Coffin v. Planters' Cotton Co.

• Decision Date: 12 June 1916
• Docket Number: (No. 59.)
• Citation: 187 S.W. 309
• Parties: COFFIN et al. v. PLANTERS' COTTON CO. et al.
• Court: Arkansas Supreme Court

187 S.W. 309

COFFIN et al. v. PLANTERS' COTTON CO. et al.

(No. 59.)

Supreme Court of Arkansas.

June 12, 1916.

Appeal from Mississippi Chancery Court; Chas. T. Coleman, Special Chancellor.

Suit by Mary M. Coffin and others against the Planters' Cotton Company and others. From a decree for respondents, complainants appeal. Affirmed.

Hughes & Hughes, of Memphis, Tenn., for appellants. Caruthers Ewing, of Memphis, Tenn., for appellees.

SMITH, J.

A condensation of the allegations of the complaint is contained in appellant's brief, from which we copy the following statement:

"The complaint alleges, in substance, that G. L. Waddell is the owner of a plantation in Mississippi county, Ark., known as the Shawnee Village. At the times mentioned he owed a balance of purchase money of about $20,000 on the land. Defendant Planters' Cotton Company, in March, 1911, loaned him approximately $30,000 on the land, taking three $10,000 notes due several months later. The plaintiff, two days thereafter, bought one of said notes from the Planters' Company, before maturity, in good faith, without notice of any defense, and paid therefore $10,000 in cash. This indebtedness was renewed in 1912, and three new notes taken by the Planters' Company, one of which was thereupon indorsed to plaintiff, who also took a separate note for the interest then due her.

"On February 22, 1913, the defendant Commonwealth Farm Loan Company (herein called the loan company) took a mortgage on the same land to secure a loan of $35,000. Of this sum $20,000 was applied to liquidate the purchase-money lien, which was in front of all the mortgages. The remainder, about $15,000, was paid to Planters' Cotton Company, and that company placed of record on the same day a power of attorney to the clerk to satisfy the record of both the mortgages to it, which was done.

"The plaintiff was ignorant of all the proceedings. No part of the note held by her has been paid, nor has she in any way authorized the release of record of the mortgage securing her note. The Planters' Cotton Company is now in the hands of a receiver, and Waddell, the maker of the notes, is insolvent.

"There were various other allegations on subordinate features of the controversy, but these were the main facts.

"The prayer is, in effect, for judgment on the note, for sale of the property, and that plaintiff be decreed to have priority in the proceeds except as to the $20,000 paid toward the purchase money."

Certain junior lienors are also parties defendant, but as the decree in the cause finds, and as they themselves concede, that their liens are inferior to the ones here involved, we make no statement of the issues as to them.

The loan company and the cotton company do not deny the execution of the different deeds of trust and other instruments referred to in the complaint, but they do deny that the deed of trust originally given had been satisfied of record without appellant's consent, but aver that she had authorized this action, and that she had fully ratified the action of the Planters' Cotton Company in satisfying the deeds of trust, and that the loan company is an innocent purchaser.

The two principal questions in the case are: First, that of the priority of the mortgagees; and, second, whether the plaintiff Mrs. Coffin ratified the action of the Planters' Cotton Company in satisfying the deed of trust securing the note on which this action is based. The principal question of fact which is important to consider in determining these questions is that of the nature and extent of the authority of one C. T. French as appellant's agent. Appellant's husband had been a member of the firm of Dillard & Coffin Company, and during the last years of his life French was employed by that firm and was held in the highest regard by its members. After the death of Mr. Coffin, French severed his connection with that firm and became connected with the Planters' Cotton Company in the capacity of general manager. He continued, however, to be the agent and confidential adviser of Mrs. Coffin, and her confidence in him appears to have been unreserved.

We agree with appellant in her claim of priority. This view conforms to the opinions in the recent cases of Driver v. Lacer, 186 S. W. 824; Calhoun v. Ainsworth, 118 Ark. 316, 176 S. W. 316, L. R. A. 1915E, 395; Calhoun v. Sharkey, 180 S. W. 216; Koen v. Miller, 105 Ark. 152, 150 S. W. 411.

The note in question was negotiable and had been properly indorsed and was owned by appellant at the time the deed of trust securing it was canceled. It was therefore the duty of the loan company to know who the owner of the note was, and it could not claim protection through the mere cancellation of the deed of trust by the cotton company, if that company was not the holder of the note at the time that action was taken. It is earnestly insisted that French was the agent of Mrs. Coffin in causing the deed of trust to be canceled. But a majority of the court do not accept that view of the evidence. All of us, however, do agree with the learned special chancellor in his finding that Mrs. Coffin ratified the action of French in canceling the lien of this deed of trust.

We have been favored with very excellent briefs in this case which evince much learning and research on the part of opposing counsel; but the legal principles involved are not difficult and have been settled by the decisions of this court. It is well settled that, before one can be held to have ratified any unauthorized act of one who assumes to be his agent, the principal must have knowledge of all the material facts upon which said agency is predicated, and ignorance of such facts renders the alleged ratification ineffectual and invalid. Schenck v. Griffith, 74 Ark. 557, 86 S. W. 850; Lyon v. Tams & Co. 11 Ark. 189; Martin v. Hickman, 64 Ark. 217, 41 S. W. 852; Niemeyer Lbr. Co. v. Moore, 55 Ark. 240, 17 S. W. 1028.

But it is equally as well settled that when one has this knowledge and remains silent when he should speak, or accepts some benefit which he obtains by virtue of his reputed agent's acts, he cannot thereafter be heard to deny the agency. In other words, he will be...