Loan. Bills and Notes, Delivery. Agency. Equity Jurisdiction, Fraud. Where a lender of money has received the note of an applicant for a loan, and sends to an agent for delivery to the applicant a check payable to the applicant for the amount of the loan, and the agent takes the check to the applicant and, holding it face downward, fraudulently induces the applicant to indorse it under the belief that he is signing a voucher, and the agent cashes the check and absconds with the proceeds, the possession of the check never has passed to the applicant.
The holder of an endowment policy applied to the insurance company which issued it for a loan upon the security of his policy, and delivered to the company his policy and his note for the amount of the desired loan. The insurance company sent to one of its agents for soliciting insurance a letter addressed to the applicant for the loan, requesting a receipt and enclosing a check payable to such applicant for the amount of the loan applied for. The insurance company authorized the agent to deliver its letter and the check and "also to attend to certain other matters in connection with the delivery of the check." The agent took the check to the applicant and, holding it face downward, fraudulently induced the applicant to indorse it under the belief that he was signing a necessary voucher. The agent then cashed the check and absconded with the money. In a suit in equity by the applicant for the loan, seeking the return of his policy and the cancellation of his note, it was held, that it might be found to have been within the scope of the agent's special authority to take a receipt or voucher for the papers which he was to deliver and therefore that it was within the apparent scope of his authority to demand that the applicant should sign some voucher, and that on the evidence presented it could be found that the plaintiff was not guilty of such negligence as to bar him from recovery.
SHELDON, J.
The only issues of fact raised by the defendant's answer are by its denial of the fourth paragraph of the bill and its averment that it has paid to the plaintiff the amount which it had agreed to lend to him. These issues have been decided adversely to the defendant, and we should not be justified in reversing the findings made by the single justice. We cannot say that the plaintiff's testimony is not to be believed, and on that testimony the possession of the check never passed from Phinney to the plaintiff. Markey v. Mutual Benefit Life Ins. Co. 103 Mass. 78, 79.
The only remaining question is whether on these findings the plaintiff is entitled to the relief asked for. Phinney was the defendant's agent to deliver its letter and check to the plaintiff. This was to be sure a limited agency; but within its apparent scope, though no further, the case stood as if it had been the defendant itself, acting through its most general agent, that had undertaken to make the delivery. Phinney might well have been authorized by the defendant to take a receipt or voucher for the papers which he was to deliver. The defendant plainly did not intend that the plaintiff should receive its check until the defendant should have received from him whatever paper it required to show the nature of the transaction and the security it was to have for the proposed loan. It did not even start Phinney on his way to the plaintiff until it had received the plaintiff's note and policy. It was for the defendant to say what further receipt or voucher it would require. It was therefore within the apparent scope of Phinney's authority to demand that the plaintiff should sign some voucher. And this was found as a fact at the hearing. The single justice found, and on the testimony of the manager of the defendant's Boston agency he was well warranted in finding, that Phinney "was also to attend to certain other matters in connection with the delivery of the check." This means, as the testimony clearly shows, that Phinney was expected to procure the plaintiff's receipt or acknowledgment and send it to the defendant.
The finding that this "was not within the apparent scope of his authority as an agent for soliciting insurance" does not help the defendant. It was not in the latter capacity that he either was or purported to be acting, or that he was authorized by the defendant to act in this matter.
It may be that the single justice could have found that the plaintiff was guilty of such negligence as to bar him from recovery. But he manifestly was not bound so to find. And upon Barry's testimony as to the transaction and the circumstances under which he indorsed the check, thinking that he was signing a voucher, the finding is not shown to be wrong. We have held in many cases that one who has signed a release or other paper under a fraudulent misrepresentation as to its contents or effect may avoid his agreement therein contained when it appears also that he was kept in ignorance of its contents by some fraudulent concealment or artifice. That was the case here. Curley v. Harris, 11 Allen, 112. Leddy v. Barney, 139 Mass. 394. O'Donnell v. Clinton, 145 Mass. 461. Rosenberg v. Doe, 148 Mass. 560. Freedley v. French, 154 Mass. 339. Bliss v. New York Central Hudson River Railroad, 160 Mass. 447. McNamara v. Boston Elevated Railway, 197 Mass. 383. Price v. Rosenberg, 200 Mass. 36. Rollins v. Quimby, 200 Mass. 162. Larsson v. Metropolitan Stock Exchange, 200 Mass. 367.
The final decree must be modified so as to include the costs of the appeal, and so modified must be affirmed.
So ordered.