U.S. Supreme Court
Bell v. Cunningham, 28 U.S. 3 Pet. 69 69 (1830)
Bell v. Cunningham
28 U.S. (3 Pet.) 69
C. & Co., merchants of Boston, owners of a ship proceeding on freight from Havana to the consignment of B. & Co. at Leghorn and to return to Havana, instructed B. Co. to invest the freight, estimated at four thousand six hundred petsos; two thousand two hundred in marble tiles, and the residue, after paying disbursements, in wrapping paper. B. & Co. undertook to execute these orders. Instead, however, of investing two thousand two hundred petsos in marble, they invested all the funds which came into their hands in wrapping paper, which was received by the captain of the ship, and was carried to Havana, and there sold on account of C. & Co., and produced a loss, instead of the profit which would have resulted had the investment been made in marble tiles. As soon as information of the breach of orders was received, C. & Co. addressed a letter to B. & Co. expressing in strong terms their disapprobation of the departure from their orders, but did not signify their determination to disavow the transaction entirely, and consider the paper as sold on account of B. & Co. Held that C. & Co. were entitled to recover damages for the breach of their orders; that their not having giving notice to B. & Co. that the paper would be considered as sold on their account did not injure their claim, and that the amount of the damages may be determined by the positive and direct loss arising plainly and immediately from the breach of the orders.
If the principal, after a knowledge that his orders have been violated by his agent, receives merchandise purchased for him contrary to orders and sells the same without signifying any intention of disavowing the acts of the agent, an inference in favor of the ratification of the acts of the agent may fairly be drawn by the jury. But if the merchandise was received by the principal under a just confidence that his orders to his agent had been faithfully executed, such an inference would be in a high degree unreasonable.
The faithful execution of orders which an agent or correspondent has contracted to execute is of vital importance in commercial transactions, and may often affect the injured party far beyond the actual sum misapplied. A failure in this respect may entirely break up a voyage and defeat the whole enterprise. Speculative damages dependent on possible successive schemes ought not to be given in such cases, but positive and direct loss resulting plainly and immediately from the breach of orders may be taken into the estimate.
The jury, in an action for damages for breach of orders, may compensate the plaintiff for actual loss and not give vindictive damages. The profits which would have been obtained on the sale of the article directed to be purchased may be properly allowed as damages.
The bill of exceptions to the opinion of the court below chanroblesvirtualawlibrary
sets forth the pleadings and evidence, and exhibited the following case.
Cunningham & Loring, merchants of Boston, owners of the brig Halcyon, Skinner master, chartered by them to proceed from Havana to Leghorn with a cargo of sugars, directed Bell, De Yough & Co. merchants at that place and consignees of the brig, to purchase for them, to be shipped to Havana by the Halcyon on her return to that port, a quantity of marble tiles and wrapping paper. The letter containing these instructions was dated 15 September, 1824, and stated:
"The whole amount of freight received at Leghorn will be about for thousand six hundred petsos; please invest two thousand two hundred in marble tiles; the balance, after paying disbursements, please invest in wrapping paper. . . . We have further engaged whatever may be necessary to fill the brig on half profits, on account of which seven hundred petsos are to be paid in Leghorn; after purchasing tiles and paying disbursements, you will invest the balance in paper."
A duplicate of this letter was forwarded, to which the following postscript was added.
"P.S. We have further engaged whatever may be necessary to fill the brig, on half profits, on account of which seven hundred petsos are to be paid in Leghorn. After purchasing the tiles and paying disbursements, you will invest the balance in paper, as before mentioned. In previous orders the reams have been deficient in the proper number of sheets. We will thank you to pay particular attention to this, as well as having all the sheets entire."
This letter was received by the plaintiffs in error on 13 November, 1824, and on 9 December following, they addressed a letter to Cunningham & Loring in which they stated,
"The order you are pleased to give us for paper and marble tiles, to be paid for out of the freight of the Halcyon from Havana to our consignment has our particular attention."
"You have done very right to send on this order, as the wrapping paper cannot be got in readiness before the end
of January, and therefore had it been delayed longer, could not have been in time for your brig Halcyon."
"We have contracted for five thousand reams at as near your limits as possible, the article being just now in great demand. The tiles shall be collected also."
On 14 January, 1825 they wrote to Cunningham & Loring:
"The wrapping paper ordered by yours of 15 September will be in readiness by the end of this month, and we shall have by that time, ready to ship, ten thousand marble tiles of twelve ounces, seven thousand six hundred of fourteen ounces, and six thousand two hundred of sixteen ounces, which will be about the investment you desire of the freight from the Halcyon."
On 21 January, 1825, the plaintiffs in error informed the defendants of the arrival of the Halcyon, and on 21 February they addressed them another letter, stating
"The sample of wrapping paper sent us by Messrs. Murdoch, Storcy & Co. we found much inferior to any made in this state, and have executed your order with a much better article, although the difference in price bears no proportion. As your account current after purchasing the paper, which captain Skinner told us was the better article for investment, gave only a small balance, we increased a little one quantity of paper, and sent no tiles."
"We now hand you bill of lading and invoice amounting to P2,801 18 for 473 packages of wrapping paper, shipped for your account and risk on board your brig Halcyon, John Skinner master, which if found right, please to pass accordingly."
"Captain Skinner has been made aware of the superior quality of this parcel of paper, and that each ream is composed correctly of twenty quires of twenty-four and not sixteen sheets, as has been occasionally shipped, so that he will no doubt make an adequate price for it, because in realty the prices at which it is invoiced are reduced by this difference below those mentioned in your order."
The account current stated the investment of petsos 2801 18 in wrapping paper, and showed that the balance chanroblesvirtualawlibrary
of the freight and other assets in the hands of the plaintiffs in error, belonging to Cunningham & Loring, had been absorbed in the disbursements of the brig, &c.
The Halcyon proceeded to Havana, and there the paper shipped by the plaintiffs in error was sold, and the proceeds acco