The Fifth Congregational Church of Washington v. Bright

Mr. Justice Bobb

delivered the opinion of the Court:

The appellee now moves to dismiss the appeal of the church ■on tlie ground that it had no right to be heard unless through a supplemental bill. We think appellant was properly permitted to intervene, as the rights of the appellee were in no way prejudiced thereby; neither was there any unnecessary delay on the part of the church in filing its motion to intervene, since there was no necessity for intervention so long as its predecessor in title was willing to conduct the defense. The appellee had known for some time that the church was the real party in interest. The mere substitution of the real for the nominal party in interest, “subject to all equities and defenses which might exist against its grantor, the said El ward Parsons Seymour,” in no way prejudiced the appellee.

The motion to dismiss, therefore, will be denied.

We will next consider the motion to dismiss the special appeal.

It appears: First, that the interest of the intervener was acquired October 1, 1903.

Second, the suit was defended by counsel for Ohappel and Seymour, who were also assisted by counsel for intervener.

Third, after the purchase by the church, consent to intervene for the protection of its interests was requested of counsel for complainant, and denied.

Fourth, the court announced its opinion on May 18, 1905, in favor of appellee.

Fifth, on May 31, 1905, the petition for intervention was filed, and same granted July 13, 1905, before entry of final decree on that day.

Sixth, on the same day the intervener noted an appeal from the decree in open court, and bond was fixed.

Seventh, on August 4, 1905, the intervener asked leave to sever from its codefendants, who had declined to appeal, and on the same day the order was made.

The special appeal from the order requiring the intervener to pay costs was presented to this court and allowed May 4, 1906. This appeal now seems to have been unnecessary. It was granted, however, without much inquiry as to its necessity, because the main case was already in the court, and no possible injury could result from granting the special appeal. It further appears that the payment of costs was not made a condition, to the leave to intervene, although such an order was sought.

The intervener was before the court, and the order was made regarding the payment of costs, and is to be regarded as a part of the final decree entered on the same day. A mere decree for the payment of costs, especially in an equity cause, being a matter of discretion with the trial court, no appeal will lie therefrom, but, if an appeal be taken from a whole decree, the question of costs, as a part of that decree, will be talien notice of as incidentally connected therewith, when that is the question directly before the court. United States v. The Malek Adhel, 2 How. 210, 233, 11 L. ed. 239, 249; Canter v. American Ins. Co. 3 Pet. 307, 7 L. ed. 688; Du Bois v. Kirh, 168 U. S. 68, 67, 39 L. ed. 895, 15 Sup. Ct. Rep. 726; Tuohy v. Hanlon, 18 App. D. C. 225, 230. In 2 How. 237, 11 L. ed. 251, the court said: “The matter of costs is not per se the proper subject of an appeal, and it can be taken notice of only incidentally, as connected with the principal decree, when the correctness of the latter is directly before the court.”

The special appeal will therefore.be dismissed, with costs.

The first assignment of error which it is necessary to notice relates to the ruling that the note in suit is genuine. While the evidence, as we view it, is not at all convincing on this point, we will assume for the purposes of this opinion that this note is the identical note signed by Oella and Loring Chappel on January 7, 1898.

The third and fourth assignments of error may be considered together, as the third challenges the ruling that Ashford was the agent of Seymour, while the fourth specifies as error the failure of the court to rule that Ashford was the agent of Bright, the appellee.

We think the facts stated clearly indicate for whom Ashford was acting when he received payment on the note. Prior to its maturity Bright sent the note to Ashford, at whose office it was payable, with full authority to receive payment thereon, and, of course, to execute a release of the trust. Seymour, the equitable owner of the property covered by the trust, paid Ash-ford, in whose custody the note then was, $2,060, principal and interest due on the note at maturity. We think, clearly that Ashford was acting for Bright, and, therefore, his agent. No negligence can be attributed to Seymour, as he was careful to have a sufficient release of the trust executed and recorded. He also procured the cancelation of a $2,000 note, which Ashford undoubtedly represented to be the original and genuine note, and which must have looked like the original, because Mr. Ellis, Ashford, cotrustee, who was familiar with the signatures of the Chappels, after careful examination, believed it genuine and joined Ashford in the release.

It was suggested at bar that Seymour should have made his check payable to Bright, instead of Ashford. This objection is without merit, for the reason that Seymour would have been within his rights had he made a cash payment to Ashford. Indeed, Ashford might have declined to accept any but a cash payment.

Objection is also made that Seymour did not demand surrender of the note at the time of payment. The only evidence upon which to base this objection is the testimony that the $400 canceled note was found among Seymour’s papers after his death, but that the $2,000 canceled note was not. It is immaterial whether Seymour retained this note or destroyed it. The evidence certainly does not warrant the conclusion that it was left in Ashford’s possession. Neither is there any contention that the note in suit is the note marked “Paid and Canceled,” which was exhibited to Mr. Ellis by Ashford. Moreover, Mr. Bright, in selecting Ashford as his agent for the collection of this note, made the fraud possible, for it is apparent that Ash-ford used two notes, one of which must have been a forgery. To obtain the money from Seymour and to procure the signature of his cotrustee to the release, he marked one “Paid and Canceled,” and the other he sent his principal, Mr. Bright, marked “Extended.” Throughout the transaction, as above stated, he represented Mr. Bright as Mr. Bright’s agent, and, as this court said in Carusi v. Savary, 6 App. D. C. [at page] 344: “The question .in this case, as we understand it, is which of two innocent persons should be required to suffer the loss occasioned by the wrongful act of a third person; the one who, by his negligence or inadvertence, bas placed in it the power of such third person to perpetrate the wrong which otherwise would not have been perpetrated, or the one who, without any negligence on his own part, has been misled by the wrongdoer into a situation into which otherwise he would not have entered. And in the light of modern equity, of the overwhelming mass of modern judicial decision, and of what seems to us to be the dicate of natural jus-ice, that question, in our opinion, can admit of but one. answer.” Had Bright sent the note to a bank or trust company for collection or extension, notice would have been given Seymour prior to the maturity of the note, and Ashford would not have been in a position to perpetrate the fraud, for, had Seymour made payment to a bank or trust company, the money would have been promptly remitted, and Bright’s note would have been marked “Paid and Canceled,” instead of “Extended.”

As the note was payable at Ashford’s office, it was the duty of Seymour, in the absence of directions from. Bright to the contrary, to tender payment there, and, finding the note in Ash-ford’s possession, he had a right to assume that Ashford had authority to receive payment thereon.

In the case of Williams v. Walker, 2 Sandf. Ch. 325, the court said: “The authority is wholly unlike a general power or a general direction to pay to the agent. It rests entirely upon the fact of the possession of the bond. While that possession continued, the payments were justified, even if Mrs. Walker were ignorant of its continuance. Her safety required her on each occasion to look to the bond, the sole evidence then of this special authority; and to see that her payments Avere properly indorsed. If she chose to pay without this caution, it did not impair the validity of the payments, Avhile the special authority in fact continued.” Megary v. Funlis, 5 Sandf. 376; Caldwell v. Evans, 5 Bush, 380, 96 Am. Dec. 358.

In the case of Doubleday v. Kress, 60 Barb. 181, the plaintiff held a note of defendant for $800, and intrusted same to one Murray to present to defendant for payment, which note was not indorsed by plaintiff. Murray presented the note to defendant, and received payment in full of principal and interest, and then pretended to plaintiff that he had only receNod tiro interest, and afterwards absconded with the $800. The court sustained the payment made to Murray, and said: “It is well settled that a debtor is authorized to pay to an agent any sum which is due upon a security which has been intrusted to the agent, by the holder, for the purpose of collecting any part of it. As, where the agent has been authorized to receive the interest only, but receives the principal. In fact the authorities go to the extent of holding a payment valid, made to an agent who is merely intrusted with the possession of the security, without the express authority to receive or collect any part of it. The ostensible authority attributed to a party to whom is . intrusted an instrument to secure the payment of money is to . receive payment according to its terms. And large amounts are constantly paid to parties in possession of such securities, without any other evidence of authority than the bare possession of the security.” See also Stiger v. Bent, 111 Ill. 328.

In the case of Glatt v. Fortman, 120 Ind. 384, 22 N. E. 300, the court held that a bank was the payor’s agent when the payor made payment to the bank, the place designated for payment in the note, but based its decision on the fact that the security was not in possession of the bank at the time payment was made; and said that “the rule upon which the payor is bound to act is that the bank is not authorized to receive payment unless the note is lodged with it, for the designation of the place of payment does not bind the payee to present the note at that place,” —clearly indicating that, if the note had been lodged with the bank at the time of payment, the decision of the court would have been that the bank was the payee’s agent.

In the case of Ward v. Smith, 7 Wall. 447, 19 L. ed. 207, Ward executed three bonds which were designated payable at a certain bank. Smith deposited one bond with that bank for collection, and retained the other two. Ward made various payments to the bank on the three bonds, and the court held that the bank acted as the agent of the payee in receiving payment on the one bond which had been lodged with it for collection, and as the agent of the payor or obligor in receiving payments on the other two bonds. Justice Field, in delivering the opinion of the court, used the following language: "When the in-strvment is lodged with the bank for collection, the bank becomes the agent of the payee or obligee to receive payment. * * * In the case at bar only one bond was deposited with the Farmers' Bank. That institution, therefore, was only agent of the payee for its collection. It had no authority to receive payment of the other [two] bonds for him or on his account.”

Connecticut General L. Ins. Co. v. Eldredge, 102 U. S. 545, 26 L. ed. 245 (appeal from the supreme court of the District of Columbia), cited by appellee, in which the court refused to set aside a deed of release, upon examination will be found not to bear out appellee’s contention that the deed of release in suit should be set aside. The facts in that case are very different from those in the case at bar, but in both cases the wrongdoer was the agent of the party seeking to set aside the release. The insurance company through its Washington agent, one Bigelow, placed a loan of $32,000, secured by deed of trust on certain property in the District, and left with Bigelow the investigation of the title of the security. Bigelow, knowing that his company would take only a first deed of trust on the property, and being aware there was a prior deed of trust on the property, and that the prior trustee had executed a release without the notes secured by the trust being paid, nevertheless placed the loan for his company. Suit was brought by the company to set aside this deed of release as a fraud on its rights. The court refused to set aside the release, and said: “Where a purchaser (and a mortgagee or trustee of a trust deed stands in the same position), at the time of taking a deed, has information that a prior mortgagee or trustee of a prior deed has released the property from the mortgage or trust, without payment of the notes or their surrender, or express authority from the holder of them, he will take the property subject to any equitable right of the holder of the notes to secure the payment of which the mortgage or trust deed was executed. * * * The company, as already stated, must be deemed to have known of the want of power in the trustee to release the property from the Coburn deed. In the case just cited there was no contention that the notes were paid, but in the case at bar payment was made on the notes, making a stronger reason for the court’s refusal in the case at bar than in the cited case. Moreover, the knowledge on the part of the agent of the fraudulent release, and his act in procuring same, were held to be knowledge and action of his principal, and hence binding upon the company.

The present case differs from the cases cited, in that it is not contended that Ashford was not fully authorized to receive payment of the note from Seymour; the contention being that in accepting payment he was Seymour’s agent, and not Bright’s, and that therefore Seymour was responsible for the failure to remit to Bright the amount collected. We think this contention is not only disproved by the record, but that it fully and conclusively appears that Ashford was the agent of Bright when he received payment from Seymour, and that, no negligence being attributable to Seymour, his payment to Ashford absolved him from further liability under the note.

It follows that the release of the trust executed by Ashford and Ellis must be sustained.

It is our opinion that the decree of the court below should be reversed, including the order requiring the payment of costs, and that the cause be remanded, with directions to enter a decree in conformity with this opinion, and it is so ordered.

Reversed.