Note to Lantz v. Vermont Life Ins. Co., 23 Am. St. Rep. 215. A letter properly stamped and mailed, and containing a notice, is presumed to have been received, but this presumption may be rebutted: Pennypacker v. Capital Ins. Co., 80 Iowa, 56; 20 Am. St. Rep. 395; German Nat. Bank v. Burns, 12 Col. 539; 13 Am. St. Rep. 247.

DAVIS V. KING.

[66 CONNECTICUT, 465.]

AGENCY APPOINTMENT AND AUTHORITY OF SUBAGENTS.-As a general rule, an agent has no right to delegate his authority to a subagent without the consent of his principal. If, in the absence of such consent, he does delegate his authority, the subagent whom he appoints will be regarded as his agent, and not the agent of the principal.

AGENCY-LIABILITY OF AGENT FOR ACTS OF SUBAGENT.-If an agent has the consent and authority of his principal to employ a subagent, he may employ one; and if, in so doing, he, in good faith, selects a suitable and proper subagent, he is not responsible to his principal for the acts and omissions of such subagent.

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AGENCY IMPLIED AUTHORITY TO EMPLOY SUBAGENT.-The consent of a principal to his agent to employ a subagent may be given expressly or by implication.

AGENT, LIABILITY FOR SUBAGENT.-If a subagent, employed with the consent, express or implied, of the principal to collect a note, wrongfully returns it to the maker, who destroys it, giving a renewal note in place thereof to the subagent, the principal agent is not answerable for the act of the subagent in surrendering the note.

Action to recover damages for the conversion of a note placed in the hands of the defendant for collection. The plaintiff recovered a judgment for the value of the note, with interest, and the defendant appealed.

Three notes of a thousand dollars each, payable to the order of a trust company, were secured by a single mortgage on real estate. One of the notes was indorsed to the defendant, an investment broker, who indorsed and sold it to the plaintiff. The plaintiff did not know that the other notes were secured by the mortgage. The defendant was in the habit of collecting the interest coupons for the plaintiff, through the trust company, without charge. The plaintiff's note was not paid when due. The trust company, with the consent of the holders of the other two notes, but without the knowledge of the plaintiff or defendant, extended the loan. After such extension, but before a knowledge of it reached the plaintiff or defendant, the plaintiff placed his note for collection in the hands of the defendant, at the latter's solicitation. The defendant forwarded the note to the trust

company, with instructions to collect and remit to him. When the plaintiff's note was received by the trust company, it wrongfully returned it to the maker, who destroyed it, and sent back a renewal note, which was tendered to the plaintiff, who refused to accept it. The plaintiff thereupon sued the defendant for a conversion of the note, claiming that its delivery by him to the trust company was unauthorized, but it was held that the plaintiff had impliedly authorized the defendant to employ the trust company to collect the note, and that as the loss resulted from the act of his own agent, he must look to him and not to the defendant.

John C. Chamberlain, for the appellant.

Charles E. Searls, for the appellee.

469 TORRANCE, J. This is an action to recover damages for the conversion of a note. The court below made a finding of facts, and upon those facts rendered judgment for the plaintiff, and from that judgment the defendant brings the present appeal.

The following is a somewhat condensed statement of the facts found: On and before June 1, 1890, the defendant was in business in Danielsonville in this state, under the name of C. D. King & Co., and advertised himself under that name as an investment broker and negotiator of southern loans. He continued said business there under that name down to the time of the trial. About June 1, 1890, the plaintiff, at the solicitation of the defendant, purchased of him the note in question. It was dated June 1, 1888, for the sum of one thousand dollars, signed by one Colley, payable to the order of the Georgia Loan and Trust Company, and due five years from date, with interest at eight per cent, payable semi-annually. It was indorsed by the Georgia Loan and Trust Company to the defendant, and by him to the plaintiff. No mortgage deed or other papers accompanied the note, and the plaintiff never saw any papers, other than it, although he understood that the note was secured by mortgage to the loan and trust company, on certain real estate situated in Georgia. The note sold to the plaintiff was one of three notes, of like amount, tenor, and date, made by Colley in June, 1888, to said loan and trust company, for a loan of three thousand dollars then made by it to him, and all three notes were secured by one and the same mortgage deed of trust, made by Colley to said company, upon land of his in Georgia. The company desired to have the notes made in three amounts for convenience

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in selling, and for the purpose of negotiating them. The court finds that the plaintiff did not know, until after the maturity of the extension coupon hereinafter referred to, that any notes than his own were secured by said trust deed, but there was a statement of that fact upon his note. When the note came due, the plaintiff, at the request of the defendant, consented to an extension for three months, and subsequently received, through the defendant, an extension coupon to cover the interest of said three months, and dated June 1, 1893, which coupon was afterward paid. Prior to this time, the defendant had collected for the plaintiff the interest coupons upon this note as they came due. The defendant did this through the firm of Burr & Knapp of Bridgeport in this state, who were investment brokers, and one of whom was the president of the Georgia Loan and Trust Company; and the Connecticut office of that company was in the office of Burr & Knapp, who were its general managers in this state. Where the Georgia company was located, or any other facts concerning it, the evidence did not disclose. The defendant, among other loans, handled those of this Georgia company, through Burr & Knapp, but under what arrangement did not appear. The coupons upon plaintiff's note as they came due were sent by defendant to Burr & Knapp, and the money, when received by them, was sent to the defendant and paid by him to the plaintiff. When the extension coupon came due, the note remained unpaid, and the plaintiff, on September 20, 1893, “at the solicitation of the defendant, and relying upon his assurance that, if he would give the defendant the note for collection, the defendant would get the amount due upon it in a very short time, delivered said note to the defendant, with positive instructions to collect the amount due thereon, and received from him a receipt therefor, reading as follows:

"Received of George R. Davis, note 2441, Georgia Loan, 1994 for $1000 for collection. Matured Sept. 1st, 1893. Placed in our hands at first on Sept. 20th, 1893.

"C. D. KING & CO."

Nothing was said between the parties as to any compensation to be paid the defendant for the collection of said note, and he never expected anything would be paid, unless some difficulty arose in making the collection; but the plaintiff understood that the defendant would attend to its collection, as he had 471 attended to the collection of coupons, as a duty assumed by him, as the negotiator of the loan, toward the plaintiff, as its purchaser, for the promotion of his brokerage business. No instruc

tions were given to the defendant as to the course to be pursued in collection. The defendant at once sent the note to Burr & Knapp, and instructed them to collect the same and remit the money to him. Prior to this time, the trust company, with the consent of the holders of the other two Colley notes, had agreed with Colley to extend the loan for a period of five years. Colley had executed three new notes, and a new mortgage of the same land to secure the new notes, to a company called the Security Investment Company, but what this new company was, or where located, the evidence did not disclose. It was the judgment of the trust company that it was for the interest of the holders of the original Colley notes that the first mortgage should not be foreclosed. These facts were unknown to the plaintiff when he placed his note in defendant's hands for collection, nor were they discovered by him for a long time thereafter. Burr & Knapp, on receipt of the note, forwarded it to the trust company, and it at once delivered the note to Colley, and it was by him presumably destroyed. The three renewal notes were payable in five years from date, with interest at seven and one-half per cent per annum, payable annually. One of these renewal notes was sent by Burr & Knapp to the defendant, and he tendered it to the plaintiff, who refused to accept it, and demanded the original note, or the money due on it. The plaintiff then, for the first time, learned of the existence of the firm of Burr & Knapp, and the business relations of the defendant with them, and that others besides himself were interested in the loan.

Upon these facts, the defendant claimed, among other things, that the trust company was not the agent of the defendant, but was the trustee and agent of the plaintiff; and that the defendant, in forwarding the note in due course of business to the trust company with instructions to collect, had performed his duty to the plaintiff, and was not liable for the default or misconduct of the trust company. 472 The court overruled these claims, and held that the defendant was an independent contractor for the collection of the note; that Burr & Knapp and the trust company were the agents of the defendant, and not of the plaintiff; that there had been a conversion of the note; that defendant was liable for a failure to return either the note or the money; and rendered judgment for the amount of the note and interest.

It appears from this finding that the Georgia Loan and Trust Company, either as the agent of the plaintiff or of the defendant, wrongfully delivered up to Colley the property of the plaintiff,

so that it became lost to him. If, in so doing, the trust company was the agent of the defendant, then he is liable for the damage thereby occasioned to the plaintiff; but if it was the agent of the plaintiff, then the defendant is not liable for such damage. As

a conclusion of law from the facts found, the court below held that the trust company was the agent of the defendant, and not of the plaintiff; and whether it erred in so holding is the principal question upon this appeal.

The law applicable in cases of this kind is tolerably well settled. As a general rule, an agent has no right to delegate his authority to a subagent without the consent of his principal. If, without such consent, he does delegate his authority, the subagent whom he appoints will be regarded as his agent, and not the agent of the principal. On the other hand, if an agent has the consent and authority of his principal to employ a subagent, he may employ one; and if, in so doing, he in good faith selects a suitable and proper subagent, he is not responsible to his principal for the acts and omissions of such subagent. Furthermore, this consent and authority from the principal to the agent to employ a subagent may be given expressly or by implication: Story on Agency, sec. 201; Evans on Principal and Agent, c. 6, sec. 2; Mecham on Agency, sec. 513.

Bearing in mind these principles, it is clear that the question whether or not the trust company was the agent of the defendant for whose acts he was responsible, depends on 473 the answer to the further question, whether the plaintiff expressly or impliedly authorized the defendant to forward the note to that company for collection. If he did, then the trust company was the agent of the plaintiff, and not of the defendant. As no claim is made that there was any express authorization of this kind, the inquiry is narrowed down to this: Do the facts found warrant the conclusion, as matter of law, that there was an implied authorization?

The court below must necessarily have held that there was no such implied authorization, and in this we think it erred. Upon the facts found, and as matter of law, we think the plaintiff impliedly authorized the defendant to employ the trust company to collect the note. The facts in this case are somewhat peculiar. The defendant was not a collection agent, nor an attorney at law engaged in the collection of claims; his principal business was that of a broker and negotiator of loans and investments. As such he had acted as the agent of the trust company in selling the note in question, and this was known to the plaintiff when