Warren v. Hates

• Decision Date: 05 November 1907
• Citation: 74 N.H. 355,68 A. 193
• Parties: WARREN et al. v. HATES et al. SAME v. DIXON.
• Court: New Hampshire Supreme Court

68 A. 193

74 N.H. 355

WARREN et al.

v. HATES et al.

SAME

v. DIXON.

Supreme Court of New Hampshire. Hillsborough.

Nov. 5, 1907.

Exceptions from Superior Court, Hillsborough County; Peaslee, Judge.

Bills in equity by John D. Warren and another against Michael C. Hayes and others, and against L. Grace Dixon. Decree in first action against all the defendants except one, and in second action decree of dismissal, and plaintiffs excepted. Exception overruled.

The plaintiffs were induced to convey the property in question to Hayes' grantor by the fraud of the defendants in the first action. Hayes mortgaged it to one Jennings. The mortgage purported to be made to secure the payment of Hayes' note for $3,500, payable to Jennings on demand, but was, in fact, made to secure Jennings for indorsing a note for Hayes. That note was paid at maturity, but the mortgage was not discharged, and it was subsequently agreed that Jennings should indorse another note for Hayes and hold the mortgage as security for so doing. In May, 1902, Hayes borrowed $3,000 of Mrs. Dixon, the defendant in the second action, to pay the second note indorsed by Jennings, and the latter assigned the mortgage to her to secure the payment of her loan to Hayes. The loan not being paid when due, she employed J. B. Dixon, one of the defendants in the first action, to collect it, and he had Hayes convey the property to her in satisfaction of her claim against him. She supposed J. B. Dixon was acting for her when he procured the conveyance from Hayes, but she afterward learned that he acted in the matter for Hayes. Both Mrs. Dixon and Jennings are innocent parties, and at the time the settlement was made she did not know any of the facts which it is now claimed invalidate her title to the property.

G. K. & B. T. Bartlett, for plaintiffs. Taggart, Tuttle, Burroughs & Wyman, for Mrs. Dixon.

YOUNG, J. The payment of the notes indorsed by Jennings did not discharge the mortgage as a matter of law (Quimby v. Williams, 67 N. H. 489, 492, 493, 41 Atl. 862, 68 Am. St. Rep. 685); so, when he assigned the mortgage to Mrs. Dixon, the legal title to the property vested in her to secure the payment of her loan to Hayes. Since she was an innocent purchaser for value to the extent of that loan, her equitable right to the property was to that extent superior to the plaintiffs'. Lewis v. Dudley, 70 N. H. 504, 40 Atl. 572. Since this is so, the conveyance from Hayes did not invalidate her lien on the property, unless she is held to know that Hayes' title to it was procured by fraud, or unless she is in some way estopped to deny that J. B. Dixon was acting for her when he procured that conveyance. If she is to be held to have known of the defect in Hayes' title, it must be because of the rule which imputes the knowledge of an agent to his principal; for it is found that she neither knew nor ought to have known of it. That rule does not charge the principal with his agent's knowledge of facts affecting the subject-matter of the business in which the latter is employed,...