274 N.W. 390 | Neb. | 1937
This suit had its inception as one to foreclose a real
The factual situation is not as complicated as it would appear. The two brothers, Charles and Grotsie Neverve, own a tract of land consisting of about 960 acres as ténants in common which they mortgaged to the Federal Trust Company on the 26th of February, 1929, to secure their notes of the principal sum of $14,000. The Federal Trust Company sold these -notes and assigned the security to the Kansas City company on May 25, 1929, and the assignment of the mortgage was recorded soon thereafter. It is not questioned that the Kansas City company secured a first lien on the land ás security.
The defendants Neverve were unable to make the payments of principal, interest, and taxes promptly as stipulated in the contract. They had not paid the taxes for 1929
But it fairly appears from the record that the Kansas City company was not satisfied with this mortgage as an investment and that as early as April 3, 1931, complained about its delinquency and, on September 16 of the same year, suggested that the Neverves refinance their loan and pay their existing mortgage. There is a series of letters between the Kansas City company and the Federal Trust Company concerning this loan, with the former continually complaining about the manner in which the payments were made. The Federal Trust Company continued to service this loan until April 24, 1933.
The Federal Trust Company, as suggested by the Kansas City company, attempted to refinance this loan as early as August, 1932. From this effort to refinance arises the dispute in this case. The Neverves wished to divide this land among themselves and executed deeds to each other to accomplish this purpose. They each made application to the Federal Trust Company for a loan on their respective tracts, the total of which they hoped would be sufficient to pay all liens against the land. They executed notes and mortgages for this amount to the Federal Trust Company who in turn sold the notes and the mortgage security to the Cosmopolitan company. The Cosmopolitan company paid the Federal Trust Company for the notes and mortgage. The Cosmopolitan company was to have a first mortgage on the land, and it required the payment of all existing liens. At the time of the transaction it was thought that the sum was sufficient to pay the mortgage and all the mechanics’ liens against the land. The abstract had not been extended and delivered to the Cosmopolitan company
In the meantime, the Federal Trust Company became financially involved and used the money for another purpose than the payment of the first- mortgage of the Kansas City company and other liens. The cause of this controversy was due to the fact that the Federal Trust Company
It is the contention of the Cosmopolitan Old Line Life Insurance Company that when the Neverves gave a new mortgage to the Federal Trust Company, which was sold to it and the purchase price paid, it constituted payment to the Kansas City Life Insurance Company. This argument is grounded upon the proposition that the Federal Trust Company was the agent of the Kansas City company. The contract and the course of dealing between the two are said to evidence the nature of the relation between the two corporations.
The mortg-age of the Kansas City company was originally given to the Federal Trust Company by the Neverves. It was then sold to the insurance company. The mortgage and note contained provisions that “both principal and interest payable at the office of Federal Trust Company in Lincoln, Nebr.” This arrangement was never changed or varied until April 24, 1933, some time after the occurrences which are material to this suit. The Federal Trust Company serviced the loan and acted as agent for the Kansas City company. The appellant insists that we conclude that the circumstances related was a payment of the money due on the notes and that the mortgage became void which the Kansas City company seeks to foreclose. Numerous cases are cited in support of the old, well-established rule in this jurisdiction, announced in Harrison Nat. Bank v. Austin, 65 Neb. 632, 91 N. W. 540: “Where one has placed his agent for the investment of money in notes and mortgages in such a situation that persons of ordinary prudence, acquainted with business usages, would be justified in regarding such agent as having full authority with reference to the extension, collection, etc., of such notes and mortgages, payment to such agent will be deemed payment to the principal.”
But the rule is scarcely applicable to this case, for the reason that the Cosmopolitan company did not intend to pay this mortgage except for the purpose of making its
There is another well-established rule applicable to the facts presented here that, where one of two parties to a transaction must suffer loss through the misconduct of a third person, the burden will be allowed to fall where equity and justice require. Omaha Elevator Co. v. Chicago, B. & Q. R. Co., 104 Neb. 566, 178 N. W. 211; Knopf v. Perkins, 127 Neb. 366, 255 N. W. 30.
Either the Cosmopolitan company or the Kansas City company must suffer as a result of the misconduct of the Federal Trust Company which was in reality a loan broker in this case. The Cosmopolitan Old Line Life Insurance Company sought to buy a loan from it just as the Kansas City company had a few years before. The service to be rendered was almost identical. The condition of the purchase was that the abstract be extended to date and show the mortgage as a first lien. It was not an unequivocal payment of the old mortgage. The money was entrusted to the Federal Trust Company on condition that it could secure a first mortgage. It never could in this case. Money paid to a loan broker to purchase notes secured by a first mortgage where subsisting liens must be paid is not such an unequivocal payment of a first mortgage as will discharge the secured debt.
The Cosmopolitan Old Line Life Insurance Company did not rely upon the Federal Trust Company as agent for the Kansas City Life Insurance Company but depended upon
Affirmed.