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FIRST DEPARTMENT, MARCH TERM, 1899.
ter's box in the same safe, to which box Weeks had the key. They were so placed there with nearly all of Morison's other securitiesboth trust and personal - which were also in Weeks' possession. The statement in the majority opinion that Morison had a desk in Weeks' office is directly opposed to the evidence. Morison had no desk there. Weeks so testified, and Morison said nothing to the contrary. Morison left almost everything with respect to the trust estate to Weeks. In March, 1885, he wrote to Madame von Linden as follows:
"If anything should happen to me by death or accident, you will find all your securities that have come into my hands in a tin box in safe at De Forest & Weeks' office, and key with F. H. Weeks. The tin box is marked with my name on it. I thought I would mention this in case anything should happen to me." And again, in November of the same year, "Mr. Weeks promised me he would write you and your husband in relation to my duties as trustee in the matters of paying back moneys advanced by your mother. I hope he has done so. I have invested all of your money in my hands except a balance of $2,000, which seems to be difficult to get a mortgage for so small amount, but Mr. Weeks thinks he will be able to get one."
Weeks testified without contradiction that Morison's papers as trustee were all practically under his control at all times during the trusteeship. Weeks even made out the accounts which Morison rendered Madame von Linden. Sometimes he sent them direct to her. At other times, he gave them to Morison to be so sent. He collected interest upon all the mortgages and deposited such interest in his own bank. As a general thing he waited until a considerable amount of interest had been thus collected before accounting therefor. He then drew his check, not for each specific sum, but for the aggregate of such collections. At times he gave this check to Morison; at other times he himself deposited it in Morison's bank, he having possession also of Morison's bank book. He made no written statements to Morison of his doings, and the latter was satisfied with what he at times" mentioned " to him "merely in conversation." Morison's own testimony is quite as suggestive as is Weeks' of his practical abandonment to Weeks of his trust functions. The following questions were put to Morison, and the folAPP. DIV.- VOL. XXXVIII. 39
FIRST DEPARTMENT, MARCH TERM, 1899.
[Vol. 38. lowing answers given: "Q. Well, did you pay any attention to these securities that were left there with Weeks as to whether or not interest was or was not paid on them? A. Well, I had to be guided a great deal by him, sir, in that respect. Q. You did not look them over periodically yourself to see whether the payments had been kept up or not? A. No, sir, not at stated periods; no, sir, I did not; in fact I left that entirely with him; he was a person that probably I could not get along with very well if I did that. Q. Well, do you remember noticing whether there were any indorsements of interest paid on this bond and mortgage during the time they were in Weeks' office there, either in the box or safe or any place else? A. No, sir, I couldn't say that I looked particularly for that; I couldn't say that now; I couldn't say positively whether I looked on them to see whether there were any indorsements of these payments or not. Q. Do you remember seeing that bond and mortgage? A. Well, it is a long time now, thirteen years, twelve or thirteen years; I knew of it as a Folsom mortgage; I might have seen it with the others; I never looked particularly at it, but I looked more to the memorandum. * * * Q. Did he at any interval or regular intervals make any statement to you as to the amount of interest he had collected on account of the securities that were left in his office by you as trustee so that you were posted at all as to whether or not the interest was being paid or was not? A. I think he did at times mention the fact that so and so paid; mentioned it merely in conversation; he did not make any written statements to me."
* * *
It is difficult to perceive why, upon all this evidence, a finding of actual authority to collect principal as well as interest would not have been justified. If the interest had not been paid, why could not Weeks, under these relations between himself and Morison, have foreclosed the mortgage and collected the principal? It is plain that the practical management of the securities and the obtaining therefrom of what was coming to the estate was left entirely to him. But, apart from that, there can in my judgment be no doub: of the apparent authority. Mr. Folsom knew that these securities were, and had been for years, in Weeks' hands. He knew, therefore, that it was no temporary or transient custody, and that it was not for the purpose of ordinary attorney's work. It was rather
FIRST DEPARTMENT, MARCH TERM, 1899.
apparently, as it was in fact, for the continuous duty of a family solicitor. He knew when he received Morison's receipt for interest that Mrs. Saalfield had transferred the securities to Morison as trustee. He knew too that they remained in Weeks' possession after that transfer precisely as they had before. What, then, did he not know? What was not "apparent?" This and this only. He was not directly informed that Weeks had, as between Mrs. Saalfield and Morison, negotiated the sale of the securities. That is absolutely the only point of distinction between this case and the cases in this State which have adopted the scriveners' rule. The reason of that rule has long since ceased to be a controlling factor in its application here. It has been adapted and applied to our local conditions, and as thus adapted and applied has become the settled law of this State. It is now independent of its scriveners' origin. The settled rule here is that the debtor, be he the original mortgagor or, as in the present case, a subsequent owner of the equity of redemption, is authorized to infer that the agent who negotiated either the original loan or the subsequent transfer of the securities is empowered to receive both principal and interest from his having possession, in the one case of the bond and mortgage, and in the other of the bond and mortgage plus the assignment thereof. (Wil liams v. Walker, 2 Sandf. Ch. 325; Hatfield v. Reynolds, 34 Barb. 612; Megary v. Funtis, 5 Sandf. 376; Merritt v. Cole, 9 Hun, 98; Wardrop v. Dunlop, 1 id. 325; Smith v. Kidd, 68 N. Y. 130; Crane v. Gruenewald, 120 id. 274.)
In not one of these cases was it held, or even intimated, that knowledge on the part of the debtor of the original negotiation of the securities by the attorney, or knowledge of his subsequent negotiation of the transfer thereof, was essential to warrant the inference of authority to receive the principal. It was held that such fact must exist, but not that the debtor must be aware of it. The apparent authority to receive the principal lies in the possession of the securities. That possession is, as was said by RAPALLO, J., in Smith v. v. Kidd (supra), "the indispensable evidence of his authority to collect the principal" (citing Curtis v. Drought, 1 Molloy, 487), and the fact of the negotiation of the securities by the agent affords no proof of such authority. In Whitlock v. Waltham (1 Salk. 157)—a case frequently referred to in our courts with approval - the rule was laid
FIRST DEPARTMENT, March TERM, 1899.
[Vol. 38. down that "if the scrivener be entrusted with the custody of the bond he may receive the interest, and though he fails, yet the mortgagee shall bear the loss. And that so it is also in such case if he receive the principal and deliver up the bond; for being entrusted with the security itself, it shall be presumed he is entrusted with a power over it and with a power to receive the principal and interest." The original or subsequent negotiation of the securities by the attorney plays no part in the apparent authority. That is simply the postulate upon which the apparent authority, evidenced by the possession, rests. Even in Doubleday v. Kress (50 N. Y. 410) the only reason why the possession of the note was held to be insufficient to authorize payment to the attorney was that it was unindorsed by the payee, and consequently the lack of authority was apparent upon its face. Williams v. Walker is precisely in point on this head. There the attorney took no part in the original transaction. He did not negotiate the loan from Isaac Halsey to Mrs. Walker. He came into the matter subsequently when Halsey assigned the bond and mortgage to the complainant, Miss Williams. He negotiated that transfer just as Weeks negotiated the transfer here. And in like manner he was intrusted with the securities, and he received the principal professedly for Mrs. Walker. Like Folsom here, Mrs. Walker was not informed of the fact that the attorney had made the investment for Miss Williams, or had thereupon attended to the execution of the assignment. The only notice she had of the assignment itself— just the notice which Folsom had when he took Morison's receipt for interest. But she found the securities in the attorney's possession, and it was held that, from that fact and that alone, she was authorized to infer that the attorney was empowered to receive the principal. This case has been repeatedly cited with commendation in the courts of this State. I have been unable to find, in any of the numerous cases wherein it has been cited, a single intimation of doubt as to its authority. The suggestion in the majority opinion, that that case was correctly decided because the attorney's possession of the securities was under a joint power which he possessed with one Pearsall, is now made for the first time. The effect of this suggestion is substantially to overturn the real doctrine upon which the case was decided. It is that doctrine, and not the general correctness of the decision, which has since received such universal
FIRST DEPARTMENT, MARCH TERM, 1899.
approval. The joint power of Pearsall and the attorney played no part in the decision. On the contrary, it was repudiated as a governing factor. This is the language of the learned Assistant ViceChancellor SANDFORD: "During her (Miss Williams') absence in Europe in 1836-7, he (Bancker, the attorney) and Mr. Pearsall were her general agents, by a written power of attorney, and no doubt were authorized to receive the principal, as well as interest, upon her securities. But this was a joint power which Bancker could not exercise alone. Aside from the joint authority to Pearsall and himself, it does not appear that he was at any time the general agent of the complainant. Nor is there any course of dealing shown between her and Bancker, in reference to her securities or investments, from which the court can infer, or Mrs. Walker was entitled to assume, that he was authorized to receive the principal sums which he or others had invested for her. The authority of Bancker (if there were any which can relieve Mrs. Walker from this cruel loss) must be derived from his capacity as solicitor for investing, and as agent for collecting the interest, and from the transactions in respect to this particular security." He then proceeds to discuss the inference deducible from the possession of the securities, and, upon an elaborate review of the cases, places his judgment solely upon the legal effect of their possession. In Hatfield v. Reynolds (34 Barb. 612) the same rule was stated with great clearness. Referring to Williams v. Walker, Judge EмOTT said: "The opinion of the assistant vice-chancellor contains a clear and full suminary of the cases, and they establish the proposition that when an agent, employed to take a bond or other security for money, is not intrusted afterwards with its possession, he is not authorized to receive payments upon it; and, contrariwise, if such agent is intrusted with the continued possessson of the bond or evidence of debt, authority for him to receive payment may be implied. So the rule is stated in the text books. (Paley on Agency, 274; Story on Agency, §§ 98, 104.) *
As the fact is dis
tinctly shown in this case that Purdy, after having been employed to make the loan, was intrusted with the possession of this bond and mortgage, and was permitted to receive payments upon it, and to indorse them for the plaintiff, until and at the time when the payments were made which extinguished the principal, we are of