Pennoyer v. Willis

• Citation: 26 Or. 1,36 P. 568
• Parties: PENNOYER et al. v. WILLIS.
• Decision Date: 19 February 1894
• Court: Supreme Court of Oregon

36 P. 568

26 Or. 1

PENNOYER et al. v. WILLIS.

Supreme Court of Oregon

February 19, 1894

On rehearing. Reversed.

For prior report, see 32 P. 57.

A.M. Crawford and W.R. Willis, for appellant.

J.W Hamilton and J.C. Fullerton, for respondents.

BEAN J.

From the evidence it appears that at the time the cause of action in this case is alleged to have accrued it was the custom of intending borrowers of school funds in Douglas county to apply to Moore, the county treasurer, and custodian of such funds, and, if he had money on hand available for the purpose, a written application was filled out in the form prescribed by the board, and signed by the applicant, which application, together with a certificate of the defendant as to the title and value of the land offered as security, and a statement from Moore as to the propriety of making the loan were forwarded to the board at Salem for its approval. If approved, an indorsement to that effect, and directing the loan, was made on the application, whereupon it was returned to Moore, who prepared and had executed the necessary note and mortgage, and paid over the money. In accordance with this custom, in February, 1884, one Roberts applied to Moore for a loan of $2,000, offering certain real estate as security. Moore filled out the application, and handed it to the defendant, with the request that he examine the title. In pursuance of this request, the defendant did examine the title, and discovered a mortgage on the land in favor of Marks & Co. for about $28,000, and one in favor of the plaintiffs for $600, and, in filling out the prescribed blank certificate of title, set out the latter mortgage, and was about to note therein the existence of the other, but, at the request of Friedlander,--a member of said firm,--omitted it from the certificate, on the assurance that it had been paid and would be satisfied on the record before the application could be returned from Salem, but, at the same time, said in the presence of Moore that, if the application should be approved, the money must not be paid over until the mortgage was satisfied. The application, together with the defendant's certificate, was then delivered to Moore, who filled out a certificate thereon, recommending the loan, and stating that he had on hand sufficient funds for that purpose, signed it as "local agent," and forwarded the same to the plaintiffs. On February 12, 1884, the board examined and approved the application, and caused an indorsement to be made thereon that "the within application was examined by the board, the security approved, and the loan ordered made," and returned it to Moore, who subsequently prepared and had executed a note and mortgage, and paid the money over to Roberts, without consulting or informing the defendant of the receipt of the order, or that the application had been approved by the board. The defendant offered evidence tending to show that, with the exception of examining and certifying to the title and value of land offered as security, and the approval of applications, the entire matter of making loans in Douglas county was intrusted to Moore; that the board furnished him with blank applications and blank notes and mortgages; that he prepared all applications for loans, and had defendant examine the title of land offered as security; that defendant's certificate of title was delivered to him, and by him forwarded to the board; that the applications, when approved were returned to Moore, with directions to make the loans; that Moore prepared and had executed the necessary notes and mortgages, and was intrusted with the duty of ascertaining that the title remained unchanged after the date of defendant's certificates, and that all liens noted therein were properly discharged; that defendant had no communication with the board concerning this or any proposed loan, except through Moore, and never had been intrusted by it with any duty in respect to loans, except examining and certifying to the title and value of land offered as security when requested by Moore; that after the Roberts application had been returned to Moore, and while in the discharge of the duty intrusted to him, he had in mind the Marks & Co. mortgage. This evidence was all excluded, and the court instructed the jury that the issue made by the pleadings, of Moore's agency, was immaterial, and not to be considered by them. The ruling of the court in excluding this evidence and so instructing the jury is assigned as error, upon which the defendant chiefly relies for a reversal of the judgment.

The contention for the defendant is that the evidence offered and excluded tended to show that Moore was such an agent of the plaintiffs as that his knowledge at the time the loan was made of the existence of the Marks & Co. mortgage was notice to the plaintiffs, and, as a consequence, they were not misled by his certificate; but had knowledge through their agent of the existence of the outstanding incumbrance before they parted with the money. It must be conceded that, in order to recover in this action, plaintiffs must show, not only that defendant's certificate was false but that, relying thereon, and without knowledge of its falsity, they were induced to and did part with the money. If, before the loan was consummated and the money paid over to Roberts, they had knowledge of the Marks & Co. mortgage, either directly or through some authorized agent, and, notwithstanding such knowledge, parted with the money, they cannot hold the defendant liable for the loss, although his certificate may have been false. It becomes important, therefore, to consider whether the evidence excluded tended to show that Moore's relation to the plaintiffs was such that they would be chargeable with the knowledge he possessed at the time he consummated the loan and paid over the money of the Marks & Co. mortgage. It is a familiar and well-settled rule that, as to third parties, notice to an agent while acting within the scope of his...