
    Seright et al. v. Zinn, Trustee.
    (Decided November 24, 1932.)
    
      Mr. Howard Buher, for plaintiffs in error.
    
      Mr. Alfred Zinn, for defendant in error.
   Sherick, J.

The defendants below, Howard B. Se-right and Mary R. Seright, who are the plaintiffs in error in this court, prosecute error claiming that the trial court erred in directing a verdict in favor of the plaintiff below, C. A. Zinn, trustee of the Harriet Humphrey estate, at the conclusion of all the evidence. The facts necessary to an understanding of the question presented are as follows:

On the 3rd day of November, 1922, the Serights borrowed of one Gf. A. Elliott the sum of twenty-one hundred dollars, and they executed and delivered to him a series of eight notes, which were due and payable in five years, and were secured by a mortgage on certain real estate.

On the same date one of this series of notes was sold by Elliott to 0. F. Ribble, then acting as trustee of a trust created under the will of Harriet Humphrey, deceased. The semiannual interest payments provided for in the note, as well as in all of the notes of the series, were paid at the office of the payee, Elliott, and in the case of the note purchased by Ribble, as trustee, Elliott paid the interest to the trustee.

The notes fell due on November' 3, 1927, and at or about that time the Serights procured of the Cumberland Savings Bank a new loan, which was intended to refinance the Serights and to pay off the existing notes and mortgage made to Elliott. In order that this end might be accomplished the bank assumed to act as agent of the Serights in'the discharge of the prior existing obligations. It delivered to Elliott its cashier’s check in the sum of $2,162.25, and at the same time received of Elliott the mortgage held as against the premises of the Serights. At the time Elliott suggested to the bank that the notes were in the hands of third parties and that he would pay the notes out of the sum so received and deliver the notes to the bank. It is disclosed that Elliott never complied with this agreement, and did, in fact, abscond.

The note sued upon was in the sum of four hundred and fifty dollars, and was made payable to the order of G-. A. Elliott. This note has upon the margin thereof the following notation: “Principal and interest payable at the office of Gr. A. Elliott, attorney-at-law, Zanesville, Ohio.” It is proven in this case that Ribble, as trustee, held this note in his continuous possession from the date of his purchase, and that the mortgage remained in the possession of Elliott. The facts are further that Ribble as trustee never notified the Serights that he was the owner of this note, and that he permitted Elliott to collect the payments of interest, which he (Ribble) received from Elliott.

Upon this state of facts it is now claimed by the plaintiffs in error that the plaintiff trustee, Zinn, who is the successor of the trustee, Ribble, is estopped to deny the authority of Elliott as the trustee’s agent, and that the trustee has ratified the payment of the principal of the note in question to Elliott. It is admitted by the plaintiffs in error that there is no evidence in this case showing any agency as between Ribble, trustee, and Elliott, by virtue of an express contract, either in writing or verbally. This, to our notion, is a fatal admission to the claim of the plaintiffs in error.

The question presented is not a new question in this state, for it is an accepted principle of agency that an authority to receive interest on an obligation owing to a principal does not imply any such authority reposing in one to receive payments on the principal of the debt, unless the obligation is in the possession of the claimed agent, or unless an express authority is proven, and the burden of so doing rests on the party making payment to show that one receiving payment was so authorized.

Now in this case much is made of the fact that the note’s notation provides that the principal and interest shall be paid at the office of G. A. Elliott; but this, to our notion, is not the controlling feature of the existing obligation. The contract of tbe maker of a promissory note, as in this case, is to pay to the payee or his order. The maker of a note must recognize that his obligation may be in the hands of an innocent purchaser at due date. It was not the duty of the trustee to notify the plaintiffs in error, the Serights, that he was the owner and holder of this note. The plaintiffs in error claim that Kibble as trustee should have spoken and notified them that he was the owner thereof.

It is held in Canan v. Heffey, 27 Ohio App., 430, 161 N. E., 235, that estoppel cannot be predicated on silence where one has no duty to speak.

It is our opinion that the case of Hoffmaster v. Black, 78 Ohio St., 1, 84 N. E., 423, 21 L. R. A. (N. S.), 52, 125 Am. St. Rep., 679, 14 Ann. Cas., 877, is decisive of the question presented. This case we have examined with exceeding care, and we find but one point of divergence or difference between the facts of that case and those of the case at bar. In the Hoffmaster case it appears that the note and mortgage were in the possession of the purchaser, and not in the possession of the agent. In the case before us we find the note in the possession of the trustee and the mortgage in the possession of Elliott. This fact, however, does not warrant a conclusion that that case is not an authority for the instant one. We recognize that the note is the obligation, and that the mortgage is but the security for the note. We therefore must conclude, as was determined in the Hoffmaster case, that when the agent of the Serights, that is, the bank, made payment of the principal of the obligation to Elliott, it did so at its peril, and that Elliott was but the messenger boy. Had the payment of the principal reached the trustee, it would have been payment, but, not having reached the trustee, it was not payment.

We have indicated that there are no facts present in this case substantiating the plaintiffs in error’s claim of estoppel; neither are there any facts showing that the principal, that is Rabble, trustee, ratified the act of the Serights in paying the principal to Elliott.

We note that the Supreme Court in the case of Marriott v. Hawk, 111 Ohio St., 285, 288, 145 N. E., 287, further approves of the Hoffmaster case. It is therefore the judgment of this court that this cause be affirmed.

Judgment affirmed.

G-arver, P. J., and Lemert, J., concur.  