Callahan v. Mercantile Trust Co.

Hammond, J. Upon the facts found by the master this is a hard case for the plaintiff. She entrusted to her legal adviser the savings of a lifetime and he shamefully abused the trust. And yet we can see no principle of law upon which she can be relieved as against any of these defendants. [397] There is nothing to justify a suspicion that any of them acted except with entire honesty and in the exercise of absolute good faith. Moore, her attorney, was the only person guilty of fraud. She saw fit to trust him implicitly, and to execute and acknowledge such instruments as he asked for, and it was solely by reason of these acts of her own that Moore was enabled to sell and deliver with her own genuine signature and acknowledgment the note and mortgage, and appropriate the proceeds to his own use. There was no forgery of her name, nor was she induced to sign or acknowledge any instrument by any false representation at the time on the part either of Moore or of any other person. She simply trusted him, signed what he put before her, and allowed him to have in his own possession all the documents which enabled him to deliver to the trust company the note and mortgage of January 9, 1902, with everything necessary to give the company an apparently perfect title to the same as a first mortgage. Before the delivery of any of the documents to any of the defendants she noticed the name of the trust company in the assignment and inquired of Mr. Morris, an attorney at law, who was there to take her acknowledgment, what she had to do with the trust company, and when he replied to her that he did not know but supposed she knew what the papers meant when she signed them, she replied that Mr. Moore was her lawyer and would not ask her to do anything wrong, and thereupon she acknowledged the discharge of the old mortgage and the assignment of the new one each to be her free act and deed. Moore at that time was an attorney at law in good standing, and this made it reasonably prudent for the plaintiff to entrust him with her money and business. The same fact, with the added circumstances that she had placed in his hands the mortgage note indorsed in blank by herself and all the documents necessary to transfer to the trust company an apparently perfect title to the note and mortgage as a first mortgage, including acknowledgments made by her, made it reasonably prudent for the trust company and the other defendants to deal with Moore on the footing that he had authority to assign the note and mortgage and to receive the purchase price. We see nothing in the circumstances to put either of the defend [398] ants upon further inquiry. If there was anything which under the circumstances could be characterized as negligence, it was upon the part of the plaintiff herself in executing papers without knowing their contents and purpose, and without asking for or receiving information as to them, and in going on with her acknowledgment of the discharge and the assignment after she herself had noticed that the assignment contained the name of a corporation with which, so far as she knew, she had nothing to do. The case therefore is one in which she has entrusted voluntarily to an agent selected by herself documents, one of which was a negotiable note indorsed by herself in blank and so made transferable by delivery, of such a nature as to enable the person so entrusted with them to divest her of the apparent title to the note and mortgage in favor of the trust company, and for the benefit of Kaufman and Bilosky, no one of whom is shown to have been acting out of the ordinary course of business. The purchase and sale of mortgages is not at all an unusual transaction. The plaintiff shows no reason why there should be shifted from her to the defendants the loss occasioned by Moore’s dishonesty, and made possible by her own active participation in the execution and direct acknowledgment of the papers. The cross bill brought by Logan remains to be considered. Although this is called a cross bill, yet it does not seek any relief by way of defence to the original bill, but sets out a case which entitles Logan to affirmative relief, namely, to have delivered to him the first note which he gave to Mrs. Callahan. This relief he needs, even if the original bill be dismissed. In such a case the cross bill may be retained and a decree granting relief may be entered as if it were an original bill. Holgate v. Eaton, 116 U. S. 33. Dawson v. Amey, 13 Stew. 494. Sig-man v. Lundy, 66 Miss. 522. Worrell v. Wade, 17 Iowa, 96. See other cases cited in Dan. Ch. (5th ed.) 1553, note 3, and cases cited in Story, Eq. PI. § 399, note a. The master has found that Logan applied to Mrs. Callahan for a loan of $5,000 upon real estate and that she, having agreed to make the loan, employed Moore as her attorney to look up the title, prepare and attend to the execution and recording of the [399] papers, and pay over the money to Logan. As the building on the premises was in process of construction the agreement was made with her knowledge for a temporary mortgage upon which the money could be paid to Logan from time to time as the building progressed, and when it was completed a new mortgage for three or five years was to be executed by him to her to take the place of the temporary loan. Under these and further facts found by the master we are of opinion that the delivery of the new mortgage by Logan to Moore was a delivery to the defendant in the cross bill, and that Logan upon such delivery was entitled to the return of the old note and the discharge of the old mortgage. The order must be Bill dismissed ; in cross Mil decree for the plaintiff Logan.