Court Opinion

ID: 5250729
Source: CourtListenerOpinion
Date Created: 2022-01-06 18:12:41.32879+00
Date Added: 2024-06-11T08:27:56.606624
License: Public Domain

Lambert, J. (dissenting):
This case is not of that class of cases where ■ payment is made to an agent because of his possession of the original instrument and the arguments on that class of cases do not apply here.
Assuming Sherwood’s complete authority it was essential, of course, that the payment when made should be made to him as agent and not in his personal capacity.
The defendants did not give to Sherwood any cash. They merely gave an order for the bank to pay him personally a specific amount of money in each instance. Very clearly they thereby made Sherwood their agent to collect that money from the bank personally, and then apply it as .agent. This is a different situation than as though they had given him their check as agent. It differs in that they thereby reposed in him their confidence and left to him as an individual, rather than as agent, the duty of collecting and making proper application of the moneys represented by the check.
If this record showed that Sherwood ever had the moneys upon this check in his possession as agent, then a much clearer case for the defendants would be presented. The record does not so show. In fact it demonstrates exactly the contrary. One of these checks, made to him personally was by him *331personally indorsed in his individual name, deposited to his individual account and converted by him without ever having come into his possession as agent. In that instance his breach of trust was a breach of a duty he owed to the defendants rather than to plaintiff. The defendants by their acts had made him their agent in the collection of this check and the application of its proceeds and the conversion occurred before the termination of that relationship of principal and agent.
The other of such checks was likewise made to the order of Sherwood personally, indorsed by him personally and transferred to the account of the Fitzhugh Amusement Company. In this instance too the conversion occurred during the continuance of the relationship of principal and agent between the defendants and Sherwood. The breach of trust duty was a breach of trust duty owed to them and the action had not at that time proceeded far enough to invade the trust duty by Sherwood to the plaintiff.
So viewed there is no room for application of any doctrine of ratification. Ratification can never apply except with full knowledge of the facts relating to the particular thing to be ratified. There can be no • serious argument that the plaintiff in this action after she knew of these conversions ever ratified anything.
There is a sort of injustice in this result in view of the course of dealing theretofore had between these parties. However, the defendants knew of the representative capacity of Sherwood, and chose to extend to him permission to act for them. They created or at least acquiesced in his agency relationship with them thereby making it possible for this defalcation to occur. The conversion was a conversion of their property and before it became the property of the plaintiff. Their conduct made that situation possible when they had ample means for their protection. They are no more innocent than is the plaintiff, and so viewed the result evidences no hardship.
The judgment and order should be affirmed, with costs.
De Angelis, J., concurred.
. Judgment and order reversed, with costs, and judgment directed in favor of defendants, with costs, requiring the plain*332tiff to discharge the mortgage upon payment of the balance of the mortgage debt after crediting the two checks in controversy and providing that in case defendants fail to pay said mortgage within five days after service of copy of judgment with notice of entry, judgment for foreclosure and sale be entered in favor of plaintiff for the amount of the mortgage after crediting said two checks. Findings of fact and conclusions of law modified accordingly. Order to be settled on notice.