
    EGISTO P. FABBRI et al., Plaintiffs and Respondents, v. MARTIN KALBFLEISCH et al., Defendants and Appellants.
    
      [Decided March 5, 1870.]
    When a contract made subsequently to the act of Congress authorizing a paper currency does not specifically provide in what currency the business done under it shall be transacted, it will be presumed that it is to be transacted in the paper currency.
    A custom that an agent who procures an insurance for his principal is entitled to scrip issued in respect of such insurance will not be upheld.
    Before Monell, Jones, and Spencer, JJ.
    Appeal from a judgment entered upon the report of a referee.
    This was an action to recover a balance, claimed by the plaintiffs to be due them, for advances and commissions, upon a final settlement of the accounts of four importations of nitrate of soda, made by them for the defendants.
    The accounts were made up in the instance of each cargo, on the footing of the currency cost in New York of the bills bought there to meet the drafts in London, drawn by plaintiffs’ correspondents in South America, on account of the shipments, and as of the day when the bills were to be remitted hence to meet those drafts; of the cost in currency here of the defendants’ proportion of the freight and duty, payable in gold here on entry of the cargoes; of the cost, paid in currency here, of defendants’ proportion of the expenses on the cargoes; of the brokerage and interest accounts in currency; and upon the aggregate of all these amounts the plaintiffs charged their commissions, as agreed.
    The defendants deny the correctness of the accounts, and allege that they should be credited about $600 for insurance scrip, received by the plaintiffs; that they are overcharged about $2,100 on purchases of gold; that they are overcharged about $2,000 on commissions and brokerage.
    
      The referee found in favor of the plaintiffs, and the defendants appealed from the judgment entered upon the report of the referee.
    
      Mr. Alexander McCue for appellants.
    The right of the defendants to the insurance scrip is unquestionable. The custom sought to be established as to the brokers’ right to retain scrip issued by way of profit, or reduction of premium on insurance effected by the principal, is against policy and law (Minnesota Central R. R. Co. v. Morgan, 52 Barb., 217).
    Such a custom is entirely inconsistent with fair and honorable dealings as between principal and broker, and holds out the strongest inducement to the broker to effect insurance at the highest rates, at the cost of the principal, in order that he may himself receive the greater amount of return premium. In such a case the interest of the broker is directly in conflict with that of the principal.
    The value of the scrip in question is fixed at $508.
    The plaintiffs and the referee have fallen into the fatal error of regarding gold as merchandise, which the plaintiffs had the right to buy for the defendants at any time they, the plaintiffs, might elect, instead of treating gold as a lawful currency, which by express agreement, and by law, was to govern the entire contract, and to determine the rights of the parties thereunder. The referee therefore erred in not recognizing the fact that gold, in which he finds the commissions were earned, was a currency different and distinct, it is true, from what is called the legal tender, but equally with that currency established and recognized by law as the currency of the country (Rhodes v. Bronson, 7 Wallace, p. 323).
    In that case the court declare “ that there were two descriptions of money in use,” and “ that contracts to pay in either were equally sanctioned by law.”
    The accounts of the plaintiffs, therefore, should have been kept in gold, and settled upon that basis, and the charges and expenses of unloading, etc., should have been charged and paid in legal tender currency, being the currency in which they were incurred; and if the plaintiffs are entitled to commissions thereon, the commissions should be charged in currency.
    The plaintiffs were not authorized to make purchases of gold, as such, for the account of the defendants. It was their duty to purchase and pay for the cargoes, and the defendants were liable only for the actual cost thereof.
    If, on making remittances, they remitted in excess of the actual amount required, the loss, if any, wasi their own—not the defendants’.
    How, had the accounts been made up in gold precisely as the liabilities were incurred, no injustice would have resulted to either party. The plaintiffs paid gold, the value of which never varied. In most instances the defendants advanced gold in kind, and when they paid currency it was only necessary to turn it into gold on that day. This the plaintiffs had a right to do, and the defendants have made up their statement upon this basis.
    On this system, the excess above referred to, which was charged to the defendants, would have resulted only in the loss of a little interest from October, 1864, to April, 1865, when the sum was credited, assuming for the sake of the argument that the plaintiffs had the right to make the defendants suffer for their own mistake; because $1,374.70 in gold, in October, 1864, was $1,374.70 in gold in April, 1865, neither more nor less, while now, when the defendants are called upon to settle, gold which was charged to them at $3,299.28, can be purchased for $1,787.11 in the same currency.
    
      Mr. George Wales Soren for respondents.
    The defendants cannot maintain exceptions taken to the admission of evidence of usage.
    Though the language of the contract be conceded to be on its face entirely explicit and unambiguous, evidence of usage cannot be excluded on the ground of incompetency (2 Phillips on Evidence (4th ed.),p. 729, note; Gibson v. Culver, 17 Wend., 305; Rushforth v. Hadfield, 7 East., 225; 1 Duer, Insurance, p. 254).
    That one who directs a broker or agent to make' purchases for him must be understood to consent that it should be done in the usual manner, and that evidence of the usage or custom is admissible, see Horton v. Morgan (19 N. Y., 172); Whitehouse v. Moore (13 Abb. Pr., 142); Pollock v. Stables (2 Q. B., 765).
    The evidence as to the expenses was competent, and was properly received. If there was any technical objection to any part of it, it was cured by the testimony subsequently given.
    The referee could not have decided, upon the evidence, as to the insurance scrip, otherwise than he did.
    Evidence of the usage in respect to such scrip being admissible, as already shown, it was proved that it was the custom for the merchant to retain it in such a case as this.
    The only instance to which defendants can appeal to defeat that evidence is that, where the scrip is retained, no special commission is charged. Ho such special commission was paid to the plaintiffs, and they were, therefore, entitled to the scrip, according to usage.
    It is to be observed that the defendants offered no proof, on their own part, to disprove the rule as to the scrip claimed by the plaintiff.
    There is nothing in the so-called legal tender or currency acts, or in the decisions under them, which impairs the validity of the referee’s decision in this case.
    Since the enactment of those laws, two descriptions of lawful money have been recognized as existing, both of them authorized by law, and both made legal tender in payments (Rhodes v. Bronson, 7 Wall., 251).
    Hothing in tl e acts forbids the making of contracts, to be performed by gold payments; and upon the construction of a contract, the courts may, consistently with these acts, inquire in which sort of money, whether gold or paper, the parties intended to make payment.
    
      The simple question here is, in which currency did the parties intend that their transactions should be conducted—and no statute or decision forbade the referee to uphold such a contract in this respect, as the plaintiffs alleged, and claim to have proven, namely, an agreement to pay all advances and commissions according to currency values.
    The principle is conceded by the Supreme Court of the United States, in its most recent decisions, that since and notwithstanding the currency acts, there may be valid contracts payable in coin, which cannot be satisfied by tender of their nominal equivalent in note dollars.
    See illustrations as to duties, special deposits of coin, agreements by government to pay coin for bullion, etc., in Ehodes v. Bronson (7 Wallace, 229).
    A fair application of that principle here should defeat defendants’ objections to the stating in currency values the amounts paid in gold for duties, exchanges, and freights; and should also forbid any such statement of the accounts as defendants propose, which adds gold cost for such charges to currency cost for other expenses, as if there were no difference between them (see Rhodes v. Bronson, 7 Wallace, 292; Butler v. Horwitz, 7 Wallace, 261; Rankine v. Demott, 4 Law Rep. (Boston), 194, Phil. Leg. Intell., July 2, 1869; compare Rhodes v. Bronson, 34 N. Y., 656; per Agnew, J., 2 P. F. Smith (Penn.), 95, 96).
   By the Court:

Jones, J.

The important question in this case is whether the contract between the parties was to be carried out on a gold or currency basis. If on the former, then the accounts should have been kept in gold, if on the latter, then in currency.

It must have been present in the minds of both parties that the payment for the merchandise to be bought would have to be paid for in sterling, and that the sterling would have to be bought with gold. If there were no other considerations to be taken into view it would be apparent that plaintiff would be bound to advance the gold for the purchase of the sterling, and could only charge the defendants with the amount so advanced at its face. But it was also equally present in the minds of the parties that there existed two currencies—one of gold and one of paper; that the paper currency was called "into existence by the authority of the United States Grovernment to meet an. exigency for which the supply of coin was inadequate; that in meeting this exigency the paper currencynecessarily became the medium through which munitions of war were to be furnished, armies levied, provisioned, clothed, and paid, and mercantile and monetary business was to be transacted within the United States; that as a necessary consequence of this, when the use of the gold currency became necessary for foreign or governmental transactions, it would have to be purchased with the paper currency the same as any other commodity; and as a further consequence of this, that every dollar of gold currency purchased would cost more than a dollar of the paper currency.

"When a contract made subsequent to the calling into existence of the paper currency "does not specifically provide (as the one in question does not) for the transaction of the business under it (including therein the charges to be made, the credits allowed, computations to be made, and accounts kept), it must be presumed that such business is to be transacted in that currency which had been called into existence by the United States Q-overnment, and which was necessarily and universally adopted as the medium through which to transact all mercantile and monetary business within the United States—to wit, the paper currency.

This is one of the results of the decisions holding that there-exists in the United States two distinct kinds of currency authorized and established by its laws—the one a specie currency, and the other a paper currency.

It follows from the above views that the charges are properly made in the paper currency value of the gold used and advanced by plaintiff at the time the same was so used and advanced, and that the credits are properly allowed at the paper currency value of the gold received from defendants at the time of the receipts. The paper currency thus charged constitutes, within the purview of the agreement, the cost of the merchandise on which the commissions are to be charged, and they are to be charged in paper currency.

The circumstances under which the over-payments were made were such as not only to justify the plaintiffs in making them, but to render it their duty to make them.

As they simply performed their duty in this respect they should fee exonerated from loss to arise therefrom. Under the view above taken of the contract, these over-payments are properly charged against the defendant at the currency value at the time they were made, and properly credited at the currency value at the time of repayment.

It is not, however, perceived on what principle a party who procures his own goods to be insured and pays the premium of insurance thereon is, in the absence of an express contract to the contrary, not entitled to all the benefits springing out of such insurance.

A custom was endeavored to be proved to the effect that, as to some of these benefits—to wit, the insurance scrip issued in respect of the insurance—he is not entitled to them, but that his agent who procured the insurance for him is. Such custom cannot be allowed to overrule the principles of law which would otherwise be applicable.

It was sought to found the custom on the ground of the right to receive the scrip being the compensation in part for the services of the agent in procuring the insurance and in attending to the collection of the loss if any should occur. Such a foundation is unsubstantial. It would make the compensation depend not on the intrinsic value of the service, but contingently on the prosperity of the company whereby profits might become divisible among the holders of the scrip. Thus, for services of equal value an agent in one case would receive nothing from his scrip, and in others divers sums varying in amount. A custom which introduces such a sliding scale of compensation for services of equal value cannot be said to be well founded, and should not be .allowed to obtain.

If, however, this foundation were sufficient to support the custom, yet the contract in question provided for the compensation of plaintiffs in procuring insurance, and that provision includes any further compensation, whether by custom or otherwise.

Under a certain state of facts these plaintiffs might perhaps be entitled to the scrip. For instance, if they had given to the insurance company their advance premium notes for a large amount, upon which they were liable to be assessed for the whole amount thereof although no premium had been earned, here they might be said to be entitled to the profits earned, because the sharing in the profits depends not on the payment of premiums, but on the advance to the company of the credit of the giver of the note to be used in the prosecution and furtherance of the business which creates the profits. Such a state of facts does not appear in this case.

The defendants consequently are entitled to be allowed for the value of the scrip, which is $508.

The judgment reversed, order of reference vacated, and new trial ordered, with costs to the appellant to abide the event, unless plaintiffs stipulate to reduce the judgment by $508. If plaintiffs so stipulate, then judgment affirmed, without costs of appeal.  