G.R. No. 30831. September 02, 1929
PHILIPPINE NATIONAL BANK, PLAINTIFF AND APPELLEE, VS. TAN ONG SZE, VIUDA DE TAN TOCO, DEFENDANT AND APPELLANT.
JOHNS, J.:
of land in the City and Province of Iloilo, known as lots Nos. 279 and
572, of the Iloilo cadastral survey, evidenced by certificate of title
No. 329. September 14, 1916, in Amoy, China, she executed before the
United States Vice Consul at that place a power of attorney, known in
the record as Exhibit K, in which she made and constituted Tan Bunco as
her attorney-in-fact, the material provisions of which are as follows:
“Know all men by these presents,
“That
I, Tan Ong Sze (Chinese characters) widow of late Tan Tek Co (chinese
characters) of Ng Chung Village in the Tong An District, Chuancho,
Perfecture, who died in H, T. 2d year 8th month 3d day (6th September,
1910) have made ordained, constituted and appointed, and by these
presents do make, ordain, constitute and appoint Tan Bunco (Chinese
characters) to be my lawful attorney of the shop Hock Bee (Chinese
characters) at Iloilo, Philippine Islands, * * * and also for me and in
my name to sign, seal and execute, and as my act and deed, deliver, any
lease, any other deed for the conveying and real or personal property
or other matter or thing wherein I am or may be personally interested
or concerned. And I do hereby further authorize and empower my said
attorney to substitute and appoint any other attorney or attorneys
under him, for the purpose aforesaid and the same again and pleasure to
revoke (and generally for me and in my name to do, perform and execute
all and every other lawful and reasonable acts and things whatsoever as
fully and affectually as I the said Tan Ong Sze (———————) might or
could do if personally present. And I do hereby ratify and confirm all
and whatsoever my said attorneys or attorney or his or their substitute
or substitutes, or any of them, shall lawfully do, or cause to be done,
in or about the premises, by virtue of these presents * * *.”
It is apparent that a clerical error was made in the preparation of
the instrument or an error was made in its translation, and in so far
as it is material to this opinion, it should read:
” (1) * * * and also for me and in my name to sign,
seal and execute, and as my act and deed, deliver any lease, any other
deed for conveying any real or personal property or other matter or thing wherein I am or may be personally interested or concerned;(2)
* * * and also for me and in my name to sign, seal and execute, and as
my act and deed, deliver any lease, any other deed for the conveying of any real or personal property or other matter or thing wherein I am or may be personally interested or concerned”
It is very apparent that the words “for the conveying and real or
personal property” should read “for the conveying of real or personal
property.” That is to say, the defendant executed a power of attorney
to Tan Bunco in which she vested him with the power “for me and in my
name to sign, seal and execute, and as my act and deed, deliver any
lease, any other deed for conveying any real or personal property” or
“any other deed for the conveying of any real or personal property.”
Plaintiff’s complaint is founded upon the promissory note, known in
the record as Exhibit B, which purports to have been executed in Iloilo
on May 23, 1922, by her attorney-in-fact under and by virtue of the
power of attorney above described, and the mortgage which purports to
have been executed to plaintiff to secure the payment of the note,
known in the record as Exhibit E.
The question is thus squarely presented whether or not under his
power, the attorney-in-fact had the authority to execute the promissory
note or to execute the mortgage on real property to secure its payment.
It will be noted that the language used in the power of attorney is
confined and limited to the authority “to sign, seal and execute, and
as my act and deed, deliver any lease, any other deed for conveying any
real or personal property,” or “to sign, seal and execute, as my act
and deed, deliver any lease, any other deed for the conveying of any
real or personal property.” Hence, does this power carry with it and
imply the authority of the attorney-in-fact to borrow money and to
execute the promissory note of the defendant and mortgage her real
property to secure its payment?
In an exhaustive opinion the lower court held that the power to
convey real property carried with it the power to mortgage, and that
the defendant was liable on both the note and the mortgage.
Cyclopedia of Law and Procedure, vol. 31, p. 1390, says:
” (II) TO MORTGAGE OR PLEDGE. Authority to mortgage
the property of a principal is rarely to be inferred. It is not to be
implied from general authority to manage, or even to sell, the
principal’s property.”
Under which, in the notes, decisions are cited from the Supreme
Courts of California, Florida, Kansas, Missouri, South Carolina, and
Texas, and it is said:
“The power to sell and convey lands as a
general rule carries no implied power to charge the principal with the
responsibilities and liabilities of a mortgagor.” (Citing decisions
from the Supreme Courts of Kansas, Michigan, Minnesota, North Dakota,
Wisconsin, and a large number of English authorities.)
And on page 1395, it is said:
“(IV) TO LEND OR BORROW MONEY. Power to lend or
borrow money, like most other special powers of an agent, is not to be
inferred without clear evidence of such a grant.”
And on page 1396, it is said:
“* * * And when authority is conferred, whether
expressly or impliedly, it must be exercised within the limits
prescribed, and burdens assumed by the agent but not authorized by the
principal cannot bind the latter. * * *. No authority to borrow money
is to be implied from a power to lend, nor merely from a power to act
for the principal in his business generally or in other specific
matters.”
And in the notes, it is said:
“* * * That authority to borrow money, conferred on
an agent, must be created by express terms or necessarily implied from
the nature of the agency, for authority to borrow money is one of the
most dangerous powers a principal can confer upon an agent.“Thus
such power is not to be implied from the power to manage the
principal’s business, even though with authority to buy goods on credit
(Hayness vs. Carpenter, 86 Mo. App., 30; Bickford vs. Menier, 107 N. Y., 490; 14 N. E., 438 (reversing 36 Hun., 446); Weekes vs. A. F. Shapleigh Hardware Co., 23; Tex. Civ. App., 577; 57 S. W., 67; Spooner vs. Thompson, 48 Vt., 259), or from authority to draw checks to make payments for property bought by the agent (Mordhurst vs. Boies, 24 Iowa, 99).”
Ruling Case Law, vol. 21, p. 885, says:
“An instrument empowering an attorney, among other
things, ‘to buy and sell real estate, and in my name to receive and
execute all necessary contracts and conveyances therefor,’ does not
authorize such attorney to sell and convey lands to which, as the
record shows, the principal had acquired title before execution of the
power. * * * The attorney may not mortgage the property; nor has he
authority to execute an option.”
The case of Hawxhurst vs. Rathgeb (51 Pacific, 846), decided by the Supreme Court of California, is square in point. The syllabus laid down this rule:
“2. The language, in a power of attorney, ‘to sell,
transfer, and release two certain mortgages * * *; to indorse and
transfer the notes secured by said mortgages; to sell and transfer my
claims for said notes and mortgages* * *; and to receive
payment * * * and give acquittances therefor—confers the power to sell
and transfer the title to the securities absolutely, or to collect
them, but does not confer power to pledge them.“3. The act of an attorney in fact in pledging securities, when his authority only gave him power to sell or collect, is void.”
And the opinion says:
“The effect of this language was to confer a power
to sell and transfer the title to the securities absolutely, or, if not
so sold, to collect them from the estate of Kunz. There is nothing in
the language which by any proper construction purports to confer a
power to pledge or hypothecate the securities for any purpose, or to
borrow money thereon. The words ‘sell and transfer’ as there used, are
of no broader signification than the words ‘sell and convey’ used with
reference to a conveyance of real estate; and the latter, employed as
the operative words in a power to convey land, do not carry authority
to mortgage or otherwise dispose of the property”
The case of Minnesota Stoneware Co. vs. McCrossen, 110 Wisconsin, 316; 84 American State Reports, p. 927, in the syllabus says:
“A POWER OF ATTORNEY TO SELL AND CONVEY real estate does not include a power to mortgage.
“POWER
OP ATTORNEY—INTERPRETATION.—A written instrument, not ambiguous either
in its literal sense or in the application of its language to the
subject or purpose thereof, must be taken to mean what it says.”
In that case the language used in the power was this:
” ‘In my name, place and stead to sell and convey
any real estate and personal property which I may now own or may
hereafter acquire in the States of Wisconsin and Washington.’ “
Construing which, the court, on page 928 of the opinion says:
“The power of attorney was a mere power to sell and
convey, importing authority to sell out and out for cash and not power
to mortgage. That is elementary: Jones on Mortgages, sec. 129; Devlin
on Deeds, sec. 363a; Morris vs. Watson, 15 Minn., 212; Colesbury vs. Dart, 61 Ga., 620; Wood vs. Goodridge, 6 Cush., 117; 52 Am. Dec, 771; Hoyt vs.
Jaques, 129 Mass., 286; Perry on Trusts, sec. 768. No departure from
such general rule, worthy of consideration, we venture to say, can be
found.”
And in the case of Campbell vs. Foster Home Association, 26 L. R. A., p. 117; 163 Pa., 609, the Supreme Court of that State says:
“1. A power to mortgage land is not included in a power of attorney to sell and convey, uncoupled with any interest in the land or the fund.”
And on page 122, among other authorities, the opinion quotes with approval the decision of Justice Cooley, in Jeffrey vs. Hursh (49 Mich., 31), in which it is said:
” ‘J. M. Hursh had power to sell the land, but not
to mortgage it. The power is not to be extended by construction. The
principal determines for himself what authority he will confer upon his
agent, and there can be no implication from his authorizing a sale of
his lands that he intends that his agent may at discretion charge him
with the responsibilities and duties of a mortgagor.’ “
In fact the authorities are overwhelming that the power to sell and
convey does not carry with it or imply the power to borrow money or to
execute a mortgage on real property.
The lower court in its opinion holds that, legally speaking, a
mortgage is a conveyance and that the power to convey carries with it
the power to mortgage. That theory is not sustained by any authority.
By its express terms and provisions the instrument itself, upon which
plaintiff relies, provides for the foreclosure of the mortgage, and the
whole purpose and tenor of plaintiff’s complaint is to foreclose the
mortgage. If in truth and in fact it was a conveyance of the legal
title to the property, there would be no reason why the plaintiff
should apply to the court to foreclose it as a mortgage.
The authorities cited in the opinion of the lower court are not in point, and that is specially true of 47 California, 242,[1] in which the syllabus says:
“CONSTRUCTION OF POWER OP ATTORNEY.—A power of
attorney in which the principal authorizes the agent to make contracts,
to settle outstanding debts, and generally to do all things that
concern his interest in any way, real and personal, to use the
principal’s name to release others, to bind the principal as he may
deem proper and expedient, and making the agent his general attorney
and agent, and ratifying and confirming whatever the attorney may do by
virtue of the power, authorizes the attorney to execute a lease of the
principal’s real estate for a term exceeding one year, and to execute
any instrument affecting the real estate of the principal, unless, it
may be, a conveyance of it.”
It will be noted that this case was decided in January, 1874.
Note the marked distinction between the powers conferred in that
case and in this. Yet it was there held that the agent did not have the
power to convey. That case was decided in January, 1874.
The lower court also cites 46 California, 603,[1] from a
reading of which it will be found that the real question involved in
that case was the priority of mortgages which involved the construction
of section 1215 of the Code which defines the terms of the conveyance:
“As embracing every instrument in writing by which
any estate or interest in real property ia created, aliened, mortgaged,
or incumbered, or by which the title to any property may be affected,
except wills.”
It did not involve the construction of a power of attorney, and
neither of those cases are even mentioned in the decision of that court
above quoted, which was rendered January 5, 1898.
The case of Golinsky vs. Allison (46 Pacific, 295), also
decided by the Supreme Court of California on October 7, 1896, is
square in point, The syllabus says:
“1. A power of attorney to an agent authorizing him
to ‘superintend’ property of his principals, and to ‘preserve, manage,
sell, and dispose of the same, and to ‘manage, work, sell, and dispose
of other property, did not confer authority on the agent to execute a
promissory note in the name of his principals, or to mortgage their
property to secure the same, though the note was given in settlement of
an antecedent debt contracted by the agent in the management of the
property.”
And in the opinion, it is said:
“A power of attorney, like any other instrument, is
to be construed according to the natural import of its language ; and
the authority which the principal has conferred upon his agent is not
to be extended by implication beyond the natural and ordinary
significance of the terms in which that authority has been given. The
attorney has only such authority as the principal has chosen to confer
upon him, and one dealing with him must ascertain at his own risk
whether his acts will bind the principal. By the above letter of
attorney given by Allison and Sackett to Barron, he had authority to
‘superintend’ the property of his principals, and to ‘preserve, manage,
sell, and dispose of the same, and also to locate mill sites, mining
claims, and water rights, and ‘to manage, work, sell, and dispose of
them’. A power to sell and convey real estate does not authorize the
attorney to mortgage it. (Jeffrey vs. Hursh, 49 Mich., 31; 12 N. W., 898; Wood vs. Goodridge, 6 Cush., 117; Brown vs. Rouse, 93 Cal., 237; 28 Pac, 1044.) For an exhaustive discussion of the subject, see Campbell vs.
Association (163 Pa. St., 609; 30 Atl., 222, 224). ‘The power is not to
be extended by construction. The principal determines for himself what
authority he will confer upon his agent, and there can be no
implication, from his authorizing a sale of his lands, that he intends
that his agent may, at discretion, charge him with the responsibilities
and duties of a mortgagor'”
No authority of any court has been cited and none will ever be found
holding that a power “to sign, seal and execute, and as my act and
deed, deliver, any lease, any other deed for conveying any real or
personal property” or “to sign, seal and execute, and as my act and
deed, deliver, any lease, any other deed for the conveying of any real
or personal property,” or any similar language, standing alone and
within itself, carries with it or implies the power to borrow money or
to execute a real mortgage to secure the payment of a debt.
The trial court also found that by her actions and conduct, the
defendant had ratified and approved the acts of her agent in the
execution of both the note and the mortgage. Upon that point, we have
read and reread the record, and there is no legal evidence to sustain
that finding. In fact there is nothing in the record which show3 or
tends to show that the defendant ever knew of the execution or the
existence of the note or the mortgage, or that she ever had any
knowledge of the transaction in question.
With all due respect to the exhaustive opinion of the lower court,
we are clearly of the opinion that it is fundamentally wrong, and that
there is no legal principle upon which it can be sustained, from which
it follows that the judgment of the lower court must be reversed. It is
true that on the former appeal and in the interest of justice, this,
case was remanded to the lower court, with leave to the plaintiff to
introduce the power of attorney in question and any other evidence
which it might have to sustain its cause of action and that there
should be an end to litigation. Be that as it may, the amount involved
is now about one-half million pesos, and it is apparent that the Bank
acted in good faith.
The judgment of the lower court is reversed and the complaint is
dismissed, but for such reasons and in the interest of justice, such
dismissal is without prejudice to any legal rights or remedies, of any
kind or nature, which the plaintiff may have against the defendant,
with costs in favor of the appellant. So ordered.
Avanceña, C. J., Johnson, Street, Villamor, Romualdez, and Villa-Real, JJ., concur.
[1] Jones vs. Marks and Harrington.
[1]Odd Fellows’ Saving’s Bank vs. Banton.