The by-laws of a building and loan association provided that the secretary shall receive all moneys from members and others and pay the same to the treasurer who shall receive and hold for the association all moneys and securities. One who borrowed from an association received the money from its president who transacted all the business relating thereto. Arrangements were made with the president to pay the loan, and pursuant to his directions the borrower went to his office where he found the bond and mortgage. Payment was made to the president who then tore the seals from the mortgage, and indorsed a certificate of cancellation thereon. Held, that the borrower and the holder of a second mortgage, who furnished the money to pay the loan, could assume that the president was authorized to receive the money and indorse the certificate of cancellation.

2. SAME FORECLOSURE-NEGLIGENCE OF AsSOCIATION.

In a suit by a building and loan association to foreclose a mortgage which had been canceled by its president to whom the money had been paid, but who had failed to pay it to the association, evidence held to show that the negligence of the association and its officers was the proximate cause of the loss which must be borne by the association, and that the mortgage was properly canceled.

SATISFACTION

SATISFACTION-STATUTES.

2 Gen. St. p. 2107, § 23, provides for entry by the clerk on the margin of a registered mortgage of a minute of its discharge. Section 25 provides that a mortgage registered or recorded shall be discharged by an acknowledged certificate which shall be recorded. Revision of 1846 (Nixon. Dig. pp. 526, 527), Act to Register Mortgages, §§ 1, 5, the words "record" or "recording" are used synonymously with "register" or "registering." In 1858 (P. L. p. 90), a supplement to the act to register mortgages provides for their being registered or recorded in full. Held, that the method provided in section 25 is not exclusive, but that the one contained in section 23 is equally effective.

Suit by the Manchester Building & Loan Association against J. Frank Beardsley and others. Bill dismissed.

66 A.-1

This is a bill to foreclose a mortgage made by Beardsley to the complainant. The defendants are Beardsley, Baker, who is the holder of a mortgage upon the same premises, and Shippee, who is the present holder of the title to the property in question.

J. W. De Yoe, for complainant. W. Carrington Cabell, for defendants.

GARRISON, V. C. The defendant Beardsley, on the 14th of June, 1901, made application to the Manchester Building & Loan Association for a loan in the sum of $1,800. Up to this time he was not connected with the association as a shareholder. His application was acted upon favorably, and he became a shareholder of nine shares, and executed a bond and mortgage, dated July 8, 1901, to the association to secure $1,800. This mortgage was recorded in full in the clerk's office of Passaic county on the 12th of September, 1901. All of the business which Beardsley then transacted with the association was done with William H. Belcher, its president. Belcher had been president of the association for many years, Allee had been its secretary, and Roe its treasurer during the same period. The association met at Haledon in Passaic county. Belcher, its president, practiced law in the city of Paterson, and in his office there there was also an office of the building association. Its name was on the door, and its safe was in Belcher's private office. In December of 1902 Beardsley arranged with one Baker to borrow money from him, and mortgage the property to him, to secure the loan, and, with the money thus borrowed, to pay off the Building & Loan Association mortgage. Having been informed by Belcher that if he came to the office in Paterson on the 2d of January, 1903, the business could be transacted, Beardsley, Baker, and an attorney procured by Baker to protect his interests, attended there upon that day. Beardsley had previously sent in his pass book to be balanced, and when they got there it was figured up how much was due upon the bond and mortgage, and Baker gave his check to Beardsley for the amount,

which check Beardsley indorsed, and turned over to Belcher, who indorsed upon the mortgage, after tearing the seals off of the mortgage, the following language: "This mortgage is paid and satisfied and the clerk of Passaic county is hereby authorized to cancel the same of record. The Manchester Building & Loan Association, W. H. Belcher, President. Dated Jan. 2, 1903."

The mortgage thus indorsed and mutilated, together with the bond, which was similarly mutilated by having its seals torn off, were then delivered to Beardsley or Baker. The mortgage, on the same day, was taken to the clerk of Passaic county, who made the following entry upon the margin of the record of the mortgage: "This mortgage given by J. Frank Beardsley to the Manchester B. & L. Ass'n is this 2d day of January A. D., 1903, canceled of record, the same being produced before me canceled, the seals removed and satisfaction indorsed thereon by Manchester Building & Loan Association, W. H. Belcher, President. Jno. J. Slater, Clerk, Dated Jan. 2, 1903." At the same time a mortgage from Beardsley to Baker for $1,600 was filed to secure the money which Baker had just advanced. Later in the same year another mortgage, to secure $500, was given by Beardsley to Baker, which was duly recorded. On the 17th day of November, 1904, Beardsley conveyed the lands in question to David N. Shippee who paid $700 in cash, and, of course, took the land subject to the mortgages of Baker aggregating $2,100. In July, 1905, Belcher, the president of the Building & Loan Association, absconded, never having paid into the association's treasury the money received on account of this mortgage. Among the papers in the safe of the Building & Loan Association at its office in Paterson there was found, after Belcher's departure, what purported to be a bond and mortgage from Beardsley to the association. The witness in each of these papers is William H. Belcher. The irresistible conclusion is that Belcher substituted at some time this forged bond and mortgage for the genuine bond and mortgage, which, as before stated, were delivered by him to Beardsley or Baker on the 2d day of January, 1903. There is also an irresistible conclusion that Belcher continued to pay into the treasury of the association the dues and interest upon the Beardsley stock and loan after the receipt of the principal due on the mortgage. Beardsley certainly did not continue to make these payments, as he assumed that when he paid the mortgage off all of his connection with the association ceased, and he did not consider that he was any longer a stockhold

to his knowledge, was canceled and in place of which he had substituted a forged mortgage. After Belcher's departure and a default then occurring in the payment of dues upon the Beardsley stock, the Building & Loan Association commenced this foreclosure suit. It made as parties Beardsley, Baker, and Shippee.

*

The complainant seeks to foreclose the mortgage, notwithstanding the payment of the full amount due thereon to the president of the complainant association, and the cancellation thereof by the said president, by claiming that the payment was not made to the proper officer so as to bind the association, and that the cancellation was not made by the proper officer so as to similarly bind the association. The contention on behalf of the association is that Beardsley was a member or shareholder; that the by-laws provide that the secretary "shall receive all moneys from the members and others, and without delay pay the same over to the treasurer, taking a receipt therefor. He shall keep accurate account with all shareholders and others doing business with the association. He shall give such bonds as shall be satisfactory to the board of directors," and that the treasurer shall receive all moneys, pay all orders, and "shall receive and hold in trust for the association all bonds, mortgages, and other securities upon which money may have been loaned by the board of directors." They argue, therefore, that Beardsley could only make payment so as to bind the association by giving the money to the secretary, and that because the treasurer was the one to have custody of the mortgage he was the only person authorized to execute a certificate of cancellation thereof. It is undoubtedly true that members of Building & Loan Associations are bound by the by-laws thereof, and may not bind the association by payments not made in accordance therewith, unless such irregular payments, or payments to persons not authorized, are ratified or confirmed by the association; or unless the association, by its conduct, has estopped itself to deny the righteousness of the conduct of the shareholder. Citation of authorities of this principle is unnecessary. Another equally well-settled principle is that a president or other officer of a corporation may not bind the same unless he be authorized; but his action will frequently bind the association if, by its conduct, it has estopped itself to deny the right of the person dealing with the president to consider him authorized. The sole question in the case before us, in view of the wellsettled principles applicable thereto, is whether, under the circumstances of this particular case, the association is to be bound by the payment, and by the action of the president with respect to the cancellation of the mortgage. I am of opinion that the association is bound.

The money which was paid was not dues,