¶1 April 6, 1926. On petition for rehearing August 17, 1926.
¶2 The opinion of the Court was delivered by
The decree of Judge Memminger is satisfactory to us, and it is the judgment of this Court that the judgment of the Circuit Court be affirmed.
¶3 Affirmed.
¶4 MESSRS. JUSTICES COTHRAN, BLEASE and STABLER and MR. ACTING ASSOCIATE JUSTICE R.O. PURDY concur.
¶5 MR. CHIEF JUSTICE GARY did not participate.
¶6
ON PETITION FOR REHEARING
Mr. Justice Blease: While I concur with practically all the legal positions taken by Mr. Justice Cothran in his able opinion, favoring a rehearing of this cause, still I cannot agree with the disposition he would make of the cause.¶7 As I see it, there is but one question in the whole case to be decided. If Barron's firm was the agent of the plaintiff for the purpose of receiving and receipting for principal payments on the mortgage debt, and if that fact was shown by competent testimony, then the defendants are entitled to credit for such payments on the principal as they made. If Barron or his firm did not have such authority, then it follows the defendants are not entitled to the credits. Barron being dead, it is easy, of course, for his former clients to repudiate his agency. It is absolutely necessary for those who have suffered, or may suffer, because of his acts, or because of the conduct of his clients, to resort to circumstantial evidence to establish the agency of Barron. In my opinion, there was sufficient evidence in the cause to convince the Circuit Judge that Barron, or his firm, was the agent of the plaintiff. It appears to me further that, in his finding of fact, the Circuit Judge has been able to mete out substantial justice.
¶8 I do not mean by the position I take in this particular cause that I am expressing an opinion as to the rights of others who may hereafter come to this Court because of the "back-wash" of the debacle of the Carolina Bond Mortgage Company. I am willing to be guided by *278
the law as laid down by Mr. Justice Cothran, when the time comes to pass upon other causes, but I shall not forget the legal principle, which I believe is as strong as any stated by the learned justice, to wit: That one must be bound, and should be bound, by the acts and conduct of his duly authorized agent. I think, regardless of all presumptions, that, if it is established that a person had authority to collect principal on a mortgage debt for the holder of the mortgage, it matters not who had possession of the papers. The agency to collect the principal is the question. That agency is a question of fact, depending upon the proof in the case.
¶9 The petition for a rehearing is denied.
¶10 MESSRS. JUSTICES WATTS and STABLER concur.
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Case posture Posture Before MEMMINGER, J., Richland, Fall Term, 1924. Affirmed.Action by J.S. Land against Isaac Reese and others as trustees of the Union Baptist Church of Columbia, and another. Decree for defendants and plaintiff appeals.
J.C. Townsend, Master for Richland County, submitted the following report:
(1) Pursuant to the order of reference set out in the attached testimony, I held references herein, attended by the attorneys of record, took the testimony offered, which is herewith reported, and therefrom find and conclude as hereinafter set forth.
(2) I find that the plaintiff, J.S. Land, did, on or about the 7th day of July, 1919, deliver his check, dated on said date, payable to the order of Barron, McKay, Frierson
Moffatt, in the sum of $3,000, for the purpose of a loan which was subsequently made, and now constitutes the subject-matter of this action.
(3) I further find that, pursuant to resolution made and passed by the constitute authorities of the Union Baptist Church of Columbia, S.C. passed at a regular monthly meeting on the 13th day of June, 1919, to borrow the sum of $3,000, and to secure the payment thereof by bond and mortgage covering the premises situate on Divine street between Assembly and Gates streets, in the City of Columbia, all of which said description of said premises more fully appear in the pleadings in this action.
(4) I further find that, pursuant to resolution, Charles Smith, Sam Smith, Dallas Robinson, and Joseph Wilson, made, executed, and delivered, as trustees, their certain bond or obligation, conditioned for the payment, `Unto the above-named, J.S. Land, his certain attorneys, executors, administrators, or assigns, the full and just sum of three thousand ($3,000.00) dollars three years after the date thereof, with interest thereon from date and until paid in full, at the rate
of eight (8%) per cent. per annum, payable semiannually on the 1st days of January and July of each and every year, and in default of the payment of any installment of interest, the entire amount of said principal indebtedness, together with interest thereon, shall, at the option of the mortgagee, become immediately due and payable.
(5) I further find that, in order to better secure the payment of said bond according to the terms and conditions thereof, and pursuant to said resolution, the parties executing said bond executed and delivered their certain mortgage, and by way thereof did convey unto J.S. Land, his heirs and assigns, the parcel of land more fully set forth and described in said mortgage, which said mortgage was filed for record, and the same was duly recorded in the office of the clerk of Court for Richland County in Mortgage Bock CX, at page 312.
(6) I further find that said bond, together with the mortgage, at the time of the execution, or immediately thereafter, was delivered to some one for and on behalf of the law firm of Barron, McKay, Frierson Moffatt.
(7) I further find that said bond is without date, and so is the mortgage, but in the recitation clause of the mortgage it is stated that said bond is dated the 3d day of July, 1919, and that said mortgage is even without date of its probate, but was filed for record on the 5th day of July, 1919.
(8) I further find that, after the execution and delivery of said bond and mortgage, the amount therein stipulated was paid out by the firm of Barron, McKay, Frierson
Moffatt, in installments, and of dates, together with other charges against said fund, according to the following statement:
Loan, J.S. Land to Union Baptist Church of Columbia, S.C.
Amount of Loan .....................................$3,000.00
Disbursements.
Attorney's fees ........................ $ 60.00
1919
July 5, by check ........................ 500.00
July 17, recording mortgage ............... 4.00
Revenue stamp on bond ................... 1.50
By check ................................ 500.00
July 25, by check ....................... 500.00
August 2, by check ...................... 500.00
August 8, by check ...................... 500.00
August 16, by check ..................... 150.00
August 17, check to balance ............. 284.50
_________ ________
$3,000 00 $3000 00
Columbia, S.C. December 23, 1919.
(9) I further find that the interest on account of said loan was paid by the makers thereof or some one for and on behalf of the Union Baptist Church of Columbia, unto the firm of Barron, McKay, Frierson Moffatt, or to said firm as the name thereof might have been changed from time to time, at all times, however, headed by Barron.
(10) I further find that on the 4th day of October, 1920, the sum of $1,000 was paid to the firm of Barron, McKay, Frierson McCants, on account of the principal due on account of said bond and mortgage, and that on the 21st day of June, 1922, the sum of $700 was paid to the firm of Barron, Frierson, McCants Elliott, on account of loan of the Union Baptist Church of Columbia, from J.S. Land.
(11) I further find that interest was paid on said loan pursuant to notices addressed to Union Baptist Church of Columbia, signed by the firm of Barron, McKay, etc., among other things in words as follows: `Interest amounting to one hundred sixteen ($116.00) dollars, on your loan No. 398, from J.S. Land, will be due on January 1, 1920,
please send check payable to our order to cover.' Reference is had to Exhibits J, K, L, etc.
(12) I further find that interest was paid by Union Baptist Church of Columbia on the balance of said loan, after giving credit for the payments made, up to the 1st day of July, 1922, and that interest on the full amount of the loan, to wit, $3,000, was remitted to the plaintiff, J.S. Land, by the firm of Barron, McKay, etc., up to the 1st of July, 1922.
(13) I further find that J.S. Land claims the full amount of said bond and mortgage, to wit, $3,000, together with interest from the 1st day of July, 1922, and attorney's fees, is now due thereon, and that the defendant Union Baptist Church of Columbia claims that there is only due the sum of $1,300 principal, with interest thereon from the 1st day of July, 1922; the controversy being over the two payments made on account of the principal, to wit, $1,000 October 4, 1920, and $700 on June 21, 1922.
(14) I further find that, soon after the execution and delivery of the bond and the recording of the mortgage, the same, together with the policy of insurance, was forwarded to J.S. Land, and he retained the possession thereof until the institution of this action.
(15) I find that Barron's firm were general attorneys for J.S. Land for the purpose of making loans for the plaintiff, but that no specific authority was delegated by the plaintiff, J.S. Land, to said attorneys to even collect the interest, and at no time was any authority given by J.S. Land for said firm to collect the principal of the loan in question or any other loans made by said firm on behalf of the plaintiff. I find also that no authority was given to change the terms of the contract contained in the bond and mortgage to accept any part before maturity, and that any collections so made were without authority either expressed or implied in so
far as the same specifically relates to any collections on the bond and mortgage, the subject of this action.
(16) I report as a matter of law that any payments on account of the principal of the bond and mortgage in question to an alleged agent is made at the peril of the payer; that the bond and mortgage executed directly to J.S. Land; that it was the duty of the makers thereof to make payments to him unless specifically authorized by J.S. Land to make payments to some third person. Mars v. Mars , 27 S.C. 134 ; 3 S.E., 60 .
(17) I further report that the defendants should not have made any payments on account of the principal of said bond and mortgage, especially before maturity, without requiring the production of said bond and mortgage and the payments credited thereon; the requiring of the production of said bond and mortgage to establish the ownership thereof. Williams v. Paysinger , 15 S.C. 571 . Talbert v. Talbert , 97 S.C. 146 ; 81 S.E., 644 .
(18) According to the foregoing findings of fact and conclusions of law, I have calculated the amount due on said bond and mortgage and find that there is due thereon to the date of this report, to wit, the 27th day of May, 1924, is the sum of $3,658, including principal interest, and attorney's fees, all according to the following statement:
Principal ........................................ $3,000.000
Interest from July 1, 1922, to May 27, 1924, at 8
per cent ......................................... 458.00
Attorney's fees .................................... 200.00
_________
$3,658.00
(19) I further find that the sum of $200 is a very reasonable fee to be allowed the attorneys for the plaintiff for services rendered and to be rendered herein until the final adjudication of this action.
(20) I further find that the lien of said mortgage is and constitutes a first and prior lien covering the premises as therein described and as set forth in the complaint in this action.
(21) I would therefore recommend that the plaintiff have judgment against the defendant for the $3,658, with interest thereon from the 27th day of May, 1924, and that, upon failure to pay or make adjustment of the same on or before 90 days from the date of any final decree herein, the said mortgage be foreclosed according to law in such cases made and provided.
Following is the decree of Memminger, Circuit Judge:
This is an action for foreclosure of a mortgage given by authorized officers of a negro Baptist Church, of Columbia, to J.S. Land, money lender, through the law firm of Barron, McKay, Frierson Moffatt, of Columbia.
The negroes paid interest to the law firm, and, pursuant to an agreement with the law firm made at the time of the execution and delivery of the mortgage, paid before maturity on account of the principal two payments amounting to $1,700. Barron had put bond and mortgage in the possession of Land, and the negroes did not call for the production of the originals when they made their payments, but got Barron's receipts for the payments. The mortgage shows on its face that it was executed by ignorant people on behalf of a negro church. Of course, the face of the mortgage shows that it was made to Land, but it is not probable that the negroes knew this, and no doubt believed they were dealing with Barron.
Barron died, and Land never received the payments, which had been made on the principal. He forecloses for the whole amount. The master finds for Land, and declines the credits set up in the answer.
Exceptions are taken, and a request made for permission on behalf of defendants, to take further testimony along
the line that the firm of Barron were absolute general agents of Land, and that payment to the firm was payment to Land. I granted this, and testimony was taken and reported, and the whole matter was presented before me for decision.
Upon first impression, I was inclined to make the usual decision in cases where a loan is negotiated through a lawyer, authorized to draw up the papers and collect interest, that a payment on the principal by the borrower to the lawyer would not bind the lender; however, after a careful study of the whole record, I find that the case differs materially from the ordinary case of such transaction.
I cannot but conclude that Barron was the general agent of Land for investing his money, and actually collecting principal and interest and reinvesting it as he saw fit, and it was a mere matter of form that the papers were made out to Land and put in his possession. Land had an agreement with Barron that Barron was to pay him interest on all funds of Land's in his hands, whether loaned out or not, and, in a number of cases appearing in the testimony, Barron did collect principal for Land and remitted it to him and then procured satisfaction for the borrower. Barron thus being the general agent for Land, under Knight v. Jackson , 36 S.C. 10 ; 14 S.E., 982 , his declarations at the time of execution of the papers were part of the res gestae , admissible as evidence and binding upon Land. It is obvious that the declaration of Barron that payment on principal before maturity would be credited was binding on Land, and Land put Barron in a position to thus deceive these ignorant negroes, and should not now be heard to contest. Barron naturally was interested in getting the loan paid up as soon as possible and lending the money out again, and getting another fee from a new borrower. It made no difference to Land, because, under his agreement with Barron, he was to get interest on his money whether Barron loaned it out or not.
Upon another ground, also I am satisfied that the exceptions to the master's report are well taken, and that the defendants are entitled to have the payments of principal credited upon the debt; that is, under the general principal that, where one of two innocent persons must suffer by the wrongful act of a third, he will be required to bear the loss who was most at fault in letting it be brought about.
Measured by this rule, it seems to be apparent that the loss should be upon Land. The only fault that can be put upon the negroes is that they trusted the statement of Barron, clothed, or apparently clothed, with power, to conduct the whole transaction, and actually conducting it, and not requiring from Barron the production of papers when the payments were made. This is insignificant, to my mind, as compared to the negligence of Land in holding Baron out as his agent to invest his money, to collect interest, in some cases to collect principal, to do nothing more than have the papers made payable to him and delivered to him. These special papers showed the loan was to a negro church; he would know they were usually ignorant and easily deceived. He could have easily notified them to make payments only to him. On the contrary, he gave the Barron firm a full swing in investing and reinvesting his money. He took no care at all in protecting innocent persons conducting transaction with Barron, and he himself was all the while protected by his agreement with Barron for investment on his funds.
No argument should be drawn from a knowledge which comes after the fact, and upon that idea it may be reasoned that Land had absolute confidence in Barron; but the testimony in this case shows that he seemed anxious to get money out of the hands of Barron when it was paid in to his credit. He had become apprehensive — he should have warned these people, and not waited and caused them a
loss `after the Deluge,' as a decision now in his favor would entail.
Let a formal decree be prepared carrying out the views herein expressed on the footing of this decree and as a part hereof; and it is so ordered, adjudge and decreed. Source: CourtListener
