Bloomer v. Dau ( 1899 )

Grant, C. J.

(after stating the facts). Complainant and defendants acted in entire good faith. Upon whom of the innocent parties shall the loss fall? We think the evidence justifies the conclusion that Mr. Cheney was the general agent of complainant and his assignor for the collection of the notes, mortgages, and other securities which had been intrusted to him for collection, including the note and mortgage in dispute, up to the time the agency was revoked. The notes and mortgages were placed in the hands of Mr. Cheney to be surrendered when payment was made. But this authority was expressly revoked, and all the notes and mortgages taken áway from the possession of Mr. Cheney. His agency was thereby canceled, and he had no authority whatever to receive payments. Complainant performed his legal duty in notifying his debtors who had previously done business with Cheney in reliance upon that authority. Had the letter to Mr. Dau been directed to his then post-office address and been received by him, complainant would have done all the law required to protect himself and to notify Mr. Dau of the termination of Cheney’s agency.

When the debtor pays his debt, he is entitled to a surrender of the written evidence of that debt. Creditors usually place the bonds, notes, and mortgages they desire to have paid into the hands of their agent whom they authorize to collect. The absence of such papers is usually sufficient to place the debtor upon inquiry as to the agent’s authority. A general agency continues until in some way parties have been notified of its termination, or have sufficient facts in their possession to put them upon inquiry. Banks are collection agencies, and the courts will take judicial notice of the fact that notes and other evidences of debt accompany the agency, and are placed in their hands, to be surrendered when the debt is paid. It must be presumed, therefore, that defendants knew that this was the customary method of doing business, and that this bank would, in the due course of business, if its agency continued, have the note and mortgage in its hands for surrender. There is another reason why they should be in the agent’s hands, namely, for a correct computation of the amount due. Where one withdraws from his agent the instruments evidencing debts, there is an implied revocation of the authority of the agent. Story, Ag. § 475. Defendants knew that the bank did not have thee note and mortgage. They chose to rely upon Mr. Cheney’s word that he would procure the discharge from the complainant. We must assume that Cheney would have told the truth if defendants had asked about his agency, and, if so, an inquiry would have disclosed the fact that he was not authorized to receive the money, and that, if they chose to leave it there, the bank would become their agent, and not complainant’s. The fact that the note and mortgage were made payable at Cheney’s bank does not establish the agency. Trowbridge v. Ross, 105 Mich. 600, and authorities cited; Adams v. Improvement Co., 44 N. J. Law, 638 (43 Am. Rep. 406).

We said in Joy v. Vance, 104 Mich. 97:

"He [the mortgagee] had a right to suppose that the mortgagor would not pay notes or mortgage without receiving them, and by keeping them in his own hands he interposed the only practical obstacle to the perpetration of a fraud by the mortgage company.”

If that is sound law, why has not the mortgagee interposed this same practical obstacle by withdrawing the note and mortgage from his agent and expressly canceling his authority ? If the bank had had the note and mortgage to deliver, defendants’ contention would be sound, even though complainant had expressly terminated the agency. We are of the opinion that the defendants had no right to assume that the agency continued, in the presence of knowledge that the bank did not have the papers, and that they dealt with the bank-at their own risk.

We find no room for the application of the doctrine of estoppel. The bank had failed before complainant had any notice or knowledge of the payment. He promptly notified Mr. Dau of the letter written him, and that Cheney had no authority to receive the money. His silence after that, and his failure to commence foreclosure, do not constitute an estoppel. Complainant’s delay in bringing suit would no more estop him than would Dau’s failure to institute a suit to prpcure a discharge of the mortgage estop him from claiming payment.

The decree must be reversed, and decree entered for the complainant.

Montgomery, Hooker, and Long, JJ., concurred with Grant, C. J.