Morgan v. Tener

Mr. Justice Sharswood

delivered the opinion of the court, January 29th 1877.

Had the defendants been merely forwarders of the notes for collection, as the learned judge below thought, the nonsuit might be sustained. Their duty would then have been performed when they had transmitted them to Bussum, their correspondent. Bus-sum would have been the attorney of the plaintiffs, and they would have been bound to make inquiry and inform themselves of the state of the proceedings on the claim in his hands. We are of opinion, however, that this was not the true construction of the contract as evidenced by the receipt. Its terms are, “to be forwarded by us for collection by suit or otherwise, at our discretion.” The defendants were to have the control and direction of the attorney to whom the notes should be forwarded. The proceeding was to be by suit or otherwise at their discretion. In the margin of the receipt, after the names and address of the defendants, is the advertisement,“ Collections made in all parts of the United States and Canada.” They recognised that the notes were still in their hands for collection after they had been forwarded by their return to the plaintiffs or their agents, the firm which had succeeded them in business. It is headed, “Annual statement of claims in hands of Tener and .Davis, belonging to Charles E. Morgan & Co.,” in which is comprehended the claim against Nuttle, marked as “M.- and S.’s claim,” to show that it belonged to the plaintiffs. The defendants were attorneys to collect, though of necessity it had to be by forwarding to another for collection. The receipt only expressed what was necessarily implied from the nature of the business. That an attorney employed to collect a claim who places it in the hands of another is liable in the absence of an express stipulation to the contrary on the receipt of it, for misconduct by such other, is assumed as undoubted law in Krause v. Dorrance, 10 Barr 462, and is shown to be applicable to collecting agencies, where the necessity of employing attorneys at a distance is apparent, in the well-considered judgment of this court in Bradstreet v. Everson, 22 P. F. Smith 133.

The defendants then being liable on the receipt of the money by Russum, and his unauthorized satisfaction of the judgment, when did the Statute of Limitations commence to run against the plaintiffs ? This question was fully considered in Rhines v. Evans, 16 P. F. Smith 195, and the law clearly and concisely stated as deduced from an examination of all the authorities by the'present chief justice of this court. “ The right of action accrues and- the statute begins to run from the time of the attorney’s receipt of the money, even though he gives no notice of its collection, the law deeming it gross negligence on the- part of the ci’editor to neglect to make inquiry for six years, unless the attorney has been guilty of concealment or some act to put his client off his guard.” It was in evidence in this case that the clients had made frequent inquiries of the defendants as to their claim, and were informed both verbally and in writing, that it had been prosecuted to judgment and was “uncollectible.” This certainly was well calculated to put the plaintiffs off their guard. If, as we have seen, the defendants were liable when Russum satisfied the judgment for his misconduct or fraud, it is not material whether they made this answer to the plaintiffs innocently and in good faith or otherwise. It was sufficient to put them off their guard, and is therefore a good defence on their part to the plea of the statute, which began to run against them only from the time of their discovery of the fraud.

Judgment reversed, and procedendo awarded.