144 N.W. 1077 | N.D. | 1913
Plaintiff brings this action in equity to quiet title against certain mortgages held by the defendants M. L. Davenport and Butler & Swords, who by answer respectively aver the ownership of an $870 first mortgage in Davenport, and an $87 commission mortgage in Butler & Swords. On trial it was stipulated that the mortgages in question were executed by the plaintiff and wife to Butler & Swords, a copartnership consisting of E. W. Butler and G. W. Swords, securing promissory notes of $870 and $87, respectively, dated April 12, 1909, and duly recorded; and that the principal mortgage of $870 had been assigned to defendant Davenport, who took the same as a purchaser in good faith and without notice of any defect in title or consideration, or of any of the facts hereinafter recited concerned in the negotiations between plaintiff and Butler & Swords. Defendants Davenport, Due, and the Carpió State Bank, so far as the trial was concerned, were eliminated as parties, and the action proceeded against Butler & Swords in whose name the second mortgage stood of record, and which mortgage was canceled by the trial court for failure of consideration of the note secured thereby. These defendants appeal and demand a trial de novo.
The question involved is a mixed one of law and fact, and depends principally upon whose agent was one O. G. Dahl, an intermediary,, through whom the loan was negotiated with defendants Butler & Swords, and who embezzled the proceeds from the loan received from them. Tt is apparent that both the plaintiff and these defendants, in dealing with each other and with Dahl, have exercised the utmost of good faith, plaintiff supposing Dahl to be a loan broker with connections with Butler & Swords, who in turn supposed Dahl was fully authorized to act for plaintiff, as his actions had led them to believe, and that they, when- dealing with Dahl, were dealing with the plaintiff, as he was not their agent in securing and negotiating loans generally, but instead acted in this instance on his own initiative.
Plaintiff negotiated with Dahl and gave him the usual application for loan, taken on the printed applications of Butler & Swords, which was evidently submitted to them and approved. In the application
Q. This mortgage then just came in unsolicited ?
A. I could not tell you anything about it.
It was well said in Merriam v. Haas, 154 U. S. 542, and 18 L. ed. 29, 14 Sup. Ct. Rep. 1159, that to determine in a given case whether a person is the agent of the lender or of the borrower is a question of the weight of testimony rather than of the application of legal principles. Again, the principle is restated in 31 Cyc. 1222 et seq., that “in the negotiation of loans it is often difficult to determine whether an intermediary is the agent of the borrower or of the lender. Each case must be decided upon its own particular circumstances. If a person desiring a loan makes known that desire to one who applies to a money lender and consummates the loan, the intermediary is the agent of the borrower, not of the lender. So, if the borrower, in a written application or otherwise, expressly makes the intermediary his agent, if he pays the agent’s commission for negotiating the loan, or if he employs the intermediary to examine the title to the property offered as security, or to discharge prior encumbrances thereon, these facts taken collectively or in various lesser comhinations justify an inference that the intermediary is the agent of the borrower. On the other hand, if a money lender employs the intermediary to negotiate loans, to examine the title to property offered as security, to see that the property is discharged from prior encumbrances, to prepare the papers and see to the execution thereof, to pay over the money to the borrower, or to perform other services in regard to the loan, these facts taken collectively or in various lesser combinations justify an inference that the intermediary is the agent of the lender. If the lender pays the intermediary’s commission, it tends to establish an agency in the lender’s behalf, and if the service is performed at the request and by the direction of the
We conclude that it sufficiently appears that Larson did not employ Dahl as his agent, but instead dealt with him supposing him to be either a money lender or an agent for the defendants. He says the application for loan was read to him, and he must have then understood from his understanding of the transactions- that he was dealing with Butler & Swords through Dahl as their agent. And so viewed this harmonizes entirely his subsequent actions in going with him to Minot to procure the money to use at the sale. Nothing would be more natural on his part than that he would accept assistance from Dahl, supposing that Dahl could render him assistance with Dahl’s principals, the mortgagees. Larson naturally concluded that when Butler was sending the draft or money to Dahl he was placing it in the hands of Butler’s agent; hence Larson had nothing to worry about. And, likewise, his expectation that he would at some time receive the money from Dahl was but a natural one, not tending to estop him from relying upon the .defendant mortgagee for final payment either direct to him or through Dahl, their supposed agent for payment. And from this standpoint his courteous letter of July 13th was nothing more than calling to the attention of the mortgagee the fact that he had not received the money from their supposed, agent.
On the contrary, the defendants contend they dealt with Dahl assuming him to be the agent of the mortgagor, plaintiff; and that when Dahl instructed them to forward the draft to him at Carpió in payment of the mortgage loan, Dahl had either express authority from his principal to so direct and to receive the money, or that such order was one reasonably to be inferred as within Dahl’s implied powers as agent, and within the ostensible scope of such assumed express or implied agency;
While the former contention of the plaintiff is in harmony with the facts, that of the defendants is defective in two particulars: (1) in the assumption that Dahl was the agent of the mortgagor in the absence of any proof of actual agency, or of the holding out by plaintiff of Dahl as his agent in the matter; and (2) the payment to Dahl of the mortgage proceeds upon a mere presumption of agency unsupported by facts amounting to a holding out or proof of an ostensible agency or of an actual agency. At this point the defendants by law were charged with knowledge of the powers of the agent, as there had been no ostensible agency shown to exist, and acted at their peril when paying him the proceeds of this mortgage. It would seem that reasonable precaution should have dictated either that the proceeds be sent to the mortgagor, or at least that the draft be drawn in the name of the mortgagor. In doing otherwise they were relying upon the statements either of their own agent or that of a third person, with whom, in the latter instance, they must act at their peril. The events of the Minot trip are important only as bearing upon the relations of the parties. They might have significance if the record established that Larson knew the draft sent was drawn to Dahl, and further proof that in so doing defendants supposed they were dealing with Dahl under the assumption known to Larson that Dahl was supposed to be Larson’s agent in receiving such money. But of these two essentials there is no proof; the defense is based upon assumptions instead of upon facts. It is a hardship that they should forfeit their security and likewise their debt under these circumstances, but it would be equally unjust to compel the mortgagor to pay something for which he has received no consideration, and in law the mortgagee under these circumstances, for retribution, must look to the party whom he has under error of fact enriched through his own negligence. In the final analysis both the facts and law seem plain and conclusive.
The judgment of the trial court is therefore affirmed.