"The suit is one to foreclose a mortgage on the real estate described in the complaint in the sum of $1,500, dated February 9, 1918; the bond being made for one year. This suit was not brought until some time in May, 1924. The mortgage was originally given by Lillie V. Craven to J. H, Kolmke who subsequently died, and this action commenced by his above-named executors.
"The answer of the defendant admitted the execution of the bond and mortgage, but alleged its payment in full.
"By consent, the case was referred to F. K. Myers, Esq., master for Charleston county, and, upon the testimony taken by him, he filed his report, denying defendant's claim of payment of the mortgage, and recommended its foreclosure.
"The facts of the case are substantially undisputed. The mortgagee, J. H. Kohnke, is dead, A. A. Kroeg, Esq., the attorney who handled the transaction, is dead, and Miss Nip-son, who was stenographer and bookkeeper in the office of Kroeg at the time of this transaction, is also dead. Thus both sides have been deprived of the testimony of these witnesses, whose evidence no doubt would throw great light on the transaction. The testimony before the master reveals that in the latter part of 1917 Mrs. Craven entered into a contract to purchase the real estate described in the complaint herein for the sum of $2,300. The payment for this property was arranged by the payment of $400 in cash, the assumption of a first mortgage of $1,500, then outstanding against the property to one F. C. Kolmke, a brother of the above-named decedent, and the execution of a second mortgage to Mrs. Ida B. Kroeg for $400. The deed to Mrs. Craven to complete this transaction is dated November 15, 1917, and was recorded the 22d day of November, 1917, in the record office for Charleston county. Air. Craven, the husband of defendant herein, testified that this transaction was closed in November, 1917. I mark this date as important, in view of the subsequent relation of the parties.
"The deed to Mrs. Craven, conveying premises described in the complaint, contains the following provision:
" 'This deed is made subject to a mortgage for $1,500 from C. W. Tollner to F. C. Kohnke, dated the 15th day of November, 1910, and recorded in R. M. C. office for Charleston county in Book B, 26, p. 12.'
"The mortgage sought to be foreclosed in this action is dated February 9, 1918, several months after the original transaction wasclosed. The Cravens testified that Kroeg wrote them, asking Mr. Craven to call at his office, and that he was told by Mr. Kroeg that Mr. J. H. Kohnke was settling the estate of his brother, Mr. F. C. Kohnke, and that the said J. H. Kohnke wanted a new mortgage on this property directly to him.
"It will be observed that the original mortgage assumed by Mrs. Craven was to F. C. Kohnke, predeceased brother of J. H. Kohnke. J. H. Kohnke apparently desired to get rid of this old mortgage and to take a new one for himself, as he was the beneficiary under his brother's will, and no doubt had requested Kroeg to obtain this new mortgage for him in order to effect his purpose. At any rate, the testimony reveals that Kroeg prepared this new bond and mortgage and took it to Craven's house, in the city of Charleston, with the request that Mrs. Craven sign it. These papers were executed at Craven's house; Kroeg and Mr. Craven being witnesses on the papers.
"At the time these papers were signed by Mrs. Craven, Kroeg stated that he was Mr. Kohnke's attorney, and that they could make payments at interest periods in sums not less than $100, and this statement is vouched for both by Mr. and Mrs. Craven. The mortgage sought to be foreclosed in this matter was made for one year. It matured, therefore, and became due on February 9, 1919. The mortgage, however, was not called by Kohnke, but allowed to run as a past-due paper. Meanwhile Craven regularly paid his interest to Kroeg and at different times paid him upon the principal sums which total the full amount of the mortgage debt. The first of these partial payments was made August 22, 1919, more than six months after the maturity of the bond and mortgage. A copy of a letter is in evidence, dated August 22, 1919, and addressed to J. H. Kohnke, which letter was taken from the files of Kroeg, reading as follows:
" 'Dear Sir: I am inclosing my check to your order for $100 on account of principal of the bond and mortgage of Lillie V. Craven.'
"Upon the final payment of Kroeg of the sum of $300 in December, 1921, he gave Craven an affidavit that the mortgage had been paid in full and he would secure the satisfaction of the mortgage just as soon as practicable.
"Kroeg was what is known as a real estate lawyer, well known by reputation in the city of Charleston as a lender of money, representing a number of lenders, and controlling large sums for loans.
"In addition, the undisputed testimony in this case is that it is a general custom at the Charleston bar that, when a loan is made through an attorney, the borrower repays the loan to the attorney through whom it is made.
"Upon these facts substantially, the master held that there was nothing in the testimony, in his judgment, on which to base a finding that Kroeg was the authorized agent of Kohnke to receive the payments on the principal of the mortgage. The master based his finding on the single ground of agency or lack of agency. The position of defendant, however, both before the master and before me, upon the exceptions presented, is that the testimony in this case does support the contention that Kroeg had authority, real or apparent, to collect the principal and the interest of this mortgage, but in addition that, even in the absence of any showing of
agency, under the broad principles of equity set out in the exceptions, the finding of the master should have been in favor of the defendant.
"Did Kroeg have authority real or apparent, to collect the principal of the mortgage in this case? In Knight v. Jackson, 36 S. C. 10, 14 S. E. 982, a like question was considered by the Supreme Court. In disposing of the contention that the declarations of the agent were incompetent, the Supreme Court said:
" 'We hold that declarations of the agent, made on the very occasion of the taking of the bond and mortgage, in relation to the person to whom such payments could be actually made for the obligee of the bond by the obligor of such bond, were a part of the res gestae, and therefore admissible to bind the defendant.'
"To the same effect, Land v. Reese, 136 S. C. 267, 134 S. E. 352; Cogswell v. Cannady, 135 S. C. 365, 133 S. E. 834.
"And agency may be proved by circumstantial as well as positive testimony. Cogswell v. Cannady, supra.
"The undisputed testimony is that, when Kroeg obtained from Mrs. Craven the bond and mortgage sought to be foreclosed in this action, he told Mrs. Craven that he was Mr. Kohnke's attorney, and that payments could be made at interest periods of not less than $100; that he represented Mr. Kohnke, and Mrs. Craven could pay him the money. At the time these statements were made, was Kroeg the real or apparent agent of Kohnke? From the testimony, it appears that the original transaction for which Kroeg was employed by Craven was closed November, 1917. For his own convenience, and for his own purpose, Kohnke thereafter saw Kroeg and requested him to prepare for him a new mortgage from Mrs. Craven and to have it executed by her. Kroeg, acting at the request and on the authority of Kohnke, prepared this new mortgage from Mrs. Craven to Kohnke, made an appointment with her at her home, and had her execute these new papers in accordance with Kohnke's request, and these papers were recorded by Kroeg and turned over to Kohnke. It seems to me that, as to this transaction, Kroeg unquestionably was Kohnke's active, positive agent. The relation between Kroeg and Craven had ceased and terminated in November. The renewal of relations between Kroeg and Craven in February was for and on behalf of Kohnke solely. Therefore, when Kroeg told the Cravens at the time they signed these papers that they could make payments to him, he was Kohnke's agent, and his statements are admissible under the cases cited to bind the mortgagee and his executors.
"It is my opinion, further, that this case was not a case of general agency, but of particular agency, or agency for a particular purpose. Under such representation by the agent of Kohnke, it was not necessary for Craven to know whether Kroeg was in possession of the bond and mortgage at the time the payments were made, in order to make them legal. Land v. Reese, supra.
"My view that this was an agency for a particular purpose and for a single transaction is especially sustained by the evidence which reveals that Kohnke handled this transaction differently from all others to which my attention has been called. According to the record in this case, many loans were made for Kohnke through Messrs. Moffett & Hyde. They, how-ever, never collected any interest for Kohnke, nor did they collect the principal on any mortgage for him except through...
