Byrne v. Dennis

• Decision Date: 02 February 1931
• Docket Number: 305
• Citation: 154 A. 123,303 Pa. 72
• Parties: Byrne, Appellant, v. Dennis et al
• Court: Pennsylvania Supreme Court

154 A. 123

303 Pa. 72

Byrne, Appellant, v. Dennis et al

No. 305

Supreme Court of Pennsylvania

February 2, 1931

Argued January 6, 1931

Appeal, No. 305, Jan. T., 1930, by plaintiff, from decree of C.P. No. 3, Phila. Co., March T., 1928, No. 13035, dismissing bill in equity, in case of Bridget Byrne v. Albert Dennis Ruth Sagen, Mary M. Loney, Paul Fulleborn and Marie Theresa Fulleborn, Frank R. Loney, William Eglin, Meyer Eglin Benjamin Eglin, Lithuanian Central Building & Loan Association, St. Edmond's Building & Loan Association, David S. Greenberg and Southwark Title & Trust Co. Affirmed.

Bill for accounting and conveyance of real estate. Before MacNEILLE, J.

The opinion of the Supreme Court states the facts.

Bill dismissed. Plaintiff appealed.

Error assigned, inter alia, was decree, quoting record.

Decree affirmed; costs to be paid by appellant.

Thomas S. Lanard, with him Charles A. Rittenhouse, 3d, for appellant. -- Loney was the agent of plaintiff at the inception of the transaction; his agency ceased, appellant contends, when he completed his first fraud, to wit, the deed from Byrne to Dennis, due to his adverse interest in the subject-matter.

A trust ex maleficio can arise only at the inception of the title, from fraud when practiced in obtaining it: Turney v. McKown, 242 Pa. 565.

It seems to be well settled in Pennsylvania that, where one employs an agent to do a specific thing, as, in this case, to take charge of the transfer of real estate, he is bound by all the knowledge the agent has in connection with the transaction: Sergeant v. Ingersoll, 15 Pa. 343; Nat. Bank of Bedford v. Stever, 169 Pa. 574; Chalick v. Weintraub, 90 Pa.Super. 252.

As between Loney and Fulleborn, Fulleborn is confronted with the fact that his agent had knowledge of the resulting trust in favor of appellant, and therefore was bound to see to the proper application of the purchase money.

A purchaser cannot make payment to a third person who is not properly authorized to receive the same: Kulp v. Markley, 267 Pa. 406; Hopkins v. Phillips, 76 Pa.Super. 243.

The Eglins cannot participate in the fraud of Loney: Robinson v. Hodgson, 73 Pa. 202; Miron v. Percheck, 279 Pa. 456.

Where a mortgagee hands a check drawn to the order of the mortgagor to a third person without any authority from the mortgagor to so do, and the third person forges the mortgagor's name and collects the check, the mortgagee should not stand the loss: Foley v. Building Assn., 69 Pa.Super. 213.

It is therefore respectfully submitted that the present assignments of error should be sustained and the decree of the court below be set aside and a decree entered for appellant against defendant, Fulleborn: Pusic v. Salak, 261 Pa. 512.

Matthew Randell, for appellees, with him Harry F. Felger, for Ruth Sagen, Meyer Eglin and Benj. Eglin; John Dolman, for Mary Loney; Clinton A. Sowers, for Paul and Marie Theresa Fulleborn; Ballard, Spahr, Andrews & Ingersoll, for Lithuanian B. & L. Assn.; and Jenkins & Bennett, for Southwark Title & Trust Co. -- When one of two innocent persons must suffer, the one who made possible the commission of the fraud, must be the loser: Vanderslice v. Ins. Co., 13 Pa.Super. 455; Hertzler v. Nissly, 295 Pa. 62; Building Assn. v. Halpern, 270 Pa. 169.

To visit the principal with constructive notice, it is necessary that the knowledge of the agent or attorney should be gained in the course of the same transaction in which he is employed by his client: Gilkeson v. Thompson, 210 Pa. 355.

The employment by the two Fulleborns of Loney for the purpose of purchasing the premises was entirely separate, independent and distinct from the employment of Loney by plaintiff to sell her property: Bank of Bangor v. Trust Co., 297 Pa. 115; Nat. Union F. Ins. Co. v. Bank, 276 Pa. 222; Frank v. Trust Co., 216 Pa. 40.

Before FRAZER, C.J., WALLING, SIMPSON, KEPHART, SADLER, SCHAFFER and MAXEY, JJ.

OPINION

MR. JUSTICE KEPHART:

Appellant, a widow, employed Loney as an agent to dispose of her real estate. He procured for her a loan on a mortgage from a building and loan association. After she executed the mortgage, he took it to the association and received in return a check payable to her order. He then forged her endorsement on the check, secured the money from the drawee bank, and misappropriated it. To continue to conceal his fraud, he induced appellant to convey the property to a clerk in his office on the representation that he had a purchaser for it. Later, Loney becoming involved with other clients, Eglins, his clerk transferred the property to such clients' nominee in part liquidation of a defalcation to them. Thereafter his mother, without knowledge of her son's fraud, gave her notes and other obligations to such clients' nominee for the property in reduction of Loney's defalcation. She afterwards conveyed the property, her son acting as agent, to Fulleborns for $6,500. They also had no knowledge of her son's fraud. This sum was distributed among the various persons claiming as lien creditors or as the mother's creditors or others. Part of it went into Loney's hands. A bill was filed by appellant against all persons through whom title to the property had passed, down to and including the Fulleborns. The bill prayed for a reconveyance of the property or an accounting of the purchase price from Fulleborns, with a decree declaring all debts created on account of the property void as to her. The court below dismissed the bill.

It is contended by appellant that Fulleborns and all those who dealt with Loney were affected with knowledge of his fraud. In Hertzler v. Nissly, 295 Pa. 62, 65, we said "It is true that the principal is bound by the knowledge acquired by the agent in the course of employment. . ., but not when secured in the course of other independent transactions: Fourth Bleucher B. Assn. v. Halpern, 270 Pa. 169; Gilkeson v. Thompson, 210 Pa. 355; B. & P. Ry. Co. v. American Bangor Slate Co., 203 Pa. 6." However, in Gunster v. Scranton, etc., Co., 181 Pa. 327, 337, 338, we said: "The rule that knowledge or notice on the part of the agent is to be treated as notice to the principal is founded on the duty of the agent to communicate all material information to his principal, and the presumption that he has done so. But legal presumptions ought to be logical inferences from the natural and usual conduct of men under the circumstances. . . . No agent who is acting in his own antagonistic interest or who is about to commit a fraud by which his principal will be affected does in fact inform the latter, and any conclusion drawn from a presumption that he has done so is contrary to all experience of human nature. If it be urged, as in some cases, that the principal having put the agent in his place should, as a matter of public policy, be held answerable for all the latter does, a sound answer is suggested by the court in Allen v. So. Boston R.R., 150 Mass. 200, 206, that an independent fraud committed by an agent on his own account is beyond the scope of his employment, and bears analogy to a tort wilfully committed by a servant for his own purposes, and not as a means of performing the business entrusted to him by his master." See First Nat. Bank v. Bangor Trust Co., 297 Pa. 115, 122. So, while notice to an agent, who, with the consent of both parties, represents each, is notice to either of them as to information acquired in the course of a given transaction within...