Buckingham v. Payne , 1861 N.Y. App. Div. LEXIS 207 ( 1861 )

By the Court,

E. Darwin Smith, J.

In receiving the note of Waite for collection, the proceeds to be applied upon the defendant's debt, the plaintiffs must be deemed, under the facts found by the referee in this case, to have assumed at least the obligation, whether resting in duty or upon contract implied by law, of an attorney or agent for the collection of the demand. They were bound to use ordinary diligence in the collection of the note, and are responsible for ordinary neglect. Such was the rule as laid down in the case of Hoard v. Garner, (6 Selden, 261,) where the defendant had covenanted to take proper means to collect the amount due and secured to be paid by the mortgage assigned, On the trial of that case, the judge charged the jury that the defendant “ was bound to use reasonable diligence in the institution and prosecution of the proceedings necessary to collect the amount due and secured to he paid by the mortgage,” and was liable for unreasonable delay in the commencement of such suit while the negligence was his own or that of his attorney. This ruling was affirmed by the superior court of New York, and by the court of appeals. Such was the rule laid down in the case of Ex parte Mure, (2 Cox, 76,) which was a case where the creditor received for collection, by assignment from his debtor as collateral security, a bond and warrant of attorney held by his debtor against another person. The lord chancellor held that the creditor was liable for negligence, and that the rule would be the same as though the creditor had been employed by the debtor as an attorney to collect the debt. The same rule in a like case of the assignment of a debt by the debtor to his creditor as collateral security is also asserted in the case of Williams v. Price, (1 Sim. & Stu. 581.) The plaintiff, upon the rule of these cases, (and in all like cases of agency as between principal and agent,) is only liable for the loss of the Waite note on the ground of negligence. Negligence in such cases must be a question of fact. If there be a dispute about the facts, this must necessarily be so. (Foot v. Wiswall, 14 John. 307. 20 Pick. 167.) The plaintiffs in this suit cannot, in my view of the rule of liability applicable to such case, be made or held liable for the loss of the Waite note, except upon a distinct finding as matter of fact that the loss of said note was owing to their negligence, or was consequent upon such negligence. In the report of the referee the evidence of facts is stated, or certain facts found upon which the inference of negligence might be based; but the question of negligence, which was the chief question of fact upon which the whole counter-claim depended, is not found. The judgment in favor of the defendant, ujdou the issue presented by the counterclaim, is not based upon any finding of fact upon which it can he sustained. The court cannot draw the inference of fact from the fact stated, which may be warranted by the evidence. . The referee, in such a case, must find the issue in one way or the other. In reviewing the judgment rendered by a referee, the court acts simply as an appellate court, and must reverse a judgment not warranted by appropriate findings on the questions of fact, if the proper exception is taken. The referee, it is true, finds as a conclusion of law that the plaintiffs undertook the collection of the note in question by legal jwocess, and that they were liable for neglect to collect the same after the 15th of May, 1854. In this decision or finding the referee held and intended, I think, to decide as matter of law, that the plaintiffs were bound to use legal diligence in the collection of said note; and this, I think, was the cardinal error of the referee in the trial and decision of the cause. He applied to the case the rule applicable to guaranties and strict contracts for the employment and exercise of legal diligence. (1 Wend. 460.) It is only when such diligence, in express terms or by necessary legal inference, is required by the contract that it is obligatory. (Morris v. Wadsworth, 11 Wend. 104; S. C., 17 id. 112.) In the trial of a cause before a referee, the referee exercises the functions both of a court and of a jury. So far as regards the questions of fact arising on such trial, he must find them in due form, and show the conclusions from the evidence to the Same effect as if the issue were submitted to a jury. His findings in his report must be as explicit and distinct upon the facts as a special verdict of the jury, and his finding of facts is conclusive, upon the same principles. In the conclusions of law which the referee finds, they are necessarily stated in his report as based upon his findings upon the facts; but I apprehend they are to be in effect as distinct, and are to be considered and reviewed as distinctly, as would be the decision of a circuit judge in his charge to the jury in submitting the questions of fact for their decision. If the findings of law are unwarranted by the facts found, it is equally erroneous and exceptionable as would be the same errors of a judge in his charge to a jury. The facts found by the referee must sustain his findings upon the law, and the law of the case must be predicated upon such findings of fact. In this case, the conclusion of law of the referee as stated in his report we think not warranted by the facts found. To sustain a report and judgment allowing the defendants’ counter-claim, the referee should have found, in substance, and to the effect that the plaintiffs were guilty of negligence in omitting to institute and prosecute with reasonable diligence a suit for the recovery of judgment upon the Waite note, and that by reason of such negligence the defendant had sustained damages to the amount remaining unpaid upon such note.

[Monroe General Term, December 2, 1861.

Smith, Welles and Johnson, Justices.]

For the omission to make such findings in the decision of the case by the referee, the judgment is not sustainable and should be' reversed, and a new trial granted with costs to abide the event.