Barnett v. Daw

Smith, J.: The facts found by the referee are mostly admitted; his legal conclusions challenged. Upon January 29, 1896, Titus, as attorney for the plaintiff with full authority, repudiated in the plaintiff’s behalf both the attempted transfer by Gates to plaintiff and the attempted barter between Gates and Deyo. That Gates had specific authority from Barnett to make this, barter with Deyo is not pre-. tended. His power of attorney from Barnett was simply the instrument in the execution of the general authority to the agent "tb transfer the property if for the interest of the principal. This general authority gave to Gates no power whatever to .transfer to Deyo property of his principal in payment of his own debt and discharge of his own mortgage. This rule of law is based upon sound reason and is fortified by abundant authority. (See 1 Am. & Eng. Ency. of Law [2d ed.], 1174; De Bouchout v. Goldsmid, 5 Ves. Jr. 211; Holton v. Smith, 7 N. H. 446.; Benny v. Rhodes, 18 Mo. 147; Trustees v. McCormick, 41 Ill. 323 ; Warner v. Martin, 11 How. [U. S.] 224.) . This attempted transfer then of the mortgage and note from Gates to Deyo was clearly voidable and has been disowned by the plaintiff both in the letter of Titus in January, 1896, and by the commencement of the action to foreclose the mortgage. The defendants contend, however, that a ratification of this transfer can be found both in plaintiff’s long silence after the recording of the deed to him and also from his .dealings thereafter with the' Northern Trust Company in transferring to it the title of the, property received from Gates. But of this deed or attempted barter Barnett at that time had no knowledge. No ground is shown for suspicion on his part of irregularity on the part of Gates wdiich would naturally lead him to make -inquiry. The knowledge of Gates clearly cannot be attributed to the plaintiff because the act of Gates was in excess of his authority and for his own benefit. A [205] ratification through constructive notice or presumed notice from Gates can hardly be urged in behalf of Deyo who knew he was dealing with Gates for Gates’ personal benefit and, therefore, presumedly in excess of his authority. Nor can we find any ratification of this attempted barter in the ■ subsequent dealing between the plaintiff and the Northern Trust Company. If Deyo, the particeps crimmis, had still held this mortgage and note, Barnett would have been required to return to him the property received by him as the fruit of the barter as a condition of demanding the return thereof. The Northern Trust Company, the receiver of Deyo’s assignee, had the same right to demand this property in consideration of the return to plaintiff of this security. The transfer then by plaintiff to the Northern Trust Company was not only proper but necessary to the disaffirmance of this attempted barter. The plaintiff took this mortgage and note from the Northern Trust Company, not by reason of their assignment, hut through his legal right' thereto, after having disaffirmed a voidable transfer. The assignment to him by the Northern Trust Company in no way limits the rights he would have under the rescinded transfer, but only makes clear the record title. It.was in fact unnecessary and can be treated as surplusage. These defendants have covenanted to pay this note. From this covenant they have been in no way released by any act of Barnett and cannot be released by an unauthorized act of his agent. From the evidence, therefore, we are unable to find any valid defense to the plaintiff’s cause of action. The judgment ordered by the learned referee must, therefore, be set aside and a new trial granted. All concurred. Judgment reversed on the law and the facts. Referee discharged and new trial granted, with costs to the appellant to abide the event.