Martinson v. Kershner

• Decision Date: 16 November 1915
• Citation: 32 N.D. 46,155 N.W. 37
• Parties: MARTINSON v. KERSHNER et al.
• Court: North Dakota Supreme Court

32 N.D. 46

155 N.W. 37

MARTINSON

v.KERSHNER et al.

Supreme Court of North Dakota.

Sept. 15, 1915.

On Rehearing, Nov. 16, 1915.

Syllabus by the Court.

Agency will not be presumed, and where its existence is denied, the burden of proof is upon him who asserts its existence.

The mere fact that the assignee and owner of a negotiable note and mortgage, while retaining possession of such securities, permits the original mortgagee, or the loan broker who negotiated the loan, to collect the interest installments, does not confer upon such person, without possession of the securities, authority to collect the principal.

The extent of an agent's authority depends upon the will of the principal, and the latter will be bound by the acts of the former only to the extent of the authority actual or apparent, which he has conferred upon the agent.

As a general rule, except in those cases wherein the principal intentionally assumes the responsibility without inquiry, or deliberately ratifies, having all the knowledge in respect to the act which he cares to have, any ratification of an unauthorized act or transaction of an agent must, in order to bind the principal, be shown to have been made by him with full knowledge of the material facts relative to the unauthorized transaction.

Appeal from District Court, Ward County; Leighton, Judge.

Action by Lars Martinson against Helena Moeszinger Kershner and others. From a judgment for plaintiff, the defendant named appeals. Reversed.Bosard & Twiford, of Minot, for appellant. F. B. Lambert, of Minot, for respondent.

CHRISTIANSON, J.

On the 15th day of April, 1907, one Charles Besmehn was the owner of a quarter section of land in Ward county in this state. And on that date, through the agency of one M. C. Egan, of Tagus, N. D., he obtained a loan on this land from the American Mortgage & Investment Company of St. Paul, Minn., and executed and delivered to this company a negotiable promissory note in the sum of $800, payable April 15, 1912, together with a real estate mortgage upon the land in question to secure the payment of said note. The American Mortgage & Investment Company thereafter on August 8, 1907, sold, assigned, and delivered the mortgage and the note secured thereby to one C. Moeszinger, and the assignment of mortgage was filed for record in the office of the register of deeds of Ward county on August 15, 1907. Moeszinger thereafter died, and his son, Louis C. Moeszinger (the father of the defendant, Helena Moeszinger Kershner), was appointed executor of the last will and testament of C. Moeszinger. Thereafter, on December 12, 1907, Louis C. Moeszinger, as the executor of the estate of C. Moeszinger, duly sold, assigned, and delivered the note and mortgage hereinbefore described to the defendant, Helena Moeszinger, who has been the holder and the owner of the note and mortgage at all times since December 12, 1907. On the 4th day of September, 1907, Charles Besmehn sold the premises involved in this action to the above-named plaintiff, Lars Martinson, and conveyed the same to him by warranty deed, which was recorded in the office of the register of deeds of Ward county on October 25, 1907. The interest installment due April 15, 1908, was paid to M. C. Egan, of Tagus, N. D., the loan agent who negotiated the loan. The interest installment due April 15, 1909, was not paid, and on July 16, 1909, the American Mortgage & Investment Company wrote Martinson as follows:

“We are advised that you have purchased from Charles Besmehn the S. E. 1/4, Sec. 31-155-87, Ward county. We hold a mortgage of $800.00 against this land and interest to the amount of $64.00 became due April 15th. Kindly send us a draft for this amount, adding interest from April 15th until the time when the money reaches us.”

Thereafter, on July 19, 1909, a draft was forwarded on behalf of the plaintiff, Martinson, to the Investment Company, in payment of such interest. About March 31, 1910, a draft in payment of the interest installment, due April 15, 1910, was forwarded to the Investment Company, and on April 2, 1910, the Investment Company acknowledged receipt of the payment in the following letter:

“We acknowledge receipt of your favor of the 31st ultimo with inclosed draft for $64.00 in payment of interest on a mortgage of $800.00 on land now owned by Lars Martinson. Canceled coupon we will send you as soon as we receive the same from the present holder of the mortgage.”

The undisputed evidence shows that the defendant Helena Moeszinger Kershner in no manner authorized the Investment Company to collect either the interest or the principal of the loan. In fact, she never had anything to do with the matter personally, but intrusted the handling of these investments to her father, Louis C. Moeszinger. On February 9, 1912, Louis C. Moeszinger wrote the Investment Company a letter containing the following closing sentence, viz.:

“I want to give you notice now that I want my money on all these loans when due. They are all too slow for me.

Besmehn Apr. 15/12.

Curtis & Humphrey Nov. 1/12.

Yours very truly, L. C. Moeszinger.”

The correspondence shows that the plaintiff wrote the Investment Company requesting an extension of the loan. When this request was made or submitted to Moeszinger does not appear, but on April 17, 1912, the Investment Company replied to such request as follows:

“We have your favor inquiring if the Chas. Besmehn mortgage covering the S. E. 1/4 of Sec. 31-155-87, now owned by Mr. Martinson, can be extended. This mortgage became due on April 15th, and we have just heard from our client to the effect that they cannot extend it, but wish to have the paper retired. We hope, therefore, to receive draft for the amount, which is $854.00, with interest thereon at 8 per cent. from April 15th until the money reaches us.”

It is conceded that the note and mortgage involved herein were never, after their purchase by C. Moeszinger on August 8, 1907, in possession of the American Mortgage & Investment Company, but that such instruments at all times from and after December 12, 1907, were in the possession of Louis C. Moeszinger, as agent for his daughter, Helena Moeszinger Kershner, and that they remained in his possession until he forwarded them to the Scandinavian American Bank of St. Paul, Minn., for collection about May 1, 1912, and that these instruments were afterwards returned to him by the bank and remained in his possession until delivered to the attorneys for the defendant in this action.

The plaintiff, Martinson, paid the interest installments which fell due in 1909, 1910, and 1911 to the Investment Company, and the Investment Company remitted the proceeds of such collections to Louis C. Moeszinger. About April 20, 1912, the plaintiff also caused a draft, payable to the American Mortgage & Investment Company, for the amount of the principal and interest then remaining due on the mortgage, to be forwarded to this company. The Investment Company misappropriated the funds, and thereafter failed, and a receiver was appointed to take charge of its affairs. The defendant and her father had no knowledge whatever of the fact that the principal of the mortgage indebtedness had been collected by, or paid to, the Investment Company until after it went into the hands of the receiver, and the defendant has never received any part of the principal sum and the last interest installment due on the mortgage.

The defendant Helena Moeszinger Kershner caused the mortgage to be foreclosed by advertisement, and the premises were at such foreclosure sale, held on April 19, 1913, purchased by the defendant, and certificate of foreclosure sale issued to her. The plaintiff thereupon brought this action to determine adverse claims and quiet title to the premises. The defendant Helena Moeszinger Kershner answered, asserting that she has a first lien upon the premises for the amount due upon the sheriff's certificate of foreclosure sale. The trial court rendered judgment in favor of the plaintiff. The defendant Helena Moeszinger Kershner has appealed to this court, and demanded a trial de novo.

[1] It is conceded by both parties that the sole question involved in this case is one of agency. Respondent does not contend that any equitable estoppel exists in this case, but relies solely on the proposition that the American Mortgage & Investment Company was the agent of the defendant, duly authorized to receive payment of the mortgage indebtedness. It was incumbent upon the plaintiff to prove that the Investment Company had such authority. In Corey v. Hunter, 10 N. D. 5, 12, 84 N. W. 570, 572, this court said:

“There are certain well-settled principles which are applicable in all cases involving the question of the existence of an agency or the existence of an agent's authority. A person who deals with an agent does so at his peril. He is bound to know that the person with whom he deals is agent of the person whom he claims to represent, and he is also bound to know the extent of such agent's authority. Agency will never be presumed, but where its existence is denied the burden of proof is upon him who affirms its existence, and the proof of such agency must be clear and specific.”

Plaintiff does not specify whether the authority relied on is actual or ostensible, but broadly asserts that the Investment Company, as defendant's agent, had authority to receive payment of the principal. Under our statute:

“Actual authority is such as a principal intentionally confers upon the agent or intentionally or by want of ordinary care allows the agent to believe himself to possess.” Section 6337, Compiled Laws 1913. And “ostensible authority is such as the principal intentionally or by want of ordinary care causes or allows a third person to believe the agent to possess.” Section 6338, Compiled Laws 1913.

There is no contention that the plaintiff relied on any statement of the defendant, or her father, or that plaintiff had...