Bowen v. Kelbaugh

Bond, O. J., delivered the opinion of the Court. The question in this ease is: When, after a mortgagee has assigned the mortgage, the mortgagors in igjnoranee of it continue paying him interest, .and, finally, pay him the principal, and he dies without turning the money so paid over to the assignee, who as between mortgagors and assignee shall hear the loss? Albert J. Long, an attorney, lent two thousand dollars for Samuel 0. Bower to Kelbaugh and wife on the security of a mortgage of laud which Long was selling them, and immediately assigned the mortgage to Bo>wer, and delivered the paper to him.

The assignment Was duly recorded in the laud records. During, the next month, Kelbaugh .and wife paid one hundred dollars of the principia! to Long, and from time to time paid interest, until they sold the land to Wheeler and wife on August 21st, 1920. The Bank of Brunswick, of Brunswick, Maryland, which lent to Wheeler and wife the money for the purchase, had Long, as it® attorney, prepare the deed .and the new mortgage, .and as a step, in the settlement paid off all the remaining principal on the outstanding mortgage to Long. Long reported to -the mortgagors that the old mortgage had been released, but it was not released.

The ³⁶⁶ evidence shows 'that it was, during all this time, in Bower’s hands. Bp to that time Long had turned over to Bower all the interest paid except one item, but he failed to turn over any of the principal, and he continued paying Bower money for interest for nearly two years after the mortgage had been paid off as stated. Long-died in 1923. Bower then assigned his mortgage to Garland E. Groh for foreclosure and collection, but when foreclosure proceedings were instituted the present bill was filed by Kelbaugh and wife and Wheeler and wife praying for an injunction to restrain the foreclosure, and for a decree for the release of the mortgage.

And after evidence had been taken the court below signed a decree for the relief prayed. The .appeal is from that decree. , The evidence showed that the mortgagors had uo actual knowledge of the assignment. Bo one on their behalf examined the land records, they had no contact with Bower ; and Long in his conversation with them- referred to it as his mortgage, and to the money as due to himself. Witnesses were examined as to possible authority from Bower to Long •to act as Bower’s agent to receive payments of principal for him, but the evidence, in our opinion, falls far short of being sufficient to prove the authority.

And the court below did Pot rest its decision on that ground. The evidence on the point is, briefly, this. 'The administrator of Long, Mr. J. O. Snyder, and another attorney, Mr. Wolfinger, testified that when, after Long’s death, Bower called to inquire about his mortgage and was shown the entries of payments in Long’s books, Bower said he had asked Long to collect the money, but had not told him to release the mortgage. Bower’s testimony is that he had had three or four mortgage transactions through Long as attorney, that he always kept his own mortgages, and that in every previous instance when a mortgage was to be paid off Long had notified him to come in, and he had come in with the mortgage, received payment and exeicuted a release. This particular transaction originated, he ■said, in Long’s coming to him for a loan of three thousand dollars ,to .another borrower, Miller Brothers.

Having had a satisfactory experience with Miller Brothers