#### HINRICKS v. BRADY.

Where the record of a mortgage described the notes to secure which the mortgage was given, and specified the rate of interest which they ordinarily drew, a purchaser of the mortgaged premises was bound by a provision of the notes that they should draw increased interest after maturity, and that overdue interest payments should also draw increased interest, though this provision was not mentioned in the record.

A real estate broker contracted for his principal to purchase land for a certain amount and assume the incumbrances as part of the consideration. The record of a mortgage on the land, while showing the rate of interest ordinarily borne by the notes secured by the mortgage, ' did not show that past-due notes and installments of interest bore- an ■increased rate of interest. -The broker did not ascertain this fact, and overpaid the vendor in consequence. Held, that the broker was guilty of negligence, rendering him liable for the ovérpayment.

*600A real estate broker in behalf of his principal made a contract to purchase land and assume all liens thereon as part of the consideration, but failed to learn of certain unpaid taxes, and so overpaid the vendor. In an action by the principal against the broker to recover such ovei’-payment it was shown that the land had been sold for these taxes and redeemed by the plaintiff, but the certificates of redemption mislaid. Held, that as the taxes were prima facie legal, and their validity not disputed by the vendor, plaintiff’s failure to .prove by the records relating to the assessment that the taxes had been legally assessed did not prevent a recovery.

(Opinion filed, July 11, 1906.)

Appeal from Circuit Court, Brule County. Hon. Frank B. Smith, Judge.

Action by H. W. Hinricks against Thomas Brady. From a judgment for plaintiff, defendant appeals.

Affirmed.

*Joe*Kirby, for appellant. *James Brown,*for respondent.

CORSON, J.

This is an appeal 'from a judgment entered upon a directed verdict and an order denying a new trial. The action was instituted by the plaintiff to recover of the defendant the sum of $807.90 for damages alleged to have been sustained by him by the negligence of the defendant while acting as his broker in the exchange of a tract of land owned by the plaintiff in Brule county for a tract of land owned by one La Bean in Lincoln county. It appears from the complaint that the plaintiff was the owner of a half section of land in Brule county valued, free from incum-brances, at $6,400, which was exchanged by the plaintiff, through-the defendant as his broker, to Flora La Bean for a tract of land in Lincoln county valued at $16,000, free' from incumbrances, but upon which there was at the time a certain mortgage for $6,850 "and certain taxes unpaid. This mortgage was recorded, and in the record and the mortgage itself it is specified that the same bore interest at the rate of 6 per cent, per annum, which mortgage and taxes plaintiff assumed as a part of the purchase price of the said Lincoln county property. It is further alleged that by reason of the negligence of the defendant, as such broker, in not ascertaining the fact that the note secured by the inorgage drew interest at the rate of 12 per cent.' after due, and that the unpaid interest thereon was to draw interest at the rate of 12 per cent, after due, the plain*601tiff has been compelled to pay, in order to release said mortgage and satisfy said taxes, the sum of $807.90 over and above the amount paid by him at the time of closing up such transaction, and in addition to the amount then paid under the computation made of the amount actually due at that time by the defendant. The defendant in his answer admitted that he assisted in the exchange of the properties described in the complaint, that the plaintiff was the ■owner of the Brule county land; and that La Bean was the owner of the Lincoln county land described in the complaint, but denied all the other allegations of the same. ' The facts, substantially as alleged in the complaint, were proven on the trial by uncontradicted evidence, and the defendant at the conclusion of the evidence moved for the direction of a verdict in his favor, which was denied, and thereupon the plaintiff moved for the direction of a verdict in his favor.- The motion of the plaintiff was granted. It appears from the evidence that the defendant was a banker in Worthing, Lincoln county, and was also engaged in the real estate business; that while acting as the agent of the plaintiff at his own request he negotiated an exchange of the plainiff’s property for the Lincoln ■county property, and the plaintiff, relying upon the said defendant and at the request of the said defendant, in addition to assuming the mortgage and taxes before mentioned, and the transfer of the Brule county land, forwarded to the defendant a draft for $1,700, which defendant paid over to the owner of the Lincoln county land, he assuming that the interest on the' note and mortgage given on the Lincoln county property was for only 6 per cent., as appeared by the record thereof, while by the note itself the maker bad stipulated to pay, as before stated, 12 per cent, interest on the principal, and 12 per cent, on the interest after due, and as the note had been a long time past due, as well as certain interest thereon, there was in fact due upon the note at the time the amount of about $660, that plaintiff was subsequently compelled to pay.

It is contended by the appellant 'that he had a right to rely •upon the statement as to the interest the note bore, made in the mortgage and the record thereof, and that the plaintiff was not bound to pay any sum in excess of the 'amount thus shown' to’ be ■due, and if he paid the same it was a voluntary payment on his *602part .for .which the. defendant was not liable, and that in any event there was no .negligence on his part in relying upon the record. It is contended by the respondent that under his agreement to assume the indebtedness of the mortgagor he was bound to pay whatever, sum was.at the time actually due upon the note by its terms not. inconsistent with the record, and that it was the duty of the defendant as his agent to have ascertained the true amount due upon the note at the time the transaction was closed, and, having failed so to. do, he was guilty of negligence in the management of the-business of such agent, and liable for the amount the plaintiff was compelled to pay in order to discharge the mortgage and taxes. We are inclined to take the view that the plaintiff is right in his-contention, and that, the .facts being practically undisputed, the court properly directed a verdict in favor of the plaintiff. It will be observed that there is no question as to the amount specified in the. note, and that so far as the record stated the interest it was stated correctly, as the note before maturity was drawn to bear *&•*per cent, interest only, and in our opinion it was not necessary that the *mortgage*as recorded should specify that the notes after due and the accrued interest should thereafter draw interest at the rate of 12 per cent, per annum in order to entitle the mortgagee to recover the same as against, the subsequent purchaser or incum-brancer. The note having been properly described, and its ordinary rate, of .interest and time of payment specified, the note was. fully identified, and the sources of. information for ascertaining the-amount due upon the note were clearly contained in the record. It. was the duty, of the agent, therefore, who has assumed to act as the broker of the plaintiff in the transaction for a consideration of' $640 ,as appears by the evidence, to have ascertained from the proper parties the amount actually due upon the note by the terms-thereof before closing the transaction for the exchange of the properties.

The question here presented was so fully and ably discussed' by the Supreme Court of California, in Ricketson v. Richardson et al., 19 Cal. 330, that we feel justified in quoting quite largely .from that opinion: “It is true the mortgage does.,not describe,, or .profess to., describe with exactnéss,. debts secured, by it.. It.de*603scribes-the notes, except as to the rate .of interest,, and provides, that, on default of payment of the sums mentioned, with-interest at their maturity, t-heja, the mortgagee may sell the mortgaged premises.. It is not necessary that literal exactness should be used .in describing the indebtedness in a mortgage security,, if the description be1 correct as far as it-goes, and if enough -be said-to direct-the attention of-the parties dealing with the-property-to sources of .correct and- full information, provided that these persons be not deceived, or subject to be misled, by -the language used. It is true it had been held, in some eases that where a note is described in a mortgage, as it is made or recorded, as a noté for a given sum, the mortgagee cannot set up, as against a subsequent purchaser or mortgagee, a different and larger debt, for -the plain reason that a party dealing with or in respect to the property from an inspection of the mortgage, contracts in reference to- its terms, and cannot be-supposed to know or suspect that the real fact is different from the recorded account of it. But the question here is wholly different. Here the mortgage not only asserts that the debts recited in it bear-interest, birt, at least inferentially, 'that they bear a conventional rate of interest; for the mortgage provides for the payment of the-interest accruing at the time of the maturity of the debts, and there would be no interest’ due then by the mere force of the law, unless it had been expressly agreed that the notes should bear interest before they were due. Now, there is no intendment, .under •such laws as ours,-that,-when interest is-the subject of stipulation,, any particular rate is agreed on. If there were any such presumption, . probably the inference would be that the interest so agreed on was the usual rate prevailing at the place of contract. When ‘it was se.en that the notes were to bear, and did bear, interest, and that the property was pledged for the principal and that interest, and the names of the payees, the dates, etc., were given, it btame-the duty of a subsequent incumbrancer to inquire into the facts’and ascertain them. A mortgage may- be given to- secure future advances, and of course, the amount cannot be inserted'in the mortgage; and yet all' such mortgages would be invalid'.according to--the argument which would maintain the invalidity 'of this, viz., that -the exact amount of the' indebtedness was not shown upon the *604face of the paper itself. So if a mortgage were made as indemnity .against contingent liabilities.”

A similar view seems to have been taken by the Supreme Court of Iowa in the case of Fetes v. O’Laughlin, 62 Iowa, 532, 17 N. W. 764, in which that court, in discussing the subject, says: “The ■defect in the mortgage consists in the omission, through mistake, probably, to state the amount of the promissory note secured by the conveyance. If such omission does not affect the validity of the instrument, the fact that it occurred through mistake cannot, of course, defeat the instrument. A mortgage given as security for the payment of money operates to secure the debt contemplated by the parties, and will remain valid as long as the debt remains unpaid. This is so, even if there be changes in the note given by the ■debtor to the creditor, by the cancellation of the note first given and the execution of a new one. So the mortgage will secure the Increase of the debt by interest. As long as the debt remains unpaid the mortgage is valid. The amount of the debt need not, therefore, be shown upon the face of the mortgage, if reference- be made to other evidence thereof, from which the true amount of the ■debt maj'' be determined. Were the rule otherwise, the increase of ■debt by interest, or its diminution by payments, would affect the validity of the instrument. The true amount of the debt secured ■cannot always be discovered from the mortgage, however accurately the note may be described therein. But, if there be such a.reference to the note and the party executing it as will direct inquiry which will lead to the discovery of the ¿mount of the debt, the mortgage is regarded as valid. It is a familiar rule of the law that all instruments referred to in deeds and contracts, with. sufficient ■explicitness to identify them, are to be regarded as so far constituting a part of such deeds and contracts as to be read with them, in order to determine their terms and conditions. In the case before us the note secured by the mortgage is referred to by its date, the name of the maker, the day of its maturity, the rate of interest provided for, and the time it becomes payable. ' Surely this reference is sufficient to-identify'the note and authorize it to be read hi order to determine the terms of the mortgage. The record of- the mortgage imparted notice'to defendant that the'amount of the noté' *605was to be determined by that instrument itself, to which reference was made. These conclusions are supported by the following cases: Kellogg v. Frazier, 40 Iowa, 502; Clark v. Hyman, 55 Iowa, 14, 7 N. W. 386; Bourne v. Littlefield, 29 Me. 302; Ricketson v. Richardson, 19 Cal. 330; Gill v. Pinney’s Adm’r, 12 Ohio St. 38; Tousley v. Tousley, 5 Ohio St. 78; Hurd v. Robinson, 11 Ohio St. 232; Babcock v. Lisk, 57 Ill. 327; Booth v. Barnum, 9 Conn. 286, 23 Am. Dec. 339; Stoughton v. Pasco, 5 Conn. 442, 13 Am. Dec. 72. See, also, Michigan Ins. Co. v. Brown, 11 Mich. 266, and Webb v. Stone, 24 N. H. 282.”

The views expressed by these courts' meet with our approval, and are supported, in our opinion, by the great weight of airthority, although counsel for appellant has called our attention to a few decisions holding the contrary view. It is further contended by the appellant that there was no negligence or carelessness on the part of the defendant in omitting to ascertain and deduct from the sum of $1,700 so forwarded to him by the plaintiff at his request the amount of taxes, which was a lien on the property, and the said excess of interest; but this contention on the part 'of the appellant is clearly untenable. The appellant having assumed to transact the business as the agent of the plaintiff, and the plaintiff having relied on- him to ascerain the actual amount of the liens against the La Bean property, .it was his duty to ascerain the amount of such liens and to pay over to Mrs. La Bean only the actual amount coming to her, afer deducting such liens and incumbrances; and as we have seen he was not authorized, to rely solely upon the statement of the amount due on the mortgage, contained in the recorded mortgage, but he was required as such agent to ascertain the amount due from the interested parties, and, failing to do this, he was guilty of negligence and carelessness in conducting the business as such agent. In discussing the liability of an agent tó his principal, Mr. Mechem, in his work on Agency (section 490), says: “It is the duty of every agent to bring to the performance of his undertaking, and to exercise in such performance, that degree of skill, care, and diligence which the nature of the undertaking, and the time, place, and circumstances of the performance justly and reasonably demand. A failure to do this, whereby the principal *606stiff éi's loss’ Or injury,' constitutes 'negligence for which the agent is" responsible.” ' '

It is further contended'by the appellant that there was no’proof that' the’ taxes claimed to be due on the property and paid by the plaintiff were legally assessed, but this contention is clearly ’ untenable. It clearly ’'appeared from-the evidence of the plaintiff that the prope’ry had been'sold for'taxes, and that in order to ’redeem the same ’he whs compelled to pay the sum' of about $141 to' redeem the same, thou'gh’the certificate of redemption had been ’lost or mislaid by the plaintiff and he was unable to produce the same .at the trial. The appellant in one’ of his letters tó the plaintiff relating 'to the transaction, stated that there was about $86 díte 'fór taxes, and it is 'clear, therefore, that he knew' of the 'existence Of the lien of the taxes prior to the closing up of the transaction ; but, notwithstanding this knowledge, lie paid over the full-, amount'of the ¡pi,70b to- Mrs: L,a Bean without deducting'any sum therefrom for "the taxes then'due upon the property. The contention that the plaintiff failed' to .prove by coriipetent evidence that the taxes liád been legally assessed, by producing the records relating to the assessment,-is dearly untenable. The'taxes were prima facie'legal and a lien upon' the property,' and so far as the record discloses wéré not questioned by Mrs. Le Bean. The plaintiff, under his .agreement, had assumed to páy all liens upon the property,1 and'deduce the amount so paid from' the amount coming to Mrs. La’ Béán. No evidence was offered on the part of the appellant justifying- or •excusing li'is failure to deduct 'from the amount due Mrs. L& Béan the'amount Of táxes and excess of interest which the plaintiff has been compelled to pay. The court, therefore, was clearly 'right' in directing a verdict for the plaintiff for the extra amount of the payments he was required to make in order to free the property from liens arid incumbrances caused by the negligence and ¿árelessness of the defendant. . ' ' ■ '

Finding no error in the' record, the judgment of the court below and order denying a new trial are affirmed.