Court Opinion

ID: 6904338
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:58:16.336207+00
Date Added: 2024-06-11T16:06:17.346122
License: Public Domain

Mr. Justice Bean
delivered the following dissenting opinion:
I am unable to give my assent to the conclusion reached by Mr. Justice Ramsey in the opinion in this case.
*407It appears from, an agreement executed on the 30th day of July, 1909 (Plaintiff’s Ex. No. 5), that Catherine L. Shehan and Charles E. Herron were about to engage in acquiring, improving and promoting an irrigation project in Malheur County, Oregon. Herron represented that he had procured deeds to certain lands and water rights to be placed in escrow in the plaintiff bank at Yale, Oregon, taking title in his own name. By the agreement made between Catherine L. Shehan of Washington, D. C., party of the first part, Charles E. Herron of Yale, Oregon, party of the second part, and M. A. Ballinger of Washington, D. C., party of the third part (who was to act as trustee in the matter), Mrs. Shehan executed to Herron and delivered a promissory note for $13,500 to the trustee for herself and Herron as a promotion fund, and the latter transferred the title to the lands and water rights to Mrs. Shehan, which title she was to hold until such time as the stock and bonds of a corporation to be formed should be ready for delivery. The capital stock of the. corporation to be issued was of the par value of a million dollars and bonds to the amount of $300,000 were to be issued and sold. When this was done, Mrs. Shehan was to deed the property to the corporation and receive all the capital stock except $950,000, which was to be delivered to Herron. The bonds were to be transferred to Ballinger in trust to be sold to pay a $13,500 note executed by Mrs. Shehan to Herron and to be discounted by Ballinger, and to pay $3,000 to Herron. The remainder of the bonds were to belong to the corporation.
It is seen that Mrs. Shehan did not buy the land and water rights, but held the record title as a mortgagee as security for having signed the note given to obtain money to be used in promoting the irrigation *408project. The lands were embraced in what was known as ‘ ‘ Bully Creek Beservoir Site, ’ ’ and the water rights were the Bully Creek water rights. In 1910 Herron applied for more money. A copy of a telegram introduced in evidence reads thus:
“Washington, August 26th, 1910. “Chas. E. Herron':
“You are authorized to execute my note and mortgage of all my Bully Creek holdings to Garrett, five thousand dollars due on or before one year, 6% interest. Catherine L. Shehan.”
A copy of another telegram in the record is as follows :
“Washington, D. C., September 4,1910. “To Chas. E. Herron, Vale, Oregon.
“In order to enable you to borrow $5000.00 I waive my priority to that extent under my contract on Bully ■ Creek property in favor of Garrett, and authorize you to make him a first lien mortgage. I have confirmed this by letter.
“[Signed] Catherine L. Shehan.”
The following is a copy of a telegram received by Herron about that time:
“Wash. D. C. 3 & 4th. “Chas. E. Herron, Vale, Oregon.
“Power attorney to execute note mortgage mailed today complete authority. M. A. Ballinger.”
The power of attorney which is in question in this suit arrived at Vale in the mail of September 6th. The money was procured from two sources: $2,000 from Mrs. Corson, and $3,000 from the bank. Notes corresponding to the amounts were given to Harry B. Garrett, the person named in the power of attorney, and a mortgage on the land and water rights was'executed and delivered to him to secure their payment. At the same time Garrett assigned the mortgage and *409the two notes to C. W. Thehand, an officer of the bank, and the mortgage and assignment were afterward recorded. At the time of receiving the notes and mortgage, Theband executed what was termed a declaration of trust acknowledging that he held them in trust for the bank and for Mrs. Corson. Afterward The-baud indorsed the notes to the plaintiff bank. It is shown by the evidence of J. W. Corson (pages 16, 17, Trans.) that the money was paid over to Mr. Herron for Mrs. Shehan, to quote:
“That amount, $5,000 actual cash, was received by Charles E. Herron under his power of attorney for Catherine L. Shehan.”
Prom the evidence of J. W. Corson to whom Herron made an application for a loan and who states that he had personal knowledge of the negotiations and opened and read several of the telegrams received, the following appears:
“A. Mr. Herron made application to Mrs. Shehan for $5,000 which he needed on the property out here, and she wired him.that she didn’t have the cash, but if he could borrow it, to borrow it, and she would pay it.
“Q. What property do you have reference to?
“A. The Bully Creek interests that were deeded by Mr. Herron to her, including the land described in the deeds from Herron to Catherine L. Shehan, deeded land and water rights which she always referred to as her Bully Creek property.
“Q. And she and Herron were endeavoring to raise money for the improvement of that property?
“A. Yes.
“Q. And Herron was here in person, was he not?
“A. Herron was here in town.
“Q. Talked with you about .it?
“A. Talked with me about it, and I told him I could get him the money if he would get me a mortgage on the property.
*410“Q. And did you have any communication with or from Mrs. Shehan in regard to the matter?
“A. I did; I had numberless,telegrams.
“Q. Have you got all those telegrams?
“A. I have.
“Q. Will you produce them?
“A. I have that one. (Witness hands paper to counsel.) What date is that?
“Q. August 26th.
“A. That seems to be the first one. (Witness hands three other papers to counsel.) ”
The power of attorney in question was in the following terms:
“Know all men by these presents, that I, Catherine L. Shehan, a widow, of Washington City, in the District of Columbia, do hereby make, constitute and appoint Charles E. Herron of Vale, in the State of Oregon, my true and lawful attorney, in and for the purposes hereinafter mentioned, to wit: He is hereby authorized and empowered to execute and sign my name to a negotiable promissory note and deliver the same to Harry E. Garrett, said note to be dated September 6, 1910, for the sum of five thousand ($5,000) dollars, payable to the order of said Garrett on or before one year after its date and bearing interest at six (6) per cent per annum and payable at any bank at Vale, Oregon. And the said Herron is further authorized to execute in my name a mortgage, or deed of trust, to secure the payment of said note and interest, upon and covering four hundred and eighty (480) acres of land owned by me in Malheur County, Oregon, that being all the land owned by me in said county,' and also all my right, title and interest in and to all water rights and surveys and reservoir and dam sites owned by me in said county, said mortgage or deed of trust to be in the ordinary form, used in said county and the said Herron is authorized to sign my name to said note and mortgage, or deed of trust, and to acknowledge for me and in my name the execution of the said mortgage, or deed of trust, and to deliver *411said note and mortgage or deed of trust to said Garrett, and said note and mortgage or deed of trust, so executed and acknowledged to said Garrett shall he in all respects as binding on me as though I had personally executed and acknowledged the same.
“In witness whereof, I have hereunto set my hand and seal this third day of September, 1910. .
“Catherine L. Shehan. [Seal.]”
This instrument was acknowledged and recorded in Malheur County, Oregon.
It is contended by counsel for defendant, Mrs. Shehan, that the note and mortgage were void for the reasons: (1) That two notes were executed instead of one; (2) that the notes provided that the interest should be paid semi-annually, and, if not so paid, the whole sum should become due; (3) that Herron and wife signed the notes and mortgage, thereby creating a cloud upon Mrs. Shehan’s title to the property; that there was a departure from the power of attorney.
The evidence produced by the plaintiff is not contradicted. There was no violation of the terms of the power. The defendants offered no evidence in the case. It is apparent from the record that Mrs. Shehan desired to obtain the loan of $5,000 for Herron to use in promoting the irrigation project. There is no pretense that she desired the money to be forwarded to her at Washington, hence it must be conceded that she obtained the money and that it was delivered to Herron as it was intended to be, and for her benefit. This was on September 6, 1910. Mrs. Shehan retained the benefit of the loan and speculated thereon. She made no known objection to the manner of the execution of the power conferred by her upon Herron until the commencement of this suit February 3,1913, more than two years and five months after the *412power had been conferred. She thereby impliedly waived any variance or departure in the execution of the power conferred, and was liable for the debt. It is therefore plain that the $5,000 in question was invested in the same manner as the proceeds of the former note of Mrs. Shehan, and would inure to the benefit of the latter. In the event of the scheme being successful, she would realize a large profit as she was to have $50,000 of the capital stock of the corporation. It was no doubt desired to have the additional loan in order to save the $13,500 she had already invested. It therefore seems to me that it is very poor grace for Mrs. Shehan to come into a court of conscience and seek to evade the payment of her note. It is not strange that with so limited a capital to carry fprward such an immense undertaking that there should be troubled waters upon the financial sea. When Mrs. Shehan authorized Herron to execute a mortgage in her name on the property held by her to secure the payment of the $5,000, it is manifest that she intended a valid mortgage to be executed, and if it was necessary for Herron and wife to sign the same, as it undoubtedly was, Mrs. Shehan has no reason to complain. She could in no way be injured. It is shown by the triple contract referred to above relating to the promotion of the enterprise, which was executed prior to the signing of the notes and mortgage, that Mrs. Shehan held title to the property embraced in the mortgage as security until a corporation should be organized and stock and bonds issued, when the same was to be transferred to the corporation. That agreement also shows Ballinger’s relations to the transaction, explains why he signed one of the telegrams, and shows the relations of the parties in the promotion of the irrigation project. It appears therefrom that both Mrs. *413Shehan and Herron were engaged in a joint enterprise, associated together for a common purpose. By Herron and wife signing the mortgage no cloud was created upon Mrs. Shehan’s title to the property. In this respect it was at the most mere additional evidence of the true condition of the title to the same.
The power of attorney did not specify when the interest on the note should be paid. The parties seem to have prepared and executed the notes and mortgage as nearly in conformity with Mrs. Shehan’s directions as they knew how to do; one of the parties being an attorney, and the bank officers taking part in the transaction. The provision in the note that the interest is “payable semi-annually” amounts to but little more than a matter of form. A blank for such time to be inserted is found in many of the forms of notes in general use. The same conclusion may be suggested in regard to the promise to pay the $5,000, being on two pieces of paper instead of one, as a matter of convenience.
The rule is laid down in 31 Cyc. 1263c(l):
“In General. Ratification of the acts of an agent need not in most cases be express, but may be implied from the acts and conduct of the principal, and generally speaking a ratification may be implied from any acts or conduct on the part of the principal reasonably tending to show such an intention on the part of the principal to ratify the acts or transactions of the alleged agent, particularly where his conduct is inconsistent with any other intention. * * So a ratification may be implied where the principal has carried out or offered to perform a part of an unauthorized agreement with knowledge of the whole, has accepted without objection a performance or a part payment or performance on the part of the other party to the agreement. * * Where an agency has been shown to exist, the facts will be liberally construed in favor of *414the approval by the principal of the acts of the agent, and very slight circumstances and small matters will sometimes suffice to raise the presumption of ratification. ’ ’
"We think the circumstances as shown by the uncontradicted evidence in this case were sufficient to put Mrs. Shehan, as a reasonably prudent person, upon inquiry as to the manner of the execution of the power. She had executed her power of attorney authorizing the procurement of the loan, the execution of a note and mortgage, and sent telegrams approving the transaction. It is not consistent with business principles that she remained for over two years without knowing or caring what had been done in regard thereto.
It is a familiar principle that a person cannot retain the fruits of an unauthorized contract made for his benefit by another assuming to act as his agent and repudiate the responsibilities of such contract, and any attempt to so retain the benefits constitutes a ratification of the unauthorized act and creates a liability on the part of such person to the same extent as if such contract were originally authorized: La Grande National Bank v. Blum, 27 Or. 215, 217 (41 Pac. 659); Mullaney v. Evans, 33 Or. 333 (54 Pac. 886); McLeod v. Despain, 49 Or. 563 (90 Pac. 492, 92 Pac. 1088, 124 Am. St. Rep. 1066, 19 L. R. A. (N. S.) 276); Hillyard v. Hewitt, 61 Or. 62 (120 Pac. 750); Grover v. Hawthorne, 62 Or. 96 (114 Pac. 472, 121 Pac. 808); Perkins v. Boothby, 71 Me. 91, 97. Subsequent ratification is equivalent to a prior authority and ratification of a part is affirmance of the whole: Moss v. Rossie Lead Mining Co., 5 Hill (N. Y.), 137.
The question of the expenditure of the money obtained upon the note and mortgage was not one which the lender or mortgagee could oversee or direct. The *415money being paid to Herron, a person designated by Mrs.. Shehan to receive the same, was all the authority that the parties making the loan could exercise. The question of disbursement by the agent is entirely between the principal and the agent: McLeod v. Despain, 49 Or. 563 (90 Pac. 492, 92 Pac. 1088,124 Am. St. Rep. 1066,19 L. R. A. (N. S.) 276). In the case of Wilson v. Troup, 2 Cow. (N. T.) 195 (14 Am. Dec. 461), the court said:
“In construing a power of attorney, therefore, in order to ascertain whether it has been well executed, the letter of the instrument is not to be exclusively regarded; but the important inquiry is: Have the intentions of the parties been carried into effect!”
We quote from Reinhard, Agency, Section 141:
“Where the owner of real estate makes a power of attorney to an agent to sell the land of the owner, but does not by such power of attorney authorize the agent to make conveyance thereof, and the agent, in excess of his authority, makes such a conveyance thereof, as well as sale, the principal, upon being informed, may reject such sale; but if he approves what has been done in his name, and accepts notes and mortgage given by the purchaser, and insists upon their payment after being informed of the conveyance, he thereby ratifies the conveyance and the effect of the power of attorney to convey as executed by the agent. ’ *
In all cases, whether the agency be general or special, it is said to be a universal principle that, unless the inference is expressly excluded by other circumstances, it includes all the usual modes and means of accomplishing the objects and ends of the agency: Storey, Agency, § 85. In McDermott v. Jackson, 97 Wis. 76 (72 N. W. 379), the court said:
*416‘ ‘ The principle that a person cannot retain the avails of an nnanthorized contract, made for his benefit by another assuming to act as his agent, and repudiate the responsibilities of such contract, and that any attempt so to do, with full knowledge of the facts, constitutes a ratification of the nnanthorized act, and creates a liability on the part of such person to the same extent as if such contract were originally authorized, is familiar.”
The case of Taylor v. Agricultural & Mechanical Assn., 68 Ala. 229, 237, 238, indicates that, while courts may not give relief in actions at law where powers have been illegally executed, they will give the necessary relief in equity, and that the principal receiving and using the proceeds of an unauthorized contract made by an agent ipso facto ratifies the acts of the agent. The court there said:
“While this rule prevails at law, in equity it is equally well settled that contracts or conveyances made by an agent having authority, though informally and defectively executed, are binding on and will be enforced against the principal. * * It is not material whether the defective execution is the result of mere inadvertence, or whether it is founded in ignorance or mistake of the law.”
Perkins v. Boothby, 71 Me. 91, 97, was an action for money had and received. The court said:
“When an agent without authority or knowledge of his principal borrows money and applies it to the payment and discharge of the legal liabilities of his principal, and the principal knowingly retains the benefit of such payment, the lender may recover therefor in an action against the principal for money had and received. A principal cannot knowingly retain the benefit of money hired by his agent, in the name of the principal, and at the same time legally refuse to pay the loan upon the ground that the agent had no authority to borrow money.”
*417Viewing tbe transaction as delineated by tbe documents and evidence contained in tbe record, we tbink that any departure from tbe terms of tbe power of attorney, in tbe execution thereof, was impliedly ratified by Mrs. Sbeban. Tbe plaintiff’s witnesses bave ■ given tbeir version of tbe important dealings, and, if tbeir theory or delineation was incorrect, it was incumbent upon tbe defendants to explain or show wherein tbe evidence of plaintiff was wrong. Tbe equities are with tbe plaintiff. Tbe judgment of tbe lower court should be affirmed.
Mr. Justice McNary concurs in this dissent.