Hughes v. Clifton , 147 Ala. 531 ( 1906 )

ANDERSON, J.

“As a general rule, a mortgage debt- or is authorized to infer that an attorney or agent, who has been employed to make a loan and retains possession of the bond and mortgage, is empowered to receive payment of both the interest and of the principal. But this inference is founded on his custody of the securities, and it ceases when these are withdrawn by the creditor; and it is incumbent on the debtor, who relies upon a payment so made to an attorney or agent, to- show that the securities were in his possession when he made the payment, unless the action of the creditor be such as to estop him from denying the agency. * * * In making payments to an agent, the mortgage debtor should be assured of his continued authority to act for the owner of the mortgage; and such assurance of .this as may be. derived from his possession of the mortgage note or bond, and indorsement thereon of 'the payment, would be omitted only through great negligence. Authority of an agent to receive interest or principal on a mortgage cannot be inferred from the fact that the agent collected and paid over to the mortgagee interest on other mortgages. Even authority to collect the interest upon a mortgage does not afford ground for inferring authority to collect the principal, where the agent is not intrusted with the possession of the securities. The rule has been strictly adhered to in all the adjudicated cases that the possession of the securities by the agent is the indispensable evidence of his authority to collect the principal.” — Jones on Mortgages, vol. 2, § 964. In the case of Smith v. Kidd, 68 N. Y. 130, 23 Am. Rep. 157, the court said: “If money be due on a written security, it is the duty of the debtor, if he pay to an agent, to see that the person to whom he pays it is in possession of the security. For though the money may have been advanced through the medium of the agent, yet, if the securities dO' not remain in his possession, a payment to him will not discharge the debtor.” In the case of Haines v. Pohlmann, 25 N. J. Eq. 183, the court in discussing the question, said: “But the inference in such case is founded on the custody of the securities, and it ceases whenever they are withdrawn by the creditor; and it is incumbent upon the debtor who makes the payment to the attorney or agent, relying upon such inference, to show that the securities were in his possession on each occasion when the payments were made.”

The payment in this case was made to a person other than the alleged agent of complainant, but conceding that it was equivalent to making it to Campbell, who sanctioned it, the undisputed evidence shows that Campbell did not have the securities, and so informed respondents’ agent, and agreed to try and get the note and mortgage, and the deposit was made with McOorlev to be paid over to complainant or his agent upon a surrender or delivery of the securities. This was in no sense such a payment or tender, as would operate as a discharge of the debt and thereby stop the interest. The case of Cheney v. Libby, 134 U. S. 68, 10 Sup. Ct. 498, 33 L. Ed. 818, relied upon by the learned chancellor, has no application to the case at bar; there the place of payment was designated in the bonds and the court properly held “that the designation of the place of payment of the bonds imparted a stipulation that the holder should have them at the bank when due, to receive payment and that the obligors would produce there the funds to.pay them.” Here we have no designated place of payment either in the note or mortgage. We do not wish to be understood as holding that there' is not an exception to the foregoing rule, when the creditor absents or obscures himself, so that the debtor cannot, by ordinary diligence, locate him, but in the case at bar there is no legal evidence to show that the respondent was sufficiently vigilant to- bring himself within the exception.

The chancellor properly rendered the decree of foreclosure, but erred in disallowing the complainant interest and in taxing him with the costs; and the decree in this respect will be reversed, and the register is ordered to include the interest and costs in ascertaining the amount to be paid by the respondents, and is ordered, to sell the land under the terms of the decree, if said sum including principal, interest, and costs is not paid within 30 days from the rendition of the decree of this court..

Affirmed in part, and in part reversed and rendered.

Weakley, C. J., and Tyson and Simpson, JJ., concur.