether the insolvency of Thomson was a revocation of his authority to sell; the sale having taken place cannot alter the rights of the party entitled to the proceeds, and that is all I have to determine. If the contest had been between Brooks and the plaintiff, arising out of any lien claimed by the former against the insolvent, that question might, perhaps, have arisen, and would have depended, for its determination, on the construction of the Factors' Act, 6 Geo. IV., c. 94. As between the insolvent and the plaintiff, the former had a lien on the goods, from the moment of his advance, and the plaintiff does not dispute his assignee is entitled to a lien, for that amount, upon the proceeds. According to the case of Hudson v. Granger, a vendee purchasing the goods under such circumstances would be justified in paying the price to the assignee, the insolvency of the vendor operating as a revocation of his authority to receive the money, but vesting the right of lien in his assignee. That right is acknowledged in the present case by the plaintiff, and he merely seeks to recover the admitted surplus, beyond the sum sufficient to cover the advance of the insolvent, now in the hands of the assignee, and for the reasons, already stated, I am of opinion that he is entitled to receive that sum. - I need hardly say, after having stated the grounds upon which I have arrived at a conclusion in favour of the plaintiff, that the question of reputed ownership does not, in my opinion, at all arise. The only ground taken by Mr. Barry for giving effect to it, was the assumption that the insolvent had dealt with these goods as his own, by selling them in his own name, and had received them rather in the character of a mortgagee than of a factor. This last ground is an assumption of fact, which the case stated contradicts; and as to the first, it is not only necessary to show that the insolvent dealt with the goods as his own, in order to bring such dealing within the operation of the reputed ownership clause, but to show that he did so by the consent and permission of the true owner. Now if the shipping and selling these goods in his own name be relied on as a dealing within the clause, the case states that they so shipped without the knowledge or acquiescence of the plaintiff, and consequently that the insolvent's dealing with the goods in this manner, was without the consent or permission of the owner. It was argued that that consent was to be implied from the plaintiff's subsequent adoption of the sale; but as was said in Scott v. Sunnan, "a man "may in many cases either consider "another as a wrongdoer or as a receiver "of money to his use, as he thinks best "and most for his advantage, and there- "fore in the case of a factor selling con- "trary to his authority, the owner may "come either against the vendee or the "factor at his election, and may choose "to confirm the sale." That is what the plaintiff has done here - he has confirmed the sale; as being what in point of fact and law it was, as between him and his factor - a sale of the plaintiff's own goods and of which the proceeds, therefore, were, subject to the factor's lien, available for the plaintiff's use. Indeed, after the advance he had received from Thomson, he could not have repudiated any sale which the former had made of the goods, though in his own name; and his only remedy therefore was against the proceeds when they came into the hands of the defendant. But, as I have before observed, the possession of goods by a factor for the purpose of sale on behalf of the owner, or his actual sale of them, is, whether he has a lien on them or not, not such "possession" or "disposition" of them, as is intended to be designated by those words in the clause relating to reputed ownership. "This," to use Lord Hardwicke's words, in exparte Dumas, "has been determined contrary to the words of the stat. 21 Jas. 1st , which statute says that all effects in the hands of the bankrupt, or in his controul, power, &c., shall be divided among the creditors: yet as the business of a factor is a distinct thing, and they were not put into the hands of a factor for a fraudulent purpose, that has been considered as a case out of the Act of Parliament in order to support the right of the parties, and not interrupt the course of commence." Now the present is a clear case of factor and owner, and that is of itself sufficient to protect the interests of the plaintiff against the operation of the reputed ownership clause, in favor of the other creditors of the insolvent, whether he sold them in his own name or not. In other words, the apparent ownership which, in other cases, would be taken to be the real ownership, is in the case of the factor, no bar to the claim of the real owner, if the apparent one should become insolvent with the goods or proceeds in his hands. It is unnecessary to say more upon a case that appears to me so plain, both as regards the law and the facts; nor should I have said thus much, if I had not been given to understand that a formal judgment was considered desirable with a view to future cases. The result is, that I consider the plaintiff entitled to a verdict, on the facts stated, for £59 4s. 1d., and I accordingly order a verdict to be entered in his favor for that amount.

Published by the Division of Law, Macquarie University