138 A.2d 456
No. 4622.Supreme Court of New Hampshire Cheshire.Argued December 3, 1957.
Decided February 4, 1958.
1. A mortgagee under a second mortgage of real estate who received funds from the mortgagor for payment toward the principal of the first and second mortgage notes and taxes, after both notes and mortgages had been assigned to others acted as the mortgagor’s agent and is accountable to the mortgagor for the sums thus received.
2. Where the principal had established in support of his petition for an accounting that he had advanced funds to his agent for disbursements toward the principal’s indebtedness to others, the burden of going forward rested upon the defendant agent to account for such funds.
3. The defendant’s burden of going forward was not satisfied, in such case, by his mere assertion that the funds thus advanced were credited by him to the plaintiff’s account, nor did such assertion cast upon the
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plaintiff the burden of proving that the various items of his indebtedness had not been credited through payments from such fund.
4. Where a mortgagor advanced funds to a mortgagee to be credited toward mortgage notes, the fact that the mortgagor failed to demand an accounting under RSA 479:13 from a subsequent assignee of the notes and mortgages and dealt with the latter with respect to the property after his foreclosure did not constitute a waiver barring the mortgagor’s independent right to an accounting from the mortgagee to whom he advanced the funds.
PETITION, for an accounting filed by the intervenor North Riding, Incorporated, in proceedings instituted by the plaintiff Guarente to enjoin foreclosure by the defendant Ginsberg of a mortgage of premises to which the intervenor held the legal title or equity of redemption by conveyance from Guarente. In the principal action an injunction was denied upon terms which resulted in the deposit in court by Ginsberg of a portion of the proceeds of sale of the premises to secure the satisfaction of any claim which Guarente might establish. Thereafter, the intervenor was permitted to file its petition for an accounting, the conflicting claims of Guarente and Ginsberg were settled by agreement, and the claim of the intervenor against Guarente was tried by the Court. After hearing, the Court made the following order: “The Court finds the intervenor has not sustained the burden of proof. Judgment for defendant Joseph W. Guarente.” The intervenor excepted to this order as “erroneous and unwarranted by the law, and contrary to the weight of the evidence.” Its bill of exceptions was allowed and transferred by the Presiding Justice (Wheeler, C.J.).
The evidence tended to establish the following facts. On August 6, 1948, Guarente (hereinafter called the defendant) purchased at foreclosure sale land and buildings situated in New Ipswich and Rindge, giving a purchase money mortgage under date of August 12, 1948, to secure the payment of $17,689.83. On November 15, 1948, the defendant agreed to sell the mortgaged premises to North Riding, Incorporated (hereinafter called the plaintiff) for the sum of $55,000, conveyance to be made in March, 1949, upon payment of approximately $16,000 on account of the purchase price. Conveyance was actually made under date of August 16, 1949, after payment by the plaintiff of a total of $10,000. The premises were conveyed to the plaintiff subject to the first mortgage which had then been reduced in principal amount to $14,689.83. The balance of the purchase price after adjustments on account of interest and insurance was evidenced by a note from the plaintiff
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to the defendant in the sum of $33,200, secured by second mortgage.
Under date of September 27, 1949, the second mortgage was assigned by the defendant to Thomas B. Farrell, Jr., for whom the defendant testified he had acted in selling the premises to the plaintiff. In July, 1951, the holder of the first mortgage demanded payment and the defendant advanced Farrell $10,000 so that he might pay a total of $13,000 to the first mortgagee. According to the defendant’s testimony the first mortgage which was assigned under date of July 13, 1951, to Santry was held by the latter for the benefit of Farrell and the defendant. In August, 1951, according to the defendant’s testimony, Farrell borrowed $13,000 from Helen J. Lockwood and others, giving a note executed by Guarente, guaranteed by Farrell and secured by both first and second mortgages on the plaintiff’s premises. Under date of September 5, 1951, the first mortgage was assigned by Santry to Lockwood and others, and the second mortgage was assigned by Farrell to the defendant, and by him to the Lockwood interests.
The President of the plaintiff corporation testified that he was ignorant of the various assignments of the mortgages and in making payments on account of the mortgage notes regarded the defendant Guarente as “owner” of the mortgages, although he understood that there were “liens against them which had to be paid off.”
On June 12, 1954, while the notes and mortgages were held by the Lockwood interests, the plaintiff paid to the defendant a total of $6,000 for which the defendant receipted under date of June 12, 1954. The receipt provided in part as follows: “This total of $6,000 . . . is paid toward the principal of the existing mortgages now on record. It is the intention that Mr. Joseph W. Guarente, holder of the second mortgage, will buy up the first mortgage now totalling $11,000 and record same in his name so that there will be only one existing mortgage, it being the first.” The June 12, 1954, payment to the defendant was paid by the plaintiff’s check for $1,000, which was deposited to the account of the defendant, and the remaining $5,000 was paid by checks of other makers endorsed to the defendant. It was not disputed that $1,000 was paid to the Lockwood interests on account of the principal of the first mortgage note, together with $275 on account of interest. The balance of $4,725 was retained by the defendant with the plaintiff’s permission on the representation that “he would prefer to hold the amount and apply it on the taxes in the two towns in September of that year.”
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The plaintiff’s president testified that the money was never applied to taxes, or to the payment of any other obligation of the plaintiff to his knowledge.
Beginning on August 20, 1954, the two mortgages were reassigned to a third person, and ultimately on March 29, 1955, to Ginsberg, the defendant in the principal case. On August 10, 1955, Ginsberg purchased the property through foreclosure of the first mortgage, and on April 18, 1956, he conveyed the premises by warranty deed to the plaintiff for a price indicated by the evidence to have been $37,250.
The plaintiff seeks an accounting of Guarente’s use of the balance of $4,725 remaining from the June 12, 1954, payment. There was evidence that as of December 31, 1953, the total principal amount of the two mortgages was $40,352.33. The evidence tends to show that the first mortgage indebtedness was reduced to $11,000 at some time prior to the assignment by Lockwood in August, 1954. The plaintiff’s president testified that immediately prior to the Ginsberg foreclosure sale more than $5,000 was due the town of Rindge for taxes. While the conveyance by Ginsberg to the plaintiff under date of April 18, 1956, recited that it was subject to any liens for delinquent taxes as of that date, there was no evidence of the amount due for taxes or of payments made on account of taxes at any time.
The defendant Guarente testified that the: balance of the $6,000 payment of June 12, 1954, was applied by him to obligations against the property. He testified that there never had been a time when the mortgage notes were not in default, and that “during this six years . . . to assist in trying to keep things alive,” he “took money which was supposed to go for principal and paid taxes with it. I took money which was supposed to go to the principal on the second mortgage and applied it on the first mortgage because they demanded it. I paid for insurance. I advanced money at times to pay interest and I later got it from [the plaintiff].” On cross-examination concerning his disposition of the balance of the $6,000 payment he testified, “I credited the account. After the date of June 12, 1954 I credited the interest due, I credited the account.” The assignee Ginsberg testified that at the time of foreclosure he had no record of payments made on account of either mortgage note, but was informed that the default was extensive and the arrears in taxes were very great. The notes themselves carried no record of payments. Other facts are stated in the opinion.
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Maurice M. Blodgett (by brief and orally), for the intervenor.
Bell Bell (Mr. Ernest L. Bell, III orally), for Guarente.
DUNCAN, J.
The issue presented is whether the finding or ruling that the plaintiff “has not sustained the burden of proof” was erroneous as a matter of law. In our judgment it was.
It is not disputed that both notes secured by mortgage on the plaintiff’s property were held by the Lockwood interests at the time of the six-thousand-dollar payment by the plaintiff to the defendant on June 12, 1954, and that they were also assignees of the mortgages. Consequently the defendant was in no position either to credit the plaintiff with payment on account of the notes or to discharge them should they be paid in full. Clark v. Wheeler, 81 N.H. 34, 40. “The payor having made the paper negotiable cannot assume that it has not been transferred although he has defaulted in his contract of payment. Paying the note, he has the right to have the note given up or his partial payment indorsed.” Id., 41. See also, Mead v. Leavitt, 59 N.H. 476; Murphy v. Barnard, 162 Mass. 72, 77-80. Moreover, the plaintiff concededly knew that the major part of the payment, not applied to the first mortgage note, was being held by the defendant ostensibly for use to pay taxes, rather than in payment of any supposed indebtedness to him.
Although the defendant claimed to have acted generally as an agent or trustee for Farrell in selling the premises to the plaintiff, at a later date he acted for the plaintiff in “trying to keep things alive” and was acting as his agent, by implication at least, in disbursing the payment made to him on June 12, 1954. See Lipman v. Noblit, 194 Pa. 416, 418; People v. City Bank of Rochester, 96 N.Y. 32, 37.
Receipt of the six-thousand-dollar payment by the defendant was established by his written receipt and was not denied by him. Application of $1,275 of this amount to the first mortgage debt by check of the defendant to the Lockwood interests was unquestioned. Establishment of these facts likewise established the defendant’s obligation, as agent for the plaintiff, to account for his dealing with the balance. Mechem, Outlines Agency, (4th ed.) s. 536; 2 Am. Jur., Agency 226, s. 286. “If the principal proves or the agent admits that the agent has come into possession of money . . . for the principal, the agent has the burden of proving that he has paid it to the principal or disposed of it in accordance with his
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authority.” Restatement, Agency, s. 382, comment d. See also Id., s. 399, comment e; Patterson v. Getz, 166 Ore. 245, 280.
“Justice and convenience may require that in certain phases of a case the party not having the burden of proof shall produce evidence, upon pain of that issue being decided against him if he declines to do so.” Spilene v. Company, 79 N.H. 326, 328. The defendant’s burden of accounting for the payment made to him could not be satisfied by merely stating that he had “credited [the plaintiff’s] account,” when the “account” was held by others and no evidence was offered as to what disposition was in fact made of the funds. The defendant testified that all payments to the Lockwood group were made by check: “Every one of them.” The original notes, which were in evidence, disclosed no payments of any description. The defendant’s assertion that he “made a credit on the principal on the second mortgage,” that he “credited the interest due . . . credited the account” could not reasonably satisfy his burden of going forward or cast upon the plaintiff a burden of proving that no interest, principal, taxes or insurance premiums had been paid from the balance in question. Anderson v. Stanwood, 178 Ore. 306, 318. As the evidence stood it would have warranted a verdict charging the defendant with the balance of $4,725. Anctil v. Dupont, 96 N.H. 501, 503. See Lowe v. Gilliam, 281 Mass. 85, 86.
The defendant argues that the plaintiff has waived its rights by failing to demand that the assignee Ginsberg account as provided by RSA 479:13, and by dealing with Ginsberg with respect to the property, after foreclosure. No accounting at the hands of Ginsberg is sought by this proceeding, and the plaintiff’s conduct toward him cannot bar its independent rights against Guarente.
The burden upon the plaintiff was to establish its right to an accounting at the hands of the defendant. This burden was satisfied by the uncontroverted evidence that six thousand dollars was entrusted to the defendant for disbursement to the plaintiff’s credit. At that point, the facts “if unanswered would justify men of ordinary reason and fairness in affirming the question which the plaintiff [was] bound to maintain.” IX Wig., Ev. (3rd ed.) s. 2494 at 299.
The case will be remanded so that the defendant may account for the balance of $4,725. In the absence of such an accounting, the plaintiff should have judgment.
Exception sustained.
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BLANDIN, J., was absent; WHEELER, J., did not sit; the others concurred.