Tubman v. Lowekamp

Stewart, J., delivered the opinion of the Court. It is shown by the decided preponderance of the testimony in this cause, without going into its particulars, that Lucy A. . Tubman was deceived in the transfer of the mortgage agqinst S. M. Tubman, to John B. Lowekamp. Her assignment of the mortgage was necessary to pass the legal title to the property ; and.its equitable effect, if the consideration. had been paid according to its terms, would have been to vest in Lowekamp, the assignee, the debt or note it was intended to secure. After a bona fide assignment she could not set up as an equitable defence against such operation, that she had not assigned the note. That would be not only a breach of good faith, but a gross fraud upon the assignee. That there was a design to perpetrate a fraud upon the assignee by her retention of the note, has not been alleged or proven, and is not to be presumed. [323] The mortgage held by Lucy A. Tubman, and the note, were parcel of the same transaction ; and these instruments did not admit of separate and independent transfer. Pratt vs. Vanwyck’s Exc’rs, 6 G. & J., 499. It is apparent from the tenor of the proof, there are circumstances calculated to create a suspicion that Lowekamp, the assignee, may have been privy to the fraud, in the procurement of the assignment, but they do not afford full and satisfactory evidence of his complicity therein. Assuming from the character of the testimony, that both Lucy A. Tubman,'* the assignor, and John II. Lowekamp, the assignee, are innocent of any fraud in the transaction, it becomes necessary to determine their relative rights upon that hypothesis. Lucy A. Tubman by the execution of the assignment of the mortgage,.and its delivery to S. M. Tubman for the purpose of receiving the $2000, the consideration thereof, constituted him her special agent for that purpose. S. M. Tubman was thus enabled to get possession of the money advanced by Lowekamp, and to apply it to his own purposes. But he was clothed with no authority as the special agent of Lucy A. Tubman, to receive from Lowekamp anything but the money due upon the mortgage His acceptance of the judgment, or its transfer to Lucy A. Tubman in part payment of tire assignment of the mortgage, was not within the scope of his authority, nor according to any instructions received from her, and was not binding upon her. Tubman, as her agent, was invested with limited powers; and it was the duty of Lowekamp to have ascertained the extent of his authority. See Chitty on Contracts, 200, stating the rule. But so far as he received the money from Lowekamp, however misapplied by him, she was bound, unless [324] Lowekamp was a party to the fraud, or was guilty of the grossest laches ; he ought not to be prejudiced by the conduct of Tubman. In the extent of the amount paid by him in money, he is entitled to be protected ; but there is no principle of law or equity, that should enforce the acceptance of his judgment against S. M. Tubman, upon Lucy A. Tubman, in part payment of the assignment. 8. M. Tubman had no express or implied authority to receive the said judgment. Nor does the proof show, that the judgment was of such a character, as to constitute its* transfer, a valid joart payment. If Lowekamp were allowed to hold the mortgage debt, to the extent of the judgment, he would derive from the fraud, an inequitable advantage over Lucy A. Tubman ; and the receipt of part of the fruits of the fraud, would involve him in its turpitude. Upon no just principle can he have any claim beyond the amount he paid. He ought not to be allowed in a Court of equity to make a profitable speculation out 'of the fraud, which he would do, if Lucy A. Tubman were compelled to accept the transfer of the judgment, in partial satisfaction of the assignment. The familiar principle that governs in a transaction, where two innocent persons are concerned, and one of them must suffer loss, which imposes the loss upon that one, whose conduct has misled the other, (Lister & Supplee vs. Allen, 31 Md., 548; Reynolds & Sauerwein vs. Davison, 34 Md., 662,) will not permit Lowekamp upon the theory that he is an innocent party, as purchaser of the mortgage to claim beyond just indemnity for the actual loss. Upon no principle of distributive justice, can he have any demand against Lucy A. Tubman, over and above.the money paid by him. [325] (Decided 8th December, 1875.) The measure of her responsibility ought not to exceed that limit. Under-the circumstances disclosed by the testimony, Lowekamp, we think, is entitled to hold the mortgage as a security for the payment of the money advanced by him with the accrued interest. Upon its payment by Lucy A. Tubman, she will be entitled to a re-assignment of the mortgage. In default of its payment by her, by such time as. may be prescribed by the Circuit Court, the property must he sold for the payment of the mortgage debt — from the proceeds of sale the amount paid in money by Lowekamp, with the accrued interest, to be allowed to him — the residue to be paid to Lucy A. Tubman, the transfer of the judgment against 8. M. Tubman to Lucy A. Tubman, declared void and she ordered to re-transfer the judgment to Lowekamp. The cause will be remanded that the Circuit Court, may pass a decree in conformity with these views. Decree reversed, and cause remanded.