Cogswell v. Cannady

• Decision Date: 29 June 1926
• Docket Number: (No. 12018.)
• Citation: 133 S.E. 834
• Court: South Carolina Supreme Court
• Parties: COGSWELL . v. CANNADY et al.

133 S.E. 834

COGSWELL .

v.CANNADY et al.

(No. 12018.)

Supreme Court of South Carolina.

June 29, 1926.

Cothran, J., dissenting.

Appeal from Common Pleas Circuit Court of Charleston County; R W. Memminger, Judge.

Action by Julius Cogswell against Walter K. Cannady and others. Decree for defendants, and plaintiff appeals. Affirmed and remanded.

H. L. Erckmann, of Charleston, for appellant.

A. L. Hamer and C. W. Waring, both of Charleston, and W. C. Martin, of Branchville, for respondents.

BLEASE, J. The plaintiff brought action against the defendant, Cannady, for foreclosure of a mortgage of real estate, security for payment of a bond for money. He alleged that no part of the principal debt had been paid. The administrators of one Kroeg were also made parties defendant.

The defendant, Cannady, in his answer, claimed that he had paid the sum of $1,400 on the principal of the debt, payment of which had been made to Kroeg, who bad authority to collect same as plaintiff's agent.

The cause was referred to the master, who found in favor of the plaintiff; the master holding that, while Cannady had made the payments on the principal, as contended, Kroeg was not an authorized agent of the plaintiff for the purpose of collecting the principal.

From the findings of the master, the defendant, Cannady, appealed to the court of common pleas. His honor, the late R. W. Memminger, circuit judge, concluded that, from the testimony, Cannady was entitled to the credits on the principal, and reversed the master's findings of fact in that regard. From the decree of Judge Memminger, the plaintiff has appealed to this court.

There is no need to recite all the grounds of appeal. The main question before this court, as we view the cause, is this: Was there error on the part of the circuit judge in finding that the payments made by the defendant, Cannady, on the principal were made to an agent of the plaintiff, with power to collect such payments for the plaintiff?

The appellant's attorney, in a very able and plausible argument, relies upon the cases of Bacot v. South Carolina Loan & Trust Co., 132 S. C. 340, 127 S. E. 562, Morris v. Carlisle, 128 S. C. 417, 122 S. E. 511, Union Bank v. Cook, 110 S. C. 99, 96 S. E. 484, and Wilson v. Brabham, 126 S. C. 273, 119 S. E. 829, as authorities for his position that the decree of the circuit court should be reversed.

The cases cited hold, without doubt, that, because an agent negotiates a loan, that fact alone gives him no implied authority to receive payment, unless he has possession of the evidence of the indebtedness. They further decide, that payment is an affirmative defense, and that, where payment to an agent is alleged, such agent's authority to receive payment must be shown. Again, these cases are authority for the view that an agent may have the right to collect the interest without like right to collect principal.

Following the law, so well established by the decisions referred to, the real issue in the cause is one of fact, not one of law. If Kroeg was the agent of plaintiff to collect principal on the debt, or if he was not agent at the time of the collections, but plaintiff ratified the agency, then the defendant is entitled to the credits. Conversely, if there was no proper agency on the part of Kroeg, or no ratification by plaintiff, then the defendant should not be allowed the credits.

While the plaintiff made the positive statement, in his testimony, that Kroeg (who apparently died insolvent) had no authority to collect principal for him, there was evidence of declarations and conduct on Kroeg's part to show the agency. Too, there was some circumstantial evidence, tending to establish that fact. Then there was also evidence going to show ratification on the part of plaintiff of Kroeg's acts.

It is true that agency may not be established by the declarations and conduct of the alleged agent alone, but such declarations and conduct are admissible as circumstances in connection with other evidence tending to establish the agency. Bass v. American Products, etc., 124 S. C. 346, 117 S. E. 594, 30 A. L. R. 168; Watkins v. Railroad Co., 97 S. C. 150, 81 S. E. 426; Buist Co. v. Lancaster Mercantile Co., 73 S. C. 48, 52 S. E. 789. And agency may be proven by circumstantial, as well as positive, testimony. Salley v. Parker, 112 S. C. 109, 98 S. E. 847.

The judge had before him the testimony of the plaintiff, a citizen of splendid repute. Opposing that testimony, he had the evidence of other witnesses. One of these, Paul M. McMillan, Esq., a gentleman of high standing, who had no interest in the contest between plaintiff and Cannady, testified as to certain words and conduct of the plaintiff, tending to show ratification of the agency of the man to whom Cannady had made his payments.

While the master, well acquainted with all the witnesses, thought that, under the circumstances, Cannady was not entitled to credit as to the payments he made to Kroeg, yet he admitted in his report that "the issue of Kroeg's agency is sharply joined." The circuit judge, to whom the witnesses also were well known, felt "absolutely convinced" contrary to the conclusions reached by the master.

In an equity cause, the burden rests upon the appellant to convince this court that the circuit judge committed error in his findings of fact. We do not hesitate to say that, if the circuit judge had concurred in the master's findings, we would have been constrained to sustain his position, for there was sufficient evidence for such conclusions. On the other hand, there was sufficient evidence to support the view of the circuit judge that the master was wrong in the conclusions he reached. We have not been convinced that the circuit judge erred in the findings he made.

The judgment of this court is that the decree of the circuit court be, and the same is hereby, affirmed, and the cause is remanded to that court for the purpose of carrying out such decree.

GARY, C. J., and WATTS and STABLER, JJ., concur.

COTHRAN, J. Being unable to concur in the opinion of Mr. Justice BLEASE I propose, respectfully, to state the grounds of my dissent:

This is an action to foreclose a mortgage, dated October 31, 1920, covering a certain house and lot in the city of Charleston, executed and delivered by the defendant W. K. Cannady to one Andrew A. Kroeg, now de-ceased, as security to a bond, dated the same day, due October 31, 1920, for $2,400, with interest at 7 per cent, per annum payable quarterly, on the 1st days of January, April, July, and October thereafter, and 10 per cent, attorney's fees. The bond and mortgage were assigned on the day they were executed to the plaintiff, J. E. Cogswell; the bond and an insurance policy, loss payable to J. E. Cogswell, were delivered by Kroeg to Cogswell on November 1, 1920; the mortgage was recorded on November 10, 1920, and at once delivered to Cogswell, who has retained all these papers from that day to this.

The defendant, Cannady, claims to have made to Kroeg two payments upon the principal of the bond, January 1, 1921, $700, and January 1, 1922, $700, and the evidence is conclusive that he did. He also paid to Kroeg the interest upon the bond, as called for, quarterly, from April 1, 1920, to January 1, 1922, which payments were remitted by Kroeg to Cogswell. The two payments on principal, aggregating $1,400, were not remitted by Kroeg to Cogswell.

Kroeg died on February 6, 1922, and thereafter Cannady paid regularly the quarterly installments of interest, directly to Cogswell, upon $1,000 ($17.50 per quarter), as if the principal had not been reduced by the two payments aggregating $1,400 ($2,400 less $1,400).

Cogswell knew nothing of the payments on the principal until after the death of Kroeg, and denied the claim of the defendant to credit therefor. Prior to the death of Kroeg, and after he had received the payments on principal from Cannady, Kroeg continued to remit to Cogswell the regular installments of interest as if the principal had remained at $2,400, $42 per quarter, April 1, 1921, July 1, 1921, October 1, 1921, and January 1, 1922.

The payments of interest made by Cannady after the death of Kroeg upon the basis of $1,000 principal, $17.50 per quarter, for the quarters May 1, 1922, July 1, 1922, October 1, 1922, January 1, 1923, April 1, 1923, July 1, 1923, and October 1, 1923, aggregating $122.50, were not accepted by Cogswell as the correct amounts, and were received by him "on account."

The plaintiff's action was commenced on November 5, 1923, he claiming $2,400 with interest at 7 per cent, from January 1, 1922, less the credits aggregating $122.50, and 10 per cent, attorney's fees. The defendant admitted the execution of the bond and mortgage and claimed credit for the two payments upon principal made by him to Kroeg, admitting his liability for $1,000 with interest from October 1, 1923, at 7 per cent.

The issue between the parties is simple: Whether the defendant is entitled to credit upon the principal for the two payments made by him to Kroeg.

The facts of the case in my opinion are equally clear. In the fall of 1919, Cannady obtained an option upon the house and lot covered by the mortgage in question; as he states in his testimony:

"Had an option on the place, and went to Mr. Kroeg to examine the title and see if it was any good. I did not know Mr. Kroeg at that time, but Mr. Asbill from whom I bought told me that Mr. Kroeg was a good man to get. I hired him. and he said the title was all right, and asked me if I needed any money. I told him I was going to Branchville to borrow the money. He told me, 'Don't go—you can borrow the money just as cheap here'; that he had clients for whom he was handling money and why Hot get it here. About a week later Mr. Kroeg called me up and said to come and bring my wife and sign the bond and mortgage. We came, and he showed me this bond and mortgage. I saw Julius E. Cogswell's name on it. I asked Kroeg whom he.was handling money for. H...