Campbell v. Foster Home Ass'n , 163 Pa. 609 ( 1894 )

Opinion by

Mb.. Justice Gbeen,

After a laborious study of this case, and a most serious con.sideration of the elaborate and exhaustive arguments of the learned counsel on both .sides, we are constrained to say that we think the case was correctly decided in the court below. On the question whether the letter of attorney from the plaintiff to her attorney in fact, Robins, dated Dec. 26, 1888, is to be construed as conferring a power to mortgage the premises in question, we are quite clear as to the correctness of the decision made both by the master and the court below. It is true the precise question does not seem to have been before us heretofore, but we are convinced that the considerations which prevailed in Lancaster v. Dolan and its train of cases, resulting in the declaration- that a power to sell land includes a power to mortgage, are entirely inapplicable in the interpretation of a mere letter of attorney with a naked authority to sell, uncoup- • led with any interest in the land or the fund.

The instrument now in question was essentially of this latter class. So far as this matter is concerned it is in the following words: “ Do make, constitute and appoint William B. Robins of said city, attorney at law, my true and lawful attorney, for me and in my name, to grant, bargain and sell in fee simple all real estate owned by me, including all ground rents, on such terms and for such prices as he may see fit, and to make, execute and deliver all necessary deeds and assurances to the purchasers and to assign all policies of insurance on said properties or with said ground rents.”

It cannot be questioned that this is but an ordinary letter of attorney to sell real estate in fee simple. It is nothing but a naked authority to sell and make deeds to the purchasers, without any interest, whatever in the proceeds, without any power to invest the same or to exercise any kind of control over them. There was no power to raise money for any trust, or to pay debts or charges, or to provide a fund for any charitable or other purpose or for the support of any third person. In short there was no power of any kind whatever, to do more than simply to sell'the property and to make deeds to the purchasers.

Under this narrow, specially defined and closely limited authority, the agent executed a .bond in the name of his principal for the payment of $7;500, and, to secure the payment of the bond, he executed a mortgage of her real estate, also in her name, and thereby made her a debtor in a large sum, when his only authority to act for her was to sell her real estate and bring her the proceeds. Instead of being the seller of real estate in the enjoyment of the fruits of the sale, she was converted into a debtor with all the duties and obligations which that relation implies. We do not know of any doctrine in the law of principal and agent which will permit such a result to be accomplished in such a mode. The books abound with endless decisions which are in utter' hostility with such a transaction as a valid act.

Being a debtor, the plaintiff would be subject to an obligation to pay, not only the principal sum of $7,500, but also annual sums of interest. For failure in her payments she would become personally liable for the moneys due, and be subject to a general judgment which would be a lien upon all her real estate, and®upon which process of execution might issue and be levied upon her personal property. In point of fact, a warrant of attorney for the entering of judgment against her for the debt, was contained in the bond executed in her name by her attorney, under an authority which gave him only a bare light to sell her lands. It is not credible that the citizen can be held subject to such consequences, so entirely inconsistent, unexpected and hostile to his express intent, in an instrument of such a character. Whatever else may be said of such a paper, it must be conceded that, in its terms, and in its legal substance, it is a plain, simple letter of attorney establishing the relation of principal and agent between the parties to it. It must therefore be regarded as subject to the rules and requirements of that branch of the law in any event, and if these will not permit it to be used for an ulterior purpose such as is claimed in the present case, then it cannot be so used.

Regarded simply as a letter of attorney establishing an agency, the law concerning it is very clear. Thus in Devinney v. Reynolds; 1 W. & S. 328, Mr. Justice Rogers, delivering the opinion, said: “ An agent constituted for a particular purpose and under a limited power cannot bind his principal if he exceeds his power. A special power must be strictly pursued, and whoever deals with an agent constituted for a special purpose deals at his peril_when the agent passes the precise limits of his power.” This was said of a deed made by an attorney in fact who was authorized to convey a tract of land after he had redeemed it, and he conveyed it without redemption, and it was held the purchaser took no title.

In Story on Agency (ed. 1882), sec. 68, the author says: “ Indeed formal instruments of this sort (letters of attorney) are ordinarily subjected to a strict interpretation, and the authority is never extended beyond that which is given in terms or which is necessary and proper for carrying the authority so given into full effect. Thus a power of attorney to sell, assign and transfer stock will not include a power to pledge it for the agent’s own debt.” 1 Jones on Mortgages, sed 129. A mortgage executed under a power of attorney, authorizing an attorney to sell and convey only is void. Said Mr. Justice Cooley in Jeffrey v. Hursh, 49 Mich. 31: “ J. M. Hursh had power to sell-the land but not to mortgage it. The power is not to be extended by construction. The principal determines for himself what authority he will confer upon his agent, and there can be no implication from his authorizing a sale of his lands that he intends that his agent may at discretion charge him with the responsibilities and duties of a mortgage: Wood v. Goodridge, 6 Cush. 117; Albany Fire Ins. Co. v. Bay, 4 N. Y. 9; Ferry v. Laible, 31 N. J. Eq. 566; Kinney v, Matthews, 69 Mo. 520; Patepsco & Co. v. Morrison, 2 Woods, 395; Devaynes v. Robinson, 24 Beav. 86.”

Deputron v. Young, 134 U. S. 241. In the case of a naked power, not coupled with an interest, every prerequisite to the exercise of that power should precede it. A. power to make and execute deeds to convey real estate, as the same may be sold to purchasers in tracts by a third party, is a naked power to convey as sales may be made, and a deed made otherwise is a fraud upon the power.

Morris v. Watson, 15 Minn. 212. As a general rule a power to sell and convey real estate, does not confer a power to mortgage, and a mortgage executed under a power of attorney to-sell and convey is void. The court said: “ The power of attorney in this case by Mary C. Hargin to Charles S. Hargin is a power to sell and convey only; therefore the mortgage executed-by Charles S. Hargin to Moses Sherburn under this power of attorney is void.”

In the case of Wood v. Goodridge, 6 Cush. 117, a power of attorney authorized the attorney, in the name and for' the benefit of the principal, to buy and sell reai and personal property and to execute and deliver deeds, to transfer the same, to- move and institute all necessary suits for the recovery and collection of his demands. . . . Especially to carry on his saw-mill and buy and sell logs and lumber .... and in general to make such contracts for the profitable improvement and use of such property and other means as he possessed for the enlargement of his estate. The attorney made a mortgage and note for a sum of money, and the question of his power to make them arose and' was'decided. The court said: “Levi Goodridge, who made the mortgage and note, had no authority under his power of attorney from Benjamin Goodridge to do these acts, so that the mortgage and note are both invalid and without any legal effect. In accordance with the general and well-settled principles of law, the power of attorney to Levi must be so interpreted as not to extend the authority given to him beyond that which is given in terms, or which is necessary and proper for carrying the authority expressly given into full effect. Now the power of attorney in this case very clearly did not in terms give to Levi authority to mortgage the real estate of his principal; still less does it, in terms, give him the power to borrow money and to bind his principal by a promissory note. ... In the absence of all evidence that the money was in fact obtained for the principal or that it was • necessary for the execution of the authority given, there being no express authority to make a mortgage or negotiable note, there is an entire failure to show that Levi had any authority to make the note and mortgage, and the title of the plaintiff, being derived under that mortgage, wholly fails.”

It is not necessary to quote further authorities for a proposition so plain in its character and not opposed by any contrary decisions. As we have already said, the cases of Lancaster v. •Dolan and those that follow it, are not pertinent to the discussion because they depend upon different principles and upon facts which have no existence here. We are therefore brought to the consideration of the remaining question whether the appellant is entitled to subrogation to the 16,000 prior mortgage which was.paid off with the proceeds of the mortgage in suit.

Upon that subject it is to be observed that the payment of the prior mortgage was the act of a mere volunteer. The plaintiff was not consulted about it and had no knowledge of it. There was no privity of any kind between the plaintiff and the defendant, and the latter was under no compulsion to make the payment for the protection of its interests. The payment was doubtless made so as to make its mortgage a first instead of a second mortgage. But that consideration would give no right of subrogation to the holder of the second mortgage. It seems to us that the case of McCleary’s Appeal, 20 W. N. 547, covers every aspect of this. There the first mortgage was an undoubtedly valid lien upon tbe property for $925. The second mortgage was a forgery, and the holder, as here, desiring to have the first lien extinguished, paid $600 of the mortgage money, $1,400, to the agent of the owner of the.property, who, with $825 furnished by the owner, paid the $925 due on the first mortgage, had it satisfied, and surrendered the bond and the mortgage to the owner. When the forgery was discovered, the holder of the second .mortgage filed a bill praying a cancellation of the entry of satisfaction, and subrogation. Both the court below and this court held that this could not be done, and dismissed the bill upon the express ground that, although the first mortgage was an unquestioned lien, and the money, to the extent of $600, was paid by the holder of the second mortgage, he was a mere volunteer in making such payment and was not entitled to subrogation.

The same doctrine was enforced in the case of Webster'and Goldsmith’s Appeal, 86 Pa. 409, the syllabus of which is as follows, viz: While 'subrogation is founded on principles of equity and benevolence and may be. decreed where no contract exists, yet it will not be decreed in favor of a mere volunteer, who, without any duty, moral or otherwise, pays the 'debt of another. It will not arise in favor of a stranger, but only in favor of a party who, on some sort of compulsion, discharges a demand against a common debtor. There the maker of a promissory note for $700 gave a judgment for that amount to his indorser to protect him against liability on his indorsement. After-wards, at the maturity of the note, another person consented to indorse a new note to take up the first one upon the express assurance of the maker that the judgment should be assigned to the second indorser for his protection against liability for the same debt. The judgment was assigned shortly after to the second indorser, who was ultimately obliged to pay the note. The property of the maker being sold upon execution process, the holder of the assigned judgment claimed a share in the distribution of the proceeds as against -'udgments obtained subsequently to the assigned judgment. Priority in the distribution was allowed to the assigned judgment in the court below, but this court reversed the decree, holding that the second indorser was a mere volunteer, and that as the first judgment had served its purpose of protecting the first indorser, it could not be used to protect the second indorser although assigned to him for that purpose by the first indorser as a condition of the second indorsement. While we decided that if the judgment had been held by the bank which discounted the note, as a part of their security, subrogation would have been granted, even against intervening judgment creditors, we held also that it could not be granted-to one who came in as the indorser of a new note given to take up the first note, because he was a .stranger to the first contract, and was to be regarded as a mere volunteer. Woodward, J., said: “ While subrogation is founded on principles of equity and benevolence, and may be decreed where no contract exists, yet it will not be decreed in favor of a mere volunteer, who without any duty moral or otherwise pays the debt of another: Hoover v. Epler, 2 P. F. Smith, 522. It will not arise in favor of a stranger but only in favor of a party who, on some sort of compulsion, discharges a demand against a common debtor: Mosier’s Appeal, 6 P. F. Smith, 76. . . . There was no privity of interest, and no contract relation, between Bauer and Banker. Bauer could create no duty to himself by a volunteered intervention for Banker’s relief. He became Adam’s indorser without being under any legal or moral compulsion, and he had no existing interest, ascertained or contingent, to protect. He had no equity to entitle him to subrogation.”

So here the payment of the $6,000 due under the first mortgage was not made under any compulsion, or for the protection of any rights.or interests previously acquired. The defendant simply loaned the money, and, in order to remove a prior lien, paid it off without, the knowledge or consent of the plaintiff. If a right of subrogation is acquired in such a state of facts we see no reason why it may not exist in every case of officious payment of the debt of another. Yet it is perfectly clear under all the authorities that such payments do not give any right of subrogation to the debt discharged.

In -Beach on Modern Equity Jurisprudence, section 801, the writer says: “ But one who is only a volunteer cannot invoke the aid of subrogation, for such a person can establish no equity. He must have paid upon request or as surety, or under some compulsion made necessary by the adequate protection of his own right. In such a case instead of creating any right of subrogation, the payment operates as the absolute discharge of the debt so paid. Thus one who discharges an incumbrance upon property which he has no interest in having relieved, is not thereby subrogated to the rights of the holder of the incumbrance; and the loaning of money to discharge a lien does not subrogate the lender to the rights of the lien holdér.”

Sheldon in his work on Subrogation, sec. 240, says: “ The doctrine of subrogation is not applied for the mere stranger or vohrnteer who has paid the debt of another without any assignment or agreement for subrogation, being under no legal obligation to make the paj^ment and not being compelled to do so for the preservation of any lights or property of his own.”

There can be no question of the soundness of the foregoing propositions, and where the facts are such as to make them applicable, they are controlling. We think, for reasons already stated, they are directly applicable to the undoubted facts of the present case. It is not practicable, within the proper limits-of a judicial opinion, to engage in a critical review of the numerous decisions cited in the arguments of counsel on both sides. A great many of them furnish their own answer when, the facts which distinguish them are duly noted and considered. Others, which are apparently in point, are affected by the presence of exceptional circumstances which authorize the-introduction of different principles with a controlling effect-But a minute and patient attention to, and consideration of, the very able and exhaustive argument for the appellant has failed to convince us of any error in the treatment of the case by the learned master and the court below, and, substantially for the reasons stated by them, we think the decree should be affirmed.

Decree affirmed and appeal dismissed at' the cost of the appellants.