Pennypacker v. Latimer

• Citation: 81 P. 55,10 Idaho 618
• Parties: PENNYPACKER v. LATIMER
• Decision Date: 09 February 1905
• Court: United States State Supreme Court of Idaho

81 P. 55

10 Idaho 618

PENNYPACKER v. LATIMER

Supreme Court of Idaho

February 9, 1905

ASSIGNMENT OF MORTGAGE-FORECLOSURE OF MORTGAGE-PAYMENT-AGENT-ESTOPPEL.

1. Where B. executed a mortgage to the B. & E. Investment Company, and the company thereafter assigned the same to P with a contract binding the company to pay interest installments and principal promptly when due, and agreeing not to foreclose the mortgage for two years after the same became due, and giving the company the right to repurchase said note and mortgage at any time, and collected nine interest installments covering a period of about five years through said company, and delivered the coupons therefor to the mortgagor through said corporation, and neglected to file its assignment of said mortgage for record in the proper county, and failed and neglected to notify the mortgagors of such assignment, held, that under those facts the said B. &amp E. Investment Company was the agent of P., and that the payment of said principal debt and interest to the B. & E Investment Company was a payment to P.

(Syllabus by the court.)

APPEAL from the District Court of Ada County. Honorable George H Stewart, Judge.

Action to foreclose a mortgage. Judgment for defendant. Affirmed.

Judgment affirmed with costs in favor of the respondent.

Richards & Haga, for Appellant.

Payment of a bill or note should be made to the legal owner or holder thereof, or to the holder's general agent for the collection of such papers, or to someone having special authority to collect in the particular instance, and proof of authority to a person to collect interest does not authorize him to collect the principal. (University Bank v. Tuck, 96 Ga. 465, 23 S.E. 467; Bronson v. Ashlock, 2 Kan. App. 255, 41 P. 1068; 2 Daniel on Negotiable Instruments, 5th ed., sec. 1230; Cummings v. Hurd, 49 Mo.App. 139; Smith v. Kidd, 68 N.Y. 130, 23 Am. Rep. 157; Dodge v. Birkenfeld, 20 Mont. 115, 49 P. 590; Bull v. Mitchell, 47 Neb. 647, 66 N.W. 632; Draper v. Rice, 56 Iowa 114, 41 Am. Rep. 88, 7 N.W. 524, 8 N.W. 797; Lester v. Snyder, 12 Colo. App. 351, 55 P. 613; Barstow v. Stone, 10 Colo. App. 396, 52 P. 48; Brewster v. Carnes, 103 N.Y. 556, 9 N.E. 323; Adair v. Lenox, 15 Or. 489, 16 P. 182; Kohl v. Beach, 107 Wis. 409, 81 Am. St. Rep. 849, 83 N.W. 657, 50 L. R. A. 600; Williams v. Walker, 2 Sand. Ch. 325.) Where the grantee of a mortgagor who has assumed the payment of a note and mortgage pays the amount due on such note and mortgage to the original mortgagee before the same becomes due, but after the assignment of such note and mortgage, and after the mortgagee had parted with the possession thereof, and was without evidence of authority to receive such payment, he does so at his peril, and must bear the loss if the money is embezzled before it reaches the legal owner and holder of the note and mortgage. (Hollingshead v. Globe Inv. Co., 8 N. Dak. 35, 77 N.W. 89, 42 L. R. A. 659; Murphy v. Barnard, 162 Mass. 72, 44 Am. St. Rep. 340, 38 N.E. 29; Biggerstaff v. Marston, 161 Mass. 101, 36 N.E. 785; Mulcahy v. Fenwick, 161 Mass. 164, 36 N.E. 689; Schultz v. Sroelowitz, 191 Ill. 249, 61 N.E. 92.) Authority from the holder of a note to an agent to collect and receive the principal and interest of the debt is not authority to collect or receive either the principal or interest before it is due, and the payor is not discharged if money paid before it is due is embezzled by such agent. (Park v. Cross, 76 Minn. 188, 77 Am. St. Rep. 630, 78 N.W. 1107; Schermerhorn v. Farley, 33 N.Y.S. 900, 11 N.Y.S. 466; Smith v. Kidd, 68 N.Y. 130, 23 Am. Rep. 157; Jones on Mortgages, 6th ed., sec. 964; Biggerstaff v. Marston, supra.) An acknowledgment of satisfaction of a mortgage by a mortgagee after assignment of the mortgage does not affect the rights of the assignee. (Oregon & Washington Trust Co. v. Shaw, 5 Saw. 336, F. Cas., No. 10,556; 4 Kent's Commentaries, 194; 2 Washburn on Real Property, 129; McCormick v. Digby, 8 Blackf. 99.) The burden of showing the existence of an agency is upon the party who alleges it, and to establish agency the evidence must be clear and convincing. (Schmidt v. Shaver, 196 Ill. 108, 89 Am. St. Rep. 250, 63 N.E. 655; Ames v. Murray Mfg. Co., 114 Wis. 85, 89 N.W. 836; Angle v. Manchester (Neb.), 91 N.W. 501.) The recording of assignment of mortgages was but briefly referred to in appellant's former brief. This question was not urged by respondent in the lower court, and we inferred that her counsel conceded that the statutes did not require the assignment to be recorded, and that the alleged payment could not be justified under any provision of the recording acts of Idaho. From the numerous allusions in the opinion heretofore rendered in this case to the failure of appellant to record his assignment, we infer that the court considered the recording thereof essential under our statutes. We feel justified, therefore, in presenting our views on this question at some length. (Vanderkemp v. Shelton (1844), 11 Paige, 29, 37; Reed v. Marble (1843), 10 Paige, 413.) The only effect of recording the assignment is to protect the purchaser against the subsequent sale of the mortgage by the apparent holder of it. (Crane v. Turner, 67 N.Y. 437; Van Kueren v. Corkins, 66 N.Y. 77; Greene v. Warnick, 64 N.Y. 220; Purdy v. Huntington, 42 N.Y. 334, 1 Am. Rep. 532; Giling v. Maass, 28 N.Y. 191; Curtis v. Moore, 152 N.Y. 159, 57 Am. St. Rep. 506, 46 N.E. 168.)

Hugh E. McElroy and D. D. Williams, for Respondent.

The respective rights of purchasers under indorsement are considered in American and English Encyclopedia of Law, second edition, under head of "Assignment" and "Bills and Notes." The rule in case of assignment is that the assignee of a nonnegotiable chose in action takes the same subject to all equities between the original parties up to the time of notice of assignment. (See 2 Am. & Eng. Ency. of Law, p. 1080, authorities under note 1; 4 Am. & Eng. Ency. of Law, p. 246, under head of "Bills and Notes.") "In a great proportion of cases agency arises, not from the use of express language nor from the existence of a well-defined relation, but from the general conduct of the parties. Where one holds out another as his agent with certain authority, he is liable for his acts on the ground of estoppel, whether he actually intends to be bound or not. So where one with full knowledge allows another to represent him as his agent and remains silent when occasion arises for him to speak, he may be held as principal." (See, also, Mechem on Agency, secs. 83, 84; Sax v. Drake et al., 69 Iowa 760, 28 N.W. 423; Wilcox v. Carr et al., 37 F. 130; Quinn v. Dresbach, 75 Cal. 159, 7 Am. St. Rep. 138, 16 P. 762.) "It is impossible to lay down any flexible rule by which it can be determined what evidence shall be sufficient to establish an agency in any given case, but it may be said in general terms that whatever evidence has a tendency to prove the agency is admissible, even though it be not full and satisfactory, as it is the province of the jury to pass on it." (Mechem on Agency, sec. 106; New England Co. v. Gay, 33 F. 636; Roberts v. Peppell, 55 Mich. 367, 21 N.W. 319; Bronson v. Chappell, 79 U.S. (12 Wall.) 681, 20 L.Ed. 436; Garner v. Fisher Co., 6 Utah 332, 23 P. 755; Doan v. Duncan, 17 Ill. 272.) In conclusion we respectfully submit: 1. That the plaintiff asserted title only as assignee, using the identical language that was used in the case of Warren v. Stoddart, 6 Idaho 692, 59 P. 540, which case was reversed by the court on the ground that plaintiff was not indorsee, and that for such reason it was not even necessary that we should prove the agency of the mortgagee but it was incumbent on the appellant to prove that respondent had actual notice that he was owner; 2. We submit that the evidence in this case is sufficient to estop the appellant from denying agency of the mortgagee in collection of his debt, and this wholly independent of any question as to the legal effect of recording or nonrecording the assignment; 3. If it be necessary to construe the law in relation to recording assignments of mortgages as the same affects payments made by the debtor to mortgagee, then the construction placed on section 2809, Revised Statutes of 1901, in case of Van Keuren v. Corkins, should be followed.

SULLIVAN, J. Stockslager, C. J., and Ailshie, J., concur.

OPINION

SULLIVAN, J.

The appellant, who was plaintiff, brought this action as assignee of a negotiable promissory note and mortgage securing the payment of the same, to foreclose said mortgage and to collect the amount due on said promissory note. The following facts appear from the record. That on the first day of March 1897, James F. and Sarah M. Belk were the owners of lot 9 in block 48, Boise City, and on that date made application to the Bunnell & Eno Investment Company, a corporation, to negotiate for them a loan of $ 850 on said lot. In that application the Belks constituted said corporation their agent for the purpose of negotiating said loan and agreed to pay them a commission of $ 141.65 for such services; that on the first day of June, 1897, said Belks executed to said company the note and mortgage sued on herein, which became due March 1, 1902. The sum of money so borrowed was duly paid to the mortgagors. On June 21, 1897, said corporation transferred said note and mortgage to the...