Porter v. Stuart

• Decision Date: 06 November 1915
• Docket Number: 2839.
• Parties: PORTER v. STUART et al. In re CAMPBELL.
• Court: U.S. Court of Appeals — Fifth Circuit

227 F. 840

PORTER v. STUART et al.

In re CAMPBELL.

No. 2839.

United States Court of Appeals, Fifth Circuit.

November 6, 1915

W. W Hill, A. F. Whiting, and P. H. Stern, all of Montgomery Ala., for petitioner.

Fred S Ball, J. Talbert Letcher, and J. R. Thomas, all of Montgomery, Ala., for respondents.

Before PARDEE and WALKER, Circuit Judges, and FOSTER, District Judge.

WALKER Circuit Judge.

The petitioner, Charles D. Porter, on January 27, 1914, made a loan to M. B. Campbell, the bankrupt herein, of $7,200 for six months, taking as security therefor a first mortgage on certain lots of a platted tract of land near Montgomery, Ala. This mortgage was duly recorded. At or about the time the mortgage was executed it was agreed in writing between Porter and Campbell that any or all of the lots might be released from the mortgage upon the payment by Campbell of $600 per lot. Porter, desiring to leave Montgomery for a visit to Tennessee (which lasted till some time in the following November), on July 28, 1914, executed to M. M. Sweatt a power of attorney to release and discharge from the mortgage any lot therein described upon the payment to him of the sum of $600 for each lot so released. This power of attorney was promptly recorded. During Porter's absence in Tennessee, Sweatt as attorney in fact released on the record several of the lots; his recorded release reciting the payment to him of $600 for each lot released. This recital was false; Sweatt not having received the money as stated. Thereafter, while Porter was still absent in Tennessee, other persons, relying on the recorded releases executed by Sweatt and their recitals of payment as called for by the recorded power of attorney to him, lent money to Campbell on his mortgages to them of the lots shown by the record to have been released. They acted in good faith and without knowledge that Sweatt had not received the $600 in each case. After these mortgages were executed Campbell was adjudged a bankrupt, and the lots came into the possession of his trustee in bankruptcy. Porter on the one hand, and the subsequent mortgagees on the other hand, each claimed that his mortgage was entitled to priority. After a hearing on the conflicting claims, the referee decided in favor of the subsequent mortgagees, and this decision was affirmed by the District Court. The matter is here on Porter's petition to superintend and revise.

We are of opinion that the assailed rulings were proper. It is contended in behalf of the petitioner that the claims of the subsequent mortgagees to priority cannot prevail, because they are to be regarded as having dealt with Sweatt as Porter's special agent, and as being subject to the rule that the principal of such an agent is bound only by the acts of the agent which are in accordance with his authority, and that a third party dealing with such an agent is bound at his peril to ascertain the extent of the agent's authority and that what he does is in conformity with the authority conferred. We are of opinion that this contention involves a disregard of material features of the case presented. Assuming that the reliance by the subsequent mortgagees on the releases found on the public records amounted to their dealing with Sweatt as Porter's special agent, though they did not otherwise have any transaction with him, yet we are of opinion that the conduct of the principal himself was such that it materially contributed to misleading the subsequent mortgagees to the conclusion, from what was found on...