§ 434. A factor is an agent employed to sell the goods or merchandise of his principal, which are in his possession, for a commission. He is often called a commission-merchant, or consignee; and the goods received by him for sale are called a consignment. If he reside in the same country as his principal, he is called a home factor; if in a different country, he is called a foreign factor. If he accompany a cargo on a voyage, and have it in charge to sell, he is called a supercargo.1 But under all these different titles he is merely a factor, subject to all the liabilities, and having the same rights and duties of this class of agents. A factor differs from a broker, as we have seen, in several important particulars. He may buy and sell in his own name; and he has the goods or merchandise in respect to which his agency is created in his possession; while a broker, as such, cannot, ordinarily, buy and sell in his own name, and has no possession of the goods sold.2 The test as to whether an agent is merely a broker or is a factor is to be found in the question, whether he has any possession or special property in the subject-matter of sale; for if he has, he is in so far a factor, although he may unite the two characters. If he have no possession or special property, he is merely a broker, and his rights, duties, and liabilities are different.
§ 435. In respect to his commission, the rule is, that a factor is always entitled thereto, if he have properly performed his duty. But if he be guilty of gross misconduct, or if he execute his duties in such a manner as to prevent any benefit to the principal, he will not be entitled to receive his commission.1 So, also, a factor cannot recover the difference, when through his negligence the proceeds of the sale are not equal to the expenses; nor can he recover expenses occasioned by his negligence.2 Whether, when the purchaser fails, he is entitled to receive a commission, is a question which depends upon the usage of trade in the particular place, and in the particular business,3 and in respect to which there does not seem to be any distinct and independent rule of law. Again, whenever he undertakes to guarantee to his principal the payment of the purchase-money, he is entitled to an additional compensation therefor, on account of the risk which he assumes, which is called a del credere commission,- the phrase del credere being equivalent to guaranty or warranty. When the factor assumes this contract of guaranty, he does not render himself primarily responsible to the principal, but only secondarily liable, in case of the failure of the buyer to fulfil his contract; and he is entitled to the general rights of a guarantor, as to notice.4 His agreement, however, to sell upon such commission is not a promise to answer for the debt of another, and need not be in writing.5 And a factor, under a del credere commission, is only understood to guarantee the payment by the purchaser, and not the safe remittance to the principal.6
1 Beawes, Lex Merc. 44, 47, 6th ed.
2 Baring v. Corrie, 2 B. & Al. 148; 2 Kent, Comm. 622, note; Story on Agency, § 34.
§ 436. In virtue of his special property in goods consigned to his care, a factor may buy and sell in his own name, as well as in the name of his principal; and, in such case, if he be the supposed principal, the purchaser will be entitled to the same rights as if he were the real principal. Payment to him by the purchaser will therefore discharge the latter from all liability to the principal.1 So, also, the purchaser, in such case, may consider the factor as principal, and set off any debt due from the factor to him against the price of the goods.2 Yet, if before all the goods are delivered, and before any part of them is paid for, he be informed that they do not belong to the factor, he cannot set them off against a debt due from the factor, in an action against him by the principal.3 Whenever the factor sells in his own name, he may bring an action against the purchaser for the price, and prosecute his remedies in like manner as if he were actually the principal; and he will also be responsible to the purchaser for the performance of his part of the contract.4 Where, however, the party dealing with a factor gives exclusive credit to him, he cannot afterwards have recourse to the principal.5
1 Hamond v. Holiday, 1 C. & P. 384; White v. Chapman, 1 Stark. 113.'
2 Dodge v. Tileston, 12 Pick. 328.
3 Clark v. Moody, 17 Mass. 145.
4 Gall v. Comber, 7 Taunt. 558; Peele v. Northcote, 7 Taunt. 478; Morris v. Cleasby, 1 M. & S. 576; Thompson v. Perkins, 3 Mason, 232; 2 Kent, Comm. 624, 625; Holbrook v. Wight, 24 Wend. 169. The rule, as stated in Grove v. Dubois, 1 T. R. 112, has been expressly overruled.
5 Couturier v. Hastie, 8 Exch. 40; 16 Eng. Law & Eq. 562, and Bennett's note; Bradley v. Richardson, 23 Vt. 720; Wolff v. Koppel, 5 Hill, 458; 2 Denio, 368.
6 Leverick v. Meigs, 1 Cow. 645; Story on Agency, § 215. But see Mackenzie v. Scott, 6 Bro. P. C. by Tomlins, 286.
§ 437. But although, when the factor contracts in his own name, he is entitled to sue the purchaser personally, and to enforce payment from him, yet his rights in this respect may be superseded by the consignor, and the latter may bring his action directly against the purchaser, although the purchaser dealt with the factor, as owner, in good faith; but, in such case, the purchaser will have the same rights as if he were sued by the factor, and may treat the contract in all respects as if the factor were the sole principal.6 He may, therefore, if he did not know of the capacity of the factor, when the sale was made, set off a debt due to him from the factor.1 So, also, the principal may call upon the purchaser to pay over the money to him and not to the factor, and if the latter should pay no heed to such requisition, he would render himself liable to the principal.2 If, however, exclusive credit be given to the factor, the principal could not interfere. The case of a foreign factor is also an exception to this rule; - as, between himself and the purchaser he is treated as the sole contracting party, and the principal can neither sue nor be sued upon his contract.3 Another exception to this rule also obtains in cases where the lien or claim of the factor upon the property bought or sold, or its proceeds, equals or exceeds the amount or value thereof; and in such a case the rights of the agent are paramount to those of the principal; and if the purchaser, after notice thereof, pay over the purchase-money to the principal, he will be liable therefor to the factor.4 Where a factor receives instructions, he is bound to comply therewith, and if he sell contrary to the directions of his principal, he becomes personally responsible for the entire amount of the debt.6