Reynolds v. Smith

This is a suit to foreclose a mortgage given to Warren A. Sherwood, deceased, and claimed to have been discharged. The case involves some of the features of Reynolds v. McMullen 55 Mich. 568, decided by this Court at the January term, 1885. It differs from that, however, in some important facts.

The public administrator in Missouri, who, as explained in the former case, undertook to deal with the assets of Sherwood to the extent of between $60,000 and $70,000, put up Michigan assets at auction, and sold the whole for a few hundred dollars. The former Alichigan administrator, Mr. Russell, who attended the sale and warned bidders of his rights, bid off a considerable part of these assets with funds of the estate. The mortgage now in dispute he bid off in the name of his wife, Julia Russell, and had it assigned to her. He subsequently, with his attorney, Mr. Woolford, called on the mortgagor, and demanded payment, representing that his wife owned the security. The mortgagor disputed the amount, claiming, among other things, that a portion was usurious, but offered to pay what was due by his own computation. This was not accepted. Russell died, and after his death, Mr. Woolford applied for payment, on behalf of Mrs. Russell, and accepted a smaller amount than the face of the mortgage and interest, and gave a release, which was duly executed and acknowledged by Mrs. Russell, to whom he accounted for the money by paying a part, retaining a part as due him from Mr. Russell, in which she acquiesced. There is testimony indicating that Mrs. Russell was in a condition to be imposed upon; but it is evident that the mortgagor paid the money and took the release in good faith.

The court below sustained the defense and dismissed the bill.

*198In the case of Reynolds v. McMullen, the defendant’s equities depended entirely on the action of the Missouri administrator. In this case the defense is based on the action of the Michigan administrator, who asserted that the mortgage belonged* to Julia Russell, and on the faith of that assertion the money was paid to her agent. This defense seems to us to be complete. It was entirely competent for Russell to dispose of the mortgage, and a sale or transfer could be made which would operate to. pass title without legal formalities. Any one dealing with an administrator has a right if acting honestly, to rely upon his representations concerning claims which belonged to his intestate, and when he says they belong to another person for whom he seeks payment, the debtor may act on his statement, and will be protected when he does so in good faith. He cannot be compelled to make special inquiry when the administrator acts in person in making the representations. The rights of defendant depend on the plainest rules of honesty and justice. If Russell was responsible for a wrongful diversion of assets, his successor must have recourse to his bond or estate to get redress. Innocent persons must not be made to suffer for their confidence in his assertions.

The decree must be affirmed with costs.