189 Ky. 136 | Ky. Ct. App. | 1920
Opinion op. the Court by
Affirming on appeals of John A. McDowell, German Savings Fund Co. Building Association’s Trustee in Bankruptcy and George E. Bauman, and reversing on appeal of Mueller & Martin.
These four appeals are from the same judgment, and having been heard together, will be considered in one opinion.
George L. Martin was the secretary of the German Savings Fund Company Building Association, and also of Mueller & Martin, Inc., a real estate brokerage corporation. The offices of these corporations were in the same room. George E. Bauman had purchased from John A. McDowell a lot, and owed thereon the sum of $2,100.00. He also owed McDowell the sum of $31.00 for unexpired insurance. Bauman subscribed for $1,800,00 of stock in
In a suit involving the rights of the parties Mueller & Martin, Inc., were given judgment against John A. McDowell for the sum of $2,131.00, with interest from January 6, 1916, while McDowell was given judgment against Bauman for the same sum and awarded a lien on the lot which he had sold to Bauman. By the same judgment, the note and mortgage executed by Bauman to the building association were cancelled, and Bauman was given judgment against the building association for the sum of $511.00, with interest from January 26, 1918, which sum was composed of the $331.00 endorsed to Martin as secretary of the association, together with certain dues which he had paid to Martin as secretary. All the parties to the judgment question its correctness.
The case is simply one where Bauman’s money, which was endorsed to Martin as secretary for use in discharging the liens on the property, was embezzled by Martin, and Martin used the funds of Mueller & Martin, Inc., to pay the debt. Though authorized by the corporation to draw checks on its funds, clearly his authority was limited to the drawing of checks for the purpose of discharging the corporation’s obligations, and did not include the right to draw checks to discharge the obligations of others. McDowell cannot be regarded as a purchaser in good faith, for when his attorney delivered the deed and received the check, the check itself was notice of the fact that it was drawn on the funds of the corporation to dis
The propriety of that portion of the judgment cancelling’ the note and mortg-age to the building associa.tion is questioned by the latter’s trustee in bankruptcy. It is argued that when Bauman delivered the money to Martin, the association’s secretary, Martin became his agent, and the association therefore should not be held liable for Martin’s acts. In nearly every case where money is borrowed from a building association to pay an outstanding lien, the secretary, in order that the association may acquire a first lien on the property, sees that the loan is used to discharge the first lien. Hence, when Martin took the money borrowed, together with that furnished by Bauman, he acted as the agent of the association, and the association is bound by his acts. As the case stands, therefore, Bauman did not receive any of the association’s money. Hence there was no consideration for the note and mortgage, and the judgment cancelling them Is proper.
On the appeals of John A. McDowell, the German Savings Fund Company Building Association’s-Trustee in Bankruptcy and George E. Bauman, the judgment is affirmed. On the appeal of Mueller & Martin, the judgment is reversed and the cause remanded with directions to enter judgment in conformity with this opinion.