Judgment of the Court
J.-This is an action by plaintiff, appellant, to recover $6,125 and interest thereon due on a certain mortgage made by defendants Domenick Jannetta and his wife Nicoletta Jannetta to one John A. Campbell, assigned by him to the appellant, and for foreclosure of the mortgage. Prior to 1924, the defendant D. Jannetta went to Italy, leaving his affairs in reference to the premises covered by the mortgage in the hands of one Thomas Hook, a real estate agent in Toronto.
The property in question was at this time subject to a mortgage for $6,125 to one Mrs. Georgina Chilcott Young. E. W. Owens, a Toronto solicitor, had been Jannetta's legal adviser up to the time the latter left for Italy, and in October, 1924, was in correspondence with Jannetta in reference to arrears of interest due on Mrs. Young's mortgage. On 23rd March, 1925, John A. Campbell, the solicitor mentioned above, wrote Owens that he had instructions from Mrs. Young to put the property up for sale unless the interest was paid. Owens sent a copy of this letter to Hook, and correspondence between Hook and Campbell followed. Hook cabled Jannetta that the property was to be put up at auction, and requested that $300 be cabled to him; and in the meantime gave Campbell his own cheque for $200, and obtained a postponement of the sale for two weeks. On April 20th, Jannetta wrote to Hook, requesting him to try to sell the property.
The $300 was cabled to Hook, who subsequently paid to Campbell $309.63 and $2.50, the balance, after crediting the $200, owing for interest and costs, as shewn by Campbell's statement sent to Hook on May 6th, 1925, for which amount a receipt is endorsed on the back of the statement, signed by Campbell, per " E. F."
On May 7th, 1925, Hook wrote to Jannetta, giving him full information as to the above facts, and informing him that all interest was paid up to the 24th of March, 1925, and that the next payment of interest would be due on the 24th of October next. He goes on to say that Mrs. Young now wants her mortgage paid off, and that he is trying to secure someone who will lend the necessary money on the property, and that when he succeeds, the necessary papers will be sent, so that the new mortgage will pay off the old one. He explains that the Young mortgage is past IVa osT due, so that a new mortgage is necessary.
On the 19th of May, 1925, Campbell wrote a letter to WlNE MFG. Hook, enclosing a mortgage drawn from Jannetta and his C wife to himself for $6,125, with interest at 7 per cent., which Smith J. was signed by Jannetta and his wife, and which is the mortgage now in question. The letter asks Hook to send the mortgage to Jannetta with instructions to have it executed and returned, and continues as follows:
Also have him give you a letter with instructions to pay over the money received from this mortgage to Mrs. Chilcott Young so that she can be paid off at once. This matter must be completed and the money in the hands of Mrs. Young by the 15th day of June, otherwise I will continue the mortgage sale proceedings and your client will lose his property. On the same day, Hook wrote Jannetta as follows:
Dear Mr. Jannetta:
Enclosed find a letter from Mr. Campbell who is solicitor for Mrs. Young, the mortgagee, which speaks for itself, and I also enclose you a mortgage and duplicate made out in his name for $6,125 and the proceeds of this mortgage when sold is to be applied on the present mortgage held by Mrs. Young and this is the only way that I can see to meet the demands as the present mortgage has expired and cannot be sold.
He goes on to give instructions about the execution of the mortgage, and then continues as follows:
* * * return them to me by return mail and send the necessary written authority for the proceeds of this mortgage to be credited to the present mortgage and in this way we may get the whole matter cleaned up for another five years. - On June 11th, 1925, Jannetta cabled Hook as follows: "Mortgage is coming "; and the mortgage was received by Hook in due course.
Here we have a proposal by Hook to Jannetta that he, Hook, is trying to negotiate on Jannetta's behalf for a new loan, followed by a proposal by Campbell and Hook to Jannetta that this new loan should be obtained by the execution of the mortgage and its sale. The acceptance of these proposals by Jannetta, by the execution of the mortgage, its return and the cablegram, was an express acceptance of the whole proposition set out in these letters, that is, an express authority to Campbell and Hook to obtain a loan by securing a purchaser of the mortgage and to receive and apply the proceeds on the Young mortgage. Hook interviewed the appellant on Jannetta's behalf to get a loan in the manner agreed to by Jannetta, and we have therefore two S.C.R.]
parties negotiating for and finally entering into a bargain for the purchase of the mortgage, one of them being Jannetta by his agent Hook, and the other the appellant. If Jannetta had been there himself instead of Hook, the -i situation would have been the same. The appellant and her brother were taken by Hook to inspect the property, and Hook told them that the property was good security, a mere representation on behalf of Jannetta that Jannetta himself would have made. Hook knew the property before going to the appellant, and would not expect to get the loan otherwise than by representing it as a good one. To convince the appellant of the truth of this representation, he took her and her brother to see the property, just as Jannetta himself would have done had he been there to act for himself. If the appellant was constituting Hook her agent to value the property, and was trusting to his valuation, there was no need for her and her brother to look at the property at all.
The verbal bargain for the loan was concluded by the appellant agreeing to take it. Campbell was in fact authorized by Jannetta, as stated, to receive the money, and Hook, acting for Jannetta, told the appellant to make the cheque payable to Campbell, which she did. The receipt and cashing of the cheque by Campbell completed the loan as between Jannetta and the appellant, and the registration of the mortgage constituted it a valid security.on the land as against Jannetta and the subsequent purchaser, the respondent, the Toronto Wine Manufacturing Company, Limited.
Owens had previously been solicitor for both the appellant and Jannetta; and Hook, knowing this, and with the appellant's assent, engaged Owens to look after searching the title and putting through the loan, and there is no doubt that, in attending to this business, Owens was acting for both the appellant and Jannetta, as it was Jannetta who paid him for these services. After getting the appellant's assent that Owens should act in the matter, Hook wrote to Owens the letter, exhibit no. 4. which is as follows: It is argued that because of the statement in this letter that the proceeds were to be used for payment off of the previous mortgage to Mrs. Young, this knowledge, conveyed to Owens, must be attributed to the appellant, for whom he was acting. Assuming that to be so, it amounts only to knowledge on the part of the appellant that Campbell, the authorized agent of Jannetta to receive the proceeds of the loan, was to apply them on the Young mortgage. It was, of course, Owens' duty, both to the appellant, and to Jannetta, to see that the title was clear, but if he was negligent in that respect, it is a question between him and them, and has nothing to do with the question of Campbell's right to receive the money as Jannetta's authorized agent.
Mr. Bullen, in an able and exhaustive argument, presented everything that I think could be offered on behalf of the respondents, and cited a number of cases upon which he placed strong reliance. An examination of these cases, however, discloses that they have no application to the facts of this case. The argument that no consideration had passed from Campbell to Jannetta, and that the appellant, buying the mortgage, is bound by the state of the mortgage account, is surely not tenable. The appellant purchased the mortgage from the mortgagor and paid over the purchase money to the very party authorized by Jannetta to receive it, so that the situation is as if Jannetta himself had received the money.
In the case of Murray v. Crossland (1), a solicitor received the mortgage moneys from the mortgagee, the intention, as found by the learned trial judge, of all parties being that the money should be paid in satisfaction of a prior mortgage. The solicitor misapplied the funds, and it smth was held that the mortgage was not a valid security for the amount, upon the express finding of fact by the learned judge that the solicitor did not receive the moneys as agent of the mortgagors.
Butwick v. Grant (2), is cited as authority for the proposition that an agent with authority to sell has no implied authority to receive the money. The case is authority for the proposition that a purchaser is justified in paying the purchase price of goods to an agent who sells them for a principal only when the agent has express authority, ostensible authority or customary authority; and that the question of authority must be determined from the facts of each particular case.
There the agent got an order for goods by sample, and the principal shipped the goods and posted the invoice under his own name. Later, the agent called and collected the price, and it was held that under those circumstances there was no ostensible authority. The case is quite different where a principal entrusts the possession of his goods to an agent to sell and to hand them over to a purchaser. In the present case the mortgage was placed in the hands of Campbell and Hook by Jannetta for the express purpose of selling it and for the express purpose of transferring it to a purchaser and receiving and applying the money.
The appeal must be allowed, with costs here and in the Appellate Division, and the judgment of the trial judge restored.
Appeal allowed with costs.