Court Opinion

ID: 6353766
Source: CourtListenerOpinion
Date Created: 2022-06-24 18:31:13.559864+00
Date Added: 2024-06-11T15:49:37.175615
License: Public Domain

Opinion,
Mr. Justice Mitchell:
This case belongs to that unfortunate class in which one of two innocent parties must suffer from the fraud of a third; and it is also an illustration of the evils of the practice, so constantly reprobated by courts, but apparently so inveterate in business, of the same person being employed as agent by separate parties whose interests are, or at any moment may become adverse. The legal principles by which such controversies are to be settled are perfectly clear, but require much care in their application.
The essential facts in this case are not really in dispute. The appellant Cairns, desiring to borrow money upon a mortgage of his houses, went to Ruhl for the purpose of getting it. Ruhl, who was a conveyancer and real-estate agent, wrote to *120Sergeant, the trustee of several estates from whom Ruhl had got money on previous occasions, naming the amount wanted, describing the property, its improvements, assessed value, etc., and asking, “shall I take it, and for whose account?” Just what answer was made to this letter does not appear, except briefly in the testimony of Sergeant that he “ took the mortgage for the Pepper estate,” and by the «fact that Sergeant drew his check as trustee of the Pepper estate to the order of Ruhl for the amount required, $6,500, and received from Ruhl the mortgage in siiit. Ruhl used $3,500 of the money properly in the extinguishment of a prior mortgage on the property, but embezzled the rest, and the question now to be decided is, upon which party shall the loss fall? Ruhl unquestionably was to some extent the agent of both parties, and we are required to look closely into the facts to discover in which capacity he did the fraudulent act. Clearly, at the inception of the transaction, he was the agent of Cairns. It was an application for money, and made on behalf of Cairns. But, more than this, what was to be done with the money when obtained, and by whom ? Cairns himself says the prior encumbrances were to be paid off and satisfied, and clearly, again, this was to be done by Ruhl, for that was in the line of his business as a conveyancer, and Cairns so left it to him, without even an inquiry for a period at least of months.
On the other hand, for what purposes was Ruhl the agent of Sergeant? Certainly, for the examination of the property, the title, etc.' If the property should prove an inadequate security, or if prior judgments or other encumbrances should cut out this mortgage, then the estate would have to bear the loss, for they took the risk of Ruhl’s attention to this part of the transaction. But is there any evidence of Ruhl’s further agency for the plaintiff ? This was the pinch of the case, and on this the learned judge below ruled it. The evidence is very briefly reported in the bill of exceptions, but the most careful examination of it fails to show that Ruhl’s agency for the plaintiff extended beyond his duties as a conveyancer in the examination of the titles, etc. The defendant endeavored strenuously to show that Ruhl was the general agent of Sergeant, and had handled the money of several estates as such; but the only competent evidence on the subject was the testi*121mony of Sergeant, and that flatly denied the agency. Ruhl, he says, “never represented me, or the estate, in investing money.....If Ruhl had a mortgage which he thought was a desirable investment, he would submit to me a memorandum, .... and I would examine and approve or disapprove of it.” It is clear that Sergeant transacted the business of the estate himself, retained his own judgment as to each investment, and left only the details of conveyancing to Ruhl. His testimony shows no agency beyond this point, and there is no other evidence in the case. Nothing is better settled than that agency cannot be proved by the declarations of the alleged agent, and the offers in the first and second assignments of error amount to no more than such declarations.
It is urged that Sergeant’s act in drawing his check to the order of Ruhl, and not to Cairns, was negligence, and that, on the principle that he who put into the fraudulent hand the means of perpetrating the fraud should bear the loss, Sergeant or his principal should be responsible for Ruhl’s act. But this is a misapplication of the principle. The means of committing the fraud may as well be said to be the mortgage, executed by Cairns and left with Ruhl and by him delivered in exchange for the check. As already seen, Ruhl was Cairns’s agent in the application for the money, and was to continue his agent in the use to be made of it. When he brought the mortgage, fully executed, to Sergeant, the latter was justified in paying for it on delivery. He might have paid for it in cash, and his payment by check to Ruhl’s order was not different in effect.
The case turned upon the question of agency, which the double capacity of Ruhl required to be defined with extreme care. The whole evidence not only fails to show that Ruhl was Sergeant’s agent in handling ¿.he money, but, on the contrary, shows clearly that he received it as agent for Cairns, and in that capacity embezzled it. The learned judge was therefore right in directing a verdict for the plaintiff.
Judgment affirmed.