Court Opinion

ID: 8035869
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:20:45.237731+00
Date Added: 2024-06-11T16:37:07.617276
License: Public Domain

Paine, J.,
dissenting.
I dissent from the foregoing opinion. I desire to set out some of the facts upon which I base this dissent.
The pleadings and the evidence disclose that Frank J. Polak was a customer of the Saunders County National Bank at Wahoo, Nebraska, and carried a checking account in said bank. The Nebraska State Savings Bank was also operated in the same room, and F. J. Kirchman was president of each bank, and the directors were the same with one exception. The two banks were considered as one bank by the general public, being often referred to as the Kirchman bank. On April 15, 1930, both banks became insolvent, and were closed by the respective authorities, the Saunders County National Bank being taken over by the comptroller of currency and the Nebraska State Savings Bank being taken over by the department of trade and commerce.
As stated in the main opinion, Mr. Polak contracted to sell the land upon which these three mortgages were outstanding, in the fall of 1929, to Frank C. Meduna and *654Thomas K. Simanek. The settlement was to be made March 1, 1930, at which time these said purchasers, to protect themselves against the mortgages, shown in the abstracts to be held by the Nebraska State Savings Bank, insisted upon making settlement at the bank.
The check from Frank C. Meduna is exhibit 18, dated February 26, 1930, payable to the Saunders County National Bank, in the sum of $9,500, and has written in the corner thereof, “For account F. J. Polak on condition Mtges. released as shown by abstract.” The several checks from Simanek were drawn on several different banks, and made a total of $18,200.
While the checks were made payable for a total of $27,-700 to the Saunders County National Bank, they were credited at once on the books of that bank to the account of the Nebraska State Savings Bank, mortgagee, in that bank, and at the same time were entered in the books of the Nebraska State Savings Bank to an account designated “Polak, Frank J. 1930,” of which account defendant Polak had no knowledge, and withdrawals made from this account by Kirchman were without his knowledge.
In a settlement sheet, exhibit 22, dated March 1, 1930, F. J. Kirchman, as president of the Saunders County National Bank, certifies that the amount due on the $17,-000 Polak loans that day was $20,403.55, and that all of the loans have been fully paid, leaving a net deposit to the credit of Mr. Polak of $7,296.45. Thereupon, warranty deeds were delivered by Mr. Polak and wife, and a release, being exhibit 10, was made by the Nebraska State Savings Bank, by F. J. Kirchman, president, and W. H. Kirchman, cashier, under date of February 26, 1930, releasing the mortgages made by the Polaks to that bank, in the total sum of $17,000. After receiving the statement of the president of the bank, Mr. Polak testifies that he demanded the return of the notes, but the officers of the bank put him off, saying they were too busy to look, them up, and that he went in every few days, but was put off each time. On April 15, 1930» when *655the Nebraska State Savings Bank was taken over by the department of trade and commerce, the balance due it from the Saunders County National Bank on that day was $82.85. The record further shows that exhibit 25 was a receipt, dated March 8, 1930, signed by Frank J. Polak, showing receipt from the Nebraska State Savings Bank of the balance on the land sale of $7,296.45, and a deposit slip of the Saunders County National Bank of the same date, showing the amount placed in his checking account in that bank.
The foregoing facts set out transactions which were still usual in 1930, of finding a cash buyer for an encumbered farm, paying off the mortgage from the purchase price and having a surplus left for the owner of the farm. The parties involved in this transaction had implicit confidence in F. J. Kirchman, and the fraudulent and dishonest manner in which the transaction was handled did not come to light until after the Kirchman banks had closed. It then developed that some of these coupon bonds had been sold long before, and were not taken up with the purchase money paid to Kirchman for that purpose.
About May 1, 1926, Frank E. Davis, plaintiff herein, had purchased one of the $1,500 bonds, Flora B. Gorder had purchased two of the $2,400 bonds on May 12, 1926, and Nellie Danahay was the owner of one of the $3,400 bonds. Each of these purchasers knew the mortgage securing the bonds was upon the Polak land, but had never notified the Polaks they had purchased the bonds or recorded any assignment of the mortgage, and knowledge of the fact was never brought to the Polaks in any way.
While F. J. Kirchman had given a certificate on March 1, 1930, that all of these loans had been paid off, and had released the mortgages securing them, yet he never called in these bonds for payment, and the three parties named above brought action upon the bonds against the Polaks.
*656The case of Rehmeyer v. Lysinger, 109 Neb. 805, holding directly contrary to the main opinion, is reviewed, and dismissed with the statement that it is a “border line” case. It cannot be disposed of so easily, in my opinion, for the facts were not as strong as this case, and yet the finding of this court was directly contrary to the holding in the main opinion. Let us consider it. The plaintiff sought to avoid the consequences of the fraudu-' lent acts of a faithless agent, as in the case at bar. Petition was for foreclosure of real estate mortgage. Defendant’s answer gives a brief history of the transaction; alleges defendant’s entire lack of knowledge or notice, actual or constructive, that plaintiff was assignee of the mortgage; alleges defendant’s payment in full of said note and mortgage, and the estoppel of plaintiff against defendant to the relief she seeks.
It appears that Mrs. Rehmeyer, who was 80 years of age, purchased the note, but did not record her assignment until 15 months after the mortgagor had paid it off to Wentz. It was held that Charles W. Wentz was the agent of the plaintiff in collecting the mortgage, and her lack of ordinary diligence and her agent’s perfidy are alone responsible, the court saying: “Where one of two innocent persons must suffer through the misfeasance of the agent of one, that one must suffer who has placed the agent in a position to perpetrate the fraud complained of.”
The Polaks were entirely innocent of the felonious acts of the president of the mortgagee bank concerning their notes, but O’Donnell, who handled the Gorder bonds, knew all the facts, placed, his agent, Kirchman, in a position to defraud the Polaks.
Let us examine another “border line” case established by this court. In Taylor v. Flodman, 109 Neb. 812, a companion case to the Rehmeyer case, the purchaser did not file her assignment of the mortgage until over two months after Wentz failed. So far as the evidence shows, not a soul knew of the transaction except the plaintiff and Wentz, and no one could know anything about it *657except as one or the other of these two individuals imparted the information. The plaintiff uttered not a word concerning it, nor did Wentz. Exactly the same as O’Donnell did in the case at bar. Did this court consider only the position of the plaintiff? No. The statement is made: “She kept her assignment from the public records, and thereby its very existence from the knowledge of defendant and the world. In the meantime that she made Wentz her agent to collect her interest and look after the mortgage matter for her stands admitted in the record. Under these circumstances, in the name of common sense and reason, why should plaintiff expect the mortgagor or any subsequent grantee to deal with any one but Wentz in the payment of the mortgage debt. * * * True, it is a hardship that the plaintiff should suffer this loss. It is also true that it would be a hardship that defendant should suffer a like loss.” These words of the late Judge Troup, with the substitution of Kirchman in the place of Wentz, make the case on “all fours” with the case at bar. Should we not give weight to a “border line” case when it is clearly on this side of the border?
There is still another decision of this court that in some respects is more closely in point than these two “border line” cases. It is Bliss v. Falke, 125 Neb. 400. Falke gave a mortgage on a half section of land to the identical Nebraska State Savings Bank to which the Polaks gave their mortgages. The same F. J. Kirchman sold an undivided half of this loan to each of two of his country banks. Now, let us take the words of the decision: “About the time they became due, January 1, 1930, they notified Kirchman, who had been the go-between of the parties in the said renewal and also in the collection of interest and in the preparation of papers and who was also a stockholder of both of the banks, that they desired payment. Kirchman notified Falke and suggested that he get the money from the defendant Otto, giving him a mortgage on the land to secure the same, and pay off the *658banks. He did so and placed the money in Kirchman’s hands for that purpose. The record shows, I think, that he borrowed the whole or major portion of it from the Nebraska State Savings Bank of Wahoo. This he did, believing .that Kirchman was duly authorized to collect and receive. Kirchman did not account to the bank but re-loaned and used the money for other purposes.”
Upon the failure of the mortgagee banks, the receiver took the position that plaintiffs do in the case at bar, and insisted that Kirchman was not an authorized agent for the collection of these mortgages, and started foreclosures. Judge Shepherd states in this opinion that the fact that Kirchman did not have the mortgages in his possession when he collected the money is not sufficient to prove that he was unauthorized to receive it, and to bind the bank by so doing. The trial court found that Kirchman was the agent for collection, and entered decree adjudging that the mortgages had been fully paid, canceled said mortgages, and dismissed the case, and the judgment is affirmed by Judge Shepherd. He says:
“Certainly, if Kirchman had not been made an agent to collect and was unauthorized to receive the money, the receiver was not bound by what he did and may foreclose and sell the land to discharge the two mortgage debts. On the other hand, the fact that Kirchman did not have the mortgages in his possession when he collected the money is not sufficient to prove that he was unauthorized to receive it and to bind the bank by so doing. Lack of possession, to be sure, is a circumstance to be considered and Falke took some risk in paying without requiring a release or an authorization in writing showing Kirchman’s agency. Thomson v. Shelton, 49 Neb. 644. * * *
“The fact that the banks never received their money,, the fact that Kirchman never accounted for the money paid, the fact that the rights of innocent depositors are involved, is not material if Kirchman was authorized to collect and receive. Kirchman may have been guilty of breach of trust, but that cannot be chargeable to Falke *659or to Otto if they were not parties to it; and there is no evidence of the latter.”
As the syllabus states the law in Nebraska, let us consider the two paragraphs therein which, up to the time of the release of the main opinion in this case, has been the law1 in our state, as announced by Judge Shepherd in Bliss v. Falke, supra,:
“Ostensible authority to act as agent may be conferred if alleged principal affirmatively, intentionally, or by lack of ordinary care causes third persons to act upon apparent agency.
“That party collecting mortgage was not in possession thereof could be considered, but was not conclusive on question of authority to act as mortgagee’s agent.” (250 N. W. 250.)
The first syllabus paragraph is taken from the case of Thomson v. Shelton, 49 Neb. 644, and is cited with approval in Pine v. Mangus, 76 Neb. 83, in which case the syllabus stated the law of Nebraska in 1906, and in my opinion, with a slight change, could well be used for the syllabus in the case at bar. It reads:
“A mortgagee of real estate assigned its mortgage, and guaranteed the payment thereof, and thereafter collected the principal and interest, but failed to account therefor to its assignee, who instituted this action to foreclose the mortgage. Evidence examined and held sufficient to show that the mortgagee was the agent of its assignee, and the payments to it satisfied the mortgage indebtedness.”
Other cases are Stuart & Co. v. Stonebraker, 63 Neb. 554, and Newman v. Fidelity Savings & Loan Ass’n, 14 Ariz. 354, which hold .that a mortgagee is presumed to be the legal owner and holder of a mortgage and the evidence of the debt secured thereby, and in the absence'of actual or constructive notice to the contrary, the mortgagee holding a recorded deed from the mortgagor must be presumed to act with authority in entering a release of such mortgage upon the record. Many other citations will be found in the excellent article in 7 Neb. Law Bul*660letin, 307, where we also find: “The apparent authority of an agent which will bind his principal is such authority as the agent appears to have by reason of the actual authority which he has.”
In “Restatement of the Law of Agency,” by the American Law Institute, just published, section 82 reads: “Ratification is the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized by him.”
It is certain that not one of the plaintiffs ever failed to affirm the agency of Kirchman in collecting their interest from Polaks during all- those years and delivering the coupons to Polaks for them.
Were the plaintiffs not negligent in permitting the Kirchman bank at all times to show apparent agency in handling all business relating to these loans? Not a single act can be cited on the part of plaintiffs to show their ownership. On the other hand, the evidence shows that the Polaks were absolutely unaware of any change in the ownership of their notes and mortgages, and had no reason to suspect a change. They paid the bonds in full to the same mortgagee from whom they had borrowed the money, and paid all interest, and he gave them releases thereof.
“Whenever one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it.” Broom’s Legal Maxims (9th ed.) 463.
In my opinion, the holdings in the case at bar disturb a long line of decisions of our court, and force the defendants, who have done no wrong, to pay large sums of money a second time for the benefit of plaintiffs, who have, by their want of ordinary care, conferred ostensible and apparent authority upon Kirchman to act as their agent in the collection in full of the principal and interest of the notes they are now suing for.