Graves v. Mumford

By the Court, Welles, J. The justice, at the special term, found that the money with which Whittlesey paid Potter the amount due on the Parsons mortgage was the money of the defendant Mumford, and was in his, Whittlesey’s, hands for the purpose of investment. , This, I think, was warranted hy the evidence. Assuming that Mrs. Mumford is chargeable with knowledge of all the facts in relation to the transactions between Whittlesey, Varick and Gorsline, it was nevertheless competent for her to make Whittlesey her agent to invest her money, either with specific instructions as to the -nature of the investment to be made and the particular securities to be taken, or with general discretionary power in those respects. It was competent for her to purchase the Parsons mortgage from Potter, with her own money, and to take an assignment of it to hold for her own benefit, as an investment of her [101] moúey or otherwise ; and this she could do through her agent Whittlesey, as well as personally, or through any other agent. In this respect, it makes no difference that it was the duty of Whittlesey, which .he owed Varick and Gorsline, to pay off. and discharge that mortgage, or that Mrs. Mnmford is chargeable with knowledge of the transactions between them. It was not Whittlesey’s duty to discharge the mortgage with her money, intrusted to him for another purpose and for her own use and benefit. But she is not so chargeable with notice, for the reason that those transactions were not connected with the subject matter of Whittlesey’s agency for her. That agency had nothing to do with the obligations of Whittlesey to Varick and Gorsline, or either of them. , Potter had a clear right to sell and assign the mortgage, and Mrs. Mumford an equally clear right to purchase it; and the facts, with notice of which it is claimed she is chargeable, transpired in his agency for other persons, with which facts and persons she was entirely disconnected. (Story on Agency, § 140. Story’s Eq. Jur. § 408.) To hold her chargeable with knowledge of those facts and transactions, would be carrying the doctrine of constructive notice to an unwarrantable extent. But it is contended that the legal effect of what took place between Whittlesey and Potter, was a payment and satisfaction of the Parsons mortgage. To this I cannot assent. It is quite probable, and I think the evidence warrants the conclusion, that Potter, at the time he received the payment, on the 2d July, 1849, supposed he was receiving it in satisfaction of the mortgage. But it does not follow that Whittlesey so intended. On the contrary, the fact that in the same interview, and before they had closed the business which brought them together, Whittlesey required an assignment of the mortgage from Potter, which the latter accordingly gave, is strong evidence to show that Whittlesey did not intend to satisfy the mortgage; and the fact that Potter then executed the assignment, shows that whatever had been his intention in receiving the money, or his impression as to the effect of it, he ultimately [102] .consented to give an assignment. It was not then too late, The payment was made by Whittlesey’s check on the Commercial Bank of Rochester, and Whittlesey, in case of Potter’s refusal to assign the mortgage, might have countermanded its payment. No receipt, satisfaction, acquittance, or other evidence of the payment, had been given. Suppose Whittlesey had told Potter, at that interview, and before the money was handed over, that he wished to pay the mortgage, and had accordingly counted out the money, and Potter had taken it into his hands, and had actually put it into his pocket, and thereupon it had been immediately agreed between them that the mortgage should be assigned, and Potter had executed an assignment to Mrs. Mumford; the question whether such payment should operate as a satisfaction of the mortgage would depend upon whether it was the duty of Whittlesey, in the character in which he was then acting, to satisfy the mortgage or to take an assignment of it. If he was acting as the agent of Yarick and G-orsline, or of either of them, and had paid their money to Potter, he would be now held as having paid the money in satisfaction of the mortgage; if, as the agent of Mrs. Mumford, and with her money, she would be entitled to insist upon the validity of the assignment. But he was clearly acting in the character of agent for Mrs. Mumford. It was her money which he was charged with the duty of investing, and which he had no right to use for any other purpose than an investment for her; and which would be entirely defeated by regarding the payment in the light of a satisfaction of the mortgage. It is no answer, as it seems to me, that Whittlesey had some time before been placed in funds by Yarick, sufficient to pay over the whole $3000 loan to G-orsline ; and that he was consequently bound, under his agreement with the latter, to pay off and satisfy the mortgage from Parsons to Potter. It by no means follows, that because he had converted Yarick’s money to his own use, Mrs. Mumford should suffer by his defalcation; or that she was not at liberty to employ bim as her agent to invest this money for her; nor is it im [103] portant, raider the circumstances of this case, that when Potter assigned the mortgage, the name of the assignee was left in blank. It was understood between Potter and Whittlesey at the time, that the latter should he at liberty to fill the blank afterwards, and it was of no consequence to Potter whose name should be inserted. It was an authority to Whittlesey to fill the blank with the name of any person he might choose, and was a matter in which neither Varick nor G-orsIine had really any interest; nor is the indorsement on the bond of Parsons, made by Whittlesey, to the effect that the bond was not to be enforced against Parsons personally, but that resort was to be had only to the mortgage, any evidence of payment or satisfaction of either the bond or mortgage. The most that can be claimed for it is a release of Parsons’ personal liability. The conversation between Whittlesey and the witness Thomas Parsons, as testified to by the latter, was improperly admitted in evidence. It should have been excluded as res inter alios actu. In my judgment, the evidence shows a valid assignment of the Parsons mortgage to the defendant Mumford, which she is entitled to hold and enforce. I agree with the learned justice at the special term, that the plaintiff is entitled to be relieved as "against the Grorsline mortgage to Varick, to the amount due on Parsons’ mortgage to Potter. The justice properly remarks that, “as between the plaintiff and the defendant Varick, the agreement of Whittlesey to pay off the Potter mortgage, and the retention of the money by him for that purpose, must bind the defendant Varick to see that mortgage discharged before the mortgage of Grorsline to him, should become valid for the full amount of $3000. That this agreement was part and parcel of the contract of loan, and Varick must be held for its fulfillment, and must he held responsible as between him and Grorsline and the plaintiff, his grantee, for the fidelity of his agent.” The judgment of the special term should be modified, so as to declare the mortgage of Parsons to Potter a good and valid [104] security and Hen upon the land and premises therein described, in the hands of the defendant Mumford, as assignee thereof,' for the amount which it was given to secure, with interest according to its terms, deducting all the payments made thereon at the dates of such payments respectively, without regarding the payment made by Whittlesey to Potter on the 2d day of July, 1849, as a payment thereon; and requiring Varick either to pay off and have discharged of record the last mentioned mortgage, or credit on his mortgage from Gorsline the amount so due on the mortgage from Parsons to Potter, at his election, and to determine such election within thirty days after due service of an order of confirmation of the report of the referee hereinafter mentioned ; and that it be referred to a referee, to ascertain and report the amount so as aforesaid due on the last mentioned mortgage up to the date of his report; and in case Varick shall neither make such payment or indorsement, then declaring the mortgage from Gorsline to him to be valid for such sum only as shall remain after deducting from the nominal amount thereof, the amount so due on the Parsons mortgage ; and that the defendant Varick pay to the plaintiff and the defendant Mumford, or their attorneys respectively, their costs in the action, including the costs of this appeal. [Monroe General Term, December 7, 1857. Jojmson, Welles and Smith, Justices.]