#### Weigell, Respondent, vs. Gregg and husband, Appellants.

*October 7*

October *26, 1915.*

*Appeal: Review: Conclusiveness of findings: Mortgages: Implied agency to receive payments: Possession of securities: Trust companies: Tender: Payment into court: Foreclosure: Solicitor’s fee.*

1. A finding by tbe trial court which, though nominally a finding of fact, is in the nature of a legal conclusion from undisputed evidence has not the same conclusiveness on appeal as a finding resting upon probative disputed facts, but may be disregarded almost as readily as a pure error of law.

*2.*A note and mortgage given by defendant to a trust company, payable to it at its offices, were sold and delivered to plaintiff. Defendant paid the interest to the trust company for five years. Then, by written agreement between defendant and the trust company as agent for the owner (whose identity was not disclosed) , the time for payment was extended, defendant agreeing therein to pay the principal and interest to the trust company as agent. Plaintiff consented to this agreement. Afterwards defendant paid interest and also, before it was due, a part of the principal to the trust company. *Held,*that plaintiff had given the trust company apparent authority to receive such payments and was bound thereby.

3. The mere fact that an agent has not possession of notes or securities at the time of payment is not conclusive that he has no authority to receive such payment.

4. In view of the broad statutory powers of trust companies and the universal custom of dealing with them as principals, though known to be agents or trustees, their authority to act need not be established by the same strict rules that obtain in case of individuals.

5. As against persons who in good faith and without negligence have relied upon the authority of a trust company to act in a business matter of which, to the knowledge of its principal, it has assumed full charge, such principal must* be held bound by acts of the company which, though in excess of its express authority, are not unusual and are fairly germane to the subject matter intrusted to it.

<5. Refusal of the holder to receive the amount due on a note because he claimed a larger sum, did not waive the tender or make it unnecessary to keep the tender good by payment into court as provided in Circuit Court Rule XV.

*4147. An allowance, without evidence, of $200 as solicitor’s' fee on foreclosure of a mortgage for $4,500 on which the balance due was. about $1,550, is reduced to $50.

Apteal from a judgment of tbe circuit court for Milwaukee county: LawbeNCe W. Halsey, Circuit Judge.

*Reversed.*

Action to foreclose a mortgage for $4,500. Defense, payment of $8,000 and tender of balance. The circuit court found against the defendants and entered judgment for the face of the mortgage with interest, costs, and $200 solicitor’s fee. Erom such judgment defendants appealed.

*Adolph FLuebschmann,*for the appellants.

*Charles F.*Wild, for the respondent.

Vinje, J.

December 10, 1903, the defendant *Margaret Anna Gregg*executed and delivered to the Citizens Trust. Company her note for $4,500 payable in five years and secured by a mortgage on real estate executed by her and her husband, *Walter F. Gregg.*On December 10, 1908, the time of. payment of the note was extended five years by an agreement in writing entered into by the Citizens Trust Company as agent for the owner of the note and mortgage as party of the first part and *Margaret Anna Gregg*and *Walter F. Gregg*as parties of the second part. In this extension agreement the defendants agreed to pay the Citizens Trust Company as agent the sum of $4,500 in five years, together with interest at the rate of five per cent.' per annum payable semi-annually. This agreement was signed, sealed, witnessed, and acknowledged by the respective parties and was accompanied by eleven semi-annual interest coupons signed by both defendants. The defendants negotiated the loan through one H. J. Mabbett and paid their semi-annual interest to the Citizens Trust Company through him. On August 24, 1909, they paid directly to the Citizens Trust Company $1,000 of principal and it released a portion of *415the mortgaged premises. On October 2, 1909, they paid a further sum of $2,000 directly to the Citizens Trust Company and took a receipt for the payment. On January 11, 1904, the plaintiff bought the note and mortgage from the Citizens 'Trust Company and both were delivered to him and have remained in his possession since. He also bought from time to time a number of other notes and mortgages from it, of which he took and retained possession. The Trust Company collected interest on the notes sold to him and in some cases the principal also, and it would either turn over the cash to him or other securities approved by him in lieu of -cash. The Trust Company looked after taxes and the insurance on mortgaged premises and executed releases of mortgages when paid in full. The Trust Company did not notify plaintiff of the payment of the $1,000 and $2,000 principal paid in 1909, and he did not perhaps learn definitely of such payments till September 4, 1913. He then ■demanded cash or approved securities from it, but received neither. He tried at various times between then and October 2, 1913, when the Trust Company closed its doors and was taken charge of by the commissioner of banking of this state, to get a settlement with it, but without success. On October 7, 1913, he notified the defendants not to make any payments to the Trust Company, and that was the first time the defendants or either of them knew who owned their note and mortgage. The extension agreement was sent to plaintiff and he consented to it, but whether such consent was given before or after its execution does not clearly appear; and he says he is unable to say whether or not he knew by the terms of the agreement that the Trust Company had authority to collect principal and interest. All other notes and mortgages bought by him from the Trust Company as well as the ones in suit were made payable to the Trust Company at its office.

The trial court found that the Citizens Trust Company *416had no authority from the plaintiff to receive the partial payments of $1,000 and $2,000, and, since he did not receive the same or any part thereof, defendants are entitled to no credit therefor as against him. This finding rests upon conclusions drawn from the almost undisputed evidence as to the transactions between the several parties rather than upon any conflict in the testimony. It therefore does not carry with it the same conclusiveness as a finding resting only upon probative disputed facts. It is rather in the nature of a legal conclusion drawn from undisputed evidence, which, if not in accordance with the view of this court, can be disregarded almost as readily as a pure error of law on the part of the trial court. This is said not by the way of criticism of the finding made or of its form, but as a reason why this court feels free to disregard it though nominally a finding of fact.

Treating the Trust Company as having no greater general powers than an individual agent, as the trial court evidently did, he came to the conclusion that it had neither express nor implied authority to receive a part of the principal before due. The cases of *Bartel v. Brown,*104 Wis. 493, 80 N. W. 801; *Kohl v. Beach,*107 Wis. 409, 83 N. W. 657; *Loizeaux v. Fremder,*123 Wis. 193, 101 N. W. 423; and *Bautz v. Adams,*131 Wis. 152, 111 N. W. 69, tend to support such conclusion, though it is deemed that the undisputed facts bring the case within the doctrine of implied authority even if the agent were an individual instead of a trust company. *McDermott v. Jackson,*97 Wis. 64, 72 N. W. 375; *Freeman v. Dells P. & P. Co.*150 Wis. 93, 135 N. W. 540. In *McDermott v. Jackson*the rule is thus stated:

> “If a principal so conducts his business, either through negligence or otherwise, as to lead the public to believe that his agent possesses authority to contract in the name of the principal, such principal is bound by the acts of such agent, within the scope of his apparent authority, in so contracting with any person who, upon the faith of such holding out, be*417lieves, and bas reasonable ground to believe, tbat tbe agent bas snob authority, and in good faitb deals with, him, even though such agent have express secret instructions to the contrary. If the principal, by his conduct, imparts to his agent a particular character, he is legally responsible to innocent third persons for all responsibilities which would be incident to such character if it existed by express authority, and without regard to any secret instructions.” Pages 72, 73.

In the present case the principal, through the extension agreement, imparted to the Trust Company the apparent power to deal with the whole subject matter of the loan by making it payable to the Trust Company at its office and by failing to disclose his identity, thus making it impossible for the defendants to know who was the owner of the securities. Only a partial payment of principal was made, and there was no special occasion for the production of the note and mortgage, or a demand for them, as in case of a payment in full. There is nothing in the evidence to show that the defendants did not have a right to assume that the Trust Company at all times held possession of the note and mortgage. When paid in full, a failure to demand and receive them is deemed in law negligence on the part of the payor unless excused by special circumstances. *Spence v. Pieper,*107 Wis. 453, 83 N. W. 660. But a want of possession of securities .does not determine the question of authority. In 2 Corp. Jur. 625, the rule is thus stated:

> “The mere fact that the agent has not possession. of the notes or securities at the time of payment is not conclusive that he has no authority to collect the same, but is only a circumstance, to be considered in determining the question; and the facts and circumstances may be such that, notwithstanding the agent has not such possession, he has actual authority, expressed or implied, to make the collection.”

A large number of authorities are cited to sustain the rule stated.

In *Central T. Co. v. Folsom,*167 N. Y. 285, 60 N. E. *418599, it is said, quoting from *Doubleday v.*Kress, 50 N. Y. 410:

> “The reason of the rule that one who has made the loan as agent and taken the security is authorized to receive payment when he retains possession of the security is founded upon human experience that the payor knows that the agent has keen trusted by the payee about the same business, and he is thus given a credit with the payor.”

In *Cheshire Prov. Inst. v. Vandergrift*(Neb.) 95 N. W. 615, it appeared that an undisclosed principal directed his agent to make a loan and to take a note and coupons evidencing the loan and the mortgage securing the same in the name of the agent and that he permitted the agent to collect the interest. It was held that such facts tended strongly to show authority on the part of the agent to receive and receipt for the payment of the note and to enter a satisfaction of the mortgage.

But in determining the question of the powers of an agent trust companies do not stand on a parity with individuals. They are by law (secs. *2024*— 77i *et seq.*Stats. 1913) authorized to act “as agent or attorney for the transaction of business, the management of estates, the collection of rents, interests, dividends, mortgages, bonds, bills, notes, and other securities or moneys” (sub. (I), sec. *2024*— Hie), and under such authority it has become customary in the business world to do just what the plaintiff did in this case — leave it to the Trust Company to collect principal and interest on loans purchased from it, reinvest the moneys collected subject to his right to approve the security, look after the payment of taxes and insurance on mortgaged premises, and execute releases of mortgages when paid.

In the instant case the loan was negotiated by the Trust Company and made payable to it and at its office; interest was paid to it semi-annually for five years, and then it made an extension agreement with the defendants, signed and ac*419knowledged by it. Tbe principal and interest were made payable to it and at its place of business. True, tbe extension agreement informed'tbe defendants tbat tbe Trust Company was acting for an undisclosed principal. But sucb principal, tbey knew, directed tbem to deal with tbe Trust Company by keeping bimself undisclosed. They were compelled to deal with tbe Trust Company as long as neither tbe principal nor it saw fit to inform tbem wbo in fact was tbe owner of tbe note and mortgage. Tbe custom of dealing with trust companies on tbe assumption tbat tbey possess plenary authority to do the things tbey bold themselves out as having authority to do, is so general tbat incalculable hardships would ensue if their authority to act bad to be established by tbe same strict rules tbat obtain in tbe case of an individual acting as an agent. Where to tbe knowledge of a principal tbey assume full charge of a business matter be must be held to have constituted tbem bis agent for tbat purpose, even though tbey may exceed express authority, so long as their action is fairly germane to tbe subject matter intrusted to their bands. Tbe principal cannot be beard to say, as against those wbo have in good faith and without negligence relied upon their authority to act, tbat be did not expressly empower tbem to do an act which relates to and is a customary transaction in tbe matter intrusted to tbem. Owing to tbe broad statutory authority given tbem to act as agents for others, and tbe universal custom of tbe public of dealing with tbem as with a principal, though known to be agents or trustees, tbey must be held to have authority to act where tbey assume to do so, and where their action is not an unusual one and is germane to tbe subject matter intrusted to tbem, and parties in good faith, and without negligence, believe tbat tbey possess tbe authority necessary to bind their principal.

Tested by these principles tbe case at bar is one where tbe plaintiff is bound by tbe acts of its agent, tbe Trust Com*420pany, in receiving part of tbe principal before it became due and in releasing a portion of tbe mortgaged premises. Payment to it was payment to plaintiff. Tbe trial court, therefore, erred in refusing a credit to tbe defendants of $3,000 on tbe note.

On December 10, 1913, tbe defendants tendered plaintiff tbe sum of $1,546.16, the amount then due on tbe note. He refused to receive it, claiming $3,000 more with interest was due. Tbe defendants failed to pay tbe amount into court as required by Circuit Court Rule XV, and tbe court properly found that their tender was not kept good. Tbe cases of *Kreutzer v. Lynch,*122 Wis. 474, 100 N. W. 887, and *Inglis v. Fohey,*136 Wis. 28, 116 N. W. 857, relied upon by defendants to tbe effect that plaintiff waived tbe tender by refusing to accept tbe money, do not apply to a case like tbe one at bar where tbe dispute is as to tbe amount due. Tbe cases mentioned are where tbe party to whom tbe tender was made repudiated *in toto*tbe contract relied upon by tbe party making tbe tender. Tbe mortgage provides for a customary and reasonable sum of money as solicitor’s fee. Tbe court found, without any evidence so far as we can discover from tbe record, that $200 was a reasonable and customary fee. This amount should be reduced to $50.

*By the Oourt.*— Judgment reversed. Tbe trial court is directed to enter judgment of foreclosure against tbe premises not released from tbe lien of tbe mortgage in favor of plaintiff for tbe sum of $1,546.16, with interest thereon from December 10, 1913, at six per cent., $50 solicitor’s fee, and tbe costs of tbe action. Judgment for a deficiency, if any, to be entered against both defendants; Tbe defendants are entitled to their costs upon this appeal.