Samonset v. Mesnager

California Supreme Court Aug 3, 1895 No. No. 19440Published

Before: Belcher

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Holding. A gratuitous agent is liable for the loss of funds entrusted to them if they fail to exercise good faith and ordinary diligence in the management and collection of those funds. The court held that the defendant's failure to secure the loan and his subsequent neglect to collect the debt, motivated by his own financial interests, constituted gross negligence.

Issues

Whether a gratuitous agent is liable for the loss of funds due to a failure to exercise ordinary diligence.
Whether the defendant's failure to secure a loan and subsequent neglect to collect the debt constituted actionable negligence.

Disposition. affirmed

Quotations verified verbatim against the opinion

“If defendant had undertaken this agency he would be bound, though it were gratuitously undertaken, to good faith and ordinary diligence in executing what he pretended to do.”

“This testimony was of itself quite sufficient to show that appellant did not exercise ordinary diligence or a sound discretion in the management of the money intrusted to him, but was guilty of gross negligence.”

Synopsis

Negligence—Gratuitous Agency to Loan Money—Investment Without Security — Liability oe Agent for Neglect.—A gratuitous agent for the lending of the money of his principal is bound to exercise good faith and ordinary diligence, and to act with a sound discretion in investing it; and it is not a sound discretion to invest it on the mere personal security of the person to whom it is lent; and, if he so lent it, and neglected to collect the money for the principal when he might have done so, because he feared that if he attempted to collect it the debtor would he crippled and rendered unable to pay a debt owed to himself and his partner, until the debtor became bankrupt, he is guilty of gross negligence in the management of the money intrusted to him and is liable for its loss.

Id,—Contributory Negligence of Principal—Absence from State— Want of Knowledge__Where the principal, after intrusting the money to the agent for investment, went to France and there remained without knowledge of the mismanagement of his money by the agent until a short time before the action was commenced, he is not guilty of contributory negligence.

Id.—Lost Letter—Oral Proof of Contents.—The contents of a letter addressed by the principal to his brother, directing him to go to the agent and demand the payment of the money, and, unless paid, to commence an action to recover the same, upon proof of loss and diligent search therefor without ability to find it, may be proved by parol evidence in an action against the agent to recover the money.

Belcher, C. This is an action to recover the sum of five hundred dollars, with interest thereon.

The court below found the facts and rendered judgment in favor of the plaintiff, from which and from an order denying a new trial the defendant, Darancette, appeals.

The facts, as disclosed by the record, are, in substance, as follows; In 1886 respondent, being about to leave the city of Los Angeles and go to France, left with appellant the sum of five hundred dollars to be loaned out by him at interest for the use and benefit of respondent. Appellant received the money and agreed to loan the same, without any charge or compensation for so doing, and to collect the principal and interest, and, when collected, to remit the same to respondent in France.

About October 1, 1886, respondent departed from Los Angeles and went to France, where he has ever since resided. Within a few days after his departure appellant loaned the said five hundred dollars to one Couture [356]and took Ins promissory note therefor, payable in one year, with interest at the rate of twelve per cent per annum, but took no security for its payment. The loan to Couture was made to enable him to commence and carry on business in selling groceries and liquors, and appellant furnished him goods from a store in Los Angeles, then owned and conducted by a firm of which he was a member.

After the note became due, appellant took no steps to collect it, except he asked Couture several times for the money, and was told by him not to be afraid, that the note was good for a considerable time, and that he had not the money then but would get it and pay all that he owed.

Couture closed out his business, and in January, 1888, went to France, where he remained till the latter end of that year, and then returned. On his return he again went into business in East Los Angeles, and was furnished with goods and merchandise by appellant’s firm. He thereafter continued in his said business until April, 1891, when he became absolutely bankrupt and unable to pay the said five hundred dollars so loaned him, or the interest thereon, and has so continued ever since.

Some time in 1890 appellant took a new note from Couture for the amount due respondent, and again, on April 21, 1891, he took another new note from him. The first two notes were made payable to appellant, and the last was payable to appellant and respondent two years after-date, and was for two thousand dollars, bearing interest at the rate of ten per cent per annum, wrhich sum included the amount due respondent, seven hundred-and eighty-nine dollars and thirty-six cents, and the balance of an indebtedness due appellant.

Samonset v. Mesnager

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