McCarthy v. White

Cope, J. delivered the opinion of the Court Field, C. J. and Norton, J. concurring. This is an action to foreclose a mortgage executed by the defendant, White, upon certain real estate in the county of Santa Cruz. There are several defendants, and among them is one Eugene Kelley, who claims the premises under a conveyance from White, and relies upon the Statute of Limitations as a bar to the foreclosure. The mortgage debt became due on the fourth of March, 1854, and on the tenth of May, 1858, a portion of the debt having been paid, the parties had an accounting, and upon ascertaining the balance due, executed a writing by which it was agreed that payment of such balance should not be enforced until the first of January, 1859. The premises were conveyed to Kelley on the eighth of April, 1859, and the conveyance was taken by him with notice of the previous transactions between White and the plaintiff; an agreement to convey, however, having been entered into on the third of April, 1856. The Court finds that this agreement -was not recorded, and that the plaintiff had no notice of it; that he left the State in 1853, and was absent until the spring of 1858 ; and that Kelley acted as his agent in taking the mortgage, and in the management of his business during his absence. The action was commenced on the twenty-eighth of October, 1859. The case of Lord v. Morris (18 Cal. 482) settles the question of the application of the statute, and the only inquiry is whether the writing of May, 1858, takes the case out of its operation. There is no doubt that it does so as against White, but Kelley contends that it is ineffectual as against him, he being the equitable owner of the property under the agreement of 1856. The property is an undivided interest in a part of a tract of land, which belonged originally to White and Kelley jointly, and the object of the agreement was to provide for a partition of the land. It set forth the terms of the partition, and stipulated for an exchange of deeds, fixing no time, however, at which the exchange should be made, [502] but stating generally that it should be made as soon as it could be legally done. The interest covered by the mortgage was to be deeded to Kelley, and the effect of the agreement was to vest in him a right to a deed upon the performance of the consideration on Ms part. This right constituted an interest m the property adverse to the mortgage, and when the statute had run, and a right of action upon the mortgage no longer existed, it was not in the power of another to create one as against Mm. The most that can be claimed for the writing is that it was an acknowledgment of the debt, and treating it as such no effect can be given to it except as between the parties. We say this, of course, upon the assumption that Kelley is under no disability in regard to the agreement, and for the present we shall consider the case without reference to the objections taken in that respect. For the purposes of the case, we shall assume that the acknowledgment, so far as it is operative at all, takes the case out of the statute in respect to the mortgage as well as the debt. It was formerly held that statutes of this nature proceeded upon a presumption of payment, and that the effect of an acknowledgment was to rebut this presumption and place the debt upon its original footing. This view is now exploded, and the statute is universally regarded as one of repose, the benefit of which may be relinquished by the party interested, but cannot be taken from Mm without Ms consent. If two or more persons are bound, the same protection is afforded to each, and an acknowledgment by one is not available against another, unless he had authority to make it, either expressly given, or resulting from the relation of the parties. The effect of the statute in this respect is perfectly well settled, and it is immaterial, of course, whether the original liability was personal and direct, or resulted incidentally from a charge upon property. In cases of personal liability, the doctrine, as we have stated it, is conclusively established, and the principle is equally applicable in a case of this character, where an attempt is made to enforce a security. It is clear, therefore, that the plaintiff cannot avail himself of the acknowledgment as against Kelley, unless the circumstances of the case are such as to preclude Kelley from relying upon the agreement. It appears that the plaintiff was ignorant of its existence, but as he parted with [503] nothing in consideration of the acknowledgment, he is not in a position to complain on that ground. It is not enough that he acted in good faith, and without notice. The acknowledgment cost him nothing, and his rights under it are not those of an incumbrancer for value. If the debt had not been barred, the position of the plaintiff would be different; having no notice of the agreement, if he had suffered the statute to run, relying upon the acknowledgment, he would be entitled to protection. As the debt was barred, however, he cannot claim that his rights have been prejudiced by the want of notice, for the acknowledgment gave him none which could possibly be affected by it. The question in regard to the agency is a more difficult one; but looking solely to the findings we cannot see that Kelley is under any disability on that account. Until the mortgage was barred the agreement had no effect upon it; and so far as appears there was no conflict between the duties of Kelley as agent and his interest as a party to the agreement. An agent is not allowed to place himself in antagonism to his principal in the business of his agency, and as against the principal he can derive no benefit from contracts made by him in violation of this rule. It must- appear, however, that the rule has been violated, and we are not to indulge presumptions upon the subject for the purpose of depriving a party of the fruits of his engagements. The Court finds in regard to the agency nothing but the fact of its existence, and the receipt of interest upon the mortgage debt, the particular duties devolving upon Kelley, as agent, not being stated. We cannot infer that these duties were of a character which prevented him from contracting in relation to the property upon which the debt was secured; the presumption is that they were not. It is never to be presumed that a party has committed a fraud, and where fraud is alleged for the purpose of depriving him of a right the facts sustaining it must be clearly made out.' The charge here is that the agreement was a fraud upon the plaintiff and an act of bad faith on the part of Kelley, but the facts found do not show it to have been so: The point made in regard to the absence of Kelley from the State is not properly before us, as there is nothing in the findings upon the subject. The judgment is reversed, and the cause remanded for a new trial.