Kohl v. Beach

• Decision Date: 25 September 1900
• Citation: 107 Wis. 409,83 N.W. 657
• Court: Wisconsin Supreme Court
• Parties: KOHL v. BEACH.

107 Wis. 409

83 N.W. 657

KOHL

v.BEACH.

Supreme Court of Wisconsin.

Sept. 25, 1900.

Appeal from circuit court, Wood county; Charles M. Webb, Judge.

Action by Philip Kohl against Daniel Beach, trustee. From a judgment in favor of plaintiff, defendant appeals. Reversed.

Action to require the defendant to satisfy a mortgage. The issues raised by the pleadings were decided by the trial court substantially as follows:

On January 4, 1893, Casper Schafer and wife borrowed of defendant $550, agreeing to repay the same in five years, and to pay interest annually at the rate of 7 per cent. per annum, and to secure such payment the debtors gave defendant their negotiable promissory note and a real-estate mortgage, which was duly recorded and is set forth in the complaint.

It was provided in the mortgage that in case of the nonpayment of any sum of money when due, either principal, interest or taxes, the entire debt should, at the option of the mortgagee, his representatives or assigns, be deemed to have become due and immediately collectible in a suit at law or by foreclosure of the mortgage.

When the mortgage was executed defendant resided, and has ever since resided, in the state of New York. During a period commencing prior to 1892 and extending to 1896, defendant furnished to one A. L. Smith, who resided at Appleton, Wis., various sums of money to be loaned by the latter in his discretion, said money being the property of an estate of which defendant was trustee. It was agreed between defendant and Smith that the latter should repay to defendant all sums advanced to him to be loaned, with interest thereon at the rate of 6 per cent. per annum. Smith was authorized to handle the loaning business as if it were his own, defendant knowing that his agent must necessarily employ others to assist him.

Smith's residence and place of business was at Appleton, Wis., about 100 miles from the property covered by the mortgage mentioned in the complaint and from the residence of the mortgagors.

In 1892 the Marshfield Land Company, with B. W. Pulling as manager, was engaged in loaning money and obtaining loans for other persons, with its place of business at Marshfield, Wood county, Wis. Subsequent to 1892 Pulling succeeded to such business, and thereafter all loaning business done by defendant, and by Smith for him, in the counties tributary, in a business sense, to Marshfield, was carried on through Pulling.

Smith and Pulling made a joint agreement in regard to loaning defendant's money, to the effect that both should receive a percentage therefrom, and that Pulling should make collection and remit to Smith; and if collection of interest at maturity could not be made in any case, Pulling should advance the same to Smith in order that he might advance the same to defendant.

The money received by Schafer and wife was paid them by Pulling, the note and mortgage was received by Pulling, the mortgage was recorded by him, and all the papers relating to the loan were then by him transmitted to Smith at Appleton, and by Smith were transmitted to defendant.

Prior to 1896, under the arrangements mentioned, money controlled by defendant was loaned to the amount of some $60,000, the loans being several hundred in number. Payments of interest and principal upon loans were made to Pulling from time to time, such payments being generally duly remitted to Smith. Schafer at no time receivedany notice that Pulling was not authorized to receive payments of interest or principal on the money borrowed by him. On the contrary, Pulling was by letter directed by Smith, in January, 1894, to collect overdue interest of Schafer. $8.50 of the first installment of interest due on the Schafer loan was in fact paid to Pulling.

In April, 1894, Pulling caused foreclosure proceedings to be commenced on the Schafer mortgage for nonpayment of the first installment of interest on the mortgage debt, the defendant being named as plaintiff in the action, and thereafter, on May 17, 1894, Schafer sold the mortgaged premises to plaintiff, at which time the full amount of the mortgage debt, to wit $595.35, was paid to Pulling. When such payment was made Pulling did not have in his possession the note and mortgage, but agreed to procure the same, with a satisfaction of the mortgage, and make delivery thereof to Schafer; but such promise was not kept. Pulling gave to Schafer the receipt of his land company for the money received as aforesaid, which receipt was accepted by Schafer in the belief that Pulling was authorized by the owner of the note and mortgage to receive payment thereof.

About the time the foreclosure proceedings aforesaid were commenced, Pulling caused other foreclosure proceedings to be instituted in the name of defendant to enforce mortgages owned by him, and subsequent thereto continued to conduct business in that way, some of which foreclosure proceedings were settled, and some prosecuted to judgment and sale, the lands being bid in in the name of Daniel Beach, trustee. In all of the foreclosure proceedings aforesaid the complaints were verified by Pulling as agent for the defendant. Smith had knowledge of the business transactions of Pulling in relation to the foreclosure of mortgages, and authorized the same.

Upon such facts the court concluded as matter of law that Smith had authority to employ Pulling and the Marshfield Land Company to assist him in making loans; that he exercised such authority; that Pulling was, at the time he received the money from Schafer, the agent of defendant by the authority of Smith, and that such payment was in effect payment to defendant and extinguished the mortgage in question, and that plaintiff was entitled to judgment accordingly. Judgment was duly entered in accordance with such conclusions, from which defendant appealed.

Lyman E. Barnes, for appellant.

George L. Williams, for respondent.

MARSHALL, J. (after stating the facts).

The decision in this case is not grounded on any estoppel of defendant by his conduct, and the conduct of others for which he was responsible, to deny the authority of Pulling to receive payment of the mortgage debt; and there is no evidence in the record to sustain any such theory. Whatever was the customary way of conducting the business prior to the making of the loan to Schafer, between defendant and Smith and between Smith and Pulling or the Marshfield Land Company, or the way in which business was conducted between the parties thereafter, it is not claimed, and there is not a word of evidence tending definitely to show, that Schafer knew anything about it or that he was influenced by any appearance of authority on the part of Pulling, other than the circumstance that he borrowed the money through Pulling and the latter had assumed the right to collect interest and to cause an action of foreclosure to be commenced for nonpayment thereof.

The customary and indispensable evidence of apparent authority, as was held in Bartel v. Brown, 104 Wis. 493, 80 N. W. 801,--possession of the note,--Pulling did not have, as Schafer well knew when he parted with the money. The note and mortgage, and all the papers relating thereto, were in the possession of appellant at New York. Schafer parted with his money upon the mere receipt of Pulling, executed in the name of his land company. The receipt does not purport to be given for appellant, and there was no pretense by Pulling that he was acting by authority, except what was inferable from the fact that he assumed to act in the matter. As was well said in Joy v. Vance, 104 Mich. 97, 62 N. W. 140, if Schafer had been as careful to ascertain the authority of Pulling as appellant was to guard his interest by keeping possession of the papers relating to the loan, no one would have suffered by Pulling's dishonesty.

Bartel v. Brown rules this case in this respect: The note not being in...