Larson v. Lombard Investment Co.

Yanderburgh, J. The defendant is engaged in the business of loaning money upon mortgage, and has established a branch of its business in St. Paul, in this state. To facilitate its operation, it secures the assistance of persons in different localities, whom its officers style “correspondents, ” by whom applications for loans are received and forwarded for examination by the defendant, and, if the securities are found satisfactory and approved, they are accepted, and the money forwarded, to be delivered to the borrower. The office of the so-called “correspondent” is therefore to'aid the defendant in procuring applications and consummating loans. Stevens & Co., bankers at Litchfield, in Meeker county, were so acting for defendant in the year 1890, when the plaintiff made an application for the loan in question in this case. The application was made in writing, in the form required, and upon blanks furnished by the defendant. It is obvious from the record that if the money had been forwarded to Stevens & Co., and in their hands, before all the conditions of the loan required by defendant had been complied with, it would have remained the property of defendant, and they would have held the same for the company in the mean time, and, to some extent certainly, have represented the company. ' It is true that the written application contains a. provision constituting the person or [144] manager to whom the application was submitted “the attorney of the applicant irrevocable for him and in his name to procure this loan from any person or corporation.” But this is not conclusive in the face of facts tending to show that the correspondent was at the same time representing the company. The court will look beyond the forms or devices resorted to by the defendant in conducting the business, into the real state of the ease. The applicant (plaintiff here) also signed a certificate appointing Stevens & Co. her agent to negotiate a loan for $900 on the land in question, in which also she agreed to pay the sum of $99.54 in advance, in consideration of their services in negotiating the loan, as a part of the interest, and to execute a note drawing six per cent, interest for the principal sum named. The plaintiff accordingly executed a note and mortgage to secure $900, and interest at six per cent., running to the defendant, which has been duly recorded. The application for the loan was approved, and the note and mortgage accepted, and afterwards sold to a third party for a valuable consideration in the usual course of business. The evidence shows that the advance payment required ($99.54) was to be deducted, and was in fact deducted and retained by defendant, from the principal sum agreed to be loaned. The defendant, upon due receipt of the papers, forwarded to Stevens & Co., at Litchfield, the sum of $900, less the commission of $99.54, above referred to. It is found by the trial court that the firm of Stevens & Co. were the agents of the defendant. If they were, however, representing the plaintiff in the transaction, then this action for the cancellation of the note and mortgage or for the value thereof cannot be maintained, because in that case the unconditional delivery of the money to them for plaintiff would have been equivalent to a delivery to her, and would have satisfied the defendant’s contract, and the plaintiff would be obliged to look to Stevens & Co. for her remedy; but, if Stevens & Co. received the money as the correspondents and agents of the investment company, the latter will be held responsible for their refusal or inability to pay the same to the plaintiff. It appears beyond dispute that Stevens & Co. were acting for the defendant for some purposes, and, so far at least, must be treated as their agents; and it was fairly [145] a question of fact for the trial court to determine whether they were not so acting in the particular transaction referred to. There was á prior incumbrance on the land of $500 and interest, to pay off which a part of the money applied for was required. She applied for the loan to Stevens & Co., who did not assume to act for themselves, but to act for the defendant; and they had in fact been the “correspondents” of the defendant for a year and a half, under a circular of instructions in respect to rates and the mode of conducting the business. And under the arrangement between the parties as actually agreed on Stevens & Co. received a certain percentage of the commissions only, notwithstanding the language of the certificate of agency. The correspondents were required to fill out the applications carefully, and to^carefully examine each abstract of title before sending it. The papers in mortgage loans were to be drawn at the office of the defendant, and forwarded to the correspondents, to be executed by the borrower. The prior incumbrance of $500, above referred to, appeared upon the application in this instance, and in answer to the question, “For what purpose is the money wanted ?” it was therein stated, “To pay up loan, build, and improve farm;” and it was the duty of Stevens & Co., on receipt of the money, to payoff that incumbrance, in order to protect the defendant, and then to pay over the balance to the plaintiff. It was a fair inference to be drawn from the evidence in the ease that until that incumbrance was paid (which was not done) the money was not to be paid over, and that Stevens & Co. were holding the money for the defendant, and not acting for the plaintiff, in receiving the money. To hold, in a case where the business is all transacted under the direction of the defendant, that the applicant for loans, not familiar with business methods, should be precluded by the printed forms, carefully devised to shield it from liability for the acts of persons acting for them, from showing an actual agency, would in many cases lead to .gross injustice. The rule applied in insurance cases should be adopted in cases like this, and, notwithstanding the stipulation in the form of application, the agent must be regarded as the agent of the company for acts done for it and in its behalf. [146] The rate sheets, blanks, instructions, and forms furnished by defendant to Stevens & Co. for use in the business, were properly received in evidence. It was undoubtedly error to allow the witnesses to testify to their conclusions or opinions on the subject of the agency of Stevens & Co., or to receive evidence of the declarations of the latter upon the subject; but we think it was necessarily without prejudice, because from the undisputed evidence, apart from the testimony objected to, we do not see how the jury could have come to any different conclusion than they did upon the questions submitted to them. The findings of fact must therefore be sustained. As the defendant, as thereby established, failed to comply with the terms of the application, and failed to furnish the money, it is not entitled to an allowance for commissions to be deducted from the amount of the plaintiff’s recovery. Order affirmed. (Opinion published 53 N. W. Rep. 179.)