Brecht v. McParland

41 A. 378, 187 Pa. 620, 1898 Pa. LEXIS 848

• Court: Supreme Court of Pennsylvania
• Decided: October 17, 1898
• Docket: Appeal, No. 491
• Status: Published

Opinion

Opinion by

Mr. Justice Gbeen,

This was a scire facias on a mortgage, and the only matter in controversy was its payment. The facts were peculiar in some respects, but they were not complicated, nor difficult to understand. They were all submitted to the jury by the learned trial judge in a charge which, as it seems to us, was a veiy clear, impartial, complete and perfectly correct presentment of all the matters, both of law and fact, involved in the controversy. In a brief way, it may be said that the substance of the contention turned upon the question as to which one of two innocent persons should suffer a loss occasioned by the dereliction of another, and the solution of that question depended upon the further question, whether the person in default was the agent of the mortgagee or of the mortgagor in receiving and disposing of the moneys paid by the mortgagor in extinguishment of the debt for the security of which the mortgage was held. Substantially the facts were that Joseph McParland, with whom his brother John McParland was interested, held certain city contracts for the construction of sewers in various parts of Philadelphia, and being in want of money with which to prosecute the work John McParland, one of the defendants, applied to Mr. Gustav R. Schaefer, a member of the bar and a personal friend, to obtain a loan for the amount needed. Mr. Schaefer undertook to raise the money, and did so, to the extent of $11,000, in all. The person from whom the money was obtained was Mr. August F. Brecht, who was a personal friend and also a professional client of Mr. Schaefer. Mr. Brecht and Mr. McParland did not meet during the negotiations, nor were they ever brought together until a considerably later time, and after the transactions were all completed. In point of fact, the money was paid by Mr. Brecht to Mr. Schaefer in various sums, and at various times, ranging from August 10, 1893, to November 7 following, and in March, 1894. Sums of money were advanced at various times by Schaefer to MeParland, largely in excess of $11,000, the particulars of which appear in a paper marked exhibit “A,” which was given in evidence but not printed, and hence it is not before us. But some idea may be had of their amount and the time of their receipt and repayment by another paper which was given in evidence, and is printed. By that paper it appears that Schaefer advanced in all to McParland from August 12, 1893, to August 21, 1896, $22,359.04, and received from him during the same time in money $8,070, and in city assessment bills for work done in building sewers an aggregate amount of $16,080.06. These transactions were between Schaefer and McParland, and among them were embraced the money which Schaefer had received from Brecht and had advanced to MeParland. It does not seem that any separate or independent account was kept of the sums received by Schaefer from Brecht, as forming a distinct and separate class of transactions, nor does it appear that the very moneys received by Schaefer from Brecht were specifically turned over to McParland. On the contrary, the account of money paid by Schaefer to McParland is in smaller and more numerous sums, and, at different dates, from those which were paid by Brecht to Schaefer. In other words, it is perfectly apparent that the moneys which Schaefer advanced to McFarland were not the identical moneys which Schaefer received from Brecht, but were casual sums which Schaefer advanced at many different times in odd amounts. Thus, on September 15, 1893, he advanced the sum of $299.04, and on September 26, 1893, one sum of $50.00 and another of $150. The aggregate of all the sums advanced by Schaefer to MeParland between August 12, and November 10, 1893, was $9,909.04, whereas, during that time he had received in the aggregate from Brecht but $8,000. Up to the end of March, 1894, the total advances made by Schaefer to MeParland amounted to $17,564.04, and he had received from MeParland during that time in money $1,200. As the dates at which assessment bills were turned over by MeParland to Schaefer are not furnished to us we cannot state them, but it is not of so much importance, as the object of this presentment is rather to show the character of the transactions between Schaefer and MeParland than the particular items of Brecht’s transactions with Schaefer. It is unfortunate that the paper marked exhibit “A” has not been printed, as it would doubtless have furnished more precise information upon this subject.

The next matter of importance to be considered is the character of the mortgages which were ultimately assigned to Brecht. They were two in number, both dated July 1, 1893, one for $5,000, and the other for $4,000, both made to Alfred E. Lowrey, to secure the payment of bonds of corresponding amounts and dates at five years after date. The mortgage in suit in this case is the one for $5,000. Both of these mortgages were assigned by Lowrey to Philip L. Schaefer on February 19, 1894, and they were not assigned to Brecht until February 24, 1896, which was long after the payment of the several sums of money which Brecht paid to Schaefer. The explanation of this rather unusual state of- facts is substantially this: McParland was in need of money in 1893, with which to carry on the construction of sewers, and he applied to Mr. Erricson to obtain the money for-him. Erricson directed that one or more mortgages should be executed bjr McParland and his wife to be used in obtaining the loans, and accordingly both the mortgages for $5,000 and $4,000 were prepared and executed, and placed with Erricson for the purpose of raising money on them. The mortgagee named in the instrument was Alfred E. Lowrey, a clerk in Erricson’s office, who testified that he furnished no money for the mortgages. His name was used as mortgagee only for convenience, as he had no interest in the mortgage. Erricson’s efforts to raise money failed of success, and then McParland applied to Mr. Gustav R. Schaefer, and he undertook to furnish the needed money. This was done by his applying to one of his clients, Mr. August F. Brecht, who agreed to advance money to the amount of $11,000 in all. The mortgages were transferred by Mr. Lowrey to Philip F. Schaefer, a relative of Gustav R. Schaefer, in February, 1894, and he also had no interest in them and furnished no money on them, but simply held the legal title in them for the time being. He in turn assigned them to Mr. Brecht when instructed so to do, but it was not until in February, 1896. During all this time the transactions between Brecht and G. R. Schaefer and between G. R. Schaefer and McParland were proceeding. Brecht paid to Schaefer in 1893 and March, 1894, money in various sums to the amount of $11,000, and Schaefer paid to McParland moneys altogether amounting to $18,664.04, which included the $11,000 received by Schaefer from Brecht. Mr. Schaefer was examined as a witness and testified that he thought he told McParland that the name of the gentleman who was advancing the money was August F. Brecht, but was not positive about it. He was asked: “ Q. What was the arrangement made by which Mr. Philip L. Schaefer was to hold the mortgages to secure these advancements, so far as the repayment of the advancements was concerned ? A. Only as securitjr for such amounts as Mc-Parland would owe on this account. Q. Did you see Mr. Brecht in consequence of this arrangement made between you and Mr. McParland? A. I didn’t tell Mr. Brecht of these mortgages. I simply held them as security. He didn’t inquire for them. I told him though that he was secured.” He was also asked : “ Q. What amount of assessment bills were given to you in payment of the loans which were made? A. Mr. McParland handed to my clerk, Frederick J. Schaefer, quite a number of assessment bills, amounting to $11,945.86, as 1 understood it. I have since learned by memoranda that I have seen in the handwriting of Frederick J. Schaefer that that amount is not tbe full amount of the assessment bills which Mr. McParland handed him for me. . . . Q. Tell us please for what purpose those bills were given to you? A. In payment of moneys advanced to Mr. McParland on behalf of Mr. Brecht. . . . Q. You want ns to understand that Mr. Brecht did not inquire how he could be secured for the repayment of this money, when you asked Mm to lend it to Mr. McParland? A. Not other than I have mentioned. Q. You never mentioned anything to him you say about mortgages? A. No; because I simply treated the mortgages as an extra collateral, in the event of the taking of these bills by Mr. McParland for his own use or elsewhere. Q. You mean to say then that you were to have, and were to he the medium though which Mr. McParland was to be, furnished the money by Mr. Brecht for tbe prosecution of these contracts? A. Yes, sir. Q. You were to be tbe medium? A. Yes, sir. Q. And that you were also to be the party to whom Mr. Brecht was to look exclusively for the return of his money ? A. He was to look to me because be said, ‘ I look to you and I don’t look to Mr. McParland, because I gave the money to you and I want you to get it from Mr. McParland.’ Naturally, I collected it from Mr. McParland for Mr. Brecht. Q. Who advised the assignment from Mr. Philip L. Schaefer to Mr. Brecht? A. I did. Q. Why did you do that? A. Because Mr. Brecht became dissatisfied with the nonpayment of the principal due him, and I told him, as I understood from my accounts, McParland owed me for Mr. Brecht a sum equivalent to $11,000, and I therefore directed Mr. Philip L. Schaefer to assign the mortgages to Mr. Brecht. . . . Q. And at the time that you assigned these mortgages to him (Brecht) you believed they were a perfectly valid security? A. Unquestionably, and that Mr. McParland .at that time owed that much money to secure Mr. Brecht, which I have since found, out was not the fact. . . . Q. Did you fully inform Mr. Brecht of what the contract between you and Mr. McParland was? A. No, only in this respect that I told him that the money was secure. Q. You did not tell Mr. Brecht then that the agreement between you and Mr. McParland was that you were to secure the lender of the money by assigning to him these mortgages ? A. No, I did not say that. Q. And you did not tell Mr. Brecht that the agreement between jrou and Mr. McParland was that, although you were getting this money from Mr. Brecht for Mr. McParland, when Mr. McParland came to return the money he was to return it to you for Mr. Brecht; did you tell that to Mr. Brecht? A. Yes, sir. Q. You told him that? A. I told him I was to get the money from Mr. McParland to pay him.”

There was considerable testimony in addition to the foregoing and to a similar effect, not only from Mr. G. R. Schaefer, but from others. The only object of presenting these citations is to show that there was testimony in the cause proving, and tending to prove, that Schaefer was acting as the agent of Brecht, both in receiving the money from Brecht, and in receiving the money from McParland to pay Brecht. It was upon this point that the ease turned, and the jury found that such was the fact. In our view there was abundant testimony to justify this finding. The whole character of the transaction, and the manner in which it was conducted, fully accord with this theory. Brecht and McParland were not brought together at all. Everything was done through Schaefer. It was he who obtained the money from Brecht. It was from Schaefer that McParland received the money, and to him he assigned the assessment bills for the very purpose of enabling Schaefer to collect the money with which to pay Brecht. As a matter of fact, McParland himself collected the most of it and paid it to Schaefer until the whole amount of the money advanced by Brecht was repaid by McParland. And all of this took place before the mortgages were assigned to Brecht. They were only assigned because Schaefer at that time supposed that McParland still owed the whole $11,000 which had been advanced to him by Schaefer. But 'this was a mistake as Schaefer subsequently discovered. It was already paid to his authorized clerk by McParland, and he, Schaefer, was responsible for it to Brecht, and he so testifies. The assignment of the mortgages to Brecht was no part of the original transaction. They were only intended as a last resort, in case the assessment bills were not collected, but they were collected and the whole amount of the money paid by Brecht to Schaefer was already paid by McParland to Schaefer before the assignment of the mortgages to Brecht was made. The conclusion is irresistible that Schaefer was acting as the agent of Brecht, both in receiving the money from Brecht for Schaefer, and in receiving the money from McParland for Brecht. Even Brecht himself testified to that effect. He was asked, “ Q. Did you have anything to do with the account between McParland and Schaefer? Were you to have anything to do with the account between McParland and Schaefer? A. McParland was to deliver the money to Schaefer and Schaefer was to deliver the money to me.”

Unfortunately Schaefer’s clerk embezzled the whole of the money without Schaefer’s knowledge, and for that embezzlement Schaefer was responsible, as between Brecht and McParland, and this responsibility he cheerfully assumed in his testimony. But it was the act of Brecht in permitting the transaction to be conducted in that way which gave the opportunity for the commission of the embezzlement, and, under the decisions, this subjects him to the loss, as between him and McParland. We are of opinion that the answers of the court below to the plaintiffs’ points were correct, and that the whole charge was a careful and accurate presentation of the very question upon which the case turned. The assignments of error are all dismissed.

Judgment affirmed.