RICE
APPELLANT ;*No 9th (DEFENDANT) ......................
........
DAWNAY J.
RESPONDENTS. OTHERS (PLAINTIFFS) ..................
ON APPEAL FROM THE SUPREME COURT OF NEW BRUNSWICK.
Sir W. J. C. J.-I am of opinion that the appeal should be dismissed.
J.-This is a suit in equity instituted by the respondents, who were plaintiffs in the court below, and who are respectively the mortgagor and mortgagees in a certain indenture of mortgage, dated the 29th of January 1874, whereby the respondent, Henry Hoste Swinney, mortgaged the lands in question, situate in New Brunswick, to the other respondents to secure a sum of $35,420, or thereabouts, together with interest.
The mortgage contained a power of sale under which the mortgagees were authorized to sell in case of default.
The object of the suit is to set aside and have declared void an alleged sale in pursuance of this power of sale made in December, 1882, by the defendant Rice, assuming to act under a power of attorney from the mortgagees.
The sale in question was made to the defendant Rodburn, the present appellant; it is alleged to have been made in November, 1882, and was carried out by a conveyance bearing date the 8th of November, The alleged consideration for this sale was $6,000, of which the appellant states he paid to Rice, the attorney of the mortgagees, $2,500 in cash and gave him for the balance of $3,500 a promissory note payable two months after date, which note the appellant now produces, swearing that he paid it at maturity to the Chemung Valley Bank, the holders of it. The bill, which offends against well established rules of equity pleading forbidding multifariousness and misjoinder, amalgamates at least two distinct equities,- one that of the mortgagees to have the sale set aside as not having been made in conformity to the terms of the power of sale in the mortgage, a case in which the mortgagor alone is interested ; and it further impeaches the sale as having been made by Rice, who was the attorney of the mortgagees only, in excess of the authority conferred upon him by his constituents.
No effect was given to this objection to the pleading in the courts below, and it is only noticed now for the purpose of pointing out that there are thus two separate and distinct grounds for relief embraced in the same suit, which must, in considering the case, be kept separate.
The cause having come on to be heard before the judge in equity, pro confesso as regards Rice, the defendant Rodburn alone having answered, that learned judge directed certain issues to be tried before himself with a jury. On the trial of these issues a verdict was found for the appellant.
On a motion for a new trial this verdict was set aside and a new trial was granted.
Subsequently the learned judge discharged the order
(irecting the issues, and the cause again came on before him, when he pronounced the decree which the
Supreme Court has affirmed and which is now brought under appeal here. By this decree the conveyance of the 8th of November, 1882, was declared to be fraudulent and void, and was ordered to be set aside. From the order of the Supreme Court sitting in appeal, the present appeal to this court has been taken.
The objection to the sale as an undue exercise of the power conferred upon the mortgagees by the mortgage deed is that the notice required by the terms of the power was not given. The purchaser insists- that he was not bound to see to this, and that he is protected against the objection by the express words of the deed.
The judge in equity appears from his judgment, Ro'uR j delivered when deciding the motion for a new trial, to S .
have considered this objection established, and the full court, with the exception of Mr. Justice Tuck, appear Strong J. to have adopted all the reasons assigned by the judge of first instance. I do not, however, purpose to enter upon this part of the case, as it appears to me the present appeal can be decided in accordance with the views of both the courts below on a, much plainer and shorter point.
The ground upon which the mortgagees impeach the sale is that their agent, Rice, and the purchaser, Rodburn, acted fraudulently and collusively in the matter of the sale ; and further, that the power of attorney under which Rice acted conferred upon him no authority to make such a sale as he assumed to make. Upon this latter point the judge in equity, Mr. Justice Palmer, is very emphatic and distinct. In his judgment, delivered. on the 22nd of September, 1885, that learned judge says upon this head
Fourth.-That Rice had no authority to take a note payable to himself and give time for payment, and the taking of it instead of money was a violation of his duty, and Rodburn was assisting in this and thereby assisting the agent to dispose of his principal's property, not for the benefit of such principal, but for the agent's own benefit. I have come to the conclusion that the last point is well taken, is unanswerable, and is decisive of the case.
I take the law to be that when an agent parts with the property of his principal under such circumstances that the person purchasing it must be taken to know that it was sold, not for the benefit of the principal, but for the purpose of the agent selling it and disposing of it for his own benefit, the result is that the purchaser holds the property as if he himself were the agent of the principal.
This ground of decision was affirmed and acted upon by the Supreme Court on appeal, for Mr. Justice Fraser, in delivering the judgment of the majority, says:
As the judgment of the learned judge in equity will be printed in the report of the case, I may say without quoting from it that I agree I agree with Mr. Justice Palmer and the Supreme Court that this objection to the validity of the sale is not susceptible of any ansv er. The letter of attorney under which Rice acted contains authority to sell, but not to sell upon credit.
So much of the instrument as is relevant to the present question is contained in the following extract
It needs no demonstration or argument to show that this authority is insufficient to warrant a sale upon credit such as that which was made by Rice to the appellant.
As to the terms of the sale actually made there can be no doubt, for we have it from the appellant himself that having paid Rice in cash only $2,500,-the latter executed the absolute conveyance which has been put in evidence, dated the 8th of November, 1882, thus purporting to convey the land. absolutely and without any real security when less than half the purchase money had been paid-the residue of the price, $3,500, being secured merely by the promissory note of the appellant, payable to the order of Rice himself two months after date. Such a sale as this was entirely unauthorized by the only instrument to which Rice's authorit y can be referred-the power of attorney of the 5th of April, 1871, already quoted from. It was, in the first place,a sale upon credit instead of for cash; andin the next place, even if there had been authority to sell upon credit, the security given for the unpaid portion of the purchase money was one to Rice himself, and a mere personal security, which, from its form,Rice could easily convert to his own use, as he in fact did by discounting it with the bank to whom the appellant afterwards paid it. There is nothing in the power of attorney exonerating a purchaser from seeing that its terms are J. properly pursued as regards the mode of selling. It does, it is true, contain a clause exonerating the purchaser from seeing to the application of the purchase money, but that is nothing to the purpose as regards the present question. The appellant was bound to see that Rice in selling kept within his powers. This he clearly did not do. It is no answer to this to say that the appellant afterwards in good faith paid the $3,500 which formed the residue of the purchase money to the holder of the promissory note which represented that amount. If the sale was not good as a proper exercise of the powers of agency conferred by the letter of attorney the day after the conveyance by which the sale was carried out was executed, it could not be made good by matter ex post facto; so that even if the cash had been paid at the maturity of the note to Rice himself, instead to the bank with whom he had effected the discount of it, the result would have been just the same-the sale would still have been unauthorized and invalid. Further, it is of no avail to say that the deed of conveyance thus being void is void at law, and therefore the interposition of equity to avoid the sale or to declare the deed a nullity was not requisite. The deed forms a cloud on the respondent's title, which alone justifies the resort to a court of equity to have it removed. Therefore, upon this ground the appeal ought to be dismissed, though in saying this I am far from meaning to imply any dissent from the other grounds upon which the judge in equity proceeded.
As to them, I express no opinion.
The appeal must be dismissed with costs.
J.-Concurred.
entirely concur in the judgment prepared by my brother Strong in this case, to which I can add nothing, unless it be to say that there appears to me to be abundance in the evidence to justify the imputation that the conveyance by the defendant Rice to Rodburn was contrived fraudulently and collusively between them to indemnify or compensate Rodburn in respect of some transactions between them, which are only hinted at without the particulars being disclosed or being capable of being discovered.
If the transaction had been a bond fide one it would have been Rodburn's interest to have produced the testimony of Rice which there is no doubt he could have done had he been so minded. In view of the facts which do appear, I do not think that Rodburn could reasonably expect a judgment in his favor, unless Rice should be produced as a witness on his behalf, and should be able to withstand a sifting cross-examination as to his dealings with Rodburn and the precise circumstances attending the execution of the conveyance to him. But instead of Rodburn attempting to support the purchase which he relies upon, by calling Rice as a witness on his own behalf, there seems, upon the evidence which we have, just ground for concluding that Rice's evidence was withheld in Rodburn's interest, in whose house he was when the commission under which Rodburn gave his evidence was being executed.
J.-Concurred.
Appeal dismissed with costs.