McCullough v. Reynolds
| Decision Date | 10 December 1917 |
| Docket Number | 31380 |
| Parties | ISABELLA MCCULLOUGH, Appellee, v. W. A. REYNOLDS, Appellee, et al., Appellants |
| Court | Iowa Supreme Court |
Appeal from Linn District Court.--JOHN T. MOFFIT, Judge.
SUIT in equity for the foreclosure of a mortgage. The defendant pleaded payment of the mortgage debt. Decree for plaintiff and the defendants Prymek appeal.
Reversed.
Joseph Mekota and C. F. Clark, for appellants.
Redmond & Stewart, for appellee.
It is not material in this statement to recite the facts attending the making of the mortgage in suit. It is sufficient that the mortgage debt was contracted in the name of the defendant Reynolds, and that, at the date of the mortgage, he held the title to the real estate in question. Afterward, the property was sold and conveyed to the defendant William Prymek, and in that transaction and in part consideration of said conveyance to him, he paid or attempted to pay the mortgage debt. In pursuance of that purpose, he went to a firm known as Miles & Son, who, he was informed and believed, were the authorized agents of the mortgagee, and paid to them the full amount of the debt, principal and interest, and said agents furnished to him an instrument purporting to be executed by the mortgagee, acknowledging full payment of the mortgage debt and discharging the mortgage lien. That this was done in good faith by Prymek, and in full faith that Miles & Son were authorized to receive such payment and that the release given him was a genuine instrument, there is no question. The mortgagee denies, however, that Miles & Son were authorized to act as plaintiff's agents in such matter or to receive payment of the debt, and alleges that she has never received any part of such payment or ratified the acts of her alleged agents in receiving it. She also denies the genuineness of the release furnished the appellant, and avers that it is a forgery.
This statement indicates with sufficient clearness the paramount question in the case: Was the appellant justified in making payment to Miles, or Miles & Son, as the agents of plaintiff to receive it? Or, stated otherwise, were Miles & Son the agents of the plaintiff to make this collection; and if not, had plaintiff, by her acts, words or conduct, so clothed them with apparent authority to represent her that appellant, as a reasonably prudent man, was justified in making payment to them?
The testimony is very voluminous, and includes a large number of exhibits which cannot be here set out at large. Without quotation of the language of witnesses, save in a few instances, by way of illustration, we shall confine ourselves to a general statement of the ultimate facts as they appear to be established by the evidence as a whole.
J. M. Miles, who was the plaintiff's distant relative, had for many years conducted a loan agency business in Cedar Rapids. He died in December, 1911. A few years prior to his death, he associated with him in such agency his son, Matt J. Miles; and thereafter the business was conducted in the firm name of Miles & Son. After the death of the father, the son continued the business for some time. Plaintiff lived in Wisconsin, and, so far as shown, never visited Cedar Rapids at any time during the period hereinafter mentioned. She was one of a family of eight or more brothers and sisters, all of whom had money which they desired to invest in loans. Beginning in 1911 and continuing down to the summer of the year 1914, Miles and Miles & Son made many loans for the plaintiff, aggregating about $ 30,000, and for the McCullough brothers and sisters, an aggregate of over $ 200,000. Among the loans made for the plaintiff was the one to the defendant Reynolds, for $ 2,200, secured by mortgage upon Cedar Rapids real estate. The note and mortgage representing this loan are the instruments sued upon in this action. The note bears date May 1, 1911, and is made payable 5 years after date, at the office of J. M. Miles & Son, with interest at 6 per cent, payable annually. It also reserves to the maker the right to pay $ 10 or any multiple thereof upon the principal sum on interest pay days. The mortgage, in addition to the usual terms of such instruments, provides that, if the mortgagor should make any change in the ownership of the property without giving written notice thereof to the mortgagee, it should constitute a default by the mortgagor in the terms of the contract, for which the mortgage might be at once foreclosed. When the appellant Prymek proposed to purchase the land, the abstract of title exhibited to him was submitted for examination to his counsel, who pointed out the necessity of removing the Reynolds mortgage. The attorney thus consulted was a resident of Cedar Rapids, and knew that Miles & Son had been doing a large business in loaning and collecting moneys for the McCulloughs. He told the appellant that the money was payable at the office of Miles & Son, and advised him to go there and pay off the lien and have a release made and shown in the abstract. Following this advice, the money was paid to Miles & Son, who delivered to the appellant a release of the mortgage, regular in form, purporting to be executed by the plaintiff and acknowledged before M. J. Miles, Notary Public. Appellant asked the alleged agents for the note which he had paid off, but was told that, the instrument having been given by Reynolds, he was the one entitled to receive it. Thereafter, no demand was made upon appellant or Reynolds by or for the plaintiff until May, 1914, when she caused written notice to be given that she still held the note unpaid, and that no one except herself or her counsel was authorized to collect it. Concerning the general course of business between plaintiff and Miles & Son, there is very little dispute. While the plaintiff swears broadly, "J. M. Miles & Son did not act as my agents in any capacity in connection with this loan, and they had no authority to collect interest," it is very evident, from her own testimony elsewhere, and from the overwhelming weight of the testimony, that J. M. Miles and Miles & Son had been, for at least twelve years, acting as her agents in some capacity with reference to each and every one of the numerous loans made by them on her account. It is also quite evident that this agency was of a more intimate and informal character than usually exists between nonresident money lenders and the local agents through whom they do business. It was not the custom of the Miles agency to send plaintiff any formal applications from proposed borrowers for approval; the services of no appraisers were required by her; the abstracts of title were not forwarded to her for inspection; all notes, both principal and interest, were made payable at the Miles office; all payments of principal and interest on the entire list of loans were in fact made at that office; such payments were at times made before they were due, and plaintiff would afterward forward the proper receipts or the canceled securities for delivery to the makers; and, though plaintiff herself was never in Cedar Rapids, it was her uniform practice to sign the releases of mortgages prepared for her by Miles & Son and send them back for either J. M. or Matt J. Miles to attach his notarial certificate, to the effect that she had personally appeared before him and acknowledged the execution of the instrument. Perhaps no more satisfactory light can be thrown upon the manner and nature of these transactions than is furnished by the following extract from the plaintiff's cross-examination. Being interrogated by counsel for defendant, she testified:
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