Wagner v. Spaeth

• Decision Date: 24 March 1927
• Docket Number: 1274
• Citation: 254 P. 123,36 Wyo. 279
• Parties: WAGNER v. SPAETH et al [*]
• Court: Wyoming Supreme Court

254 P. 123

36 Wyo. 279

WAGNER v. SPAETH et al ^[*]

No. 1274

Supreme Court of Wyoming

March 24, 1927

APPEAL from District Court, Goshen County; CYRUS O. BROWN, Judge.

Action by John P. Wagner against Agnes Spaeth and others. Judgment for plaintiff, and defendants appeal.

Reversed and Remanded with Direction.

Osmer E. Smith, and Kinkead, Ellery & Henderson, for appellants.

A draft, acceptance, order or promissory note is not payment or extinguishment of debt, in the absence of an agreement; 30 Cyc. 1194; National Life Insurance Co. v. McDermott, 186 Ill.App. 157; Kirkpatrick v. Puryear, (Tenn.) 24 S.W. 1130; Fidelity Co. v. R. R. Co., (Va.) 9 S.E 759; Morris v. Harveys, 75 Va. 726. The De Moulin Company accepted the cashier's check in full payment and delivered up every evidence of their security; Underwriters Wrecking Co. v. Board of Underwriters, 35 La. 803. Having elected the mode of payment, it cannot thereafter be repudiated; Byles on Bills, 389; Bancroft on Commercial Paper, Sec. 1551; Day v. Thompson, 65 Ala. 273; Schaffer v. Olson, 139 N.W. 983; 43 L. R A. (N. S.) 762. Where a bank fails, after paper has been paid, loss falls upon the owner of the paper and not upon the maker; 7 C. J. 627; Minnesota Co. v. State Bank, (N D.) 158 N.W. 1063; Planters Co. v. Armour Packing Co., (Miss.) 69 So. 293. One cannot deny that a note, taken by him for a debt due him, is not in payment and discharge thereof, without an offer to surrender the note; Mfg. Co. v. Co., 59 Ill.App. 573; 30 Cyc. 1221. An exception has been made to the rule that a check does not operate as payment where a bank holds a claim for collection and accepts a check drawn on itself; Scott v. Gilkey, 153 Ill. 168. Acceptance of a check, by a bank on which it is drawn, charging the drawer with the amount thereof and placing the proceeds to the credit of the payee, creates between the bank and the payee the relation of debtor and creditor; Bank v. Gibboney (Ind. App.) 87 N.E. 1064; Board v. Robinson, (Minn.) 84 N.W. 105. Where a check is received in payment of a note, and the note cancelled and surrendered, the transaction amounts to a payment of the note; Arnot v. Bingham, 29 N.Y.S. 68. Where a bank receives paper for collection, the bank is the agent of the payee or holder; 3 R. C. L. 269; 7 C. J. 597; Ingalls v. Fiske, 34 Mo. 232; Osborn & Co. v. Baird, 45 Wis. 189. Where paper is sent to a bank for collection, at the request of the obligor, the bank is the agent of the owner of the paper in making collection; Schafer v. Olson, Supra. Wyoming State Bank was the agent of the payee to remit; Bank v. Free, 24 N.W. 566. The bank does not become agent for the maker unless it applies the money on the note; Morse on Banks & Banking, 5th Ed. Vol. 1, Sec. 214, P. 448. If the debtor pays to the bank the amount due on his note, and takes it up, he is fully absolved; Morse, 5th Ed. Vol. 1, Sec. 214, Pages 446, 447.

Harold I. Bacheller and E. Paul Bacheller, for respondent.

The general rule, as to the liability of a bank as the collection agent, is stated in 2 C. J. 624; Stockton v. Fortune, (Ill.) 55 N.E. 367; Bautz v. Adams, (Wis.) 111 N.W. 69; Bartel v. Brown, (Wis.) 80 N.W. 801. Possession of the paper, or convincing evidence aliunde of express authority, is indispensable to warrant a finding that a bank has authority to receive payment; Smith v. Kidd, 68 N.Y. 130. Where "C" was applied to for a loan on certain property, with authority to pay off certain liens including a mortgage thereon, and the mortgagee did not know that a loan had been negotiated for such purpose and had not authorized "C" to hold the money for him, "C" is the agent of the mortgagor and the mortgage is not satisfied until actually paid to the mortgagee; Security Co. v. Graybeal, (Ia.) 52 N.W. 497; U. S. Bank v. Burson, (Ia.) 57 N.W. 705. A debtor, who pays his obligation without precaution to find that the party to whom he pays holds the obligation, does so at his peril; Koen v. Miller, (Ark.) 150 S.W. 411; Ilgenfritz v. Mutual Benefit Life, 81 F. 27. A mortgagor, with knowledge that mortgage had been assigned and that the original mortgagee was endorser of notes secured, and the original mortgagee did not have possession thereof, the mere fact that he had received former payments and had transmitted the proceeds to the assignee, did not make him agent of the assignee to receive payments; Guaranty Securities Co. v. Brown, (Tex.) 254 S.W. 240. Authority to collect interest does not infer authority to collect principal; unless agent has possession of securities; Calhoun v. Ainsworth, (Ark.) 176 S.W. 316; Wiesner v. Kosiedowski, (Wis.) 193 N.W. 374. The remittance by the State Bank made to respondent was the remittance of appellants and, in the absence of proof that the cashier's check tendered in payment of respondent's loan was accepted by it in payment, the presumption is that it was a conditional payment and would be effective to retire the loan only in the event that it was paid upon presentation; 30 Cyc. 1194; Lusk Co. v. Giinther, 32 Wyo. 294; 21 R. C. L. 60; 18 A. L. R. 532.

KIMBALL, Justice. BLUME, Ch. J., and POTTER, J., concur.

OPINION

KIMBALL, Justice.

This is an action to foreclose a real estate mortgage to secure a note for $ 1200. The plaintiff claimed to be the holder of the secured note and the assignee of the mortgage. Defendant Agnes Spaeth, who on her purchase of the mortgaged property had agreed to pay the mortgage, will be called the mortgagor. The First Colorado-Wyoming Joint Stock Land Bank, another defendant, will be called the "land bank." The defendants claimed that the debt secured by the mortgage had been paid and the mortgage released. The district court gave judgment for the plaintiff, and the defendants appeal.

There is hardly any dispute about the facts. The note and mortgage were given to De Moulin Loan and Investment Company of Hot Springs, South Dakota (herein called the "De Moulin company"), and afterwards assigned by that company to the plaintiff who lives at Dubuque, Iowa. After the assignment, the De Moulin company continued to look after all matters pertaining to the loan, including all collections of interest and principal. The agency of the De Moulin company for plaintiff is unquestioned.

The debt became due in September, 1922. About that time, as appears from correspondence between the De Moulin company and the mortgagor, demands for payment were met by the mortgagor's promises that she would pay if she were successful in obtaining a loan for which she had applied to the land bank. Her lands were then encumbered by several other mortgages in addition to the one held by plaintiff. To pay all the mortgages would require about $ 7000, and that was the amount of the loan for which she had made application to the land bank. Her application was approved, and in December, 1922, to secure the money loaned, she executed and delivered to the land bank a mortgage on the lands that had been previously mortgaged to plaintiff's assignor. The land bank did not then pay over the money, but retained it for the purpose of paying prior mortgages including the plaintiff's. The Wyoming State Bank of Lusk, in the county where the mortgagor lived and where the lands were situated, undertook at the request of the land bank the task of paying off the prior mortgages and procuring releases. The Wyoming State Bank hereafter will be called the "state bank." The amount of the loan was sent by the land bank to the state bank on January 30, 1923, by a check payable to "Agnes Spaeth and Wyoming State Bank." This check on its receipt by the state bank was endorsed, "Passed to the credit of Agnes Spaeth," (signed) "Wyoming State Bank by Jno W. Newall, Pres.," and was paid February 3, by the bank on which it was drawn. The money thus collected by the state bank was not at once "passed to the credit" of the mortgagor, for it was intended that she should receive only the amount left after paying the prior mortgages.

The secretary of the De Moulin company testified that in the early part of February his company received from the state bank a letter stating in substance that the bank had the money to pay the plaintiff's mortgage, and if the De Moulin company would send on the papers the bank would remit. In response to that letter, the papers which included the note, the mortgage and a release properly executed by plaintiff, were sent by the De Moulin company to the state bank with a letter giving a statement of the amount due, and asking the bank to remit. These letters exchanged between the state bank and the De Moulin company were not produced at the trial. The plaintiff, claiming that they could not be found, was permitted to prove their contents by the testimony of the secretary of the De Moulin company. The letter enclosing the note, mortgage and release was received by the state bank about February 9. On February 27 the mortgagor came to the state bank which then credited her account with the amount previously received from the land bank. She immediately gave the state bank a check on itself for the amount due plaintiff. The state bank then delivered to her the note and mortgage, and on the same day charged the check against her account and issued and mailed to the De Moulin company a cashier's check for the amount. The release of mortgage was sent by the state bank to the county clerk for record. The cashier's check was received by the De Moulin company in due course of mail, but was never paid, as the state bank failed to open for business March 1, and thereafter passed into the hands of a receiver.

There is nothing in the record to suggest that either the De Moulin company, the mortgagor or the land bank has been negligent in trusting the state bank. None of the parties had...