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January, February, March, and April, 1875, you had no personal knowledge of the state of your account with the Sev. enth National Bank; of what notes, bills, or drafts were discounted for you, nor what collaterals were given, nor how money was raised from the bank or checked out; in short, that you entrusted the entire management of this part of your financial business during these months to Alexander Ervin, without examination and without statement from him. Am I right ?” “Answer. I entrusted such matters to him during that time, as previously, with such additional authority as may have been-as was given him by the power of attorney." ***
There is other evidence showing that the dealings between Ervin, as agent of Morris, and the bank, after the date of the letter of attorney, were as unrestricted as they were before. These subsequent transactions were in the usual course of Morris' business, and enured to his benefit, and he is chargeable with knowledge of them. It does not, therefore, lie in his mouth, or in that of his voluntary assignee, to say that the powers of Morris were limited by the terms of the letter of attorney. The original transaction with the bank in respect to the Wood notes, viz., the discount of the first dividend, was as much outside the scope of the letter of attorney as was the subsequent pledge of the notes.
A written power of attorney may be expanded by the declarations or acts of the principal. Whar. on Agency, $ 225. “By such expansions,” says this author, “he may extend his liability beyond the written instrument. Eminently is this the case where the principal, by his acts and statements, leads third parties to believe that he has reposed in the agent trusts beyond those specified in the written power. By such a course the principal is estopped from afterwards disputing his liability to innocent third parties, who were led by such acts or statements on his part to contract with the agent." Id.
It is clear to me that the conduct of Morris was such as to induce the belief on the part of the officers of the bank that he had invested Ervin with authority to make the pledge in question. In that belief they acted, and Morris received the benefit of the contract. To restore the bank to its former
position is now impossible. In this view of the case, therefore, and aside from the question of actual authority, the plaintiff, whose equities are not superior to those of Morris, is estopped from disputing the defendant's title to the fund in controversy.
It is unnecessary to discuss the several exceptions to the master's report. His conclusion is correct. The exceptions are therefore overruled, and a decree will be entered (substantially in the form recommended by him) in favor of the defendant in the issue.
RHODE ISLAND HOSPITAL TRUST COMPANY, Adm'r, v. HAZARD.
(Circuit Court, D. Rhode Island. February 17, 1881.)
1. WITNESS — PARTY TO SUIT — ACTION BY ADMINISTRATOR Rev. St.
In a suit by an administrator for the annulment of a contract, upon the ground of fraud and undue influence, the defendant is disqualified, by section 858 of the Revised Statutes, from testifying as to
transactions and conversations with the decedent personally. 2. CONTRACT-FRAUD—INSANITY—EVIDENCE.-[ED.
Wm. W.&S.T. Douglas and Charles Hart, for complainants. Chas. S. Bradley and Benj. N. Lapham, for defendant.
LOWELL, C. J. This bill is prosecuted by the administrator of John G. Copelin, late of St. Louis, Missouri, having been filed June 5, 1875, by the guardian of Copelin, who was then living, but insane. It alleges and charges that the defendant, Rowland G. Hazard, of Peace Dale, in Rhode Island, on the fourth of February, 1871, was the owner of threefourths of the capital stock of the La Motte Lead Company, of Missouri; that the property of the company was a lead mine, encumbered by certain mortgages and debts, and was worth nothing beyond them; that the defendant sought the acquaintance of Copelin for the sole object and purpose of selling him as much as possible of said stock, and represented to Copelin that the mine was worth $3,000,000, and that
it could be sold for that sum; that it was making large profits; that he was willing to sell one-half his stock, being threeeighths of the mine, to Copelin for $225,000 cash, and the assumption by Copelin of three-eighths of the mortgage debt; that Copelin's mind had become at this time much impaired and weakened, so that he was incapable of managing his affairs intelligently, or comprehending the scope and effect of what he did, and was easily imposed on by the representations and flattery of others; that between the fourth and tenth days of February, 1871, the defendant did, by persistent and repeated representations so made to Copelin, induce him to buy the stock at the price before mentioned, and that an agreement for the purchase was made, which is copied into the bill; that Copelin paid the $225,000, and $37,500 of the debts; that Copelin was not capable of understanding even a true representation, but the defendant in fact greatly overstated the value of the property; that Copelin knew nothing of the property except what he learned from the defendant; that the defendant knew, or had reason to believe, that Copelin was not of sound mind; that in November, 1873, Copelin was found by a jury to be of unsound mind; and that in December, 1873, a guardian was appointed for him, who wrote to the defendant a letter rescinding the contract, and offering to return the stock.
The prayer is that the defendant may answer without his oath, that the contract and conveyance may be annulled, and the defendant be adjudged to pay the sum so received by him.
The answer denies all the specific allegations and charges concerning the state of mind of Copelin, and the defendant's knowledge thereof, and all the other facts relied on to show fraud or undue influence, and sets out at much length the circumstances of the purchase of three-fourths of the mine by the defendant, and his sale of one-half of his interest to Copelin; that the purpose and object of sale was in fact to procure the assistance of an able business man in Missouri; that Copelin was not known to him until this time, when he was introduced by a friend as being such a business man;
that Copelin examined the property and consulted with persons competent to advise him about the purchase; that the defendant made no representations as to value or profits, but referred him to his own examination for the former and to the treasurer of the company for the latter; that the mine was and is, in the opinion of the defendant and of experts, worth at least $3,000,000, and that it was contracted to be sold to certain English purchasers for that price soon after Copelin had bought, and the negotiation for the sale was mentioned to Copelin, in case it should come to a result, which the defendant did not then think very probable; that this sale was not consummated for the reason that the laws of Missouri did not at that time permit land to be held by aliens, and not for any reason connected with its value; that the purchase by Copelin had been ratified by himself and his attorneys in fact; that one of those attorneys had refused to return the property to the defendant at cost, and he denies all combination, etc.
Copelin was attacked with a disease of the brain known to physicians as general paralysis of the brain, was put under special charge and treatment for this disease in 1873, and died of it in 1875. It is a progressive disease, always fatal. One of its early symptoms is a great extravagance of ideas and of conduct, often manifested in making foolish and unnecessary purchases. The point of difficulty in the case is that of time. When did Copelin cease to be a speculator and become a lunatic? The symptoms unfortunately are common to sane and insane people.
There was nothing in this particular purchase which would necessarily convict a person of insanity. A mine is certainly a very difficult piece of property to appraise, and opinions about this mine vary all the way from nothing to $5,000,000 or $6,000,000. But two things are clear that those best acquainted with mining, and with this mine, put the highest value upon it, and not a single witness who depreciated it has any special knowledge about it; and an English company, upon the report by experts sent out for the purpose, agreed to buy it for $3,000,000, and failed to conclude the
purchase for reasons not connected with any diminished.confidence in its value. So far as market value can be predicated of such a piece of property, the weight of testimony is decidedly that it was worth all that Copelin paid for it. Whether it was wise or foolish to make such a purchase, would depend very much upon the amount which the purchaser could fairly afford to risk in a venture of the uncertain character of mining property, upon his willingness to wait for good times, if they became bad, and many other matters.
When the times changed, in 1873, great properties were lost, and many persons became bankrupt from the mere fall in market price of goods and lands, upon which they owed what they supposed to be a mere fraction of the true value. At the present moment those same properties may have recovered a considerable part of their former value. This mine was thus depreciated, and was sold for a very small price upon a foreclosure of a mortgage held by this defendant. In a letter printed in the record, the defendant attributes this loss, which the representatives of Copelin have suffered, to their having chosen to disavow the contract, instead of aiding him to pay the debt and preserve the property. With the foreclosure this case is not concerned.
There is no evidence of any fraud, misrepresentation, or undue influence on the part of the defendant. These allegations of the bill are unsupported, unless where they are disproved. There is no evidence that the defendant knew, or suspected, or had reason to know or suspect, that Copelin was of unsound mind; that the defendant sold the property to Copelin for more than he was ready to sell it for to others; that the transaction was in any respect, excepting its magnitude, different from any ordinary transaction of purchase and sale, so far as the defendant was concerned.
The sale was repeatedly ratified by Copelin and his attorneys, if he was capable of ratifying and of appointing an attorney. The complainants deny that a certain letter of the defendant to Copelin's attorney, Mr. Lackey, was an offer to rescind the bargain. It is not literally such an offer, but it is an intimation that the defendant has a right to rescind,