Bautz v. Adams

• Decision Date: 19 March 1907
• Parties: BAUTZ v. ADAMS ET AL.
• Court: Wisconsin Supreme Court

131 Wis. 152

111 N.W. 69

BAUTZ

v.ADAMS ET AL.

Supreme Court of Wisconsin.

March 19, 1907.

Syllabus by the Judge.

A person who deals with land by taking a mortgage or deed thereof, is protected by the recording act as to a prior mortgage on the property which has been improperly discharged by the record owner, but not the real owner, of the security, such person not having notice of the assignment of such prior mortgage.

A debtor upon commercial paper whose obligation is secured by a mortgage on real estate owned by him is not protected by the recording act in paying the mortgage indebtedness to the record, but not the real, owner of the mortgage and taking a release thereof, such record owner not having possession of the security nor actual authority from the real owner to act as the latter's agent in the transaction.

Agency to receive payment of money due upon commercial paper secured by mortgage or otherwise can only be implied from possession, by the one assuming to have authority in the matter, of the securities and capacity to deliver the same upon payment being made.

Actual authority of a person, not the owner or possessor of a note and mortgage, to receive payment of the indebtedness is essential, in order for such payment to extinguish the security.

The actual authority above mentioned need not be expressed in writing or established by direct evidence. It may be established by circumstances showing with reasonable certainty its existence.

On appeal, in testing the sufficiency of a record to support a judgment, as a rule, the presumptions are against error and such only are to be considered as appear with reasonable clearness.

If a finding by a trial court, which is vital to a judgment is ambiguous, that one of two reasonable probable meanings which will support, is to be preferred over one that will defeat, it.

If a fact, essential to a judgment rendered in an equity case, does not appear to have been found by the trial court, but it appears from the record with reasonable certainty to exist, it may be found on appeal and judgment be rendered or directed accordingly.

Appeal from Circuit Court, Milwaukee County; Orren T. Williams, Judge.

Action by Wendelin Bautz against Mary M. Adams and others. From a judgment in favor of defendants, plaintiff appeals. Affirmed.

Action to foreclose a mortgage. An answer was interposed pleading, among other things, payment of the mortgage indebtedness and discharge of the mortgage. The issues of fact were thus decided:

(1) December 5, 1891, Mary M. Adams gave Wilhelm Woldt her promissory note for $1,350, due in four years, with interest at the rate of 6 1/2 per cent. per annum, payable semi-annually, securing payment thereon by the mortgage mentioned in the complaint. (2) At the time of the aforesaid transaction one C. W. Milbrath by a power of attorney duly recorded was the attorney in fact for said Wilhelm Woldt. (3) January 17, 1892, by virtue of such power of attorney said Milbrath by an instrument duly executed and recorded, assigned said mortgage and note for value to the plaintiff, who continued in possession thereof up to the date of the trial. (4) The assignment was not recorded until the 30th day of August, 1905. (5) April 2, 1892, the mortgagor conveyed the mortgaged premises to said Milbrath, the conveyance being duly recorded April 15, 1892. May 5, 1904, said Milbrath conveyed said premises to one Gustav C. Mueller, the deed being duly recorded June 3, 1904. March 4, 1905, said Mueller conveyed the premises to George M. Hinkley by warranty deed, which was duly recorded March 13, 1905. (6) Said Hinkley purchased the premises subject to said mortgage and note December 5, 1905, and was furnished with an abstract showing such mortgage to be outstanding in the name of Wilhelm Woldt. He was informed that said Milbrath, acting under the aforesaid power of attorney, had full power to receive payment of the principal of and interest on said note and to satisfy and discharge the mortgage. (7) April 6, 1905, said Hinkley paid said Milbrath, as attorney for said Woldt, $1,362.50, by his personal check, which which was the whole amount due, said Milbrath, as such attorney, making and delivering to said Hinkley a satisfaction and discharge of said mortgage, which was duly recorded in the office of the register of deeds, April 7, 1905. (8) At the time of such payment said Hinkley had no knowledge of any assignment of said mortgage or that plaintiff had any interest therein and acted in good faith. (9) Plaintiff was the owner and holder of the note and mortgage and permitted said Milbrath to represent himself as authorized to receive payment of the note and satisfy the mortgage. Said Milbrath and the C. W. Milbrath Company, of which he was president, had for many years acted as agent of plaintiff in loaning money upon notes and mortgages and in receiving payments thereon. The amount due on the note and mortgage in question was placed to the credit of plaintiff on the books of the Milbrath Company, but he received no money nor knew of the fact.

Upon such findings the court held that the mortgage was extinguished, and that the defendants, executors of the last will and testament of George M. Hinkley, were entitled to judgment dismissing the complaint with costs. Judgment was accordingly rendered from which plaintiff appealed.James T. Drought (Lawrence A. Olwell, of counsel), for appellant.

Edgar L. Wood, for respondents.

MARSHALL, J. (after stating the facts).

So far as the findings are concerned, to the effect that Hinkley paid the mortgage indebtedness to C. W. Milbrath on the faith of the mortgage appearing of record in the name of Wilhelm Woldt and a power of attorney thus appearing authorizing Milbrath to loan money upon mortgages and to release, satisfy or assign all notes and mortgages owned by Woldt and to collect all rents and lease, sell and convey all real estate and personal property and to perform other acts for and in the name of said Woldt, whether they are open to successful attack as contrary to the clear preponderance of the evidence is not deemed material. Therefore, we will not follow in detail the argument of counsel for appellant on that branch of the case.

The evidence is undisputed that the official records, at the time Hinkley paid the money to Milbrath, showed that the mortgage was outstanding in the name of Woldt and that C. W. Milbrath was his attorney to do the things heretofore mentioned. It is also undisputed that interest on the note, as the same became due, was for many years paid to Milbrath and by him paid to the one entitled thereto on production of the paper, and that Hinkley and his agent, supposing from the state of the record that Milbrath possessed authority to receive payment of the principal of the note and to discharge the mortgage, made such payment and received a release of the mortgage, as stated in the findings. Whether Hinkley was warranted in relying on the record, as he did, is the first question to be determined.

Counsel for respondents in support of the affirmative of the proposition stated cite Marling v. Nommensen, 127 Wis. 363, 106 N. W. 844,Friend v. Yahr, 126 Wis. 291, 104 N. W. 997, 1 L. R. A. (N. S.) 891, 110 Am. St. Rep. 924, and Mason v. Beach, 55 Wis. 607, 13 N. W. 884. A brief analysis thereof will suffice to show that they do not apply to the situation before us.

In Mason v. Beach, the discharge of the mortgage was made by the plaintiff pending foreclosure thereof after he had transferred his interest to another who concealed the transaction. The court held that, under the statute permitting an action after the transfer of the plaintiff's interest to be continued in his name or in the name of the assignee, in case no substitute is made, as to persons having no notice of the transfer, the plaintiff is to be regarded as possessing authority to deal with the subject of the litigation as owner thereof. No comment is necessary to show that such doctrine does not rule this case.

In Friend v. Yahr, the plaintiff dealt with the real estate by taking an assignment of a mortgage thereon and a note secured thereby, relying on a release of a prior mortgage by the person having title thereto of record. On that branch of the case the question of whether one is warranted in paying a mortgage indebtedness to the record owner relying wholly on the record, the securities not being in possession of such owner, was not involved. The precise point decided is indicated by the following language used in the opinion: “A person taking a mortgage from the...