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Chetwood v. Berrian.

design being to place them all on an equal footing. They may avail themselves of it or not, as they please, but they cannot, by refusing to prove their debts, defeat the law and divest the assignee of this right and transfer it to themselves. Besides, I am compelled to say that I know of no rule of law which, in a case like this, where there is no evidence either way, would justify the court in presuming that no debt had been proved against the bankrupt's estate. On the contrary, it would seem to me, in view of the fact that there were creditors, that a trust was raised in their favor, and that all they had to do to entitle themselves to the benefit of it was to prove their debts; that if presumptions are indulged in at all, it should be in favor of that course of conduct on the part of the creditors which would be the most probable and natural under the circumstances.

The complainants' bill must be dismissed, with costs.

GEORGE R. CHETWOOD

υ.

THOMAS B. C. BERRIAN et al.

1. In 1872 complainant gave to an agent written authority "to assign, satisfy or discharge all mortgages made to him." The agent, thereunder, assigned to the defendant a mortgage of $10,000, declaring that the assignment was for the benefit of complainant. The agent applied the $10,000 to his own use.Held, that complainant was bound by the assignment and the agent's concomitant declarations; the defendant testifying that he had no knowledge of the agent's fraud.

2. The assignment was made in December, 1879. The mortgage was afterwards foreclosed, the premises bought by the agent, and conveyed to the defendant in July, 1881. The complainant, who was then in Paris, was notified thereof in October, 1881, and returned to this state in April, 1882. He lived continuously thereafter, until April, 1883, with his agent, who informed him fully as to this transaction. He filed his bill in June, 1883.-Held, that his delay constituted a ratification and an estoppel as against defendant.

Chetwood v. Berrian.

On final hearing on bill and answer, and proofs taken in open

court.

Mr. Robert E. Chetwood, for complainant.

Mr. John R. Emery, for defendant Berrian.

VAN FLEET, V. С.

The complainant seeks to obtain a decree against the defendant Thomas B. C. Berrian, declaring that he holds certain lands in trust for complainant, and directing him to convey them to complainant. The complainant puts his right to this relief on the ground that Berrian, as against him, acquired title to the lands in question by fraud. The complainant's case, briefly stated, is this: that his agent, to secure his own debt to Berrian, assigned a mortgage made to the complainant, and standing in complainant's name, to Berrian, afterwards foreclosed the mortgage, procured the mortgaged premises to be sold, purchased them himself, and then conveyed them to Berrian. The strength of the complainant's case, as thus stated, it will be perceived, consists in the fact that Berrian accepted, as a pledge for the personal debt of the agent, a security which on its face showed that it was the property of his principal.

The complainant on the 25th of September, 1866, by writing under his hand and seal, constituted John Chetwood his attorney in fact, with power to bargain, sell and convey his lands situate in the cities of Newark and Elizabeth; also upon payment to satisfy, discharge and cancel of record all mortgages held by him upon property in the states of New York, New Jersey or Michigan, and also to assign such mortgages and the bonds secured thereby; also to collect all dividends which might be declared by any corporation in which he was a stockholder, to vote for him at any election or meeting of stockholders of such corporations, and to take any action in such corporations which he might see fit. Soon after the execution of this power of attorney, the complainant went to Paris, France, where he remained until 1870. In that year he returned to New Jersey, taking up his

Chetwood v Berrian,

residence at Elizabeth, where he had resided before going to Paris. He remained there until June 8th, 1872, when he again left for Paris. He remained in Paris on this last occasion until April, 1882. The day before he left for Paris the last timeJune 7th, 1872-the complainant executed another power of attorney to the same person, giving him enlarged powers. By this last instrument he gave his attorney power to sell, convey or lease all his real estate in any one of the United States; to assign, satisfy or discharge all mortgages made to him on property in any one of said states; to sell and transfer all stocks in any joint stock corporation or association standing in his name; and for those purposes, to execute all necessary deeds and instruments, giving and granting unto his attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the principal might or could do if personally present, with full power of substitution and revocation. The appointee was the complainant's nephew, a lawyer by profession, and in successful practice in the city of New York, and also a member of the New Jersey bar. The complainant was a man of wealth. He estimated his forťune, at the time when he executed the last power of attorney, at $230,000, of which more than four-fifths consisted of personal estate. The complainant is a physician by profession, and when he went to Europe in 1866 was over sixty-four years of age. His object in going to Paris, in would seem, was not to pursue his profession, nor to engage in any business, but to enjoy his fortune, and live a life free from care and labor. All his securities were left with his attorney, who collected the income of his whole estate, paid his taxes, and made such other disbursements as were necessary, and from time to time made such remittances to the complainant as he required. The control exercised by his attorney over the complainant's estate was general, complete and exclusive. He was continued in power after the complainant's return in 1870. The power of attorney executed in 1866 was not revoked, and the bond and mortgage subsequently assigned to Berrian, were taken to secure a loan

Chetwood v. Berrian.

made by his attorney for the complainant in 1871, while he was still in this country.

The transaction which gave rise to this suit took place in December, 1879, in the city of New York. The defendant Berrian is a man of small fortune, consisting of about $20,000, and an invalid. He resided in Europe continuously from June, 1872, until September, 1879. He went there for medical treatment. Prior to December, 1879, the complainant's attorney had pledged the bond and mortgage subsequently assigned to Berrian, as security for a loan made to him by the Germania Insurance Company. When that loan fell due, the complainant's attorney applied to Berrian for a loan of $10,000 for the complainant, offering to assign the bond and mortgage under which the title in question was made, with others, as collateral security, and stating that he had written authority to act for the complainant in the matter. The attorney swears that Berrian made the loan upon his representation that it was for the complainant, and that he so understood the transaction at the time, as the money was required to release the complainant's securities from a previous pledge. His evidence on this point is uncontradicted. The money obtained from Berrian was used to pay the insurance company, and to release the bond and mortgage subsequently assigned to Berrian from the claim of the insurance company. But the money obtained from the insurance company was used by the complainant's attorney for his own purposes, in fraud of his principal. He has purloined and squandered nearly the whole of the complainant's personal estate.

The case made by the bill is not proved. The vital fact of the complainant's case, as stated in his bill, is that Berrian, to secure a debt due from the attorney, in his individual capacity, to him, accepted a mortgage which he knew belonged to the complainant. If that fact had been established, the case would have been free from the least doubt. Berrian would then have been shown to have been a conscious and willing participant in the attorney's fraud, and would not have been permitted, as against the complainant, to have kept any of the fruits of the fraud. But that is not the case. On the contrary, it is undis

Chetwood v. Berrian.

puted that the complainant's attorney, availing himself of the position in which the complainant had placed him, and of the authority with which the complainant had apparently clothed him, has obtained Berrian's money under a representation that he was acting for the complainant, and that the complainant was the borrower. In this condition of affairs, the important question is, Who shall bear the consequences of the attorney's fraudhis principal, or an innocent third person who dealt with him in good faith? It is an elementary principle of the law of agency that a principal is bound by all the acts of his agent within the scope of the power which he has conferred upon his agent. And this includes not only the particular act which the principal has expressly authorized, but also whatever is usually done, in the ordinary course of business, in the performance of that act. Very broad powers were conferred in this case. It would be difficult to select more comprehensive terms, or to state them in a more unrestricted form. These are the words used by the complainant in granting power to his attorney:

"To assign, satisfy or discharge all mortgages made to him."

"to

It will be observed that the words are not "to sell and assign," nor "upon payment to satisfy or discharge," but both powers stand entirely unlimited and unrestrained, in their broadest form, and must, therefore, receive a construction commensurate with the breadth of the terms used. A grant of a power assign," standing wholly unrestrained, and without any limitation whatever upon its exercise, is broad enough to authorize an assignment to secure a loan made for the benefit of the grantor of the power. When a principal confers power by terms so uncertain as to be susceptible of two different constructions, and the agent in good faith adopts the one least favorable to his principal, the principal cannot repudiate the acts of his agent as unauthorized because he meant the terms to be read in the other sense. Ireland v. Livingston, L. R., 5 Eng. & Irish App. (H of L.) 395, 416. A power " to sell and assign" will not authorize an agent to pledge the property of his principal, for in such case the terms

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