Music Trade Review

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THE MUSIC TRADE
REVIEW
The Rights and Liabilities of a Consignee
W
HAT are the rights and liabilities of a consignee? A con-
signee is one to whom goods are shipped, usually that he
may sell them for the owner. He is also known as a factor or a
commission merchant, and as there have been a great many cases
in the courts involving his rights and liabilities, there is a consider-
able body of law concerning him. For any merchant, wholesale or
retail, whether he carries on the regular business of consignee or
not, is nevertheless apt to have goods occasionally consigned to him
for sale, and he should therefore be interested in what the law says
he may and may not do.
A consignee is the agent of the owner and, generally speaking,
he will be judged by the law of agency. A consignment is 1 not a
sale, and the consignee is not the owner. The consignor, or the
shipper, remains the owner, subject to some exceptions, until the
goods are sold.
The duty of a consignee to whom goods are shipped to sell for
the owner is exceedingly strict. His authority as to making sale is
of course fixed by the contract between himself and the shipper.
This contract, incidentally, should always be full and complete, and
leave as little to discretion as is necessary. Besides his express
authority, the consignee will have the implied authority to do what-
ever is necessary to carry out his contract.
Here are some of the things a consignee may not do:
He can do nothing in connection with the goods placed with
him for sale, which will benefit himself at the shipper's expense.
He cannot, after selling the goods on certain credit, extend the
period thereof.
He cannot accept pay for the goods in anything but money,
unless given authority to do so by the principal.
He cannot sell the goods to himself.
A consignee employed to sell cannot buy so as to bind the ship-
per, his principal.
He cannot compromise claims which arise out of the sale of the
goods'.
He cannot pledge the goods as security for a loan to himself,
although he can do so to secure a loan needed by him to pay the
shipper for the goods before their sale. This rule has been modified
by laws in various States which protect persons loaning money in
good faith, and in ignorance of the circumstances, to consignees, on
goods belonging to shippers.
If the goods are shipped to him to sell in certain markets, hz
cannot sell them in other markets.
Here are what some leading cases decide a consignee can do
and bind his principal:
He can sell the goods in his own name and this makes a good
sale.
He can sell on reasonable credit if there are no instructions or
customs to the contrary.
He can give with the goods a reasonable guarantee as to condi-
tion of soundness, etc., when they are sold, but he cannot give any
unreasonable warrant or guarantee, such as to guarantee them to
keep sound under conditions which would inevitably destroy their
soundness.
The importance of this is that if the warranty was within the
consignee's right to give, the buyer can hold the shipper on it, while
he cannot hold the shipper, but can only hold the consignee per-
sonally, if the guarantee was not within the consignee's power.
Next, the consignee can accept payment for the goods and dis-
charge the buyer, so that the latter cannot be compelled to pay again.
Readers hereof will remember that the law is otherwise where a
buyer pays someone not authorized to receive the money.
If the consignee has sold strictly according to his instructions,
the sale is binding upon the shipper, and he cannot escape from it
no matter how much it may be to his disadvantage. Sometimes a
consignee is not given explicit instructions', in which case he can
use his discretion and is not responsible for errors in judgment. A
consignee must be particularly wideawake as to the financial stand-
ing of persons he sells other people's goods to, and if he is negligent
and lets them go to irresponsible people, the shipper can hold him
personally.
As stated, the title to goods shipped to a consignee for sale re-
mains in the shipper until they are sold. The consignee's creditors
cannot seize or attach them, nor their proceeds after they are sold.
Likewise, if the consignee goes into bankruptcy, the consigned
goods, or their proceeds, if they have been sold, do not pass to the
assignee with the rest of the bankrupt estate. So if the consignee
transfers them without authority, the shipper can get them back,
unless their transfer was made to a person innocent of the circum-
stances, and was apparently within the scope of the consignee's
authority. In some such cases the person to whom the goods are
transferred may be permitted to keep them.
Many shippers are under the mistaken impression that they can
merely bring a civil suit against a consignee who sells the goods and
fails to remit the proceeds. It is true that they can bring such a
suit, but they can also issue a warrant for his arrest for embezzle-
ment. Since he is merely the shipper's agent, the money he collects
and retains, is the shipper's money, and he is therefore guilty of a
criminal offence when he fails to turn it over. Several States have
passed laws creating the offence of "larceny as consignee," but even
where this has not been done, it would still be a criminal offence
under the common law.
The consignee, however, has a lien on the goods, or on the pro-
ceeds of their sale, for all commissions to which he is entitled, or
for advances, or other expenditures properly incurred in connection
with the sale. This lien even extends to the insurance money if
the goods are destroyed by fire, and the consignee can deduct such
sums from the fund in his hands whether the shipper like it or not.
—Copyright, May, 1912, by Elton J. Buckley.