livered to the defendant ad merchandizandum, he pleaded that he carried them to Porto Bello, and, in order to keep them safe, he put them into the warehouse of the South Sea Company, which was broken open, and the goods taken away. Though it were [was] objected, that the defendant had undertaken a special and particular trust, and having committed the goods to the care of a third person, which he could not do, must be answerable for the loss; yet it was decided in his favor, the Court declaring that a bailiff ad merchandizandum is not obliged to keep the goods always about him; and that if the warehouse were [was] not a place of safe custody, that should have been replied.(h) (5)

*2. One of the most important duties which the [18] safety of merchandize requires, in factors and consignees who act as factors, is that of protecting it by insurance.(4)

Where the course of dealing between the principal and agent is such, that the latter has been used to effect insurances, by directions of the former, he is bound to comply with an order to insure, though he has [have] no effects in

bill of exchange, or promissory note, is sent for collection, is authorized, (such being the usual course of business,) to deposit it in a bank for collection, with a notary for protest, or with an attorney to be put in suit, and is not responsible for their neglect or misconduct. Hum v. The Union Bank of La. 4 Robinson's (La.) Rep. 109.||

And see Bromley v. Coxwell, 2

(h) Goswell v. Dunkley, 1 Str. 681. Bos. & Pull. 438. In this case A. entrusted B. with goods to sell in India, agreeing to take back from B. what he should not be able to sell, and allowing him what he should obtain beyond a certain price, with liberty to sell them for what he could get, if he could not obtain that price: B. not being able to sell the goods in India himself, left them with an agent to be disposed of by him, directing the agent to remit the money to himself in England: it was held that A. could not maintain trover against B. for the goods. And see McMorris v. Simpson, 21 Wend. 610.||

(5) The question will be," has he done that which under the circumstances was prudent and warranted by the usage of trade."+

(A) See De Forest v. Fulton Fire Ins. Co. 1 Hall, 110. He may insure in his own name and recover for the loss, subject to account with his principal. Ibid. 114.||

hand at the time of receiving the order; unless notice has been previously given by him to discontinue that mode of dealing.(i) But if he have effects in hand, he cannot in any case refuse to comply with the order.(k) Or if the bills of lading from which his authority is derived contain an order to insure, this is an implied condition which the agent must fulfil, if he accept the employment.(1)

(i) Smith v. Lascelles, 2 T. R. 189; Beawes, 43.

(k) Id. ib.

(1) Id. ib. | Mr. Livermore states the doctrine on the subject with clearness and precision. "In the three following cases it is settled as clear law, that an order for insurance must be obeyed:-1st Where a merchant abroad has effects in the hands of his agent or correspondent here, he has a right to expect that his agent will comply with an order to insure; because he is entitled to dispose of the money in his agent's hands in what manner he pleases. 2dly. Where a merchant abroad has no effects in the hands of his agent, or correspondent here; but the course of dealing between them has been such, that the one has been used to send orders for insurance, and the other to execute them; the former has a right to expect that his orders for insurance will still be obeyed, unless the latter give him notice to discontinue that course of dealing. 3dly. Where the merchant abroad sends bills of lading to his correspondent here, with an order to insure, as the implied condition on which he is to accept the bills of lading; and the correspondent accepts the bills of lading, he must obey the order; for it is one entire transaction, and the acceptance of the bills of lading amounts to an implied agreement to perform the condition. (Per Buller, J. in Smith v. Lascelles, 2 T. R. 189.) And in this case the consignee would be bound to effect the insurance, though he was to receive no benefit from the consignment. As, if A. living in Jamaica, sends a cargo to B. residing in London, who is not to receive any benefit, but is to deliver it to a third person; and is directed to insure, B. may refuse to receive the cargo; but if he consent to receive it, though it is for the benefit of the consignor, he is bound to make the insurance, and many actions have been brought upon that principle." 1 Liv. Agency, 324–326. Lord Erskine in Crosbie v. M'Doual, 13 Ves. 158. And see Randolph v. Ware, 3 Cranch, 503. Morris v. Sumnerl, 2 Wash. C. C. Rep. 203. Thorne v. Deas, 4 Johns. Rep. 101. French v. Reed, 6 Binney, 308. Mr. Justice Story adds, as another case in which the agent is bound to insure; "where the general usage of trade requires the agent to insure." Agency, § 190. Kingston v. Wilson, 4 Wash. C. C. Rep. 315. As to the duty of a consignee in regard to effecting insurance, Washington, J. says; "The law is clear, that if a foreign merchant, who is in the habit of insuring for his correspondent here, receives an order for making an insurance, and neglects to do so, or does so, differently from his orders,

If in any of these cases the agent neglect to make insurance, he is himself, by the custom of merchants, to be con

or in an insufficient manner, he is answerable, not for damages merely, but, as if he were himself the underwriter, and he is of course entitled to the premium. In this case an insurance was effected, valid as far as it went, and had it gone as far as the defendant contends it ought, it would, by the legal decisions in England, [where the insurance was made,] have been inoperative and void, [under the then existing prize law.] But the defendant says, that this ought not to have entered into the consideration of the plaintiffs; that having ordered such an insurance to be made, it was the duty of the plaintiffs to make it, and to secure to the plaintiffs the chance of an indemnity, though founded only on the honor of the underwriters. To this charge of misconduct, the plaintiff has given two answers: first, that he received no orders to effect the insurance, in the manner now contended for; and secondly, that he made the attempt to do it, and could not get it effected. The words 'solid insurance,' contained in the defendant's letters are certainly equivocal. They might mean such an insurance, as would completely protect the property against captures by British cruizers, the imminent dangers of which were perceived by the defendant, and acknowledged and dreaded by the plaintiffs, as their letters evince; or they might mean, that the underwriters should be men of solidity, and able to pay in case of loss. It may be proper here to observe, that a claim for damages against an agent, comes with a bad grace from a principal who complains of a disobedience of orders, couched in ambiguous terms. If with a reasonable attention to the language, the words would bear the construction which has been placed upon them, it would be too much to condemn him to damages, because, upon a refined and critical examination of them, a different construction should be deemed the correct one.-The second excuse depends upon the fact, whether a reasonable diligence was used by the plaintiffs to effect an insurance, as ordered. If it was, they would not be answerable for the want of success which attended those endeavors, even if it were perfectly clear, that the general principle contended for, applies to a case of this kind; as to which we give no opinion." De Tastet v. Crousillat, 2 Wash. C C. Rep. 132–136.

So, the plaintiffs, in 1822, shipped a number of bales of cotton from Alabama, consigned to Boyd & Suydam, the defendants, as commission merchants at New York, to be sold for the account of the shippers; which cotton was received by them in June of that year. In consequence of a regulation of the board of health of New York, it became necessary to store the cotton out of the city, and it was accordingly stored at Brooklyn, the usual place of deposit under such circumstances, where it was soon after burnt and lost. Walworth, Ch. "The complainant claims to charge Boyd & Suydam with this loss, on the ground that it was their duty to have insured the cotton thus deposited with them in a building which was liable to

sidered as the insurer,(B) and liable as such in the [*19] event of loss.(m) (c) If no "available insurance

be destroyed by fire. The cases cited by the complainant's counsel, in relation to this claim, show that a commission merchant has such an interest in goods consigned to and received by him for sale, that he may insure in his own name to the full value of the goods. But it does not follow from this that it is his duty, without any express or implied directions to that effect from his principal, to insure the goods for the benefit of such principal. And there is no evidence in this case of any usage of trade, from which the duty of the defendants to insure the goods can be implied. If the defendants had made themselves liable for the loss, by their negligence in placing the cotton in an unsafe place of deposit, when a safe one might easily have been obtained, as that fact is not admitted in the answer, the complainant should have filed a replication, and should also have established the fact of negligence by proof. As the case now stands upon bill and answer, I think Boyd & Suydam are not chargeable with the loss upon the cotton which was destroyed by fire." Brisban v. Boyd, 4 Paige, 17.||

(B) In which case he is entitled to credit for the premium which should have been paid. De Tastet v. Crousillat, ante, n. (1).||

(m) Wallace v. Telfair 2 T. R. 188, in notis; Mal. 86; Beawes, 43; 1 T. R. 24; Delaney v. Stodart, 2 Ves. 239. || So, in a case before the Circuit Court of the United States for the district of Pennsylvania, Washington J. charged the jury, that if one merchant is in the habit of making insurances for his correspondent, and is directed to make an insurance, and neglects to do so, he is himself answerable for the loss as insurer, and is entitled to the premium as such: that the amount for which an underwriter would be liable is the only measure of damages against him; if he can excuse himself for not having effected the insurance, he is answerable for nothing; if he cannot excuse himself, he is then answerable for the whole. -An exception being taken to this charge, the judgment was, in February, 1809, affirmed by the Supreme Court of the United States. Morris v. Summerl, 2 Wash. C. C. Rep. 203. Condy's edition of Marshall, note to p. 301. 1 Liverm. Ag. 326. The case in error does not appear to have been reported.

A factor employed to settle with underwriters, and adjusting the claim at a rate far less than that to which the principal would be entitled, without express instructions to that effect, will be liable for the deficiency. Rundle v. Moore, 3 Johns. Cas. 36. If he [the agent] limit the [insurance] broker to too small a premium, by which no insurance is effected, he is liable [to his principal]. Wallace v. Telfair, 2 T. R. 188, note. + And where the broker negligently omits to have the usual clauses inserted in the policy, he renders himself liable to the assured for any loss he may sustain thereby. Park v. Hammond, 6 Taunt. 495; Mallough v. Barber, 4 Campb. 150.4 || As to the liability of an insurance broker for not effecting insurance, see Turpin v. Bilton, 5 Mann. & Gran. 455.||

(c)

There is an implied obligation on the part of an agent employed to

be effected, it is the same as if none at all were made.(n) It has been held that, although no advantage can be taken of a gratuitous promise to procure insurance, in case of a total neglect to do so; yet, that if a voluntary agent actually proceed to make insurance, but through his gross mismanagement the benefit of it is lost, he is answerable for the injury sustained.(o)(6)

In an action against an agent for a failure in making

effect insurance, according to special instructions, to inform his principal of his having failed in accomplishing the object; as the latter, on being informed of the failure might have procured insurance elsewhere, or have offered other terms. Callander v. Oelrichs, 5 Bingh. N. C. 58. De Tastet v. Crousiliat, 2 Wash. C. C. Rep. 132.||

(n) Ante, note (m).

(0) Wilkinson v. Coverdale, 1 Esp. Cas. 74 Seller v. Work, Marshall, 208, 3d ed 305; || French v. Reed, 6 Binney, 308.||

+

(6) This also is a rule of general application founded on the clearest principles of equity and expediency. If a man gratuitously undertake to do a service for me, although morally it may be wrong in him not to fulfil that undertaking, it is manifest that I have no right to enforce the performance. But if he do in fact proceed to the execution of what he has undertaken, it is equally manifest that for gross neglect or mismanagement in the execution he ought to be answerable, inasmuch as I have sustained an injury by being induced to repose in him a trust which might have been punctually fulfilled by another. || Thorne v. Deas, 4 Johns. Rep. 84; Smedes v. The President &c., of the Bank of Utica, 20 Johns. Rep. 372; S. C. in error, 3 Cowen, 662; Boorman v. Brown, 3 Ad. & Ell. N. S. 511. Mr. Justice Story, speaking of the varied obligations arising from the various classes of bailments, observes: "where, indeed he [the bailor,] enters into an express contract, there may not, in point of morals, in foro conscientiæ, be any difference in relation to the extent of his duty, or the fidelity to be exacted of him in the performance of it. But law, as a practical science, although it endeavors never to violate any moral duty, is compelled, on many occasions, to leave that duty wholly to the conscience of the party, without any attempt to enforce it by compulsive process. It is, for instance, a rule of the common law, which has its foundation also in other codes, not to enforce contracts made between parties, where there is no valuable consideration for the act to be done. If the act is left undone, the party, although his promise may be ever so direct and positive, is not compellable to perform it. If for instance, a person has gratuitously promised to give another money, the law will not oblige him to perform his promise; for it is deemed a nude pact, (nudum pactum,) a naked promise, not clothed with a valuable consideration to support it; and the maxim is: Ex nudo pacto non oritur actio. If, on the other hand, the money has