Court Opinion

ID: 3875805
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:08:50.747887+00
Date Added: 2024-06-11T13:46:03.488771
License: Public Domain

I do not agree with the conclusion announced in the opinion of Mr. Justice Carter, and respectfully submit herewith the grounds of my dissent.
This is an action to foreclose a mortgage given by one F.P. Love to J.S. Brice, attorney, to secure a note for $2,000.00, in which the plaintiff claims an interest to the extent of $1,200 by virtue of a written assignment by Brice to her. The defendants, purchasers of the mortgaged premises, claim that the amount due upon the mortgage has been paid in full to J.S. Brice, attorney, including the plaintiff's $1,200 interest; that in said collection Brice was acting as agent for the plaintiff; and that payment to him was payment to her.
The case was referred to W.J. Cherry, Esq., special referee, who reported in favor of the defendants. Upon exceptions, his Honor, Judge Featherstone, confirmed the report, and rendered judgment dismissing the complaint. The plaintiff has appealed upon exceptions which fairly raise the questions hereinafter discussed.
The facts are as follows:
On December 22, 1919, F.P. Love borrowed through J.S. Brice, an attorney of the York bar, $2,000, and executed a note therefor to "J.S. Brice, attorney," payable ____, and secured it by a mortgage upon the premises in question.
On December 24, 1919, two days later, the plaintiff, Mrs. Neely, transmitted to Mr. Brice a check for $1,200 for *Page 315 
investment by him, and on the same day he indorsed upon the Love note the following assignment:
"The within note, and mortgage securing the same to the amount of twelve hundred dollars, for value received, is this day transferred and set over to Mrs. Martha A. (M?) Neely, this 24th December, A.D. 1919.
"[Signed] J.S. BRICE, Atty."
It appears that the note, with the assignment upon its back, was delivered by Mr. Brice to Mrs. Neely. There is some doubt as to the delivery of the mortgage, which did not have an assignment upon it. John A. Neely, son of the plaintiff, in his testimony, was under the impression that both papers were delivered. His testimony, however, is vague upon the question of the delivery of the mortgage. There appears no doubt as to the delivery of the note. I will assume that the note was delivered, but that the mortgage was retained by Mr. Brice.
A daughter of Mrs. Neely was the custodian of her papers. She was killed in a railroad accident in 1921 or 1922, and, after her death, her brother, John A. Neely, came into possession of his mother's papers which had been in the custody of his sister. Among them was the Love note for $2,000. On December 28, 1922, nothing had been received by Mrs. Neely upon it, John A. Neely delivered the note to Mr. Brice.
There is a contest between the parties as to Mrs. Neely's purpose in delivering the note to Mr. Brice (through the agency of her son John A. Neely), as will be seen. The plaintiff contends that it was delivered for the purpose of having him collect the past-due interest. The defendants contend that it was delivered for the purpose of having him collect the entire unpaid amount of $1,200 and the past-due interest; of which more hereafter.
On February 3, 1923, a little more than a month after John A. Neely delivered the note to Mr. Brice, on December 28, 1922, Mr. Brice wrote a letter to F.T. Love, a son of the mortgagor, F.P. Love, who had died May 17, 1922, *Page 316 
threatening foreclosure of the mortgage unless at least thepast-due interest be paid.
The heirs of F.P. Love, aroused by the threatening letter of Mr. Brice, decided to have an auction sale of the property in order to raise funds with which to satisfy the mortgages (there was another than the Brice mortgage; the amount due upon both was about $3,900). The sale was had, and the defendants W.A. Love (not related to F.P. Love) and A.C. Hargett, a son-in-law, purchased each a part of the land.
Upon investigation of the title, it was found that certain minor grandchildren of F.P. Love, who had an interest in the land as heirs at law, had not been concluded by the auction sale. Consequently, an action was commenced in the Court of Common Pleas for Chester County by the adult heirs of F.P. Love, who had executed deeds conveying their interests to the purchasers, against the minor heirs at law, for the purpose of perfecting the title of the purchasers.
This action, proceeding regularly, resulted in a decree confirming the auction sale, and directing the Clerk of Court to execute a deed conveying the interests of the minor heirs at law to the said purchasers. Prior to the delivery of these conveyances, and in settlement of the entire matter, it became necessary to apply the purchase money to be paid by the defendants, purchasers, to the satisfaction of the outstanding mortgages. That was arranged in this manner A.L. Gaston, Esq., who represented the heirs at law in perfecting the title to the land, wrote a letter to Mr. Brice addressed to him as "attorney," dated February 20, 1923 as follows:
"I hope to take up the mortgages which you hold on the land of F. Pierce Love, deceased, amounting to $3,900, and will thank you to have these mortgages assigned to me personally, without recourse, by your clients, and mail then to the Commercial Bank on March 1st, when Mr. Gage will pay the draft." (Italics added.) *Page 317 
Mr. Gaston expected to be absent in Florida, and requested that the matter be handled through Robert Gage, cashier of the bank.
Accordingly on February 27, 1923, Mr. Brice drew a draft upon Mr. Gage, cashier, for $3,900, the amount due upon the two mortgages (Love and Carroll), and attached thereto the notes and mortgages assigned to "A.L. Gaston, Esq.," by himself, "J.S. Brice, attorney," although he had been directed by Mr. Gaston to have them assigned "by yourclients." Mr. Gage, upon presentation of the draft, paid it, and charged the amount to Mr. Gaston's account.
I quote from the printed brief of counsel for the respondents:
"The note of F.P. Love for $2,000 to J.S. Brice, attorney, had on the back of it an assignment of $1,200 to Mrs. Martha M. Neely, the 24th day of December, 1919, but,when the papers were received by Gaston or the bank asChester, S.C. this assignment was canceled or mutilated byhaving pen and ink marks through it and to the signature ofJ.S. Brice attached to it. Miss Bessie Wylie, the Clerk in Mr. Brice's office, testified that the marks through the papers were made by Mr. Brice, and before the paper was sent off." (Italics added.)
There seems to be no doubt but that the Love note of $2,000 bore the assignment from Mr. Brice to Mrs. Neely,intact, when John A. Neely delivered it to Mr. Brice, in December, 1922.
The assignment of the note and mortgage was held by Mr. Gaston, along with the assignment of the other note and mortgage (Carroll) (pending the payment by the defendants of the purchase price of the tracts bought by them), as collateral security for the advance of $3,900 made by him.
Thereafter, on March 30th, the purchasers paid to Mr. Gaston the amounts due by them, and on March 31st he executed a satisfaction piece of the Love mortgage in question, and transmitted it to the Clerk of Court of York *Page 318 
County, where it, together with the assignment from Mr. Brice to Mr. Gaston, was entered upon the record of the mortgage, on April 4, 1923. (The assignment from Mr. Brice to Mrs. Neely was never recorded; the law at that time did not require such record.)
The deed from the adult heirs to the defendants was dated February 21, 1923, and that from the Clerk of Court of Chester County, conveying the interests of the minor heirs at law, March 30, 1923. As the checks from the purchasers are dated March 30, 1923, it may be assumed that these deeds were not delivered until that day. They appear, by reference to the book and pages, to have been recorded at the same time; the date does not appear in the record for appeal.
The proceeds of the draft were passed to the credit of Mr. Brice, and were expended by him upon his personal account; no part of them has reached the plaintiff, except perhaps in a payment made by Mr. Brice to Mrs. Neely, as interest upon her $1,200, $288.92, on April 10, 1923, more than six weeks after he had received the full amount of principal and interest in the paid draft of $3,900.
This is a hard case. It involves a severe loss upon either the plaintiff or the defendants, as it may be decided. Both are perfectly innocent of wrongdoing. It presents the most embarrassing of all questions which a Court is required to face. One or the other must lose; which one? In my opinion, that issue is to be determined by the answer to the question, which was the more to blame in furthering the misappropriation of the money by Mr. Brice.
The evidence, in my opinion, establishes in Mrs. Neely's favor the following facts: On December 24, 1919, she transmitted to Mr. Brice, her attorney in matters of loans and investments, a check for $1,200, to be invested by him for her. On the same day Mr. Brice invested that sum of money in a mortgage which he had taken on December 22d, two days before, from F.P. Love, by assigning to Mrs. *Page 319 
Neely $1,200 of the $2,000 represented by the note and mortgage. Mrs. Neely never from that day to this reassigned her interest in that mortgage to Mr. Brice. The mortgage never left the hands of Mr. Brice until he forwarded it with the draft. The note was delivered to Mrs. Neely. It was redelivered by her son to Mr. Brice for the purpose of collecting the past-due interest. In order to carry out his purpose to appropriate the whole of the proceeds of the mortgage to his own use, Mr. Brice, without authority from Mrs. Neely, canceled the assignment from himself to Mrs. Neely, of a part of the mortgage debt, assigned the whole of the mortgage to Mr. Gaston, drew a draft on him for that amount, collected the proceeds, and failed to account to Mrs. Neely.
In favor of the defendants, it establishes the facts that they have paid full value for the tracts of land purchased by them; that they had no actual notice of the conduct of Mr. Brice in connection with the assignment of the note and mortgage to Mr. Gaston.
Considering, then, the conduct of Mrs. Neely, in comparison with that of the defendants, in determining the issue which was the more to blame in connection with the failure to account for the money by Brice:
Mrs. Neely had acquired a valid interest in the note and mortgage, assigned to her by Mr. Brice, to the extent of $1,200, and is entitled to recover it, unless it be shown that she has parted therewith, or has so acted as to estop her from asserting her claim.
At the time of the execution by Mr. Brice of the assignment to Mrs. Neely, there was no law requiring such assignments to be recorded. It is, of course, not affected by the Act of 1924 (33 Stat., p. 928), requiring assignments to be recorded, which by its terms did not go into effect until July 1, 1924, nearly five years later. *Page 320 
The following quotation from 1 Jones, Mtg. (6th Ed.) § 956, is approved by this Court in the case of Wilson v.Brabham, 126 S.C. 273; 119 S.E., 829:
"There can be no question that utility and convenience demand that the registry laws should cover assignments of mortgages as well as other conveyances. But the protection secured by registration is wholly the creation of statute, and if the statute does not require an assignee to record his assignment, he is not guilty of negligence on failing to do so."
It is contended that the culpability of Mrs. Neely consisted in any one or all of the following charges: (a) That Brice was her agent for the purpose of collecting the amount of both principal and interest due to her on the mortgage; (b) that, if not her agent therefor, she allowed him to hold himself out as her agent for that purpose; (c) that, by filing a claim against the estate of Brice, after his death, she ratified his act in receiving for her the amount due to her out of the mortgage collection.
(a) As to the first charge: That Brice was Mrs. Neely'sagent for the purpose of collecting the amount of both principaland interest due to her on the mortgage.
This question is summarily disposed of by the statement:
"The Special Referee held that Mr. Brice was the agent of the plaintiff, and that holding was concurred in by the Circuit Judge. The facts are fully sufficient to sustain this holding."
The Constitution provides (Article 5, § 4):
"The Supreme Court * * * shall have appellate jurisdiction only in cases of chancery, and in such appealsthey shall review the findings of fact as well as the law.
* * *"
As I understand the Constitution, it means that in that review the only burden which the appellant carries is the burden of every appellant to show that error was committed in the judgment at law or decree in equity appealed from, absolutely uninfluenced by the holding of the Court below *Page 321 
to any other than this extent; it is not an appeal, otherwise. In an action at law, when only questions of law are reviewable, this Court is not influenced by the opinion of the Court below. In an action in equity when questions of fact and of law are reviewable, this Court is not influenced by the opinion of the Court below on a question of law. Why should it be on a question of fact?
From a review of the facts of this case, I do not think that there is a particle of evidence tending to show that the note (the mortgage was retained by Mr. Brice), was delivered to Mr. Brice by Mrs. Neely, or her agent, John A. Neely, for the purpose of collecting the principal of what was due to her under Brice's partial assignment; that, on the contrary, the evidence is overwhelming that the note was delivered to Brice by John A. Neely for the specific purposealone of collecting the past-due interest.
The testimony of John A. Neely is clear to the effect that the note was delivered to Mr. Brice for collection of the past-due interest and to enable him to prepare a new set of papers carrying out an agreement on the part of the sons of F.P. Love to buy the land and assume the mortgage.
The proved circumstances in the case conclusively show to my mind that the note was delivered by Neely to Mr. Brice for the purpose of enforcing the collection of the past-due interest upon the $1,200 of the note and mortgage owned by Mrs. Neely.
It does not appear that Mrs. Neely was at that time in need of money. She had other funds in the care of Mr. Brice, no part of which was she calling for, beyond the interest. This view is strengthened by the circumstances that in April, 1923, after Mr. Brice had collected the whole amount due to Mrs. Neely, principal and interest, as will be later shown, he remitted to her a check for $288.92, expressed to be the interest on the $1,200 from December 24, 1919, at 7 per cent, annual interest; and at that time it does not appear that Mrs. Neely made any objection to his not *Page 322 
having collected the principal as well as the interest; and no explanation of his failure to do so appears to have been offered by Mr. Brice. If the note had been placed in the hands of Mr. Brice, for collection, on December 28, 1922, it is strange that Mrs. Neely, in April, 1923, should have accepted the interest only, without complaint.
The further fact is significant: John A. Neely had delivered the note to Mr. Brice on December 28, 1922. A little more than a month later, on February 3, 1923. Mr. Brice, who it is claimed had received the note for collection
of both principal and interest, wrote to F.T. Love, a son of the mortgagor, F.P. Love, who had died May 17, 1922, threatening a foreclosure of the mortgage against the heirs at law, "unless I can get the money, or enough money to paythe interest on the $2,000. * * * Now, if you all can get up the money to pay the interest on the $2,000 since it was given, * * * I can let it go over until fall."
I think, therefore, that it is perfectly clear that Mrs. Neely and John A. Neely were interested only in the payment of the past-due interest, and that the note was delivered to Mr. Brice for the purpose only of collecting that interest.
I attach no weight to the testimony of John A. Neely that there was an arrangement on foot by which the sons of F.P. Love were to buy the land and assume the debt by the execution of new papers, and that Mr. Brice needed the papers for that purpose. I do not discredit his statement at all, and have no doubt, in view of what transpired later, that his information emanated from the source of subsequent disasters.
The defendants attempt to sustain their contention that the note was delivered to Brice for the purpose of having him collect both principal and interest by the testimony of Col. W.W. Lewis, an honored member of the York bar, now deceased, who detailed a conversation had by him with John A. Neely, after the death of Mr. Brice, when Col. Lewis was interested in the administration of his estate, from *Page 323 
which it sought to establish the fact that Neely had stated that the Love paper had been delivered to Mr. Brice for collection.
His testimony is not at all definite, and is by no means sufficient to satisfy me that Neely made such a statement, if, indeed, his statement be any evidence of the fact that the note was delivered to Mr. Brice for collection. The statement of Col. Lewis is the only evidence in the case of the fact sought to be established, and in my opinion it amounts to no evidence at all.
But assume that the Special Referee and the Circuit Judge were correct in sustaining the defendants' contention that the note was delivered for the purpose of the collection of the principal as well as the interest, what do we find? We find that Brice did not collect the note and mortgage, but executed an absolute assignment of both to A.L. Gaston, Esq., and that, in order to effect that assignment, he canceled the assignment which he had previously executed to Mrs. Neely, so that it might appear that he was the owner of the entire interest, in the face of Mr. Gaston's request that the assignment be executed "by your clients," an instruction which fixes upon Mr. Gaston notice that others than Mr. Brice owned the mortgage.
It hardly needs authority for the proposition, that an attorney's power to collect does not confer, by implication, the power to assign a client's security.
In Annely v. DeSaussure, 12 S.C. 488, it is said at page 509:
"The relation of attorney and client implies authority to enforce the demands of his client, of obtaining either voluntary or coercive satisfaction of such demands, and to bind the client as a party litigant in certain matters appertaining to the conduct of causes; but it does not confer a general power of attorney to contract independently in relation to such demands, nor to transfer such demands to a thirdparty." *Page 324 
In 3 A.  E. Enc. L., 369, it is said:
"An attorney in whose hands a note or other obligation has been placed for collection has no power to transfer it to another, either for a consideration for his client's benefit or for collection." Mechem, Agency, 813; 2 Green. Ev., § 141. Penniman v. Patchin, 5 Vt., 346. Benedict v. Smith, 10 Paige (N.Y.), 126. Smock v. Dade, 5 Rand. (Va.), 639; 16 Am. Dec., 780. Wilson v. Wadliegh, 36 Me., 496.Chapman v. Cowles, 41 Ala., 103; 91 Am. Dec., 508. Wadhamsv. Gay, 73 Ill., 426. McClintock v. Helberg,168 Ill., 384; 48 N.E., 145. Schroeder v. Wolf, 227 Ill., 133;81 N.E., 13.
The reason of the rule is that an assignment carries with it certain guaranties on the part of the assignor which do not exist in case of payment. One may be willing that a payment be made and entirely unwilling to assume these obligations.
Certainly it gave Brice no power as attorney, without authority from Mrs. Neely, and for the purpose of getting into his hands the whole amount of the mortgage, which he appropriated to his own use, to perpetrate, in legal contemplation, a forgery. He might as well have forged Mrs. Neely's name to a reassignment of the $1,200 interest in the mortgage or forged a receipt from her acknowledging that she had been repaid the $1,200. This is in effect what he represented to Mr. Gaston in the cancellation of the assignment; a restoration of the original status.
(b) As to the second charge: That, if Brice was notMrs. Neely's agent for the purpose of collecting the amountof both principal and interest due to her on the mortgage,she allowed him to hold himself out as her agent for thatpurpose.
In what way Mrs. Neely allowed Brice to hold himself out as her agent to collect the amount due to her on the mortgage I am unable to discover from the evidence; and it has *Page 325 
not been pointed out by any of the judicial utterances in the case.
One circumstance, and one only, is adverted to as evidence of this fact; namely, that Brice was in possession of the note and mortgage. It appears to have been overlooked that Brice had an interest amounting to $800 in the note and mortgage, after he had assigned $1,200 of the debt to Mrs. Neely, which gave him as much right to the possession of the papers as Mrs. Neely had, and is referable to his interest in them.
The transactions of Brice afford not the slightest evidence that he was holding himself out as Mrs. Neely's agent. He was acting throughout in his own personal interest, the very opposite of agency.
It certainly did not occur to Mr. Gaston that Mr. Brice was holding himself out as the agent of Mrs. Neely to collect the amount due to her in the mortgage. He was the helmsman in the transaction, and, if any such notice reached any one, it must have been Mr. Gaston; and yet the evidence shows that, as the note and mortgage had been executed to "J.S. Brice, attorney," Mr. Gaston was notified of the fact that Mr. Brice was merely a conduit, as is shown by his instructions to Mr. Brice to have the papers assigned "byyour clients." If Mr. Brice had followed those instructions, there would have been no trouble. Mrs. Neely would have been on the alert to have a settlement with Mr. Brice, and not lulled into security by the payment of the past-due interest, six weeks after Mr. Brice had received the whole, or, if Mr. Gaston had been in Chester when the draft was presented, the trouble would not have occurred — showing that the loss was not sustained by any holding out process chargeable to Mrs. Neely.
(c) As to the third charge: That, by filing a claimagainst the estate of Brice after his death, Mrs. Neely ratifiedhis act in receiving for her the amount due to her out ofthe mortgage collection. *Page 326 
In the first place, I have been unable to find either in the Special Referee's report or in the Circuit decree any suggestion of such a finding, nor a proposition on the part of the respondents to sustain the decree upon this additional ground. I do not think, therefore, that the point is properly before this Court.
Moreover, it is entirely inconsistent with, and is not claimed in, the answer. The contention of the defendants is that the money was received by Brice as the agent of Mrs. Neely; and it is well settled that ratification is inconsistent with the theory of agency. "An instruction that ratification of an agent's acts only applies to acts beyond the scope of his agency was proper." Sparkman v. Supreme Council,57 S.C. 16; 35 S.E., 391.
However, I will discuss the proposition.
The evidence shows that, after the death of Brice, and after John A. Neely learned of the receipt by Brice of the $1,200 which belonged to his mother, John A. Neely filed a claim (I will assume as agent for his mother) against the administrator of the estate of Brice for the amount so received by him. It is declared that "such conduct on the part of the mortgagee was evidence of ratification of the agency to collect the money," and the cases of Miles v. Gadsden,139 S.C. 52; 137 S.E., 204 and Miles v. Felkel, 139 S.C. 95;137 S.E., 329, are cited in support of such declaration.
Beyond the following statement in the report of the Master in the Gadsden case, there is no reference either in that report or in the Circuit Decree, or in the opinion of this Court, or in the Felkel case, upon the subject:
"I am of the opinion * * * that the filing of the claim by the plaintiff's agent was a ratification of the payment by Gadsden [the mortgagor] to Kroeg [the attorney], for the account of Doscher [the mortgagee], as a credit on the mortgage debt." *Page 327 
The proposition received such scant attention in both of the cases cited, and in my opinion is so opposed to reason and justice, and to the decided cases everywhere, that I make bold to express my opinion upon it.
Of course, if it be conceded that Brice was the agent of Mrs. Neely to receive both principal and interest, all question of ratification passes out of the discussion; for, if so, the payment to him was payment to her. The question can arise only in cases where the agent received money for his principal which he was not authorized to receive. It is therefore necessarily assumed in this discussion that Brice was without authority to receive the portion of the mortgage debt which belonged to Mrs. Neely.
The primal, and I think a conclusive, barrier to the application of the doctrine of ratification in this case is that in Brice's transaction, culminating in his personal receipt of the money, made possible by his cancellation of the assignment from himself to Mrs. Neely, his personal assignment to Mr. Gaston and his draft upon him, Brice did not assumeto act as the agent of Mrs. Neely. He not only did not profess to act as agent for Mrs. Neely, but he studiously presented the evidence that he was acting for himself by committing a forgery upon the rights of Mrs. Neely in canceling the assignment from himself to her. The authorities are overwhelming upon the proposition.
"* * * It is a rule, that an act, to be capable of ratification, must be done professedly on behalf of the quasi principal, by one who assumes to act as his agent. * * * Ordinarily, where one man acts for another, he must act for him professedly, or else the act will purport to be his own act and not the act of him for whom he is secretly acting." Tiffany, Agency, § 47. "No act performed by one man can be adopted by another on his behalf. In other words, an act to be capable of ratification, must as a rule, be done by one who assumes openly to act as agent." Id., § 48. *Page 328 
The author cites the case of Wilson v. Tumman, 6 M. 
G., 236, in which the Court said:
"That an act done for another, by a person not assuming to act for himself, but for such other person, though without any precedent authority whatever, becomes the act of the principal, if subsequently ratified by him, is the known and well established rule of law. * * * Such was the precise distinction taken in the Year Book, 7 Hen. IV, folio 35, that if the bailiff took the heriot (a feudal tribute), claimingproperty in it himself, the subsequent agreement of the lord would not amount to a ratification of his authority as bailiff at the time; but if he took it, at the time, as bailiff of the lord, the subsequent ratification by the lord made him bailiff at the time."
The author adds:
"Accordingly if A enters into a contract with C, openly assuming to act as the agent of B, B may ratify it; but if A enters into a contract in his own name with C, B cannot claim the benefit of it by subsequent ratification, nor can A divest himself of his liability towards C by procuring a ratification from B. It follows that a contract cannot beratified by an undisclosed principal."
Mr. Mechem says in his work on Agency (2d Ed.), § 386:
"Since the effect of ratification is to confirm the act as done, it is indispensable, in order to have an act of agency, that the act ratified must have been done by the assumed agent as agent in behalf of a principal. If the act was done by him as principal, and on his own account, or on account of some third person, it cannot be thus ratified."
Further:
"And not only must the assumed agent have intended to act as agent for the person ratifying, but as declared by the House of Lords after most elaborate consideration, and according to the weight of authority in the United States, he must have professed to act for a principal, though it is not *Page 329 
necessary that he should have disclosed who that principal was, if he was capable of identification within the rule already laid down. As stated by Lord Roberson:
"`Whether the unauthorized agent be marked out as an agent by what he says, or what he wears, is of course a mere matter of circumstance and evidence; but as an agent hemust be known to be and as agent he must act.'"
And again:
"What the prevailing rule amounts to, when reduced to its lowest terms, is that the act or contract to be ratified shall purport to have been done or made, not merely on the agent's behalf but by the agent, in the name and on the account of the alleged principal, so that, when ratified, as it was done or made, it shall be capable of being enforced by and against the principal as an act or contract to which he was a party. The rule makes impossible a ratification by anundisclosed principal. * * *"
In a note to Section 386, the author cites 50 cases from the "four winds," sustaining the proposition, and perhaps 50 more may be found in Century Digest, Principal and Agent, Key No. 622, and the Decennial and Annual Digests under the same title, Key No. 164.
"The difficulty is that the doctrine of ratification is not applicable to a case where the person who makes the contract was not at the time, and did not profess or assume to be, acting on behalf of a principal." Schlesinger v. ForestProduce Co., 78 N.J. Law, 637; 76 A., 1024; 30 L.R.A. (N.S.), 347; 138 Am. St. Rep., 627. Brown v. Myers,89 N.J. Law, 247; 98 A., 310.
In Hopkins v. Smathers, 114 S.C. 488; 104 S.E., 30, the Court said:
"Plaintiff's transactions show he dealt with Rhodes as if he were owner, and not agent of another, and, when he did not get the car, then attempted to make Rhodes agent for Smathers." *Page 330 
Exactly the situation in the case at bar: Mr. Gaston relied absolutely upon the assignment by Brice, not professing to act as agent for Mrs. Neely, but positively denying her interest in the mortgage by canceling his own assignment to her.
Another barrier is that the doctrine of ratification is assimilated to that of election of remedies, and that doctrine is not applicable except in cases where suit has been instituted.
The presentation of a claim is not considered evidence of an election.
"The general theory of the doctrine is that of election of remedies — that a man cannot have two inconsistent remedies, and that, having elected one, he must stand by his choice. The doctrine does not rest on the theory of estoppel. * * *" Note, L.R.A., 1917-D, 704.
In Butler v. Hildreth, 5 Metc. (Mass.), 49, quoted with approval in Robb v. Vos, 155 U.S. 13; 15 S.Ct., 4;39 L.Ed., 52, the Court said:
"It would, we think, be going too far to say, that merely demand of the price should be deemed a waiver of his right to avoid the sale, and claim the goods; because, in many cases, if the price could be obtained, it would be equally beneficial to the creditors, and he would have no further occasion to pursue the harsher remedy of impeaching the sale. But we think that if the assignee commences an action against the purchaser for the price, and causes his property to be attached to secure it, this is a significant act, an unequivocal assertion that he does not impeach the sale, but by necessary implication affirms it."
So in the case at bar: Mrs. Neely did nothing more than present a claim against the administrator of Brice for money belonging to her which he had unlawfully received and failed to account for. If she could have received the full amount misappropriated by Brice, the defendants would have profited by the filing of the claim. I do not see that they have any right to complain of an act of Mrs. Neely, which, *Page 331 
if successful, would have relieved them from the "harsh remedy" which Mrs. Neely was forced to take.
It might as well be said that, if Brice had been living when Mrs. Neely discovered that he had collected her part of the mortgage, Mrs. Neely could not have asked him for it without waiving her right to proceed against the mortgagor in foreclosure. The filing of a claim against the administrator of Brice, deceased, is no nearer a suit than the demand upon Brice, living, would have been.
Another barrier to the application of the doctrine of ratification is the utter absence of evidence that Mrs. Neely, in filing the claim, had the slightest intention of waiving her right of foreclosure against the mortgagor.
"Generally speaking, a ratification may be implied from any acts, words, or conduct on the part of the principal which reasonably tend to show an intention on the part of the principal to ratify the unauthorized acts or transactions of the alleged agent, provided the principal in doing the acts relied on as a ratification acted with knowledge of the material facts." 2 C.J., 489.
"Ratification is a matter of intention, express or implied, on the part of the principal, and, in order to establish an implied ratification, there must be some acts or conduct on his part which reasonably tends to show such intention." 2 C.J., 492.
In 2 C.J., 513, it is said:
"Where a principal with knowledge of the facts claims and seeks to enforce by such, rights based upon the unauthorizedacts or contract of an agent, or other person acting in behalf of the principal * * * he thereby impliedly ratifies such act or contract."
And at page 515 the corollary is thus stated:
"Where the action is not based upon the contract made bythe agent, the principal may, without ratification, maintain an action to protect his rights. * * *" *Page 332
A fortiori should be allowed to maintain an action to protect the interests of the third party as well as his own.
"Intention, express or implied, to ratify an unauthorized act is a material factor in an inquiry of ratification vel non
by an asserted principal; and the intent requisite may be inferred where there is evidence tending to show that the asserted principal, with adequate knowledge of the facts and circumstances, so conducted himself as to evidence his purpose to confirm or adopt the unauthorized act of another."Birmingham News Co. v. Birmingham Printing Co.,209 Ala., 403; 96 So., 336.
"The question as to whether the act of an alleged principal is a ratification of a supposed agency depends upon his intention, and, when the act relied on to show ratification is equally consistent with a purpose to the contrary, an intent to ratify is not ordinarily implied." Culver v. Nichols,140 Md., 448; 117 A., 873.
It was the most natural thing in the world for Mrs. Neely, after the discovery of Brice's collection and misappropriation, which was not done until after his death, for her own protection and that of the mortgagor, to make demand upon Brice's administrator for the money. For all that she knew to the contrary, Brice may have left the money in shape to be turned over to her or had given directions to that end. If he had been alive, it would have been the natural and theproper thing for her to have done.
I am inclined to think that, if Brice had avowed hisagency, was acting for Mrs. Neely in collecting the money, and Mrs. Neely had brought suit against him for it, she would be held to have ratified his act. See an interesting and able opinion of Justice Riddick of the Arkansas Supreme Court in the case of Wood v. Claiborne, 82 Ark. 514;102 S.W. 219; 11 L.R.A. (N.S.), 913; 118 Am. St Rep., 89.
In the case at bar he not only did not avow his agency, butconcealed it, and Mrs. Neely has never brought suit. *Page 333 
If she had brought suit, under the circumstances of thiscase, her act could not have amounted to ratification, for the reason that Brice throughout was acting for himself, and not as her agent. She would have had the right to sue him for money had and received, repudiating the idea that he was acting as her agent. In that event she would have been suing Brice upon his promise, implied by law, to pay her the money he had unlawfully collected.
In Peay v. Aiken, 1 Strob., 103, the Court said:
"* * * In an action for money had and received, the possession of the plaintiff's money is considered enough to support the implied promise."
"Both at common law and under the Code, money paid under fraudulent misrepresentations may be recovered on the common count for money had and received." Winklerv. Jerrue, 20 Cal.App., 555; 129 P., 804.
"If one wrongfully obtains the money of another, he may waive his damages and sue for money had and received."Rhodes v. Jenkins, 2 Ga. App., 475; 58 S.E., 897.
In Madden v. Watts, 59 S.C. 81; 37 S.E., 209, the Court holds:
"But it is insisted that there is no privity between the plaintiff * * * and the respondent respecting the transaction. It is well settled that an action for money had and received lies against any one who has money in his hands, which he is not entitled to hold as against the plaintiff, and want of privity between the parties is no obstacle to the action."
This is a quotation from the case of Soderberg v. King'sCounty, 15 Wn., 194; 45 P., 785; 33 L.R.A., 670; 55 Am. St. Rep., 878, and the Court also quotes the following from Bayne v. U.S., 93 U.S. 642; 23 L.Ed., 997:
"Assumpsit will lie whenever the defendant has received money which is the property of the plaintiff, and which the defendant is obliged by natural justice and equity to refund." *Page 334 
Also State v. St. Johnsbury, 59 Vt., 332; 10 A., 531. See, also, Luther v. Wheeler, 73 S.C. 83; 52 S.E., 874; 4 L.R.A. (N.S.), 746; 6 Ann. Cas., 754. Buchanan v. Buchanan, 4 Strob., 63.
In Marvin v. McRae, Rice, 171, the Court said:
"The general principle to be found in all the cases is, that if A has money in his hands which belongs to B, B may sue him in this form of action."
In O'Neall v. McBride, 4 Rich., 343, the plaintiff sued in trover, and recovered a verdict of $800.00. In the meantime, the defendant had wrongfully disposed of the subject of the action, and had deposited the proceeds of sale with the sheriff as representing the property. The Court held that, notwithstanding the fact that the plaintiff had pursued the defendant to judgment in trover, he had the right to recover the proceeds of sale as money had and received.
The question whether a principal by filing a claim or suit against his agent, upon an unauthorized transaction by the agent, has ratified the transaction, depends upon whether the action of the principal may be construed into a recognition of the validity of the transaction. As Mr. Tiffany expresses it, in his work on Agency:
"Bringing suit predicated upon the validity of the unauthorizedtransaction amounts to ratification."
For instance, if an agent should make an unauthorized sale and accept a note for the purchase price, and the principal should sue the maker upon the note, his action in so doing would necessarily be construed into a recognition of the validity of the sale; he cannot accept the benefit of a transaction and then repudiate it.
But, where the action of the principal is based upon a repudiation of the validity of the transaction, and is for the recovery of the money had and received by the agent, the principal is simply taking advantage of one or the other of the sources from which he may recover his money. *Page 335 
As in the case at bar: Brice in an unauthorized manner received money which belonged to Mrs. Neely. She did not present the claim in recognition of his right to receive it; exactly the contrary.
In Drake v. Whaley, 35 S.C. 191; 14 S.E., 397, the Court quotes with approval, and with the italics indicated, the following from Hall v. Marston, 17 Mass. 575:
"The principle of this doctrine is reasonable and consistent with the character of the action of assumpsit for money had and received. There are many cases in which that action is supported without any privy between the parties other thanWhat is created by law. Whenever one man has in his hands the money of another which he ought to pay over, he is liable in this action, although he has never seen or heard of the person who has the right. When this fact is proved, that he has the money, if he cannot show that he has legal or equitable ground for retaining it, the law creates the privity and the promise."
Mrs. Neely knew nothing of the misconduct of Brice until after his death. In fact, he was careful to conceal from her the knowledge of his misappropriation, and deliberately lulled her into a sense of security by paying her the past-due interest a short while after he had received the full amount of principal and interest.
"Where an agent receipts for a suit of clothes in payment of a bill due his principal, the latter does not ratify the collection of the bill in that manner by seeking to recover the money of his agent." Holland v. Johnson,38 Misc. Rep., 187; 77 N.Y.S., 247.
In Crute v. Burch, 154 Mo. App., 480; 135 S.W. 1004, the owner of a mare and mule colt directed his agent to sell the mare for $60.00. The agent sold both mare and colt for $115.00, and accounted to his principal for only $60.00. The purchaser of the colt sold it to the defendant. The owner valued the colt at $60.00, and endeavored, through an attorney, to collect that amount from the agent. He then *Page 336 
brought replevin against the vendee of the purchaser from the agent for the colt. The Court disposed of the contention of the defendant as follows:
"And it is further contended that plaintiff, by entering into negotiations with [agent] for collection of the price of the mule, he ratified the contract of sale. This position is equally as untenable as the first. He did not agree to take [the agent] as paymaster for the price of the mule, but was willing that he should pay for it. Surely it cannot be said this can be construed as an affirmance of the theft of the mule. Had he accepted from [the agent] the price of the mule, or had he agreed to look to him for its payment, that would have been an affirmance of the sale."
In Barnsdall v. O'Day (C.C.A.), 134 F., 828, it was held, quoting syllabus:
"The bringing of an action by a principal against his agent in the purchase of lands for the amount of a commission secretly paid him by the vendor does not operate to ratify the contract, so as to discharge the vendor from liability in damages for fraud and deceit, by which, with the assistance of the agent, the sale was induced."
In 31 Cyc., 1282, it is said:
"A suit against the agent for moneys wrongfully received is not necessarily a ratification, as to third persons, of the agent's unauthorized contract."
In Bank of St. Mary's v. Calder, 3 Strob., 403, it was held that, where money has been wrongfully lent by the agent without taking sufficient security, an action in assumpsit by the principal against the borrower to recover the money lent is not an approval of the security taken, and will not relieve the agent from liability.
In Brown v. Foster, 137 Mich., 35; 100 N.W., 167, it was held (adopting as the substance of that decision what is declared in 31 Cyc., 1282):
"Where an agent makes an unauthorized sale and delivery of property amounting to a conversion, the owner may, without *Page 337 
ratifying the sale as made, waive the tort and sue the agent on the common counts in assumpsit to recover the value of the property."
The distinction which I am endeavoring to draw is illustrated by an Alabama case. Newman v. Morgan,202 Ala., 606; 81 So., 548. In that case the plaintiff authorized his agent to settle a claim against a railroad company, which he accomplished for $1,250.00. The plaintiff sued the agent for $1,250.00, and, upon the trial, denied that he had authorized or accepted the terms of the settlement. The Court held that the issue as to this fact was negligible, as the plaintiff by that suit had ratified the settlement. There the ratification was based upon recognition of a contract, not as here, upon practically a claim for money had and received.
II. Considering next the conduct of the defendants, in comparison with that of the plaintiff, in determining the issue which was more to blame in connection with the embezzlement of the money by Brice:
I assume, as has been stated, that the defendants paid full value for the tracts of land purchased by them, and that they had no actual notice of the fraudulent conduct of Brice in connection with the assignment of the note and mortgage to Mr. Gaston.
But there are circumstances connected with the transaction which, in my opinion, should have put the defendants, or those who were acting for them, upon an inquiry which would have developed the true status of affairs.
In the case of Wilson v. Brabham, 126 S.C. 273;119 S.E., 829, the bank held a mortgage upon certain land. It assigned the note and mortgage to the plaintiff who did not record the assignment. Thereafter the mortgagor applied for a loan from a third person. The third person, through her attorney, had the titles examined and found open the bank's mortgage. Upon application to the mortgagor, it was stated that the bank's mortgage had been paid. The mortgage could not be produced. The attorney for the *Page 338 
third person then obtained from the bank a formal satisfaction of the mortgage which was duly entered (which, of course, having assigned the mortgage to the plaintiff, it had no right to give). The third person then advanced to the mortgagor and took notes and mortgages upon the property as security. In a contest, then, between the plaintiff, assignee of the bank mortgage, and the third person who relied upon the satisfaction executed by the bank, wrongfully, the Court held that, as the plaintiff was under no obligation to record his assignment, and as the attorney for the third person accepted the statement of the mortgagor and the satisfaction by the bank of the assigned mortgage, for which the plaintiff was not responsible, the third person's mortgages must be subordinated to that of the plaintiff. The Circuit Decree, which was affirmed, states:
"The plaintiff purchaser was not required by law to record the assignment to him. The borrower (lender?), afterwards finding an open mortgage to the bank, was not complying with the law in taking a satisfaction on a separate sheet of paper and without proof that the bank was theproper one from whom to get a satisfaction; because the lawrequires that the satisfaction must be from the holder andowner of the instrument." (Italics added.)
It is settled, therefore, I think, that Mrs. Neely was under no legal obligation to have her assignment recorded, and that the defendants, purchasers, were under a legal obligation to see that the satisfaction of the mortgage, to the extent owned by Mrs. Neely, was properly made by her.
It was held in the Wilson v. Brabham case, that the conduct of the third person's attorney who accepted the statement of the mortgagor that the bank mortgage had been paid, and the satisfaction by the bank of its mortgage, which had been assigned to the plaintiff, contributed to the loss sustained by the third person who advanced upon what turned out to be the second and third mortgages. *Page 339 
In the case at bar, the defendants did not attempt to pursue, on their own account, the slightest independent investigation to ascertain whether the "holder and owner" of the mortgage (in this instance, of a part of it) was the one who was to receive the payments which they were about to make, which, of course, depended upon the validity of the assignment from Mr. Brice to Mr. Gaston. They relied implicity upon the assurance of Mr. Gaston that the title was clear, or would be clear as soon as he received their money and entered satisfaction of the mortgage upon the record.
I accept, without reservation, the statement of Mr. Gaston that he was, in these transactions, acting as attorney for the heirs of the mortgagor and agents for them in clearing the title and having the deeds properly executed; but I think that the facts show that, in addition thereto, he was acting, in this particular matter, also as an intermediary between the purchasers and the mortgagee, to see that the mortgage was properly satisfied with the money paid to him by the purchasers. He was to receive an assignment of the mortgage to himself, personally; to pay the draft; to hold the mortgage as security for his advance; to receive from the purchasers the money for the land; to apply it to his account at the bank; and to enter satisfaction upon the record of the mortgage — all of which he faithfully performed, and saw that the deeds from the adult heirs at law and from the clerk, covering the interests of the minors, were delivered to the purchasers. The purchasers, therefore, attempted to do through him what the law required them to do, to see that "the satisfaction must be (was) from the holder and ownerof the instrument."
The purchasers were under this legal obligation, and, if they saw fit to rely upon Mr. Gaston's investigation and conduct, they are bound by the notice which he had of facts sufficient to put him upon inquiry.
It will be kept in mind that I am endeavoring to compare the conduct of the parties respectively to this suit, in an *Page 340 
effort to determine which was the more culpable, and in doing so it becomes necessary to review the diligence of Mr. Gaston in the matter, who assumed and was so permitted by the defendants to perform the duty which the law imposed upon them. (I may interpolate here that nothing that I may say is intended to reflect in the slightest degree upon him, whom I regard as a courtly gentleman of the highest character and a lawyer of exceptional ability. He did what many a lawyer, considering the reputation of Mr. Brice and all the circumstances, would probably have done.) The keystone of his investigation was the validity of the assignment fromBrice to him.
In the first place, the mortgage was to "J.S. Brice, Attorney," which should have notified him that Mr. Brice was a conduit merely acting in a representative capacity, a trustee for some one else. His first letter to Mr. Brice shows a "watchful recognition of his plight." He writes, "will thank you to have these mortgages assigned to me personally, without recourse, by your clients." The assignment was made by "J.S. Brice, Attorney," not by his clients.
In the next place, the note showed upon its back that at one time, at least $1,200.00 of it had been assigned to Mrs. Neely. This assignment had been canceled, and the evidence is conclusive that it had been canceled by Mr. Brice at the time of the transmission of the draft with the note and mortgage, without authority from Mrs. Neely. Did that not call for an inquiry as to the validity of the cancellation? Of course, Mr. Gaston could not have known that Mr. Brice had canceled the assignment and had done so without authority; but the paper came from Mr. Brice. Mr. Brice had assigned $1,200.00 of it to Mrs. Neely. If Mr. Brice had become revested with the whole of the mortgage, would there not reasonably have been a reassignment by Mrs. Neely underneath the original assignment? There is no question but that with this notice, if inquiry had been made of Mr. Brice, or (I may say, and) Mrs. Neely, the fact would have *Page 341 
been developed that Mr. Brice had no right to cancel the assignment, and that the $1,200.00 still belonged to Mrs. Neely. One who has notice of facts reasonably calculated to put him upon inquiry is charged with knowledge of the facts which such inquiry would develop.
The case for the defendants is based upon the supposed fact that Mr. Brice was authorized to collect the whole of the principal and interest due to Mrs. Neely; and that the cancellation of the assignment and the execution of the assignment to Mr. Gaston were but convenient and legitimate means to effect the collection. If he canceled the assignment to Mrs. Neely without authority, and appropriated the money collected, the offense under the criminal law would have been a serious one. That he did cancel it without authority is demonstrated beyond a doubt by the evidence, and I regret to say that the evidence of his appropriation is equally clear. I have endeavored to show that there is not a particle of evidence tending to sustain the contention that the note was delivered to Mr. Brice for collection of the principal.
It has been suggested that it is not an unusual thing for one to deposit a security as collateral to a note; assign it; pay the note and erase or cancel the assignment; and that Mr. Gaston had the right to assume that that course had been adopted in this case. That may be true, but in this case there is nothing upon the face of the paper that shows that Mr. Brice owed Mrs. Neely $1,200, or that the assignment was as collateral. It shows an absolute assignment, and the evidence shows an absolute assignment. There is nothing to justify the cancellation, and all to show the necessity of an inquiry. What does this mean?
I am strongly inclined to think that, if Mr. Gaston had been in Chester when the draft was presented, and not in Florida, the irregularity and disobedience of instructions would have been discovered and corrected. *Page 342 
III. I see no room in the case for the application of the rule of bona fide purchaser for value without notice. That might apply under the Act of 1924, which provides for the recording of assignments of mortgages, but not to a case prior to that Act, where, under the case of Wilson v. Brabham, the duty of a subsequent purchaser or incumbrancer is to see that the satisfaction of the mortgage is made by the holder and owner.
The Special Referee finds:
"The notice from the records in the Clerk's and Register's office, therefore, was that J.S. Brice, attorney, who had been the legal owner and holder of the F.P. Love mortgage, had assigned the same for value to A.L. Gaston, Esq., and that it had been paid by (to?) the latter and extinguished;and this is all the notice that is imputable to the defendantsLove and Hargett."
Unfortunately for this statement, it appears that the payments by the defendants were made on March 30, 1923;
that the deeds were delivered then; and that Mr. Gaston's satisfaction, with the assignment, was executed on March31, and not recorded until April 4th.
The same inadvertent statement occurs in the decree of his Honor, Judge Featherstone:
"As stated above, when they purchased the land, there was on record this mortgage in the name of J.S. Brice, attorney. There was an assignment by J.S. Brice, attorney, to A.L. Gaston. There was a satisfaction by A.L. Gaston. Therecord was perfectly clear."
The record was not clear when the purchasers paid their money and accepted delivery of their deeds. It did not be come apparently clear until the assignment from Mr. Brice to Mr. Gaston and the satisfaction of the mortgage were recorded on April 4th.
IV. The issue here may be solved by considering the result, if instead of the indirect handling of the matter, Mr Brice had drawn a draft upon the purchasers for the amount *Page 343 
of the mortgages, and had accompanied it with the notes and mortgages and satisfaction pieces. If nothing appeared upon the papers indicating that Mrs. Neely ever had an interest in the mortgages, and it appeared, after the draft had been paid and the mortgages satisfied, that an interest to the extent of $1,200 was owned by her, by previous assignment from Mr. Brice, and that Mr. Brice was not authorized to satisfy or assign that interest, could there be a doubt that her interest could be enforced against the purchasers? A stronger case would be presented, where the papers carried a canceled assignment to Mrs. Neely, with no explanation of how or why or by whom the cancellation had been made.
In Wright v. Eaves, 10 Rich. Eq., 582, it is held that the assignee of a mortgage is entitled, as against a subsequent purchaser from or incumbrancers of the mortgagor, to payment in full of the assigned mortgage.
"Of course, if an assignment of a mortgage is not a recordable instrument under the recording statutes and its record would not serve as notice, an assignee of a mortgage cannot be prejudiced by failure to place his assignment on record even though a third person purchases or lends money on the property in reliance of a discharge of record made by the mortgagee." 19 R.C.L. c., 65; note, 15 L.R.A. (N.S.), 1025.
In 1 Jones, Mtg. (6th Ed.), p. 1018, it is said:
"If the discharge is made by one professing to act in a representative capacity, as for instance, an administrator or guardian, and he has not been empowered to act, or has been empowered to act only after giving bond and has failed to comply with this requirement, the discharge will not bind those whom he represents, and will not protect one who afterwards purchases in good faith."
The same rule has been applied to the case of a mortgage to one as attorney. Hazeltine v. Keenan, 54 W. Va., 600;46 S.E., 609; 102 Am. St. Rep., 953. *Page 344 
See also, Freeman v. Bailey, 50 S.C. 241; 27 S.E., 686, where it was held that, where a note was payable to one as Probate Judge, a transferee was put upon inquiry, and was bound by whatever disclosures such inquiry would reveal. Also Ford v. Brown, 114 Tenn., 467; 88 S.W. 1036; 1 L.R.A. (N.S.), 188.
For these reasons, I think that the decree of the Circuit Court should be reversed, and the case remanded to that Court for judgment in favor of the plaintiff.