Scherer v. Post Office Building & Loan Ass'n

The opinion of the court was delivered by Black, J. This suit was instituted by the plaintiff to recover from the defendant the sum of five hundred and sixty-six dollars. The ease was tried at the Essex Circuit, resulting in a verdict for the plaintiff, for the full amount sued for with interest from October 25th, 1907. There are a number .of grounds of appeal, all alleging trial errors, by the court below, such as admitting and rejecting testimony, refusal to charge as requested, error in the charge. But we think this case can be disposed of upon a sipgle point, viz., it was error for the trial court to refuse the motions to non-suit the plaintiff and direct a verdict in fa.vor of the defendant. The fundamental and only question involved in the [667] case is the. application of the law of principal and agent, to the facts developed at the trial. This in turn may be narrowed to the sole question, whether the solicitor of the defendant association was a general or a special and limited agent, to disburse, the funds entrusted to him. The essential facts, in brief, on which these motions were based are: The plaintiff applied to the defendant for a mortgage loan of ten thousand dollars, to he secured by a first mortgage lien on his property, Nos. 118-120 Howard street, in the city of Newark. This application was. accepted by the defendant association, a corporation of New Jersey, organized and operating under the building and loan laws of this state. On October 7th, 1907, a, check was drawn to the order of the plaintiff tor the sum loaned, less premiums, dues and interest, cost of stock certificate, amounting to the sum of three hundred dollars and fifty cents. The check was placed in the hands of its solicitor, whose duty it was to see that the association obtained a first mortgage lien in exchange for the check on the property, which had been accepted, as security for the loan. This check was. subsequently endorsed by Scherer, the 'borrower, to the solicitor of the defendant association for deposit. Some two or three weeks after applying for the loan, the solicitor of the association sent for Scherer, the borrower, and told him he could not go ahead with the loan, as there was not enough money to pay all the liens and claims against the property offered by Scherer, as security for the loan from the association. The solicitor suggested that Scherer, endeavor t.o settle with his creditors on a fifty per cent, cash and fifty per cent, note basis, and stated that if such a settlement could lie made, five hundred and sixty-six dollars more money would be needed to complete the loan. The suggested settlement was made and plaintiff testified that he gave the solicitor the five hundred and sixty-six dollars for that purpose. This was evidently after the Dond and mortgage had been signed, acknowledged and recorded, as none of the disbursing checks are dated earlier than October 25th, 1907. The plaintiff concedes that the disbursements [668] were made — that as made they were proper — that the solicitor is justly entitled to a credit of nine thousand six hundred and ninety-nine dollars and fifty cents, the amount of the association’s check on any moneys received by him for or from the plaintiff, Scherer. Some fifteen months thereafter, Scherer applied to the solicitor for a statement showing how he had disbursed the loan moneys. The first statement showed an error of the payment of five hundred and sixty-six dollars to one Berla. This was subsequently corrected in a statement in writing dated November 22d, 1909. The suit was instituted July 19th, 1913. The solicitor died May, 1916, before the trial of the issues here involved. The defendant association never received the five hundred and sixty-six dollars which Scherer, the plaintiff, testified he gave the solicitor, or any similar sum, either from the solicitor or from the plaintiff, Scherer. On November 22cl, 1909, the account of the plaintiff with the defendant association was closed, the loan paid and the mortgage canceled of record. From this statement of facts, which is not controverted, we think it is quite apparent and clearty established that the solicitor was not the agent of the defendant association, in receiving money from Scherer, the plaintiff, the only authority of the solicitor under the by-laws of the association was to examine the title to Scherer’s property, and if and when it was unencumbered to pay over to Scherer the net amount of the defendant association’s loan, in exchange for a first lion bond and mortgage, executed by Scherer and his wife. That it did not permit him to accept additional _ money from Scherer, for removing liens against Scherer’s property, or for an}' other purpose. It is quite clear’ there was no universal agency between the solicitor and the defendant association, because the association would have no power to create one. The written evidence of the solicitor’s agency is found in the association’s by-laws, paragraph six (6), a, b, c and cl, which provide for the appointment of a solicitor. They are in the usual form of such b}r-laws: “The solicitor shall ex [669] amine all title deeds and make the necessary searches for ascertaining the title to all property offered to the association as mortgage security, and shall furnish a written opinion or report to the board of directors on all real estate loans;” the report shall he filed with the papers, ho shall prepare all legal papers and transact all other law business of the association whenever required, for which lie shall receive a fair compensation. The question is therefore narrowed to the point whether the solicitor was authorized in any way by the defendant association to receive money for it to pay off liens on Scherer’s property, which the loan of the association was insufficient to completely satisfy, or did the association by its actions lead the plaintiff, in the exercise of care and prudence, to believe that the solicitor possessed such authority? This court has said that when the facts are not in dispute, and the inferences from them are not in doubt, the question at issue, that of agency, is one of law for the court. Belcher v. Manchester, &c., Loan Association, 74 N. J. L. 833. The plaintiff was a. member of the association bound hv its by-laws; as such member, ho made such by-laws a part of Ms loan contract, and assented thereto. When be found his loan in the hands of the association’s solicitor made out in his own name and no authority in the by-laws to either receive or disburse the check, he was charged with notice that the solicitor was a limited or a special agent, into whose powers and limitations, he must impure and upon whose representations alone, he could not rely. No principle of law is better settled than that one who claims through a special agent takes the risk of his want of power. Black v. Shreve, 13 N. J. Eq. 455. If a special agent exceeds his authority the principal is not hound. Pars. Pont. (9th ed.) 42. We think it is clear that the solicitor was a special agent of the defendant association, that he had no authority from the association to receive money from Scherer to disburse for Scherer’s benefit, and so bind the association. The association is not liable for the five hundred and sixty-six [670] dollars which the plaintiff testified he paid the solicitor. The case must be decided upon principle rather than upon precedents involving like facts; a case somewhat similar, at least in principle, is Pepper v. Cairns, 133 Pa. St. 114; 7 L. R. A. 750. While the courts have very often defined and distinguished general and special agents, the great trouble is that they are totally unable to define general and special agents in terms which make the distinction applicable to each particular case (31 Cyc. 1338); a collection of many cases will be found illustrating the distinction between a general and special agent, applied to an almost endless variety of circumstances, in Id. 1340 et seq. A special agent, as distinguished from a general agent, is one employed for a particular purpose only; in this case, the agency of the solicitor was limited by the amount of money entrusted to him, to exchange for a bond and mortgage, as a first lien on land; the agency could not be enlarged by receiving more money from the borrower so as to bind the defendant association. We think it was error for the trial court to refuse to grant the defendant’s motions to nonsuit the plaintiff and to direct a verdict in favor of the defendant. This disposes of the case and renders it unnecessary to discuss the other grounds of appeal. The judgment of the Essex Circuit Court is therefore reversed and a venire de novo awarded. For affirmance — Kalisch, Williams, JJ. 2. For reversal — The Chancellor, Garrison, Swayze, Trenchard, Parker, Bergen, Minturn, Black, White, Heppenheimer, JJ. 10.