Federal Land Bank of Columbia v. Ledford

• Decision Date: 08 July 1940
• Docket Number: 15112.
• Parties: FEDERAL LAND BANK OF COLUMBIA v. LEDFORD et al.
• Court: South Carolina Supreme Court

9 S.E.2d 804

194 S.C. 347

FEDERAL LAND BANK OF COLUMBIA v. LEDFORD et al.

No. 15112.

Supreme Court of South Carolina

July 8, 1940

The master's report follows:

The above-entitled action was referred to me by order of the Circuit Court to hear and determine the issues arising herein and to make my report to this court.

This is an action for the foreclosure of a mortgage given by J. H Champion to the plaintiff on September 23, 1921, to secure a note of even date in the sum of $800, the mortgage having been recorded in Mortgage Book 130 at page 54, which mortgage I find to be a first lien on the property described therein. Subsequently the defendants succeeded to the title of J. H Champion by deed and later by inheritance.

It appears that all parties have been properly served and that all parties are before the court, having answered. The minors have answered through their duly appointed guardian ad litem.

The defendants, other than the Duke Power Company, set up payment by Alma E. Ledford of $400.88, alleging that she should be given credit for same. The matter of payment will be discussed fully later in this report.

The defendant, Alma E. Ledford, assumed plaintiff's mortgage as a part of the consideration for a conveyance of an interest in the property to her.

Considerable testimony has been taken and the sole issues is whether the plaintiff's mortgage should be credited with the alleged $400.88 payment. The following are the facts in connection with the alleged payment:

Defendant Alma E. Ledford, held (as Effie Ledford) a mortgage over another tract belonging to Fred W. Turner. On September 29 1934, Turner applied to plaintiff for a loan on his land. In his application, Turner agreed "if this application is accepted and a loan granted hereon, I agree to furnish at my expense *** an abstract or other evidence of title to the *** property offered as security for said loan". On the approval of the application, Turner notified plaintiff that he had selected F. Gentry Harris, Esq., as his attorney "to prepare and/or examine the abstract of title and assist in the closing of the loan". On November 20, 1934, Harris notified plaintiff in writing that he accepted the employment.

T. M. Burgess was then secretary and treasurer of the Spartanburg National Farm Loan Association. Turner was seeking the loan pursuant to the pertinent Acts of Congress, "to be made through a national farm loan association serving the territory wherein the security is located". Burgess was also local correspondent for the plaintiff and for the Land Bank Commissioner and as such was an agent of the plaintiff for the purpose of closing loans made by the commissioner through the plaintiff as his agent.

In due course, Harris supplied the abstract of title, and on December 28, 1934, plaintiff mailed to Burgess papers and instructions for closing the loan. Among these papers was a draft on plaintiff through a Columbia Bank for $400.88 covering the mortgage held by Effie Ledford on the Turner land. The draft was made payable to the joint order of Fred W. Turner and Effie Ledford. It was sent out from plaintiff's office signed by J. D. Hornsby, an employee, as having been audited by him but not signed by anyone as drawer. It therefore reached Burgess as an uncompleted draft, to be signed by him as drawer in accordance with plaintiff's instructions for the closing of the loan by Burgess.

The Turner loan was duly closed, and on January 5, 1935, Fred W. Turner brought Mrs. Ledford to the office of F. Gentry Harris, Esq. There the $400.88 check was endorsed by the payees, and was turned over by Mrs. Ledford to Mr. Harris with the intention that it should be applied in reduction of the Champion mortgage which is sought to be foreclosed in this action. In addition to the check, Mrs. Ledford gave Harris the sum of $23.10 for remittance to plaintiff in payment of a semi-annual installment on her mortgage then due. Harris remitted the $23.10 to plaintiff and it was duly credited. He endorsed and cashed the $400.88 check, presumably by deposit to his account in bank. Before remittance could be made to plaintiff it was necessary to ascertain exactly the amount that could be paid under the anticipation provision of the loan papers. Harris wrote plaintiff to ascertain the amount. On February --, 1935, he died without having made the remittance.

It is at this point that the contentions of the parties sharply divide them. In brief, defendants contend that in receiving the $400.88 check, Harris was acting as the agent of plaintiff; whereas plaintiff denies any such agency and contends that it never received the amount of the check.

The case of Joint Stock Land Bank v. New York Title & Mortgage Company (Peques' Case) 172 S.C. 435, 174 S.E. 402, 405, disposes of defendants' contention, so far as it may relate to the alleged existence of agency in fact. In that case, as in this, the borrower was required to furnish an abstract of title and the contention was made (though in a different connection) that the abstracting attorney was the agent of the lender bank. But the Supreme Court held otherwise, saying: "It is difficult to see how *** it can be held that [the abstracting attorney] was the attorney and agent of the bank ***. One cannot escape the inference that he was the attorney and agent of the applicant for the loan ***."

But defendants do not contend that there was an agency in fact. In their argument, they say: "We do not claim that the plaintiff appointed Mr. Harris to make collections on its mortgage, but we do claim that by its conduct *** it held him out as its agent and that it is now estopped from denying such agency."

I think, therefore, that decision of the case depends on the answers to two questions:

(1) Whether the proof is legally sufficient to support an inference of agency by estoppel; and (2) if legally sufficient to support such an inference, whether the preponderance of the evidence establishes agency by estoppel.

I have carefully considered the proof and have concluded that it is not legally sufficient to support the inference of agency by estoppel.

As giving rise to estoppel, defendants rely on alleged conduct of plaintiff in the following respects:

1. In that plaintiff frequently permitted Harris to make collections and either turn them over to Mr. Hall, its representative, or remit them directly;

2. In that plaintiff received and retained part of the money which Mrs. Ledford paid to Harris, i. e., the $23.10 which plaintiff has credited on the mortgage debt;

3. In that plaintiff permitted Harris to advertise the fact that he was plaintiff's representative.

As to the making of collections by Harris, I find no proof that he ever held himself out as plaintiff's general agent in doing so. It is true that at times plaintiff turned over to him certain mortgages for foreclosure. But the fact of his making collections on such mortgages under special authority could not in law amount to a general holding out to the public as collecting agent.

It is true also that at times Harris received from mortgagors and turned over to W. D. Hall, plaintiff's representative in this territory primarily dealing with collections, various amounts for credit on mortgages held by plaintiff. But I find no proof that any such amount was paid to Harris as agent in fact of plaintiff, nor is there any proof that in receiving any such amount Harris represented himself to any one as plaintiff's agent. Nor is there any proof that any such holding out came to the knowledge of defendants. In the absence of some proof that Harris was undertaking to act for plaintiff in such transactions, the court is not at liberty to assume that Harris undertook so to act. I think the reasonable inference would be that he was acting for the accommodation of the mortgagors.

I hold that the proof fails to establish agency by estoppel in this respect.

The proof is undisputed that plaintiff received and retained a portion of the amount which Mrs. Ledford turned over to Harris on January 5, 1935, to-wit: The sum of $23.10. However, there is no proof that in accepting and crediting that amount, plaintiff knew anything about the circumstances of the $400.88 check. In fact, the proof is that the $23.10 was received and applied in the regular course of business without condition or qualification and without notice of any circumstances that would have served to put plaintiff on notice that Harris was in any respect undertaking to act as its agent in connection with its receipt or in connection with the $400.88 check.

I hold that the elements of estoppel are lacking in connection with the receipt of the $23.10.

As to the advertisements inserted by Harris in the newspapers, there is no proof that any such advertisements ever came to the notice of plaintiff or were authorized by plaintiff. It is true that Hall testified that he had seen some of the advertisements carried by Harris, but he also testified that he did not read them. The advertisement which defendants offered in evidence (and which was admitted on the excluded sheet) does not represent Mr. Harris to be plaintiff's agent. Furthermore, there is no proof that defendants acted in reliance on any such advertisements, or ever even saw one or heard of its contents.

I find, therefore, that the advertisements proven are not capable of supporting the suggested inference of agency by estoppel.

The general trend of the proof is contrary to the theory of the agency of Harris for plaintiff.

The correspondence between Mrs. Ledford and plaintiff which is in evidence shows that over a period of years all matters relating to the Champion mortgage were transacted directly between Mrs. Ledford and plaintiff, and there...