Hughes v. Dundee Mortgage Trust Investment

by Horace Gray

United States Supreme Court

140 U.S. 98

Hughes  v.  Dundee Mortgage Trust Investment

The plaintiff then proved the issue of the certificates mentioned in the declaration, and introduced testimony as to the value of the services rendered and responsibility assumed in issuing the same, and rested his case. Whereupon, it being then admitted in open court 'that Addison C. Gibbs had been the attorney of the Oregon and Washington Trust Investment Company, Limited, prior to the appointment of the plaintiff as such; that the plaintiff had been the partner of said Gibbs, and had taken his appointment on the same terms as Gibbs had held his, save only as it might be varied by the resolution, the letter of the secretary, and the printed rules, offered in evidence by the plaintiff,'-the defendant offered in evidence a letter from the secretary of that company to Gibbs, dated August 22, 1874, which, it was admitted, contained the terms of the appointment of Gibbs, and the body of which was as follows: 'The directors of the Oregon and Washington Trust Investment Company, Limited, have had under consideration a recommendation to appoint you as law agent in and concerning the preparation of mortgages for loans authorized by them in America, and I have now the pleasure of informing you that they have appointed you as law agent on the following footing: (1) You shall do all work, and carry through all procedure and see to the execution and registration and publication of deeds, requisite and necessary for giving and securing to the company valid and effectual first and preferable mortgages over real estate for such loans as the directors at Dundee may from time to time sanction and authorize. (2) In the performance of your duties as law agent aforesaid you will have regard to the amended rules made by the directors, of which a copy is hereunto annexed. (3) You shall not, directly nor indirectly, take or receive for behoof of the company any commission, bonus, or other benefit from a borrower; and the company shall not covenant for or accept in respect of any loan anything but the interest conditioned to be paid in and by the mortgage, and which interest shall never exceed what is lawful and right. (4) You shall not, by yourself or any or either of your partners, be or act as local directors of the company; and you shall not, directly nor indirectly, be interested in any property mortgaged or proposed to be mortgaged to the company, o be in copartnery or joint adventure or otherwise connected with any borrower. (5) Your professional fees against borrowers, including abstracts, searches, investigating titles, preparation and recording of mortgages, shall in no case exceed what the laws of the state warrant, and, although the law might warrand and allow more, shall never exceed what follows: Scale of maximum fees to be charged borrowers by law agent. For loans under $2,001, 3 1/2 per cent., (exclusive of traveling and hotel bills;) for loans under $4,001 and above $2,000, 3 per cent., (exclusive of ditto;) for loans above $4,000 and under $20,000, 2 1/2 per cent., (do., do.) (6) You shall be responsible to the company for the validity and sufficiency of all mortgages prepared or taken by you. (7) I commend to your attention a letter which I have to-day written to Mr. Reid, defining his duties as manager of the company at Portland; and both you and he will be pleased to understand that that appointment, according to the terms of that letter, and your appointment, according to the terms of this letter, are made upon the footing that the said appointments and terms thereof are lawful and right, according to the laws of the states or countries in which the real estates upon which the company's loans may be made are situated, and according to the laws of the United States; and nothing shall be done by you or Mr. Reid, directly or indirectly, either in your own names or for your own behoof or in the name of for behoof of the company, to prejudice or affect or imperil in any way the validity and sufficiency of any mortgage granted or to be granted to the company, or to create or give rise to any claim, penalty, tax, or other exaction or loss to the company. (8) Your appointment is, of course, at the pleasure of the company.'

The defendant also offered in evidence the following parts of a letter written by the plaintiff to John Leng, one of the directors of the Oregon & Washington Trust Investment Company, Limited, dated September 30, 1876: 'To take up separately the different subjects upon which you requested an expression of my views. Attorney's fees: The fees now charged upon each loan as the fees of the attorney for the examination of titles, and of which one-half of one per cent. on the entire amount of the loan is now paid to Mr. Reid, is a scale of fees based upon the minimum charges made by respectable and responsible attorneys here for the same service and responsibility. I have always felt that it was an injustice to the attorney to require any part of these fees to be paid to the company's manager. The division was acceded to, at the time when established, under the belief that, if the company's expenses were kept down until it was demonstrated that its business in Oregon would be profitable, the directors would then feel disposed to make such allowance for the pay of its manager, etc., as to give to each one employed in the company's service ample compensation for services rendered. The business of the company is now in such a prosperous condition as, I think, entitles me to ask that I be allowed to receive for my services in their behalf at least the minimum fees charged for like services by gentlemen in equal standing in my profession here, which would be the entire fees now charged borrowers, and out of which there is now paid Mr. Reid one-half of one per cent. on the entire amount of the loan. It would be no object to but in fact a loss for me to continue to act as the attorney of the company if the fees actually received by me are to continue as at present.'

The defendant also offered in evidence a resolution of the Oregon & Washington Trust Investment Company, Limited, dated November 23, 1876, in these terms: 'Attorney. That Mr. Hughes, the company's attorney, be remunerated by fees charged borrowers in terms of scale of March, 1875, and now current. The directors trust that these rates of remuneration, which, along with the relative appointment, are to continue during their pleasure, willbe satisfactory to all concerned.'

The plaintiff, for the purpose of showing the meaning and intent of that resolution, offered in evidence a letter from John Leng to the plaintiff, dated November 24, 1876, in these terms: 'My colleagues have cordially adopted my recommendation that you receive your fees according to the scale now subsisting, without any deduction. This will take effect 1st January, and I hope will be quite satisfactory to you. I learned in the eastern states that the mortgage form of the one large lending company provides that the expenses paid to the attorney in the event of foreclosure shall be such sum as the court may consider reasonable or a reasonable sum. They say the borrower never objects to this, and the attorney is always allowed what satisfies him. Would it not be well for you to adopt this?' The plaintiff also proved that that resolution was transmitted to him with that letter. No other testimony as to the terms of the contract with the plaintiff was offered by either party. The court directed the jury to return a verdict for the defendant, and the plaintiff excepted to the direction, ans sued out this writ of error.

J. N. Dolph, for plaintiff in error.

Thos. De Witt Cuyler and J. Percy Keating, for defendant in error.

Mr. Justice GRAY, after stating the facts as above, delivered the opinion of the court.

Notes