Land Mortgage Investment Agency Co. v. Preston

Land Mortgage Investment Agency Co. v. Preston. Bill in Equity to Remove Cloud on Title. 1. Person dealing with agent within scope of his authority, not liable for his defaults. — The lender of money is authorized to pay it to the person or agent authorized by the borrower to receive it, and having done so, the lender’s responsibility ceases, and a loss of the money, caused by the absconding of the agent, cannot be visited on the lender. , 2. Burden of proof on party holding the affirmative. — The burden of proving a disputed fact is in all cases on the party affirming its existence, and claiming to derive right and benefit from it; it is on the lender of money to prove the execution of a paper relied upon as giving authority to the borrower’s agent to receive and pay over the money borrowed. 3. Lender responsible for act of his agent in paying over money. Where' the lender had money deposited with its broker, who acted as agent of the borrower in making the application for the loan, and after the approval and acceptance of the loan the lender authorized such broker to pay the money over to the borrower out of the money deposited for that purpose, tne broker was the agent of the lender in paying over the money, and the lender is responsible for the act of the agent in paying over the money to one not authorized to receive it, and who failed to deliver it to the borrower. 4. Evidence held not sufficient to prove execution of instrument. On the issue as to whether a borrower executed an alleged paper authorizing his agent to receive money, the borrower testified he did not execute the paper, nine witnesses, not experts, but more or less familiar with the borrower’s handwriting, testified that in their opinion the signature was not genuine, eight witnesses, some of whom were experts, testified by comparison that it was, in their opinion, not genuine, and some of them, that the signature was the same handwriting as other parts of the paper, written by the alleged agent; and opposed to this, the lender introduced eight witnesses, who were experts, and who testifying by comparison of handwriting, gave it as their opinion that the signature was genuine: Held, that, with the burden of proof on the lender to show the genuineness of the paper, he had not discharged it by a preponderance of evidence. Appeal from Dale Chancery Court. Tried before Hon. Jere N. Williams. The case is stated in the opinion. A. T. Borders, and Hugh Nelson, for appellants. H. L. Martin, and Sollie & Kirkland, contra. [MAJORITY — PER CURIAM.] PER CURIAM. The Loan Co. of Alabama, a corporation under the laws of this State, located at Selma, which will be referred to as the Alabama company, was engaged as a broker or middle man negotiating loans on real estate and mortgages thereon, and in acting as such for resident and non-resident persons and corporations in and about lending money, receiving reasonable commissions for its services, such as were authorized by its charter, to be paid by the lender or borrower, as might be agreed on in each particular case. Among the companies from which it sometimes obtained money in placing loans was the appellant company, the Land Mortgage Investment and Agency Company of America, Limited, of London, England, hereafter referred to as the London company. In conducting its business, the Alabama company had its correspondents in different counties of this state, who sought or ascertained parties desiring to secure loans on their farm lands, especially, and who acted as broker between the borrower and the Alabama company, and among these Avas J. W. Y. Manghen, of Ozark, who acted in this capacity in Dale county. The Alabama company acted, in securing the loan in this case, not for the London company, as it contends, but as agent for the borrower, Paul H. Preston, and the said Manghen, as is' the contention of the appellant companies, did not act as the agent of either of said companies, but for the borrower, Preston. Neither the borrower, Manghen, nor the Alabama company, as the evidence satisfactorily shows, at the time of the application for said loan, nor during the preliminary negotiations therefor, knew with what person or with what loan company, as lender, the loan, if effected, would be placed. Neither in that time, ever had any correspondence or negotiation with the London company about the loan, and the latter company knew nothing about the proposed loan, and the proposed borrower, until all the papers had been prepared and submitted to it to secure the loan thereon. Preston executed his notes to the London company for the principal loaned, falling due in different years during the period of the loan, and for the annual interest accruing thereon, and a mortgage on his lands to secure the payment of the same, properly executed by himself and wife to pass the homestead. He also executed to the Alabama company a second and similiar mortgage on the same lands, with five notes therefor, to secure the payment of $45, its compensation for negotiating said loan for him, and he agreed to pay to said Manghen $10 for his services to him in and about the placing of said loan. When the money borrowered was paid over by the Alabama company to Manghen for the appellee, as is not denied, instead of paying it to him, Manghen appropriated it to himself and ran away, and the borrower never received any part of it. Said mortgages became due and foreclosable, and on default in their payment, they were foreclosed under the power in them, and R. M. Nelson became the purchaser at the amount that was due on them, and deeds were made to him by the mortgagees. The said Preston filed this bill to remove said mortgages and deeds as a cloud on his title to said lands, of which he is in possession, on the ground, in short, that he has never received the loan or any part thereof ; that said Manghen was not his agent in procuring said loan, but the agent of said loan companies, to which he gave no authority to pay the money to said Manghen for him. The respondents allege that Manghen was the agent of complainant to receive said money, and if he misappropriated it, it was not the fault of respondents, but the misfortune of complainant for which respondents are not liable. In the cases of Edinburgh-American Land Mortgage Co. v. Peeples, 102 Ala. 241, and American Mortgage Co. of Scotland, Limited, v. King, 105 Ala. 358, we considered and passed on the liabilities of the respective loan companies, on account of the embezzlement of this same Manghen of the loans effected by him for Peeples and King in those cases. In each of those cases, it was shown that the applications of the borrowers contained the provision : “I agree to pay J. W. V. Manghen, as my attorney, a reasonable fee for taking this application, conducting correspondence, and making ample abstract of title to my land, and in securing and paying over the same.” We held that the lender was. authorized to pay the money to the persons or agents authorized by the complainants to receive, it, and having done so, its responsibility ceased, and the loss could not be visited on the lender. The alleged application in the present case contains this identical agreement, except that the reasonable fee the lender agreed to pay Manghen is named at $10. This agreement is marked C, as an exhibit to the deposition of W. B. Nelson, a witness for respondents. In addition, there are exhibits A, B and D to said deposition introduced by respondents', each purporting to be signed by the borrower, Preston, in and about procuring said loan. The complainant objected to the introduction of each of these papers, on the grounds that they were not self-proving, because their execution by complainant had not been proved, and because they were not competent evidence. A purports to be the oath of the appellee to an application to the Alabama company to procure for him a loan of $500 on his said lands, representing himself as their owner, stating that the statements of his indebtedness as made to his agent, Manghen, and the other statements therein, were true. B, to be a contract with the Alabama company by the appellee, agreeing to pay them certain sums annually if the company succeeeded iñ 30 days in procuring the loan. C, to be an agreement of appellee with said Manghen, agreeing to pay him as attorney of appellee a fee of $10 for taking the application for the loan, conducting the correspondence and making a complete abstract of title to his lands and receiving and paying over the money and all such work in connection with the loan, and I) to be an affidavit by the appellee, reciting the giving of his mortgage to the London company; that his abstract of title was correct; that he had a perfect title, free from lien or incumbrance, &c. Without the contract, marked exhibit C, there would not appear to be any authority for the Alabama company to pay over the money to Manghen, and if said contract is not a forgery, but was signed by the borrower, it would follow, he will have to share the same misfortune that befell Peeples and King in the other cases. The only question we have for decision, therefore, is as to the Alabama company, whether said contract is a forgery or not. The burden of proving the execution of said contract, and the other exhibits referred to, is on the respondents, since they set them up as a defense. The burden of proving a disputed fact is, in all cases, upon the party affirming its existence, and claiming to derive right and benefit from it. — 3 Brick. Dig. 433, §388. A great many witnesses were examined on each side, and the chancellor rendered his final decree granting the prayer of the bill, and declaring the mortgages on the complainant’s land to be of no effect, and ordering their cancellation. The evidence is sufficiently clear, not to leave it in doubt, that Manghen was not the agent of either of said companies, but was the agent of complainant for procuring the loan, for which complainant agreed to pay him the sum of $10. The London company never heard of Manghen or the complainant before it was asked to make the loan by the Alabama company, on the papers passed and presented by that company. He was the correspondent, merely, of the latter company in and about such loans as he might be engaged to make by parties in Dale county desiring them, and he looked to them, and not to the Alabama company or the company that might lend the money, for his compensation. The papers marked A, B, C and D were such as was usual in and about procuring such a loan by any borrower. It is averred in the bill that complainant, “being desirous of obtaining a loan, and seeing an advertisement óf said Manghen in the Ozark Star, did make application to him for a loan of money of $250.90 ($500); that said application was made to the said J. W. Y. Manghen, as the agent of said Loan Company of Alabama,” and as a result, he executed the two mortgages in question. He further states, “that acting upon his faith and confidence in said Loan Company of Alabama and its agent, J. W. V. Manghen,” he executed and delivered said mortgages. He says in his first deposition, “I never agreed to pay Manghen anything. I see no contract appended to my bill, wherein I agreed to pay Manghen anything. I do not remember all that was comprised in the application for the loan. The reason Manghen was not my agent was, that he represented himself to me as the agent of the loan companies. I do not know why Manghen did not read them to me. I think I read all the papers myself that I signed. I will swear that I did agree to' give Mangben ten dollars to negotiate tbe loan for me.” Again, be states, “I did not in t'bis matter correspond directly witb tbe Loan Company of Alabama. * * * I don’t know about tbe application and abstract. He (Mangben) took my papers and said be could get tbe money on them. I did not agree with, bim for bim to conduct any correspondence. I don’t know about tbe correspondence. I did not make any agreement witb bim at all, except that be was to take the papers and get tbe money on them. I do not know whether be took my application. * * * If there was an application made, I did not authorize Mangben to make it. I did not authorize any one to do any correspondence for me in respect to said loan.” He distinctly swears be did not sign any paper authorizing tbe money to be paid to Mangben. In one of bis depositions (for be ivas examined three times), be states, “I did sign the ten promissory notes attached to tbe deposition of J. S. Bennett in this case. I did not sign tbe notes attached to tbe deposition of W. B. Nelson in this case.. I signed only one mortgage and set of notes.” This was contradictory of tbe allegations of bis bill. On another examination, be asked to correct that statement, and said be signed all tbe notes and both mortgages. He further stated as a reason for bis mistake, that be did not understand tbe question put to bim, and was drinking some, and was not exactly at himself. These averments in bis bill, and these answers to interrogatories propounded, tend to show that complainant did make application for this loan in some shape, either verbal or written, and that be is confused and indefinite in bis recollection of what really did occur. Tbe complainant introduced much proof to show that exhibits A, B, C and D were not genuine, and the- respondents examined many to show that they were.- Of those examined by complainant, there were nine, not claimed to be experts, but who swore they bad seen complainant write, and Avere more or less acquainted witb bis handwriting, Avho expressed tbe opinion that tbe signatures to said exhibits were not complainant’s. He introduced eight others, who be claims were experts, Avho testified from comparison of handwritings, that the signatures of complainant to tbe exhibits were not bis. Some of these, it may be, have not shown themselves to be experts, in the higher sense, that by study, occupation and habit they become skillful in marking and distinguishing the characteristics of handwritings, genuine and spurious.- — Moon v. Crowder, 72 Ala. 79, 88; Griffin v. State, 90 Ala. 596 ; Rogers on Exp. Test. §129. But their testimony is in without objection for what it may be worth. Some of them were competent as experts. All of them gave their opinions adversely to the genuineness of complainant’s signature to the said exhibits. On the other hand, respondents introduced eight witnesses, whose occupations and business rendered each competent to speak as an expert in handwriting, and they each testified to the genuineness of the signatures of the complainant to said papers. To sum up: The complainant swears positively he did not sign the contract marked exhibit C, nor any one of the other exhibits, marked A, B, and D. Seventeen other witnesses for complainant, who had seen him write, swear the signatures are not his, and eight others swearing by comparison and as experts, say that they are not genuine. Roman, an expert, examined by defendants, and whose deposition was introduced by complainant, gives it as his opinion that the party who signed the notes (admitted to have been signed by complainant), did not sign the exhibits. It should be stated that the signatures to these papers, purport to have been witnessed by said Manghen, and the blanks in them were filled by him, and the witnesses expressing their opinion on the subject, say that one and the same man did the writing, and if Manghen’s signatures to the papers as a witness were signed by him, which is not denied, he signed the name of complainant to said papers. As an off-set to this, we have t'he opinion of the eight expert witnesses of defendants swearing from comparison, that the complainant’s signatures to the contract, exhibit C, and the other exhibits, are genuine. We must conclude as did the chancellor, with the burden on respondents to show the genuineness of these papers, that they have not discharged it by a preponderance of the evidence. When the loan was accepted by said company, which had money deposited in a bank in Selma for investment for it by the Alabama company, it authorized the latter company to pay the money over to the borrower out of moneys already deposited for such purposes, and the Alabama company caused tbe money to be paid to said Mangben for tbe complainant. In this transaction of paying over tbe money to tbe borrower after tbe approval and acceptance of tbe loan by tbe London company, tbe Alabama company represented tbe lending company. That company, as has been stated, bad no dealings with tbe complainant, except through tbe Alabama company. In tbe absence of authority so to do from tbe complainant, tbe Alabama company bad no right to pay tbe loan to said Mangben. It was also tbe duty of tbe London company, when it accepted tbe loan, to transmit tbe money to tbe borrower. If it attempted to do so through its agent for tbe purpose, tbe Alabama company, which company paid tbe money borrowed to Mangben, who was not tbe agent of the borrower to receive it, and be made way with it, tbe London company must suffer through tbe default of its said paying agent, tbe Alabama company. Tbe complainant surely cannot be made to lose tbe money be attempted to borrow, through tbe negligence of either of said companies. Affirmed. Haralson, J., not sitting.