Prescott v. Brooks

Young, J. This case was before this court on a former appeal. 11 N. D. 93, 90 N. W. 129. The former appeal was taken from only a portion of the judgment and the defendant then sought, as he now seeks, a retrial under § 5030, Revised Codes, which authorizes retrials' in actions tried to the court without a jury. A majority of the court reached the conclusion that a retrial was not authorized by said section upon an appeal from only a part of a judgment, and the appeal was dismissed without prejudice. The defendant has now appealed from the entire judgment. Counsel for respondent has interposed a motion to dismiss the appeal, based upon two grounds. The first is that it was not taken within the time allowed by law. This ground was urged in a similar motion upon the former appeal, and was ruled adversely to the respondent. The same reasons exist for denying the present motion. The judgment in question was entered on August 4th, 1900, and written notice of entry of judgment was served by appellant upon respondent on the same day. No notice of entry of judgment has ever been served by respondent upon the appellant. The present appeal was taken on May 10th, 1902. It will thus be seen that the appeal was taken more than a year after the entry of the judgment. But that fact is of no importance under our statute. The one year time limit for appealing-does not begin to run from the entry of judgment, but from the service of the statutory notice.. On this point we said in the opinion on the former appeal: “The time within which appeals may be taken to this *774 court is regulated by § 5605, Rev. Codes, which reads as follows: ‘An Appeal from a judgment may be taken within one year after the entry thereof by default, or after written notice of the entry thereof in case the party against whom it is entered has appeared in the action, and from an order within sixty days after written notice of the same shall have been given to the party appealing. . . .’ This not being a judgment by default, an appeal could be taken by a party desiring to appeal therefrom at any time prior to the expiration of the one-year period allowed, after written notice of the entry thereof. It will also be noted that, as to this judgment, the time for appealing did not begin to run from its rendition, nor from its entry; neither did it begin to run from actual notice or knowledge of the entry of the judgment. The language of the statute is explicit. It grants a period which does not expire until one year after written notice of the entry of the judgment in which to appeal. This statute places it in the power of either party to a judgment to set the time for an appeal running against his adversary, by serving upon him a written notice of entry of judgment. But it is clear that by serving such notice a party does not set the time running against himself, and thus limit his period for appealing. His service of notice is to cut off his adversary’s time for appeal.” In addition to the authorities cited, in the foregoing opinion, see cases cited 2 Cyc. 198. The second ground of the motion is “that if the right of appeal did riot accrue on August 4th, 1900, (when the judgment was entered and notice of entry served by appellant) it has never yet accrued to appellant and his appeal must be dismissed as having been prematurely taken.” There is no merit in this contention. The right of appeal arose, it is true, when the judgment was entered. But counsel has fallen into the mistaken belief that the statute gives a fixed period of one year in which to appeal. This is not true. The time for appealing can never be less than one year, but it may be more, and will be if the parties fail to exercise their right to limit the time by serving the statutory notice. The right to appeal arises upon the entry of judgment and it continues until it is cut off by the service of the statutory notice. The function of the written notice of entry, as we attempted to make clear in the former opinion, has nothing to do with creating a right to an appeal, but relates entirely to fixing the time *775 when the right ends, and that time is one year after the' service of the written notice of entry of judgment. Briefly stated, the right of appeal accrues upon the entry of judgment and continues until cut off by the service of the statutory notice and the lapse of on© year after such service. In this case the respondent'has not limited the appellant’s time for appealing by service of this notice. The present appeal presents the entire case for review. The statement of the case contains all of the evidence offered at the trial. The appellant specifies therein that “he desires the supreme court to review on the appeal herein the entire case, with respect to the $500 note and 'mortgage . . . and the counterclaim ... of the defendant upon said note, . . . and the question whether said mortgage has ever been paid; and that the court erred in the 7th finding of fact . . . and in its first conclusion of law touching the payment of said note and mortgage.” Section 5630, Revised Codes, which authorizes trials de novo in this court, provides for but two kinds of specifications. Where the appellant wishes to review the entire case he shall so specify; when he wishes to review but a portion of the facts he is required to specify the particular facts, naming or pointing them out definitely. Farmers’ & M. Nat. Bank v. Davis, 8 N. D. 83, 76 N. W. 998; Douglas v. Richards, 10 N. D. 366, 87 N. W. 600. It is patent that the appellant has not specified or pointed out any particular facts for review in the specification above quoted. He has, however, demanded a review of the entire case, and we are of opinion that the additional and useless language contained in the specification should be treated merely as surplusage and should not operate to entirely defeat a review in this court, particularly in view of the fact that the statement contains all the evidence presented to the trial court. A proper consideration of the questions involved requires a restatement of the facts set out in the former opinion as follows: Plaintiff instituted this action for the purpose of determining the amount due on his two promissory notes, secured by mortgages in favor of one S. W. McLaughlin, upon a tract of land situated in Pembina county. The mortgage first executed secured a principal note for $500, with interest coupons thereto attached. This mortgage was executed on December 2, 1887. The other mortgage was given on December *776 9, 1889, and secured the payment of a principal note of $880, with interest coupons attached thereto, and covered the same land. Both notes were non-negotiable. The last, or $880 note, was given by plaintiff to pay the $500 note. The excess above the amount due on the $500 note was paid to plaintiff by McLaughlin in cash, but the latter did not cancel the $500 note, or release the mortgage securing the same. McLaughlin assigned both mortgages to other parties. The $500 note and mortgage was transferred to one Helen M. Andrews, and the $880 note and mortgage, to the defendant George Brooks. Both were made defendants in the action. No objection was made by either party to the form of the action or to their joinder as defendants. 'They answered separately, and demanded judgment for the full amount secured by their respective mortgages and a foreclosure of the same. Plaintiff claims that he should have credit for the $500 which was not paid to him from the $880 loan, and demands that the same be credited either .upon the $500 note or the $880 note. Helen M. Andrews alleged in her answer that the $500 note had not been paid, and that the mortgage securing the same was a first lien on the premises for the full amount of the note, with interest. Defendant Brooks, in his answer, denied that the $500 note had not been paid, and alleged that S. W. McLaughlin was the agent of Helen M. Andrews for the collection of the $500 note, and that “said mortgage and note alleged to be held by said defendant Helen M. Andrews was fully paid 'to said S. W-. McLaughlin on or about December 9, 1889,” which was the date of the execution and delivery of the $880 mortgage, and asked that his $880 mortgage be declared a first lien on the premises and that the Andrews mortgage be declared paid and canceled. After issue was joined, but before trial, the defendant Brooks purchased the $500 note, and took an assignment of the mortgage securing the same, so that when the case came to trial he was the owner of both mortgages. The pleadings, however, were not amended. The case was tried to the court without a jury, under the provisions of § 5030, Revised Codes 1899. The trial court sustained the allegations contained in the answer of Brooks, and found, as a conclusion of law, “that the giving of the $880 note by the plaintiff to the said S. W. McLaughlin paid and satisfied the said $500 note and mortgage aforesaid, and that plaintiff *777 was entitled to judgment canceling said note and mortgage,” and that defendant Brooks is entitled to “the usual decree of foreclosure and sale on the said $880 note and mortgage,” etc. In accordance therewith, a judgment and decree of foreclosure was entered upon the $880 note and mortgage, which judgment also declared the $500 note and mortgage null and void, and directing their cancellation. The appellant contends that upon the evidence contained in the record he is entitled not only to the judgment for the full amount of the $880 note, with interest, which was awarded to him by the trial court and with which he is entirely satisfied, but that he is also entitled to a judgment and decree of foreclosure of the mortgage securing the $500 note, and for the full amount of said note with interest. It is conceded that the plaintiff received a full cash consideration at the time of the execution and delivery of the $500 note, and it is further agreed that the consideration for the $880 note, was the sum of $380 paid to the plaintiff by McLaughlin at the time of its execution, in cash or its equivalent, and the agreement for the payment and cancellation of the $500 note. It is also agreed that the $500 thus provided by Prescott was not remitted by McLaughlin to Helen M. Andrews and the same has not been paid either to her or to the defendant by McLaughlin. The respondent’s position is that his total indebtedness is but $880, and interest thereon, which sum he concedes that he received from the two loans, and there is no claim that he received any further sum. It is not material to him whether this admitted indebtedness is held to be represented by one or both of these notes, so long as he is permitted to discharge his obligations and secure a satisfaction of the two mortgages upon his land by paying that sum. As stated, the trial court reached the conclusion that the plaintiff’s obligation, evidenced by the $500 or Andrews note, was extinguished by the $880 loan, and, as a necessary sequence to that conclusion found that there was no partial want of consideration for the $880 note, and gave judgment for the full amount of the same with interest. These conclusions are, in our opinion, entirely sound and the judgment appealed from must therefore be sustained and the conclusion that the plaintiff’s obligation on the Andrews note was extinguished is not nee *778 essarily dependent upon the alleged authority of McLaughlin to collect it. The conclusion cannot be escaped, we think, that the plaintiff’s-debt was extinguished as to the $500 note, whether McLaughlin is held to have acted with the authority of an agent in collecting it, or is held to have been without any original authority; and this for reasons which will be hereafter stated. The exact legal relation which existed between McLaughlin and Miss Andrews is not satisfactorily disclosed by the evidence. Neither of these parties were witnesses. McLaughlin became insolvent about January 1st, 1897, and was out of the country at the time of the trial. The defendant did not see fit to call Miss Andrews as a witness, or to introduce any documentary evidence touching the legal relation which existed between her and McLaughlin. It is a just presumption, under the circumstances of this case, that had such evidence been produced it would have been unfavorable to the defendant. 1 Greenl. Ev. § 195b. The case rests upon the evidence of Prescott, and certain documentary testimony introduced by him. The documentary evidence consists of fourteen letters received by Prescott from McLaughlin; two letters received by him from the defendant- Brooks in 1897, and five letters received by him in 1897 from Fish & Cary, who, it is conceded were the agents .of Miss Andrews, located at Milwaukee, Wisconsin; also all of the several coupon notes which were paid by Prescott on the two loans, and a number of renewal notes. The $500 note bears date December 2nd, 1887, and, by its terms, became due on December 1st, 1892. It bore eight per cent annual interest, which was represented by five coupons. Prescott paid to McLaughlin the coupon which fell due December 1st, 1888, and also the second coupon, which fell due December 1st, 1889, and received both of them from him duly canceled. These two coupons had been endorsed to Helen M. Andrews by McLaughlin and had thereafter been endorsed back to McLaughlin, so that upon their face they appeared, when paid and received by Prescott, to have been owned by McLaughlin. At the time of paying the second coupon, namely, December 9 th, 1889, Prescott executed the $880 note and mortgage. This note by its terms, became due on December 9th, 1894. It bore eight per cent annual interest, which was represented by five coupons of $70.40 each. It is not disputed that this note was given to pay the $500 incumbrance *779 then upon the land, and the mortgage given to secure it was in form a first mortgage. At the time of this transaction and up to the time of the trial it appears that Prescott had not noticed the endorsement upon the two coupons which he had thus paid, neither did he have any actual notice of the transfer of the $500 note to Helen M. Andrews by McLaughlin, or of the recording of the assignment of the mortgage. It is apparent that he assumed that McLaughlin still owned the note, and, further, that it had been paid and extinguished and the mortgage released, as agreed by McLaughlin, and he continued in this belief without notice or knowledge to the contrary until January 30th, 1897, more than seven years after he had given the $880 note to McLaughlin for the purpose of extinguishing it. On February 9th, 1890, which was about two months after it was executed, McLaughlin sold and assigned the $880 note and mortgage to the defendant Brooks. It appears that at all times thereafter, and up to 1897, McLaughlin was the defendant’s agent for the collection of the same. The evidence shows that Prescott paid to McLaughlin all of the coupons due on the last named or $880 loan, viz.: the coupons maturing in 1890, 1891, 1892, 1893 and 1894; and, further, that in 1894, through McLaughlin as agent for the defendant, a written extension agreement was entered into whereby the note was extended for a period of five years, and five new coupons were executed. One of these coupons was paid to McLaughlin, that is, the one which matured on December 9th, 1895. The letters written to Prescott by McLaughlin which are in evidence, are dated in 1894, 1895, 1896 and 1897, the last one bearing date January 22nd, 1897, and relate to the payment of the coupons, the extension of the loan and the statement of the amount due upon the $880 loan. In four of these letters, the mortgage is described as a first mortgage upon the premises, and in two of them a detailed statement of the amount of the incumbrances upon the land is given, after describing this mortgage as a first mortgage. The first information which Prescott had that the $500 note had not been canceled and the mortgage satisfied, as agreed by McLaughlin, was given by the following letter from Fish & Cary, under date of January 23rd, 1897 : “Silas W. Prescott, Cavalier P. O., Pembina Co., N. D. Dear Sir: — I have for collection your note for $500, due Dec. 1, 1892, upon which no interest has been paid since *780 that date. This note is secured by mortgage on N. W. J Sec. 21, T. 161 N. of R. 54. Do yoii exj^cct to pay this note without suit? The note draws 12 per cent after due. The note runs to S. W. McLaughlin and he assures us that you intend to pay. Let us hear from you.” Prescott replied to this letter, stating that he owed no such note, that he had given a $500 note, but the same had been paid by making a new' loan of $880 from McLaughlin and that if the note they referred, to was a part of this last loan it was all right, otherwise it was all wrong. lie also immediately wrote to McLaughlin demanding an explanation, to which he received no reply. Under date of February 15th, 1897, Fish & Cary again wrote Prescott as follows: “The note and mortgage were transferred by McLaughlin to Helen M. Andrews and it is now owned by her and she placed the same in our hands for collection. The note and mortgage, with coupon attached, were in the possession of Mr. McLaughlin for collection. He has reported that he was about to collect the same from time to time, but last summer he turned all over to.Miss Andrews, or to Fish & Cary for Miss Andrews, upon which there appeared to have been no interest paid since 1892. We would like to know if you still own the land and. whether or not you are in a position to pay the interest and the principal due at this time. We are instructed to proceed to collect. . . .” Later, and on March 2nd, 3897, in replying to a further letter from Prescott, which called for further information, they stated: “We hope, this information is full enough to satisfy your mind that we have the note and mortgage in our possession.” On March 22nd, 1897, Fish & Cary sent the papers to Grand Forks, where McLaughlin resided and had his place of business, for collection, and, on the same day, wrote to the plaintiff, informing him of that fact, as follows: “We send this day by American Express to Grand Forks, N. D., for collection your note, . . . upon which there is now due $500, and interest from Dec. 1st, 1892, at 12 per cent, equaling $815. Also a mortgage deed, . . . also assignment of said mortgage to Miss Helen M. Andrews, . . . also satisfaction of mortgage executed by Helen M. Andrews, bearing date Nov. 23rd, 1892. AAc have been unable to obtain any reply from letters from Mr. McLaughlin about this claim. We have instructed the American Express Company to hold the papers for ten *781 days and to deliver all of them to yon or tó Mr. McLaughlin on payment of the amount due thereon. I have therefore informed Mr. McLaughlin that if he would pay the amount due on this note without delay, we would accept of the interest at 8 per cent per annum, to which he makes no reply whatever. We must therefore insist on. the amount being paid according to the terms of the note, as my client has been put to expense in endeavoring to collect the same. Unless this is paid we shall institute proceedings for foreclosure at the earliest practical moment. I shall send a copy of this letter to Mr. McLaughlin and shall ask the Express Company to give you notice by sending you from Grand Forks an additional copy of this letter.” Under date of March 31st, 1897, Fish & Cary, in reply to a letter from Prescott, wrote: “You have not paid any interest since 1892 and while Mr. McLaughlin twice stated early last summer that he was prepared to take up the mortgage and pay it and would do so in a few days, all at once he ceased to write and we can get no reply to our letters. We therefore send the note, mortgage and release forward for collection.” The evidence afforded by these letters, and no objection has been urged in this court to their consideration and no attempt v'as made by the defendant at the trial to contradict or explain their contents, when taken in connection with Prescott’s testimony and the long and unexplained silence of Miss Andrews, establishes the fact that McLaughlin was the collection agent of Miss Andrews and that this relation commenced in the fall of 1888, prior to the payment of the first interest coupon, and continued until McLaughlin’s insolvency became apparent iff the summer of 1896, and that he had possession of the note and coupons and all papers connected with the loan prior to the time they were turned over to Fish & Cary in 1896. This is not an inference, but is established by direct evidence. As has been seen, the coupons due in 1888 and 1889 were in McLaughlin’s hands for collection and were paid to him by Prescott and the canceled coupons delivered to the latter; further, Fish & Cary in their letter of February 15th, 1897, above quoted, expressly state that “the note and mortgage, with coupon attached, were in the possession of Mr. McLaughlin for collection,” and they further state in the same letter: that in the summer of 1896 McLaughlin turned all papers over to Miss Andrews, or *782 to Fish & Cary for her. Among the papers so received by them from McLaughlin was a satisfaction of the mortgage in question, executed by Helen M. Andrews on November 23rd, 1892. It should require no argument to show, upon this state of the evidence, that Prescott’s debt on this note has been extinguished. It is true, as counsel for defendant contends, the mere authority of a collecting agent does not authorize him to bind his principal by the receipt of anything as payment except cash; and it is also true that the ordinary authority of a collecting agent does not authorize him to accept payment of a note before it is due; and it is true in this case also, that McLaughlin did not receive cash directly from Prescott; and it is further true that the $500 note was not due when the $880 loan was made. But these facts are not decisive, for the reason that while Prescott did not pay the money directly into McLaughlin’s hands, he nevertheless executed and delivered to him a note and mortgage for the express purpose of paying the $500 note; and within about two months thereafter McLaughlin converted the same into money, so that'he had the funds in his possession with which to perform the obligation which he owed to Prescott to pay it. There is no direct evidence of any authority in McLaughlin to receive payment for Miss Andrews at this time. Such authority can be established, if at all, only by inference from other facts in the case. However that fact may be, it is not a vital one because it is unquestioned that McLaughlin had authority to collect the note when it became due on December 9th, 1892, and at all times thereafter, and, further that he had the papers in his possession, including a satisfaction of the mortgage. The funds required to pay the debt, as we have seen, had been provided and were in his hands as a result of the negotiation of the $880 note. They continued in his possession for it is conceded that it was not paid to Prescott by him and it was not paid to Miss Andrews. We cannot assume that it was embezzled by McLaughlin during this period, for the evidence introduced by the defendant clearly establishes that up to and including the year 1895, McLaughlin was not only solvent, but of high financial standing. Conceding then that McLaughlin had no authority to collect the note prior to its maturity, he had the authority when it became due, and the funds to pay the same were in his possession! He had authority to receive it and he was under *783 obligation to pay it. In such cases tbe law makes tbe application. This case is similar to those where a debtor places claims against other persons in tbe bands of bis creditor or bis collector, or agent, with tbe understanding tbat tbe money realized shall go to pay bis debt. “If moneys sufficient are thus received they are eo insianti applied in ex-tinguishment of the debt, precisely as if tbe debtor had paid tbe money, for be does thus pay tbe money as soon as it passes into the hands of tbe collecting agent and must be deemed to be thus applied.” Grandy v. Abbott, 92 N. C. 33. Where tbe authority rests in one person to make payment and to receive payment, ■ tbe possession' of funds which ought to be applied to the debt, is, in law, an application. Ruffin v. Harrison, 81 N. C. 208, id., 86 N. C. 190. This result follows in this ease because of McLaughlin’s obligation to Prescott to pay the note, and his authority from Miss Andrews to receive payment; and this without regard to any knowledge on the part of Miss Andrews as to his use of the money or as to the manner. in which the fund had been provided. The evidence, in our opinion, however, discloses that she did have such knowledge. The letter of Fish & Cary, dated’March 31st, 1897, and above quoted, shows that she had treated McLaughlin as her debtor. During the entire time when demands were being made upon McLaughlin by her, no demands were made upon Prescott, and none were made upon him until McLaughlin became insolvent. The letter last referred to states: “McLaughlin twice stated early last summer (1896) that he was prepared to take up the mortgage and pay it and would do so in a few days. All at once he ceased to write and we can'get no reply to our letters.” Again, when Fish & Cary sent the notes for collection they were not sent to Cavalier, where Prescott resides, but to Grand Forks, McLaughlin’s residence, and a letter was sent to the latter as well as Prescott demanding payment, and McLaughlin was given the privilege of paying the note with eight per cent interest, whereas the samé drew twelve per cent and was amply secured. Aside from the obligations arising out of this $880 mortgage transaction, McLaughlin owed no obligation to Miss Andrews to pay the $500* note. He was neither endorser nor guarantor.' He had transferred the note to her without recourse. Nevertheless, the evidence clearly shows *784 that she had been dealing'with McLaughlin with reference to an obligation which he owed to her. The relation of debtor and creditor which these letters tend to show existed between them, could only have arisen and been thus acted upon by her because of her knowledge of the collection of the $500 note by McLaughlin, or through an express promise of McLaughlin and her assent thereto, that McLaughlin would be responsible for the payment of the $500 note and interest. Such an agreement, if in fact made, would amount to a novation or substitution of debtors, and of course, would extinguish Prescott’s liability on the note. The fact that McLaughlin paid the coupons due in 1890, 1891 and 1892, as it is conceded he did, and the offer of Miss Andrews to accept from him the same rate of interest for 'the remaining five years, when the note drew twelve per cent after maturity, tends to show that such an agreement existed. Direct proof of the agreement is not necessary. It may properly be inferred from the facts and circumstances in evidence. Brown v. Kirk, 20 Mo. App. 534. But, for the purposes of this case, it is unimportant to discuss or consider this 'question further, for, as we have seen, the debt was extinguished in either event. If McLaughlin was her collecting agent, the note was paid and she has against him such rights and remedies as are available to a principal whose agent embezzles funds. If she accepted McLaughlin as her debtor, there was a novation and a release of Prescott, and she has only the rights and remedies of a contract creditor. It is sufficient for this case to say that by trusting McLaughlin either as an agent or as a contract debtor, she extinguished Prescott’s obligation and cannot compel him to protect her against the results of her misplaced confidence in McLaughlin. The defendant, who purchased the note after maturity with full knowledge of the facts, stands in no better position than Miss Andrews. Counsel for defendant strenuously contend that all inquiry into the question of the non-payment of the $500 note was foreclosed by a stipulation entered into by counsel for plaintiff and made of record, to the effect that the note was not paid. This is one of a large number *of stipulations. The stipulation is inexplicable. It is certain, however, that plaintiff’s counsel did not intend to confess judgment against his client on this note by this stipulation. The trial judge did not believe *785 he had any such purpose; neither had defendant’s counsel. If that had been the purpose of the stipiilation, this note would have been eliminated from the case, either by payment by the plaintiff or by the defendant’s taking judgment upon his counterclaim on the note. It was also stipulated that “the case shall be tried on the facts stipulated and on such other facts as shall be proved by witnesses and documentary evidence in the case, and such judgment rendered as the facts warrant, regardless of the pleadings.” The issue on the note was not withdrawn from the case and it is plain from the stipulation last referred to that the entire case was submitted to the trial judge for determination. Possibly the stipulation that the note was not paid was intended to mean that payment had not been made to Miss Andrews. But however it is viewed, we are clear that it is not controlling. Payment is usually a mixed question of law and fact. In this case the question is purely a question of law. The facts relating to the payment were submitted to the trial court and are in the record. The question as to whether they amounted to a payment was for the court to determine as a legal conclusion. Adams v. Helm, 55 Mo. 468; Frost v. Martin, 29 N. H. 306. The stipulation of counsel that it was not paid, was, at most, in this case, an agreement upon a legal conclusion and was properly disregarded by the court, to whom the case was submitted for judicial determination. Stipulations of counsel as to facts aré binding, but we do not understand that it is within the province of counsel to substitute their judgment upon questions of law for that of the court, and thus bind the court to what, in this case we consider would have been an erroneous judgment. For the reason stated the judgment of the district court will be in all things affirmed. Morgan, J., concurs.