Ritter v. Plumb
| Decision Date | 03 May 1927 |
| Docket Number | 37758 |
| Citation | 213 N.W. 571,203 Iowa 1001 |
| Parties | M. W. RITTER, Appellant, v. C. A. PLUMB et al., Appellees |
| Court | Iowa Supreme Court |
Appeal from Marshall District Court.--JAMES W. WILLETT, Judge.
Action in equity, to foreclose a real estate mortgage. A purchaser of the mortgaged property subject to the mortgage defended and pleaded payment of the mortgage debt to the alleged agent of the mortgagee. From a judgment for the defendant the plaintiff appeals.
Reversed.
G. A Mote, for appellant.
A. B Hoover, for appellee Tom Smith.
On March 1, 1920, C. A. Plumb and wife executed the real estate mortgage in suit to the appellant, Ritter, to secure the payment of two notes, one for $ 300 and one for $ 700. The notes were signed by C. A. Plumb and his wife and J. D. Plumb. On the same day, C. A. Plumb and wife conveyed the mortgaged premises to the appellee Smith, subject to the mortgage.
The note for $ 300 has been paid. The action is to foreclose the mortgage for a balance alleged to be due on the note for $ 700. Personal judgment was asked against the makers of the note. The appellee Smith was made a party, but no personal judgment against him was prayed. He alone appeared, and pleaded payment. He alleged that the note had been paid by him to J. D. Plumb; that J. D. Plumb was appellant's agent to receive such payment; that appellant had ratified the act of Plumb in so receiving payment; and that he was estopped to deny Plumb's agency.
It is undisputed that J. D. Plumb did not have possession of the notes and mortgage at the time of any alleged payment to him.
It is well settled that it is the duty of one making payment on a written obligation to another as agent to see, at his peril, that the one paid is in possession of the obligation, or, if not, the debtor must establish the authority of the one whom he pays, to receive payment. But the possession of negotiable paper is not the only evidence of authority to receive payment, and payment to an agent will be sustained where the conduct of the holder, or his manner of doing business, has been such as to fairly indicate that the agent had authority to receive payment, or to induce the debtor to believe that he had such authority. Wolford v. Young, 105 Iowa 512, 75 N.W. 349; Townsend v. Studer, 109 Iowa 103, 80 N.W. 210; Harrison v. Legore, 109 Iowa 618, 80 N.W. 670; Bissell v. Spring, 179 Iowa 1005, 162 N.W. 245; McCullough v. Reynolds, 181 Iowa 1089, 165 N.W. 333; Sioux City Cattle Loan Co. v. Lovrien, 198 Iowa 296, 197 N.W. 914; Huismann v. Althoff, 202 Iowa 70, 209 N.W. 525.
I. There is no evidence of express authority on the part of J. D. Plumb to receive payment, as appellant's agent, of either of the notes.
The evidence relied upon to show that appellant held Plumb out as having authority to receive payment of the note for $ 700 relates to the circumstances of the prior payment of the note for $ 300, and to payments made by others to Plumb on obligations due appellant.
There was nothing in the manner of payment of the $ 300 note to indicate that Plumb was appellant's agent to receive payment of the one for $ 700. Appellee, through his agent H. A. Smith, gave to Plumb his check for $ 239.50, payable to the order of appellant, together with a sufficient sum in cash to pay the $ 300 note. This check and the requisite additional cash were by Plumb given to appellant, who surrendered the note to Plumb, and the latter sent it to appellee. Plumb was appellant's debtor, one of the makers of the $ 300 note. The testimony is undisputed that, when this note was due, appellant demanded the money of Plumb, who said he would get it; and that he made no demand of appellee. Appellee knew that appellant was the holder of the mortgage on his property, and his check in part payment of the note was payable to appellant. To that extent, there was no payment to Plumb at all. Appellee alleged in his answer that he had agreed to pay the mortgage; but no such agreement was contained in his deed, and he testified that he bought the property subject to the mortgage. Appellant knew only that appellee had purchased the property subject to the mortgage. The receipt by him from Plumb, who was under obligation to pay the debt, of the check of one who, so far as he knew, and in fact, was under no obligation to pay it at all, with sufficient cash to pay the note, did not charge him with notice that Plumb, his debtor, had assumed to act as his agent in receiving the money from the purchaser of the property, against whom he made no claim. There is no evidence that Plumb in this transaction claimed to be appellant's agent.
The claimed payment of the note for $ 700 was made July 3, 1922. The appellant went to California on September 2, 1922, and was gone almost a year. He admitted that, in two instances, where he held contracts acquired from Plumb for the sale of property, or which were payable at Plumb's office, he directed payments during his absence to be made to Plumb. There is testimony that, in another instance, payments on a note due appellant were made to Plumb, prior to 1922. The papers in that instance were left at Plumb's office, and were surrendered on final payment.
It is clear that any authority given to Plumb, subsequent to the claimed payment of the $ 700 note, to receive payments due appellant from others, could not constitute a holding out of Plumb as his agent to receive money due him generally prior to such express authority. There was no showing that appellee or his agent had any knowledge, at the time the $ 700 note was claimed to have been paid to Plumb, that the latter had ever received or collected money due appellant. There was nothing, therefore, in these transactions to induce a belief on their part that he had authority so to do. The evidence failed to establish that appellant held Plumb out as his agent to receive money due him, or that his conduct was such as to induce in appellee a justifiable belief that he had such authority.
II. The appellee claims to have made payment of the note for $ 700 by his check for $ 766.65, payable to the order of J. D. Plumb, which was given to Plumb on July 3, 1922. Plumb gave a receipt for the amount of the check, signed by himself, which recited that the amount was a full settlement of the note and mortgage held by appellant, and in which he agreed to turn over the papers pertaining to the mortgage, including the insurance policy and abstract. On July 8th, Plumb paid to appellant $ 100 of principal, and the interest due on the note up to March 1, 1922; and on September 2, 1922, made another payment of $ 100 on the principal.
The claim of ratification on the part of appellant of Plumb's action is predicated on appellant's conduct at and subsequent to August 23, 1922, on which date he was informed of the payment made to Plumb. Concerning what then occurred, H. A. Smith, appellee's agent, testified that he first met appellant on that date, to see about the abstract and releasing the mortgage. He said:
Appellant did not deny having this conversation. He denied that the receipt was shown to him, and testified that Smith could not then find it. He admitted thereafter receiving $ 100 from Plumb on the note.
Nothing was done by either party while appellant was in California. After his return, H. A. Smith, representing appellee, saw him in August, 1923. He testified:
"
He testified that appellant volunteered to go with him to see Plumb, but that they did not find him. The appellee and H. A. Smith testified that they talked with appellant on September 26, 1923, and he then told them again that the note would have to be paid. This action was commenced by service of notice on appellee on October 25, 1923.
We are of the opinion that no ratification of an assumed agency on the part of J. D. Plumb to receive...
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