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Weber v. Bridgman

113 N.Y. 600 Court N.Y. Decision date 1889-06-04 English

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Louisa Weber, as Administratrix, etc., Appellant, v. Herbert L. Bridgman et al., Respondents.

Headnote

The authority of an agent authorized to collect and receive payment upon securities belonging to his principal, when it is not coupled with an interest, ceases upon the death of the principal, and a payment thereafter made to the agent does not bind the estate of the principal, although the payor was not aware of the death at the time of making the payment; nor does the fact that the agent at the time of payment held the security affect the rights of the principal.
In 1871 W. executed to H. a power of attorney, authorizing him, among other things, to collect and receive moneys becoming due from any person to his principal and to execute discharges therefor, etc. H. purchased a bond and mortgage, receiving an assignment thereof to W., and as agent collected the interest thereon as it fell due, receipting therefor in the name of W. The latter died in Germany in January, 1874. The bond fell due in May of that year and was paid by B., the then owner of the mortgaged premises, to H., who executed a satisfaction of the mortgage and delivered to the payor the bond and mortgage, the assignment and the power of attorney. H. knew at the time of the death of W., but he did not disclose the fact to B. and the latter made no inquiries.' In an action brought in 1885 to foreclose the mortgage the court found that H. never accounted to plaintiff, administratrix of W., for the bond and mortgage or the proceeds, and that plaintiff never assented to or ratified the payment, and did not know of the existence of the bond and mortgage or the cancellation thereof until within a short time of the commencement of the action. Held, that the payment was invalid, and in the absence of evidence that the personal representatives of the decedent assented or ratified it, was no defense; that the fact that H. had possession of the securities did not affect the question, as B. had full notice of the extent of and limit to the authority of H.
(Argued April 24, 1889;
decided June 4, 1889.)
Appeal from order of the General Term of the Supreme Court in the second judicial department, made December 14, 1887, which reversed a judgment in favor of the plaintiff, entered upon a decision of the court on trial at Special Term and ordered a new trial.
This action was for the foreclosure of a mortgage executed „ by James Dunn to Thomas Bierds, covering premises situated | on Carlton avenue, Brooklyn, as security for the payment of | his bond of $2,000, dated May 9, 1872. It was assigned to
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Paul Weber. He died intestate. On the 4th of June, 1874, the plaintiff, Louisa Weber, his widow, was appointed administratrix of his estate, and on July 1, 1886, commenced this action. James Dunn was made defendant, but did not appear. The other defendants were made parties as having an interest in the premises subsequent to the lien of the mortgage. Defendant Adams answered. He alleged that on the application of one Herbert Bridgman he loaned him, April 19,1880, and February 21, 1884, certain sums of moneys on his bond, secured by mortgages of those dates on the premises described in the complaint; that at the time of each transaction Bridgman was the lawful owner of the property in fee simple. The defendant Bridgman claims to be the owner of the premises. Both the defendants aver that the mortgage in suit was paid to the then holder and duly satisfied of record May 13, 1874.
The trial judge found in favor of the plaintiff and directed the usual judgment of foreclosure and sale. The General Term, upon the defendant’s appeal, reversed the judgment “ upon questions of fact and questions of law.” The question of fact litigated upon the trial arose upon the defense of payment. It appeared, to the satisfaction of the trial judge, that Paul Weber, then residing in Hew York, but about to visit Europe with his wife and family, did, on June 6, 1871, ■execute to one August Hartwig a power of attorney under seal, authorizing him in these words, “ to demand, ask, sue for, collect and receive all sums of money, debts, rents, dues, accounts, interest on bond and mortgage, and other demands of every kind, nature, description whatsoever which are or may become due, owing or payable to me from any person or persons whomsoever, and to give good and sufficient receipts, •acquittances and discharge therefor, giving and granting unto my said attorney full power to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises, as fully, to all intents and purposes, as I might or could do if personally present, with full power •of substitution and revocation, hereby ratifying and con
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firming all that my said attorney or his substitute shall lawfully do or cause to be done by virtue hereof.” Weber acknowledged this instrument so as to entitle it to be recorded. He remained absent from Hew York, and died in Germany January 11, 1874. During his absence Hartwig bought for him the bond and mortgage in question, taking an assignment to Paul Weber, and, after record, held possession of said bond, mortgage and assignment till May 12, 1874, collected and receipted for, in Paul Weber’s name, the semiannual interest as follows:
October 9, 1872, of James and Bridget Dunn, the then owners......................................... $70
June 9, 1873, of James and Bridget Dunn, the then owners......................................... 70
December 2, 1873, of James and Bridget Dunn, the then owners.................................... 70
and endorsed the same on the bond.
On April 23, 1874, Bridgman acquired title to the premises and assumed payment of the mortgage. It became due May 9, 1874, and was paid by him by check to Hartwig May 12, 1874, and a discharge was given by Hartwig as attorney for Weber. At the same time the bond and mortgage, the assignment to-Weber and the power of attorney were delivered to Bridgman. Hartwig, during all this transaction, knew of the death of Weber, having been informed of it as early as the 1st of February, 1874, but he did not disclose that fact to Bridgman. But the trial judge also finds that Bridgman made no inquiry “as to the whereabouts of the principal, Paul Weber, or whether he was dead or alive.”
Mrs. Weber returned from Europe on the twenty-second or twenty-fourth of May. The trial judge also found that Hart-wig never accounted to the plaintiff for the bond and mortgage or its proceeds, nor for the assets in his hands, nor did he pay her any money; that plaintiff never ratified the act of Hartwig in canceling said mortgage; that she had no notice of the existence of said bond and mortgage or the cancellation.
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thereof, and never knew of the cancellation until within a short time before the commencement of this action; that said. Hartwig left no record of it, nor ever informed plaintiff of its existence or cancellation; that said mortgage is wholly unpaid, and remains unimpaired as a valid and subsisting lien by reason of any act of the plaintiff or her duly authorized agent.
As conclusion of law, he held that the agency of Hartwigterminated with the life of Paul Weber, and that the satisfaction of the mortgage was invalid and void.
Further facts appear in the opinion.
Alex. S. Bacon for appellant.
Hartwig’s agency terminated at his principal’s death. (Megary v. Funtis, 5 Sandf. 376 ; Hunt v. Rousmanier 8 Wheat. 174 ; Hess v. Rau, 95 N. Y. 359 ; Helmer v. St. John, 8 Hun, 166 .) Payment to-an agent after his principal’s death is not valid when the agent acts in bad faith and with knowledge of the principal’» death, and the payor acts without notice of such death, but without making inquiries concerning it. (2 Kent’s Com. [12th ed.] 646, 647; Hunt v. Rousmanier, 8 Wheat. 174 ; Hess v. Rau, 95 N. Y. 359 ; Story on Agency [9th ed.] § 488; Davis v. Windsor Sav. Bk., 46 Vt. 728 ; Jenkins v. Atkins, 34 Am. Dec. 648 ; Rigs v. Cage, 37 id. 559; Goet v. Galloway, 4 Pet. 331 ; Clayton v. Merritt, 52 Miss. 353 ; Cleveland v. Williams, 29 Tex. 204 ; Mich. Ins. Co. v. Leavenworth, 30 Vt. 11 ; Tramers v. Crane, 12 Cal. 12 .) The defendants were guilty of negligence; it was their duty to make inquiries to learn whether Hartwig’s power of attorney was still in force. (Nixon v. Palmer, 8 N. Y. 398 , 400.) The burden rests on the defendants to show a ratification on Mrs. Weber’s part. Hothing short of a valid ratification will suffice for a defense to this action in foreclosure. (Nixon v. Palmer, 8 N. Y. 398 ; Seymour v. Wyckoff. 10 id. 213, 224; Owings v. Hull, 9 Pet. 607 , 629; Ben v. Cunningham, 3 id. 69; Bitch v. Smith, 82 N. Y. 627 .)
Thomas H. Rodman for respondents.
The payment by Bridgman, May 12, 1874, to Hartwig, as Weber’s attorney,
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■acting under his written power, with the bond, mortgage and ■assignment in his hands, was a valid payment, although Weber was then dead; and in equity discharged the mortgage, irrespective of the effect to be given to the satisfaction piece •executed by the agent at the time. (Ex parte Snowball, In re Douglas, L. R., 7 Ch. 548; Hovel v. Lethwaite, 5 Esp. 158; Salte v. Field, 5 T. R. 214; Hazards. Treadwell, Strange, 506; 12 Mod. 347; Hunt v. Rousmanier, 8 Wheat. 174 ; Story on Agency, 646, note c.; Lewis v. Kerr, 17 Iowa, 73 ; Dick v. Page, 17 Mo. 234 .) This is a stale demand which a court of equity will not favor. (Sheldon H. B. Co. v. Eickemeyer H. B. Co., 90 N. Y. 607 .)

It should be assumed, without argument, that the plaintiff is not bound by the act of Hartwig, unless his authority to receive the money and discharge the mortgage was ■established, or unless she has, with knowledge of the facts, recognized that transaction and adopted it. The respondents’ contention is that both alternatives are established, viz.: That "the payment to Hartwig was a valid payment, and also that Hartwig accounted with the plaintiff and paid over to her the money so received by him.. As Bridgman dealt with Hartwig as an agent, and now seeks to charge the representative of Weber as if his dealing had been with the principal, the burden of proof was on him to show either that the agency existed, and that the agent with whom he dealt had the authority he assumed to exercise or that the plaintiff is estopped from disputing it. That an agency of some kind did at one time exist in favor of Hartwig was sufficiently manifested by the power of attorney and proof of its due execution and delivery by Weber. If it be conceded that the act in question was within the authority which Hartwig once had, it would not aid the defendant, for that authority was determined by the death of Weber before the act was performed, and although Bridgman had no notice of his death the act was void and the estate of the principal is not bound.

The question is not new, and it has been uniformly

p. 605
answered by our decisions to the effect that the death of the principal puts an end to the agency, and, therefore, is an instantaneous and unqualified revocation of the authority of the-agent. (2 Kent’s Com. 646; Hunt v. Rousmanier, 8 Wheat. 174 .) There can be no agent where there is no principal. There are, no doubt, exceptions to the rule, as where the agency is coupled with an interest (Knapp v. Alvord, 10 Pai. 205 ; Hunt v. Rousmanier, supra; Hess v. Rau, 95 N. Y. 359 ); or where the principal was a firm and only one of its members died. (Bank v. Vamderhorst, 32 N. Y. 553 .) But both cases recognize the general rule to be as above stated. In Davis v. Windsor Savings Bamk ( 46 Vt. 728 ), the rule was applied. The defendant paid money to the agent after the death of his principal, but in ignorance of it, and the administrator of the deceased recovered. It is quite unnecessary to go through the cases on this subject. The rule at common law which determines the authority of an agent by the death of his principal is well settled, and no notice is necessary to relieve the estate of the principal of responsibility, even on contracts into which the agent had entered with third persons who were ignorant of his death. Those who deal with an agent are held to assume the risk that his authority may be terminated by death without notice to them. This rule was established in England (Leake on Con. 487), although now modified by statute, and is generally applied in this country. (Story on Agency, § 488 ; Pars, on Con. vol. 1, p. 71; 2 Kent’s Com. [12th. ed.] 645, 646.)

In some states alterations have been made by statute; and, following the civil law, it was held in Pennsylvania (Cassidy v. M’Kenzie, 4 Watts & Serg. 282 ), that the acts of an agent or attorney, done after the death of his principal, of which he was ignorant, are binding upon the parties. This was, however, in opposition to the current of authority. (1 Pars, on Con. 71; 2 Kent’s Com. 646.) But even that case does not aid the defendant, for here the agent knew of the death of his principal. Moreover, the defendant might have known it had he taken the precaution to inquire. He had never before dealt with the agent. The power of attorney was not of

p. 606
recent daté, and the defendant should be held to have assumed the burden of showing that Hartwig was, at the moment of the transaction, a person authorized to act so as to bind the real owner of the bond and mortgage, whoever that person might prove to be. There is no equity in his favor, for the loss, if any, is from his own negligence.

It is claimed, however, by the learned counsel for the respondents, that the rule has application only where the act of the agent is required to be done in the name of the principal, and his contention is, as we understand it, that, inasmuch as 1 Hartwig had possession of the bond and mortgage, the defend-1 ant from that fact had a right to infer an agency to collect, I and so the payment was valid. However that might be under other circumstances, the contention has no force in this instance. The power of Hartwig was not left to inference. Whatever it was it came before the defendant in writing. The power of attorney was in his hands. It authorized such .acts only as could be performed in the name of the principal, and so the defendant understood it. He caused the power to be recorded, took a discharge of the mortgage under it executed by Hartwig as agent for Weber, and gave the check payable to the order of Hartwig in that character. Except ■for the power of attorney and its recitals, and the acts of Hart-wig under it, the defendant would not have even the shadow of a defense. In his own name Hartwig could do nothing, and of this the defendant had full notice. The power of attorney which accompanied possession of the securities defined the actual authority, and the defendant had notice of its contents at the same moment that he saw the bond and mortgage in the hands of the attorney. The authority which might be gathered from their mere possession is, under these circumstances, of no force. The giving of an authority in writing imports that the extent of the authority is to be looked for in its terms, and not elsewhere.

But a more difficult question remains, one on which the ■courts below differed, and in consequence of which difference we have jurisdiction to pass upon it. (Code, §§ 1331, 1338.)

p. 607
It is a question, of fact whether, with knowledge of the circumstances, the plaintiff ratified the payment.[1]

* * * * * * *

It is true that between the time of payment and the beginning of this suit many years elapsed, but the fact of payment was unknown to plaintiff. It is also true that she failed, before this action and during all these years, to demand either principal or interest from the defendant, but she was altogether ignorant that the security existed, by means of which either had become due. To show the contrary was the duty of the defendant, if the truth enabled him to do so. The trial judge found that he had failed in this respect, and we have no hesitation in saying that a différent finding would not have been justified by the testimony. The conclusion jiactully reached was the only one permitted by the evidence. The appeal necessarily succeeds. (Sherwood v. Hauser, 94 N. Y. 626 ; Baird v. Mayor, etc., 96 id. 561; Crane v. Baudouine, 55 id. 256; Westerlo v. De Witt, 36 id. 340.)

The order of the General Term should, therefore, be reversed, and the judgment of the Special Term affirmed, with costs.

All concur.

Ordered accordingly.

* The omitted portion of the opinion discusses the evidence as to knowledge and ratification of payment by plaintiff; the court coming to the conclusion that it failed to show such knowledge or ratification.

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