Morrow v. Stanley

Thomas, J., delivered the opinion of the Court. Benjamin 0. Pearce, of Cecil county, Maryland, died in September, 1895, leaving’ a last will and testament by which he directed his executor, John S. Wirt, of Elkton, Maryland, to invest his entire estate and to pay over the income therefrom to the testator’s widow during her life. After the death of his widow, the testator gave his estate to his three children, “to be equally divided among them.” The will was duly admitted to probate and letters testamentary were granted to said executor by the Orphans’ Court of Cecil County on the 2nd of October, 1895.

On the 7th of December, 1895, Thomas L. Stanley, of Cecil county, executed to John S. Wirt a mortgage of his farm in said county to secure the payment of the sum of $2,500.00, which the mortgage recites was then “owing from the said mortgagor to the said mortgagee,” and the mortgage was recorded on the day it was executed. It was not given ⁵⁹² to secure a note or bond, but contained a covenant on tbe part of tbe mortgagor to pay said sum of $2,500.00 on tbe 7th of December, 1896, and the interest thereon semiannually. On tbe 10th of December, 1895, John S. Wirt obtained from tbe Orphans’ Court of Cecil County an order authorizing him to invest $2,500.00 of tbe funds in bis bands as executor of Benjamin C. Pearce “in a first mortgage upon tbe farm of Thomas L. Stanley, in Cecil county,” and on tbe 2nd of January, 1896, be endorsed on tbe original mortgage from Stanley to him the following assignment: “Por value received I hereby assign the within mortgage to John S. Wirt, executor of Benjamin O. Pearce. Witness my hand and seal this second day of January, 1896.

John S. Wirt. (Seal)” Witness — J. P. MoCay. This assignment was never recorded. Thomas L. Stanley paid to Mr. Wirt tbe interest on tbe mortgage to 1900, and $500.00 on account of tbe principal of tbe mortgage debt.

In Rovember, 1900, Mr. Wirt sold some bant stocks belonging to bis client, Laura C. Barroll, and invested tbe proceeds in said mortgage. The assignment of tbe mortgage to* Miss Barroll, which was written by Mr. Wirt on tbe mortgage record, below tbe mortgage, and witnessed by W. G-. Purnell, deputy clerk, is as follows: “In consideration of tbe sum of two thousand dollars, I hereby assign the above mortgage to Laura C. Barroll. Witness my hand and seal this 19th day of Rovember, 1900.

John S. Wirt (Seal). Witness: W. G. Purnell, Deputy Cleric.” On tbe 20th of Rovember, 1900, Mr. Wirt wrote Miss Barroll tbe following letter, inclosing a certified copy of tbe mortgage and assignment to her: ⁵⁹³ “Elktoh, Mdv Nov. 20, 1900. “Miss Laura 0. Barroll, Elkton, Md. ■■ My Dear Miss Laura— ' ' ■, I enclose herewith mortgage of Thomas L. Stanley for $2,500.00, which in consideration of the sum of $2,000. the amount due thereon has heen assigned to. you. I also inclose the Insurance Policy which has been marked to your use.

This is a first mortgage upon the property, and I think Stanley will be in the future, as he has heen in the past, a prompt interest payer. When the interest is paid next month I will deduct out of it the interest on the mortgage up until yesterday for myself and will remit you the balance. After that you will receive the interest every six months on the amount of $2,000. I have not yet heard from Lowndes & Redwood returning me the certificate for the balance of shares due you, but will probably receive a letter from them tonight or in the morning, and when I do I will send you the certificate with the balance of the shares of stock belonging to you.

Yours very truly, Joust S. Wirt." After said assignment Mr. Wirt collected the interest on the mortgage for Miss Barroll,. sending her a check for same less his commissions, and signed the receipts therefor as ’.attorney for Laura O. Barroll. He died in May, 1901, leaving a will, and letters of administration with the will annexed were granted by the Orphans’ Court of Cecil County to George R. Ash, who found the original mortgage from Stanley to Wirt, with the assignment of January 2nd, 1896, endorsed thereon, in Mr. Wirt’s safe inclosed in an envelope marked “Pearce Estate.” Laura C. Barroll died in March, 1905, leaving a will, and letters testamentary were granted by the Orphans’ ⁵⁹⁴ Court of Cecil County to Sarah Ellen Barroll. On the 19th of June, 1905, Thomas L. Stanley borrowed from Isabel R. Steel the sum of $3,000.00 and executed to her a mortgage of his said farm in Cecil county to secure the payment thereof. With the sum so borrowed he paid Sarah Ellen Barroll, executrix, the amount due on the mortgage assigned to Laura C. Barroll, and the mortgage was released by said executrix.

On the 6th of June, 1905, the Circuit Court for Cecil County, sitting as a Court of Equity, passed a decree assuming jurisdiction of the trust estate created by the will of Benjamin C. Pearce and appointing James O. Morrow trustee to execute said trust, with directions to sue for and recover the property belonging to said trust estate, and on the 25th of January, 1906, said trustee filed his hill of complaint in this case against Thomas L. Stanley, Sarah Ellen Barroll, executrix of Laura 0. Barroll, Isabel R. Steel and George R. Ash, administrator, etc., of John S. Wirt, setting out the facts we have stated above and alleging that the estate of John S. Wirt was insolvent; that the sum of $2,500.00 loaned by him to said Stanley belonged to the estate of Benjamin C. Pearce, deceased; that the money received by him for the assignment of said mortgage was wasted and not accounted for by him or by his administrator since his death; that Laura C. Barroll “knew, or by reasonable inquiry might have known, that the said mortgage and the debt thereby secured belonged to the estate of Benjamin 0. Pearce,” and that said Wirt had no right or authority to assign the same to her; that there was due on said mortgage the siim of $2,500.00, with interest thereon from the 7th day of December, 1905, and that if the said Thomas L. Stanley had paid any part of the sum secured by said mortgage to Sarah Ellen Barroll, executrix of Laura C. Barroll, said trustee was entitled to have the same paid to him by said executrix, and upon her failure to do so he was entitled to recover said sum from Thomas L. Stanley. The bill prays, first, that Thomas L. Stanley and Sarah Ellen Barroll, executrix, be required to answer and “discover and disclose fully and in detail what sums of money have ⁵⁹⁵ been paid on account” of said mortgage debt; second, that said executrix of Laura 0.

Barroll be required to pay to tbe plaintiff all sums received by her or tbe said Laura 0. Bar-roll on account of said mortgage debt; third, that tbe said Isabel R. Steel be required to answer, etc.; fourth, that a decree be passed for tbe sale of tbe real estate described in said mortgage or so much thereof as may be necessary for tbe payment of said mortgage claim; fifth, that tbe administrator of John S. Wirt be required to file in this cause tbe original mortgage and any other security be may have for tbe payment of tbe mortgage; sixth, that said assignment from John S. Wirt to Laura 0. Barroll be declared null and void; seventh, that an injunction be issued against tbe said Stanley, Sarah Ellen Barroll, executrix, and George R. Ash, administrator, enjoining said Stanley from paying any part of said mortgage to anyone except tbe plaintiff, enjoining Sarah Ellen Barroll, executrix, from assigning or releasing said mortgage or distributing tbe estate of ber testatrix until tbe plaintiff’s claim has been paid and satisfied, and enjoining said George R. Ash, administrator, from assigning or delivering said mortgage to anyone except tbe plaintiff, and commanding him to assign tbe same to tbe plaintiff, and, eighth, for general relief. Tbe answer of Thomas L. Stanley denies that tbe sum of money be borrowed from John S. Wirt, and which was secured by said mortgage, belonged to tbe estate of Benjamin C. Pearce, and alleges that be did not borrow the same from John S. Wirt as executor; that tbe loan was made to him and tbe mortgage was executed prior to tbe order of tbe Orphans’ Court authorizing said executor to invest tbe sum of $2,500 in a mortgage upon bis property, and that be bad no knowledge of said order-; that be paid John S. Wirt $500.00 on account of tbe principal of tbe mortgage debt and tbe interest due thereon prior to tbe assignment of tbe same to Laura C. Barroll and that be paid tbe balance of said mortgage to Sarah Ellen Barroll, executrix, with no intention of defrauding anyone interested in said mortgage.

Tbe answer of ⁵⁹⁶ Sarah Ellen Barroll, executrix, also denies that the sum of money originally secured hy said mortgage belonged to the estate of Benjamin C. Pearce, and alleges that Laura 0. Barroll took the assignment of said mortgage believing that the same belonged to John S. Wirt; that said Wirt represented to Laura C. Barroll that the mortgage belonged to him; that relying upon said representation and the mortgage record she paid to him the sum of $2,000.00, the balance then due on said mortgage, and that he thereupon delivered to her what he represented and what she believed to be the original mortgage and assignment thereof, and that she had “no notice or knowledge of any character whatever that said mortgage debt belonged, or was claimed to belong, to the estate of Benjamin O. Pearce.” The answer of Isabel R. Steel alleges that she took said mortgage for $3,000.00 believing that the mortgage assigned to Laura O. Barroll was the only lien against the real estate of Thomas L. Stanley, and that in making said investment she acted in good faith, relying upon the record title of the said Stanley, and without any notice, either actual or constructive, of the plaintiff’s claim. In addition to the facts we have already stated, the evidence shows that Laura O. Barroll, at the time of the assignment of the mortgage to her, was about seventy years of age; that she had entire confidence in Mr. Wirt, trusted him as her friend and attorney and consulted him in all matters of business. There is not the slightest evidence in the case to show that she knew that the debt secured by the mortgage belonged to the estate of Benjamin O. Pearce, or that she knew of the assignment of the mortgage to John S. Wirt as executor.

On the contrary, all the evidence