Mulcahy v. Fenwick

| Mass. | Mar 28, 1894

Barker, J.

The case is reserved by a justice of the Superior Court, upon facts found and reported by him, but without any determination or adjudication of the rights of the parties. The question whether Hutchinson was the agent of Fenwick, and as such agent received and collected from the plaintiffs the principal and interest of the mortgage, is one raised by the pleadings, and upon it the plaintiffs have the burden of proof. The facts reported are as consistent with the theorjq that, in making the payments which he made to Fenwick, Hutchinson was acting for the plaintiffs, or for himself alone, as that he was an agent of Fenwick. The plaintiffs must therefore be held to have failed to prove that the payments to Hutchinson were in effect payments to Fenwick.

Upon the facts reported, the plaintiffs must be held to have made the payments to Hutchinson at their own risk. They had given a note and mortgage to one Letteney,- who "was a clerk in Hutchinson’s office, and they assumed that Hutchinson was the real party in interest, and made their payments to him. The note was payable to Letteney or order in three years from its date, and on the day after its date the note and mortgage were sold for value to Fenwick, and delivered to him, and thereafter kept in his possession. The assignment of the mortgage to him purported also to assign, transfer, and set over to him the note and claim thereby secured, but the note was not indorsed bjr Letteney until January, 1892, after maturity. The payments of principal were made to Hutchinson on June 19, 1890, November 7, 1890, and March 17,1891. The plaintiffs had no actual notice of Fenwick’s ownership of the note and mortgage, and he gave them no notice that he was in any way interested in the matter.

As Hutchinson was not the payee of the note, he had no apparent right to receive payment upon it, and in paying to him the plaintiffs acted at their own risk, and must bear the loss. If the note had been non-negotiable, instead of negotiable and not indorsed by the payee, the result must have been the same. The plaintiffs undertook, by the terms of the mortgage,, to pay the debt to Letteney “ or his executors, administrators, or assigns,” and by the note to pay it to Letteney “ or order,” and they have voluntarily chosen to pay to Hutchinson, who had no right, either from Letteney or the real owner, to receive payment. They are in the position neither of the maker of a negotiable note, who has paid it in due course of business to a holder who produced it in support of his authority to receive payment, nor of a mortgagor, who has paid to his mortgagee, having no knowledge that he has parted with the mortgage.

The plaintiffs contend that Letteney could not maintain an action against them upon the note, because it was not delivered to him and he paid no consideration for it; but the facts reported show that a full consideration moved to the plaintiffs for the note, and that they delivered both note and mortgage as operative instruments. The written assignment made Fenwick the owner of the note, although it was not indorsed, and payment to a stranger did not affect his rights.

The plaintiffs also contend that Fenwick was negligent in not giving the plaintiffs notice of the assignment before the maturity of the note, and that he should therefore bear the loss. But the law does not impute negligence to the assignee of a mortgage because he does not notify the mortgagor that he has taken an assignment, or because he receives interest from a third person, who offers to see that he receives his interest, or because he does not demand payment at the maturity of the mortgage. Fenwick owed no duty to the plaintiffs in this respect, and none of his acts stated in the report require the inference that he was at fault with reference to the plaintiffs.

The result is, that the plaintiffs have shown no right to have the note and mortgage cancelled, and their bill should be dismissed, without prejudice to their right to redeem on paying the principal of the mortgage, with interest from June 7, 1892, and a decree to that effect is to be entered in the Superior Court.

So ordered.