[539]*539Opinion by
Mr. Commissioner Iving.
The facts leading up to this suit, as we gather them from the record, are substantially as follows: In March, 1898, appellants borrowed $28,000 from J. N. Teal, of Portland, Oregon, executing their promissory note therefor, payable to his order live years after its date at the Pendleton Savings Bank, Pendleton, Oregon, with interest at the rate of 8 per cent per annum. To secure the payment of this note, three mortgages were also executed and duly recorded, covering certain lands in Umatilla County, Oregon. In June of the same year, appellants, desiring to reduce the rate of interest and in order to sell their lands and apply the proceeds upon the indebtedness, wanted the privilege of paying the principal and interest before due, and, as Teal would not accede to these terms, but was willing to receive the full amount at any time, they made application for a loan to C. B. Wade, then cashier of the First National Bank, of Pendleton, Oregon. Norborne Berkeley testified that, as their agent, be made the application, and that the first time he spoke to Wade concerning the loan he answered: “We haven’t got the money now, but can probably let you have it later’’; that during the same week he renewed the request, and Wade replied: “I think we can get the money now, and will let you have it.” After talking the matter over, he told Wade that, if he would buy the Teal note and hold it and allow them to pay it off in such sums as they could, it ivould suit them bettter than as it was, since they wanted to sell certain ranches and apply the proceeds on their obligation. Wade was to give them a lower rate of interest, and for his services in the transaction would charge $1,500, all of which was agreed to; and after learning that Wade had received the note and mortgages from Teal appellants executed eight promissory notes, made payable to “C. B. Wade, trustee,” dated June 29, 1898, with interest at the rate of 7 per cent per annum, payable semiannually, “on or before five years from date.” The notes aggregated $29,500, as follows : Two for $7,000 each, and two for $2,500, two for $1,500, one for $3,500, and one for $1,000. One of the $1,500-notes [540]*540represented tbe bonus to Wade. All the signatures of the new notes were procured within a short time after Wade received the Teal note and mortgages duly assigned. The new notes were accordingly turned over to him, and, with the exception of the bonus note, were duly assigned to the parties advancing the money.
As a part of the transaction, appellants and Wade entered into an agreement concerning the payment and disbursement of rents to be received on the property, which on June 30, 1898, was reduced to writing, and, omitting the signatures, is as follows:
“This Agreement, made and entered into this 30th day of June, 1898, by and between N. E. Despain, Florence L. Berkeley and Forborne Berkeley, Jr., her husband, Bernice Dickson, and Haldane Dickson, her husband, Albert M. Despain, Edith G-. Despain, and N. E. Despain as guardian of the persons and estates of Louis B. Despain, Eleanor Despain and Constance A. Despain, minors, parties of the first part, and C..B. Wade, trustee, party of the second part, Witnesseth':
That, Whereas, the first parties have borrowed of C. B. Wade, trustee, party of the second part, twenty-eight thousand dollars ($28,000), payable on or before five years, and bearing interest at the rate of seven per cent per annum, said loan being secured by a note and mortgage for $28,000, which note is secured by a real estate mortgage on- certain city property in the City of Pendleton, and farm lands in Umatilla County, Oregon, same having been duly executed and delivered to J. F. Teal, of Portland, Oregon, by said first parties, and by said J. N. Teal duly assigned to second party hereunto;
Therefore, in Consideration- of the Premises, and for the further security of said G. B. Wade, trustee, said first parties hereto do sell, transfer, set over and assign to C. B. Wade, trustee, all the rents and profits of the property in the City of Pendleton, described in said mortgage from said first parties to J. N. Teal, for the period of five years, unless said sum of twenty-eight thousand dollars ($28,000), and interest thereon, shall have been sooner paid to said second party.
First Parties do Further Agree that they will, without expense to said second party, collect and deposit in the First National Bank of Pendleton, Oregon, to the credit of the second party, the rents and profits of mortgaged property within limits of the City of Pendleton.
[541]*541And Said Second Party Agrees (1) that of moneys so deposited by said first parties, if same be sufficient therefor, lie will pay or cause to he paid to 27. E. Despain, the sum of one hundred fifty dollars ($150) per month; (2) that he will pay interest on said loan semiannually; (3) that he will pay premiums on such fire insurance policies as may be procured, subject to approval of second party, by said first parties on property in City of Pendleton material to this agreement; and (4) that if, after such payments as hereinbefore set forth are paid, there remains any balance of such rents and profits, the same shall be paid on principal of said loan of twenty-eight thousand dollars ($28,000); provided, however, that if first parties shall be unable to pay taxes assessed against said property the party of first part may pay such taxes from such balance, if any there be.”
It appears that after receiving the application Wade spoke to McLeod, Sturgis and others concerning it, explaining the time, terms and conditions desired, and suggested that they advance the necessary money, indicating it would be a safe investment, for the reason he would procure an assignment of the note and mortgages from Teal to himself, as trustee; and, as an additional safeguard, he would arrange to have all rents from the property, together with receipts of sales of lands, if sold, paid to him during the period of the loan, which he would apply in payment of the interest, when due, and credit the excess upon the principal. With this understanding McLeod furnished $7,000, Lina II. Sturgis a like sum, while the balance of the funds was advanced by other parties not involved here. The money advanced, being sufficient for the desired purpose, amounting to $28,000, was paid over to Wade, who, with full knowledge, consent and request of all concerned, paid the same to Teal. The assignment was in the usual form, dated June 29, 1898, and executed to “C. B. Wade, trustee”; the note being indorsed, “without recourse to J. N. Teal.”
The new notes were given for the purpose of indicating and specifying in writing the terms of payment of the obligation represented by the Teal note and mortgages, as well as to indicate the interest each of the parties advancing the money might have in the entire indebtedness and mortgage security, inelud[542]*542ing the additional $1,500 bonus note given^ These notes were executed, assigned and accepted with the full knowledge and understanding of all the parties concerned that Wade, as trustee, was to hold the Teal note and mortgages, and neither the note nor mortgages, should be deemed discharged until the amounts specified in the new notes should, be fully paid. Wade accordingly entered upon bis trust, retained possession of the Teal note and mortgages, received all rents and other proceeds from time to time, and, after paying the amounts excepted under the contract, credited the excess on the new notes until the $29,500, with interest, was paid, except the sums involved in this suit, all of which were paid to him to apply on the notes; but the money for which a decree is here demanded was neither credited thereon nor paid to the respondents. He so continued under the trust, without his right to do so' being questioned, until September 8, 1903, when he became insolvent. After the execution of the new notes they were indorsed by Wade to the various persons entitled thereto. McLeod retained his note in his possession, while the Sturgis note was held by Hartman as her agent; but all credits on these notes were placed there by Wade, who was given the notes by the holders for that purpose as the money was paid to them.
Prior to the date Wade’s insolvency became known, tracts of the mortgaged land were sold from time to time, and releases duly executed by Wade, as trustee, and the moneys received therefor in accordance with the understanding and agreement between the parties concerned. During all this time and for many years prior thereto, Wade was cashier of the First National Bank of Pendleton, Oregon, and plaintiff, McLeod, was a director and stockholder only. The money was deposited in this bank as received, and entered on its books under the account of “Wade-Despain Trust.” As payments were made to the holders of the notes, checks were given by Wade, signed “Wade-Despain Trust.” Like checks were given for all other disbursements made by him under the written agreement. In this manner Wade kept a memorandum of moneys reecived and paid on the notes, as [543]*543well as of all disbursements under,,the contract. When the notes were assigned to McLeod and. Sturgis, Wade guaranteed the payment thereof in the ^following language, indorsed on the back of each note:
“This note is secured by a note of $38,000, signed by the same parties, which is secured by real estate mortgages assigned to C. B. Wade, trustee. For value received I hereby guarantee pa}mient of this note and waive protest, demand, notice of nonpayment thereof. C. B. Wade, Trustee.”
It is urged by counsel for respondents that during the entire transaction, and until his insolvency, Wade was the agent only of appellants, and that respondents are bona fide purchasers of the new notes, and that, by operation of law, these notes carry with them the- Teal mortgages; that the new notes were intended to be substituted for the old, and by oral agreement these mortgages were to secure their payment; that this oral agreement is supplemented by the statement indorsed on the new notes given: “This note is secured by a note of $38,000, signed by the same parties, which is secured by real estate mortgages assigned to C. B. Wade, trustee.” Appellants’ counsel insist that Wade was only respondents’ trustee and agent, and that, sufficient money having been paid him to cover the entire claim growing out of the deal, they were released from any further obligations. It appears that appellants’ object in procuring the money with which to take up the Teal note and mortgages was for the purpose, first, of reducing the rate of interest from 8 per cent per annum to 7 per cent; second, to secure the privilege of paying the principal and interest at any time and in order that the realty could be sold and mortgages released as sales were made, thereby enabling the indebtedness to be extinguished as soon as practicable. To accomplish these objects they were willing to pay a $1,500 bonus, and were not only willing to pay this additional sum, but consented to and did enter into the agreement whereby all the rents and proceeds from sales should be paid to the holder of the mortgage security. With notice of these conditions, consisting of both actual and constructive knowledge, respondents advanced the money with which to [544]*544purchase the Teal note an,d mortgages, and, as a means of segregating and evidencing the respective interests therein of each of the several persons advancing the money, as well as to show a change in the terms of payment and rate of interest, the new notes were given. The transaction was, in effect, the same as if all the new terms and conditions of payment were indorsed on the old note and mortgage, the difference being, under the method adopted, that each person, if desired, might hold the written- instrument evidencing his or her interest, while leaving the security in Wade’s possession, thereby making it more convenient for all, in that Wade could act as agent and trustee for each party represented. In this way the sales were to be facilitated as well as the pay-ment of the indebtedness insured, and thereby carry into effect one of the main objects in changing creditors. It is clearly apparent that the new notes were given and the negotiations perfected in this manner, and with this object in view. As evidence that there should be but the one debt and that neither the Teal note nor mortgages should be deemed paid or canceled, all were assigned to Wade as trustee; and to make certain that the note and mortgages should be kept alive, this fact was stamped bn the back of the new notes as executed.
1. For the purpose of assuring the payment of the $1,500 promised him, Wacle not only consented to act as trustee for the holders of the notes, but was willing to guarantee payment of the notes held’ by respondents, and accordingly indorsed the notes as guarantor, and, as such indorser, was personally bound, notwithstanding the fact that the word “trustee” was added to his name: Ogden Railway Co. v. Wright, 31 Or. 150 (49 Pac. 975).
The date of the written agreement executed to Wade, as trustee, by appellants is immaterial, as the transaction must be considered as a whole, even though it consumed more than one day. While there is no direct testimony that Sturgis had actual knowledge of such understanding, it does appear that McLeod relied upon an agreement to that effect. On this point McLeod testified:
[545]*545“Q. Did he (Wade) tell you anything about having these other notes further secured by having the city rents turned over to him?
A. I asked him (Wade) how he was to pay the interest on these notes. He said the rents was to come to him, and if any of the property was sold they would apply it on these notes. That is the reason he gave on or before five years after date so that they could have a chance to sell it.
Q. He also told you he would have these rents assigned to him to apply on the notes?
A. He said he could pay the interest because he was getting the rents.
Q. They hadn’t been going to him prior to that time, had they ?
A. I don’t know.
Q. As I understood you on direct examination, you said Mr. Wade told you he was collecting the rents; are you entirely correct in that ?
A. Yes, sir; he said he was getting their rents.
Q. Didn’t he tell you he would have these rents turned over to him so they could be applied on the interest?
A. Yes, sir; that is what he said, he was getting the rents.
Q. On his explanation to you of how this $28,000 note was assigned to him and held as security for the payment of the amount due on these others, you felt it was safe and you put up your money?
A. I thought so or I would not have done it.”
Mr. Hartman, the agent of Sturgis, testified:
“Q. He (Wade) was to hold that $28,000 note and mortgage to secure the payment of this?
A. Yes, sir.
Q. That was the agreement at the time?
A. Yes, sir; to be assigned by Despain and secured by this $28,000 mortgage.
Q. Wade was to hold it as trustee?
A. He was to hold it as security for this note.
Q. Do you know whether or not Mr. Wade collected the rents from this property?
A. I so understood it.”
[546]*546This testimony, taken together with the fact which is testified to by both McLeod and Hartman, that all the interest and moneys paid and credited on the notes came through Wade’s hands and were indorsed thereon by him; that appellants’ property was sold from time to time, and the mortgages released, with the full knowledge of both McLeod and the agent of Sturgis, and that all money received on the notes came from such sales and rents; that such sales were made and releases executed without objection on their part, and apparently with their approval, they receiving their portions of the money as applied in payment of interest, etc., — all furnish strong evidence tending to show full knowledge and notice of all the conditions and terms under which the notes were executed.
2. But, if it be assumed, as contended by respondents’ counsel, that the new notes were executed with the object of -thereafter being indorsed and sold by Wade for the purpose of raising the money with which to take up the Teal note and mortgage, it must then be conceded that, for the purpose of making this sale and applying the proceeds as agreed, Wade for the time being was the agent of the Despains, and, in that respect, their trustee, and continued as such until the consummation of the sale of the notes and application of the proceeds as directed. It would then follow that the word “trustee” was added that it might be known there was a cestui que. trust, and that conditions were to be performed by the trustee for the beneficiaries. Then would not this word attached to the payee’s name impart notice, or at least be sufficient to put the purchaser upon inquiry, as to the terms and conditions under which the trust was created? In Wills v. Wilson, 3 Or. 310, the court states the rule to be that, “when the circumstances are such as would excite suspicion and naturally attract the attention, a party will be presumed to have been put upon inquiry, and if lie does not inquire he will be presumed to have known the facts.-” To the same effect are Mercantile Nat. Bank v. Parsons, 54 Minn. 56 (55 N. W. 825: 40 Am. St. Rep. 299), and Shaw v. Spencer, 100 Mass. 382 (97 Am. Dec, 107: 1 Am. Rep. 115). In the [547]*547ease at bar respondents concede that they entered into a combination with several other parties to furnish the money with which to take up the $28,000 note and mortgages securing it. It clearly appears from the evidence that in order to do so safely and satisfactorily to all concerned many conditions were involved. The old note with mortgages securing it were to be assigned to Wade as trustee, to be held to secure the assignees of the new notes which were to be given. He was to receive notes, specifying the various interests of each, with new terms included, and assign them to the various parties advancing the money, as their interest would appear. All the money so furnished was to pass through Wade’s hands. In brief, Wade was to be the “go-between” for all parties until the transaction was completed. He became agent for Teal in holding the note and mortgages until the money was paid, and, under respondents’ contention, agent for appellants in procuring the funds to pay Teal, as well as agent for respondents to invest their money. These circumstances, taken together with the word “trustee” added to his name in the notes, were certainly sufficient to attract attention and cause an average business man to closely scrutinize all the terms and conditions under which the entire deal was consummated.
In Shaw v. Spencer, 100 Mass. 382 (97 Am. Dec. 107: 1 Am. Rep. 115), Mr. Justice Foster, in discussing this question, says: “Notice of the existence of a trust is by all the authorities held to impose the duty of inquiry as to its character and limitations. And whatever is sufficient to put a person of ordinary prudence upon inquiry is constructive notice of everything to which that inquiry might have led.” Among authorities to the same effect are: Randolph, Com. P. (1 ed.), § 444; Daniel, Neg. Inst. (5 ed.), § 271; Prather v. Weissiger, 10 Bush (Ky.), 117; Gaston v. American Exch. Nat. Bank, 29 N. J. Eq. 98; Duncan v. Jaudon, 82 U. S. (15 Wall.) 165, 175 (21 L. Ed. 142); Railroad Co. v. Durant, 95 U. S. 576, 577 (24 L. Ed. 391) ; National Bank v. Insurance Co. 104 U. S. 54 (26 L. Ed. 693) ; 34 Cent. L. J. 45; Smith v. Burgess, 133 Mass. 511 ; Third Nat. Bank v. [548]*548Lange, 51 Md. 138 (34 Am. Rep. 304). A few states appear to hold to the contrary rule. Indiana and Missouri are cited as holding that words of this nature affixed to the name of a payee are merely descriptio personae: Speelman v. Culbertson, 15 Ind. 441; Powell v. Morrison, 35 Mo. 244. The consideration and criticism of these cases by subsequent decisions weaken them as precedents. In Speelman v. Culbertson, the words, “administrators of the estate of John Babcock, deceased,-’ appeared after the names of the payees; while in Powell v. Morrison, the note was payable to one “James Gastello, Sheriff of St. Louis County.” ■ The court in announcing the opinion manifests much doubt as to the correctness of its position, while one of their number dissents.
In discussing this question in Payne v. First Nat. Bank, 43 Mo. App. 377, Mr. Justice Biggs, speaking for the court, says: “There is a class of cases in this state which hold that a note, payable to a person as executor, guardian, agent or sheriff, is prima facie the payee’s individual property; that the words Executor,’ ‘guardian,’ etc., are merely descriptio personae; and that such words are not sufficient within themselves to put a purchaser of such a note on inquiry as to conditions or limitations (if any) of the payee’s power to .pledge or sell, * * citing authorities of that state. The doctrine of the foregoing cases has for its foundation the reason that, in the execution o‘f such trusts, the law contemplates that it will be necessary to collect or' sell the trust property. Upon this reason the prima facie right of such payee to make any kind of disposition of the note -is predicated. But, in our opinion, these cases are not applicable when the negotiation of instruments, or the sale of other property held by a trustee, is involved, and the instrument upon its face discloses the beneficial interest of another.” This authority, after quoting with approval from Shaw v. Spencer, 100 Mass. 382 (97 Am. Dec. 107: 1 Am. Rep. 115), and Duncan v. Jaudon, 82 U. S. (15 Wall.) 165 (21 L. Ed. 142), ádds: “These authorities are sufficient to show that the powers of a trustee as to the disposition of the trust property are quite the [549]*549reverse of those of an executor, guardian or sheriff. * *” The appellate court of Missouri in Sparrow v. State Exch. Bank, 103 Mo. App. 347 (77 S. W. 170), also observes: “It must be confessed that the rule declared by the Supreme Court of the United States in National Bank v. Insurance Co. 104 U. S. 54 (26 L. Ed. 693), and the eases in which it has been followed by that court, cannot be reconciled with that declared in the Missouri eases already alluded to. If the question here had not been authoritatively ruled by our own supreme court, we should be inclined to adopt that declared by the Supreme Court of the United States, since the reasoning in those cases by that great court in favor of the ride therein announced, it seems, are of the most cogent and persuasive nature.”
3. We find on examination of the cases sustaining respondents’ contention on this point that most of the authorities upholding that view manifest some doubt as to the soundness of their position. This point has not heretofore been directly before this court; but we find the great weight of authority, as well as the better reasoning, supports the rule that the word “trustee,” added to a payee’s name in a written instrument, is sufficient to put the purchaser upon inquiry as to all the terms and conditions under which it may have been executed, and in the absence of such inquiry knowledge thereof will be presumed. We also deem a recognition of this rule necessary to properly protect, the beneficiaries of such trusts; otherwise, under the claim of being a bona fide purchaser, through the neglect of the assignee of an instrument to make inquiry, the cesinis que trust-cut in many instances would, without fault on their part, suffer great loss. The adoption of the rule here recognized protects the innocent without hardship to investors; while the contrary doctrine offers an inducement to purchasers of this kind of property to neglect making inquiry as to the import of the word “trustee,” by which the innocent must often suffer at the hands of dishonest trustees in whose selection it often happens tlie beneficiary has no voice.
When considered in the light of the many circumstances surrounding the transactions leading up to this suit, we cannot [550]*550avoid the conclusión that, if the notes were purchased in the manner claimed, having received the assignment of the notes made payable to the order of Wade, as trustee, they had full knowledge of all the agreements, oral or written, connected therewith. Even though Wade was a trustee for the appellants in disposing of the notes until the completion of all the arrangements, as urged, as well as agent for respondents to the extent of furnishing the “gilt edge paper’’ referred to, and in securing the assignment of the Teal note and mortgages to* him for the benefit of the assignees of the new notes, yet such agency for defendants, though presumed to have continued until shown to. have ceased, necessarily ended the moment the transaction became complete. On the completion of the deal the makers of the notes, by agreement, were absolutely bound to pay to Wade, as trustee, all rents received, as well as all proceeds resulting from the sale of the jiroiierty. There was no discretion left for them to do otherwise. TJnlike that of a principal and agent, they were not at liberty to disregard Wade’s demands, whether the various agreements were oral or written, as the understanding between all concerned had been acted upon, Wade having entered upon the duties devolved upon him by the trust. The notes had been sold, mortgages assigned, and money advanced and paid as directed, of all which each of the parties thereto, whether obligors or obligees, had either actual or constructive knowledge. Wade thereby became fully recognized by respondents, not only by operation of law, but, in fact, as their trustee, to see that all the terms and conditions of the trust were carried out.
To insist that after the entire transaction was completed Wade was agent or' trustee of appellants would be inconsistent with every principle governing business dealings between men, as this would make the mortgagors, through Wade as their agent, the holders of the securities given by them with an agreement to pay all proceeds of rents and sales ovfer to themselves. Respondents would have been retaining the notes, and at the same time intrusting the mortgage securities to the pos[551]*551session of tlie persons executing them. The record shows all persons interested to have at least good average business ability, which, when considered with the other facts, impels us to the conclusion that when the transaction became complete Wade became the trustee solely for the assignees of the notes, not only as claimed by respondents’ counsel and,-as evidently held by the learned court below, “merely as a receptacle or custodian raised by implication of law for the preservation of the mortgage security,” but a trustee in the full sense of the word, with full authority to act for and in their behalf in the protection of their interests, including the authority to receive all payments to be applied on the notes until paid in full. In this connection it must be remembered that respondents were stockholders in the bank, while McLeod was a director. Wade had been for many years, and 'was then, the cashier. The notes presumably were all in his possession, except the two involved here, and all made payable, not only to him as trustee, but at the bank of which he was cashier. All money applied in the 2>ayment of interest and cancellation of any notes given in the transaction was paid to Wade at this bank. Except as to the amounts sued upon, the notes were always taken to Wade when each payment was made on the interest or 2irincipal, and was by him indorsed on the notes. The Teal note and mortgages, as well as all the notes, except those assigned to McLeod and Sturgis, were there held by him and in his possession. Mortgages were released which, with all payments made through him, were known, recognized and acquiesced in by all concerned. Every act not only tended to give notice to the creditors of the existing conditions under which the trust was executed, but to impress more strongly on the debtors the fact that their agreements were recognized and that their payments were being made to the right person. That it was a case of mis2)laced confidence on both sides is self-evident. It is one of the numerous cases where one of two innocent persons must suffer because of the betrayal of a trust reposed in a third, and where the person most at fault must bear the loss: Story, Agency (9 eel.), § 127; [552]*552Bamberger v. Geiser, 24 Or. 207 (33 Pac. 609); Kasson v. Noltner, 43 Wis. 646.
4. In view of the facts and conditions stated, as gathered from the evidence, it conclusively appears that respondents were most at fault. For the purpose of bringing this suit they recognized Wade as their trustee, and one of the most unequivocal methods of showing a ratification of an agent’s authority is the bringing of a suit based upon the agent’s acts. They appear to recognize his authority where to their advantage, and to disclaim his acts where to their injury. It being to their advantage, he is recognized as the holder and trustee for the purpose of holding the Teal note and mortgage. ' The old note is recognized as having sufficient life to bridge the chasm between the mortgages and the new notes, but extinguished for any other purpose. Wade’s authority is recognized as to moneys paid to him and credited on the notes, by reason of which the amounts so received are retained, but rejected as to the loss occasioned by his other receipts. It Is elementary that this position cannot be upheld or recognized by a court of equity. When a principal elects to ratify any portion of an unauthorized act, he must ratify the whole of it. He cannot avail himself of such acts so far as beneficial to him, and repudiate its obligations whether such ratification be expressed or implied: Mechera, Agency, §§ 128, 130, 151; LaGrande Nat. Bank v. Blum, 27 Or. 215 (41 Pac. 659) ; Noble v. Nugent, 89 Ill. 522; Hovey v. Blanchard, 13 N. H. 145; Kasson v. Noltner, 43 Wis. 646.
5. It is contended, under the rule announced in Bamberger v. Geiser, 24 Or. 207 (33 Pac. 609), that it was the appellants’ duty, when paying the money to Wade, to see that it was properly applied in the discharge of the indebtedness, and the court below must have so assumed in reaching the conclusion manifested by its decree. But the decision in the case referred •to it not applicable to the facts governing the controversy before us. In that case the assignee not only received the note by assignment, but the mortgage was delivered into his possession and retained by him, while the money was paid to the firs!. [553]*553mortgagees without any evidence of their right to receive it, and without even apparent authority to do so. In this case Wade, as trustee for the payee, retained possession of both the original note and mortgages, together with all other contracts, notes and writings, except the two new notes involved here, constituting the evidence of the terms, conditions and rate of interest under which the makers had the privilege of paying the portion of the original indebtedness owed by them, with the word “trasteé” included, thereby imparting notice of the understanding and agreement that the amounts there •specified could be paid to Wade as trustee. It, therefore, cannot be held, nor did this court in Bamberger v. Geiser hold, or mean to hold, that under such circumstances the persons making the payments were bound to see that the money was properly applied.
The principle here invoked was recognized in Swegle v. Wells, 7 Or. 222. There the defendants made application to Shaw & Henton, money brokers, for a loan, offering to secure the same by a real mortgage. They did not have the money, but reported the application to Swegle, who agreed to make the loan. It was agreed that the loan would be made in Henton's name, and the note made payable to him or hearer. A note and mortgage were executed accordingly, and the money paid into the hands of Shaw & Henton, who delivered it to the applicants. The note was then turned over to plaintiff, and while in his hands, before due, its maker paid the full amount therein to Shaw & Henton at their office. The defense raised was to the effect that the money was paid to plaintiff’s agents, who were authorized to receive it, thereby canceling the note; while plaintiff there contended that Shaw & Henton were not his agents, and were without authority to collect the money, and that it was the duty of the defendant to have seen that the money was properly applied. Although a suit in equity was brought to foreclose the mortgage securing the note, the ease was tried before a jury. This court there held that while the verdict .of the jury was only advisory to the chancellor, not conclusive, and might he treated as a mere nullity if not supported by the evi[554]*554dence, yet, there having been evidence to the effect that Shaw & Henton were in the real estate and brokerage business, and had been intrusted with the authority to make the loan, as well as with the authority to perfect the transaction and take the note payable to Henton, or bearer, notwithstanding the plaintiff was the lawful owner and holder of the note for value before due, with the note in his possession, the evidence was sufficient to show authority in Shaw & Henton to collect the amount named in the note, and the verdict of the jury would not be disturbed, and equitable relief was accordingly denied. To the same effect see 2 Kent, 613; Wardrop v. Dunlop, 1 Hun, 325; Williams v. Walker, 2 Sandford’s Ch. 325; Hatfield v. Reynolds, 34 Barb. 612; Lazier v. Horan, 55 Iowa, 75 (7 N. W. 457: 39 Am. Rep. 167); Palo Alto B. & I. Co. v. Mahar, 65 Iowa, 75 (21 N. W. 187); Thomassen v. Van Wyngaarden, 65 Iowa, 687 (22 N. W. 927); Kasson v. Noltner, 43 Wis. 646.
6. Wade’s authority to represent respondents, whether expressed or implied, did not cease until after his insolvency became known, and not until after all payments appearing in the evidence were made; he during all this time retaining the securities which the payments were intended to cancel. In Hatfield v. Reynolds, 34 Barb. 612, one Purdy, an attorney for Hatfield, made a loan for him to Reynolds. Purdy retained the security in possession for safekeeping, received the interest regularly, and finally the principal was paid to him. Purdy died insolvent without accounting to Hatfield. The lower court there held that such bond and mortgage were left with Purdy only for safekeeping, and not for the purpose of collecting either principal or interest; and, he having acted without authority, defendant was liable. On appeal, this decision was reversed, the court holding that, as plaintiff left the bond and mortgage with Purdy for safekeeping, and evidently permitted it to remain for^other purposes, allowed payments to be made upon it to Purdy, received the amount of. these payments from him and suffered him to indorse them upon the bond, it would be deemed from these facts, coupled with the circumstances attending the [555]*555origin of the bond and mortgage, that authority to Purdy to receive payments was implied, and observes: “I do not perceive that if the defendant had taken the precaution to call for tire production of the papers whenever he made a payment, he would have strengthened this implication. The authority is implied from the possession of the papers and the continued receipt of money upon them, which are facts, and not from the exhibition of the papers by the agent, which is only the evidence of the facts. * * To have called for the bond and mortgage under the circumstances of this case, would have been a very prudent and proper precaution, but it would have been only a precaution. It would have enabled the defendant to verify the authority of Purdy, but it would have been no more than verifying it.”
7. After a careful consideration of the evidence, as disclosed by the record and law applicable thereto, we can reach no other conclusion than that Wade was the agent of respondents with full authority to collect the sums represented by the notes given, and so collected the money which was paid to him in trust for the benefit of respondents with their full knowledge and assent; and that sufficient having been paid to him in that capacity to cancel the principal and interest of all the notes given, they, together with the mortgages, should be canceled. The prayer of the answers to that effect should, therefore, be granted.
The decree of the court below should be reversed, and one entered here in accordance with these views. Reversed.