fact that the mortgage would have to be Keith, because they fully understood that satisfied. On May 9, 1907, responsive to an Rhoades-not Mulroney-was the claimant of inquiry from Cooper, Rhoades reported that the mortgage, and Mulroney's assignment for he was holding the money in bank awaiting Rhoades was valueless unless Rhoades had title clearances, to be paid over "as soon as title to the mortgage as a subsisting lien. title is approved," and on May 25, 1907, he Such was not the fact. So far as the record inclosed to Cooper a conveyance of the prop- discloses, the payment by Rhoades to the erty from the owners of record, together mortgagee occurred while he was still in the with a quitclaim and affidavit from certain employ of the railway company; but whether predecessors in the title, as called for by this be so or not, he remained its agent for counsel, stating at the same time that "the the purpose of completing what he had uncase is now closed," although in point of fact dertaken. Hence it matters little whether the mortgage had not been satisfied. Later, his payment to the mortgagee was intended and on February 12, 1908, Rhoades appeared by him as a purchase for his benefit or before E. C. Mulroney, the attorney for Leon- that of his principals, because the nature of ora B. Forbis, and paid the amount of prin- his agency was such that any title to the cipal and interest due her, took the note in- mortgage which passed by virtue of the asdorsed "without recourse," and caused the signment vested at once in his principals. mortgage to be formally assigned to John M. 2 Corpus Juris, 705, and notes; Dowd v. Mulroney, of Iowa, who knew nothing of Holbrook, 152 N. C. 547, 67 S. E. 1060; Bergthe transaction at the time, and who paid ner v. Bergner, 219 Pa. 113, 67 Atl. 999. As nothing for the assignment. Thereafter the they were the owners of the fee, and as they assignment was placed of record, and in had no intention to keep the mortgage alive, June, 1911, Rhoades, being indebted to the if that were possible, the lien thereof bedefendant bank and desiring further accom- came extinguished by merger. 2 Pomeroy's modation, represented that he was the owner Equity Jur. § 796 et seq. of said note and mortgage, and offered the same as collateral security. His offer was accepted, and he turned over the note and caused John M. Mulroney to assign the mortgage to the defendant Keith as president of the bank. The note was then nearly four years overdue, and title to the property affected by the mortgage stood of record in the plaintiff Northwestern Improvement Company; but neither the bank nor Keith had any knowledge of the circumstances under which Rhoades became possessed of the note or control of the mortgage. Thereafter, in consequence of demands of the bank, plaintiffs became advised of what had occurred, and brought this suit against Mulroney, Rhodes, Keith, and the bank, to clear the record of the mortgage. All answered, Mulroney disclaiming any interest, and the bank seeking a foreclosure by way of cross-complaint or counterclaim. There was no conflict in the evidence, and judgment was given for the plaintiffs. The bank and Keith appeal from that judgment as well as from an order denying them a new trial.

The judgment is assailed upon the ground that, though the appellants took the note and mortgage long after maturity, and therefore subject to any defenses available to the maker, they did not take subject to latent equities in favor of third parties, and therefore the case made, showing that the mortgage appeared of record to be a valid and subsisting lien standing in the name of Mulroney, and that neither the bank nor Keith had knowledge of any infirmity in the transaction, was insufficient. We think the correct result was reached in this case for several reasons:

[1-3] (a) The right of the appellants could not be established by the record of the assignment to Mulroney and his assignment to 158 P.-53

[4-10] (b) Again, the right of the appellants depends upon their situation with reference to the note, to which the mortgage was a mere incident. Rev. Codes, § 5746; Cornish v. Woolverton, 32 Mont. 456, 81 Pac 4, 108 Am. St. Rep. 598. Confessedly the bank did not become a holder of the note in due course (Rev. Codes, § 5900), but took only the title thereto which Rhoades had (Rev. Codes, § 4913), accepting the risk of all defects therein (Rev. Codes, §§ 5905-5907; 46 L. R. A. 776 et seq.), as well as of defenses to the note or demands existing at the time against Rhoades with reference to the note (Rev. Codes, §§ 6478, 6542, subd. 2). Assuming, therefore, that Rhoades got title to the note, prima facie, as the result of the indorsement and delivery of it to him, then these provisions of Code, § 5903, come into play:

"The title of a person who negotiates an instrument is defective when he obtained the instrument, or any signature thereto, by fraud * or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud."

In virtue of his position as agent of the plaintiffs, Rhoades became aware of the Forbis mortgage, and became charged with the duty to secure its satisfaction for the benefit of his principals out of funds furnished him for the purpose of acquiring clear title to the land. He could not, without fraud, obtain the note, and with it the mortgage, for himself (1 Mechem on Agency, 88 1198, 1199, 1210); and if in doing so he got any title at all, it was such as could and would be overthrown whenever his principals might choose to assail it in his hands. Neither, having the note, could he assign it as his own without a flagrant breach of faith, but by that very fact would pass a title so

defective that the respondents, acting with reasonable diligence after discovery of the fraud, could easily defeat it.

mortgage was paid. Nafis could have maintained no action upon it. The result was that, before either of these earlier mortgages was assigned to the plaintiffs, they were, as a matter of law, paid and satisfied, though not discharged of record."

[11] The suggestion is made that, as between the appellants and the respondents, the latter should suffer, because it was their fault that Rhoades was enabled to present himself to the appellants in the aspect of an owner of the note and mortgage. This, in the absence of anything to create an estoppel as against the respondents, ignores the duty of inquiry put upon the purchaser of past-due paper. The debt evidenced by the note was, by virtue of the mortgage, made a charge upon specific lands the title to which stood of record in the Northwestern Improvement Company, and that company would be called on, of necessity, to pay in place of the original maker. Its equities were not latent equities of third parties, but equities of a party directly interested, and the simplest inquiry of it would have informed the appellants that these equities were such that nothing of value could be conveyed to them by Rhoades. In the last analysis, therefore, the fault was the appellants', and for it they must suffer.

(c) Finally, there is reason for the view that the act of Rhoades in paying the mortgagee canceled the debt and satisfied the mortgage, even though such was far from his intention. An interesting and informing case of analogous character may be found in Gearon v. Kearney, the first report of which (22 Misc. Rep. 285, 50 N. Y. Supp. 26) is cited and quoted by the present appellants as supporting their contention, but which was reversed on appeal (32 App. Div. 258, 52 N. Y. Supp. 1013), and retried with an exactly opposite result, subsequently affirmed (47 App. Div. 636, 62 N. Y. Supp. 48). In that case, Kearney, the owner, retained Nafis, an attorney, to procure a loan for the purpose of paying off two existing mortgages duly recorded, and running, respectively, to one Roberts for $1,800, and to one McCann for $1,200; to this end Kearney under Nafis' instructions, executed a mortgage for $3,000 running to one Anderson, and Nafis, out of the proceeds, paid Roberts the amount of his mortgage, but, instead of satisfying it of record, took an assignment of it to Anderson. Later Nafis caused all these mortgages to be assigned to himself, and thereafter transferred them to different parties in the following order: First, the $3,000 mortgage, with the representation that it was a prior nortgage; next, the Roberts mortgage; and lastly, the McCann mortgage. The question presented by the litigation was the right of the innocent purchasers of the Roberts and McCann mortgages, which were prior of rec- GLENN v. S. BIRCH & SONS CONST. CO. ord, to prevail over the innocent purchaser of the $3,000 mortgage, and in the final disposition of it the court said:

"The evidence of Kearney shows that he executed the $3,000 mortgage for the purpose of raising that amount to apply in discharge of the two existing mortgages on the property, and that Nafis agreed to so apply such money. The evidence of Mrs. Anderson is to the effect that she gave the $3,000 to Nafis to be invested on a first mortgage, and that he agreed with her to make such investment. By reason of these agreements of Nafis with Anderson and Kearney, it became his duty to apply the sum received from Mrs. Anderson in satisfaction and discharge of the earlier mortgages. When therefore, instead of satisfying the $1.800 mortgage, he took an assignment of it to Mrs. Anderson, the transaction operated as a payment despite the form or shape it assumed. * * By the assignment from Mrs. Anderson to Nafis the rights of the latter could not be greater than those of the former. * * *As to the $1,200 mortgage the case differs, in that Nafis did not pay it and take an assignment, until after he had assigned the $3,000 mortgage. 串 * But Nafis, at the time he took the assignment of this mortgage, was still under agreement with the owner of the land to pay off and discharge that mortgage with the proceeds of the Anderson mortgage. Part of those proceeds were still in his hands for that purpose, or at least such is the presumption of law. When he took up the mortgage and had it assigned to himself, as against the owner of the land the

The judgment and order appealed from are affirmed.

Affirmed.

BRANTLY, C. J., and HOLLOWAY, JJ.,

concur.

(No. 3669.) (Supreme Court of Montana. 1. CONTRACTS

(52 Mont. 414)

June 7, 1916.) 24-ACCEPTANCE OF Offer. In order to form a contract, there must be an offer by one party and an unconditional acceptance of it by the other in accordance with its terms, and, if the acceptance falls within or goes beyond the terms of the offer, there is no

contract.

[Ed. Note. For other cases, see Contracts, Cent. Dig. §§ 100-103; Dec. Dig. 24.] 2. SALES 23(4)-ACCEPTANCE OF OFFER. Plaintiff wired defendant asking for coupon improvement warrants at 94. Defendant replied that he had $200,000 at 97. Plaintiff asked details of improvements covered, which defendant gave, confirming price of 97 and offering to hold them three days for plaintiff. Plaintiff wired confirming purchase, subject to legality, sending written contract by mail. Defendant wired confirming sale subject to such

contract.

Plaintiff sent a contract to sell to a third party instead of to plaintiff. Defendant wired that contract was unsatisfactory, and withdrew offer. Plaintiff wired that it was too late to withdraw, and offered to accept warrants himself. Defendant replied, absolutely refusing to consider plaintiff's contract. Held that there was no binding contract; plaintiff's acceptance in each case being conditional, as subject to legality or requiring a different contract. [Ed. Note.-For other cases, see Sales, Cent. Dig. § 47; Dec. Dig. 23(4).]

On September 29th, defendant wrote to plaintiff giving in detail the information called for in the telegram of September 28th. In that letter the defendant wrote as follows: "We herewith confirm our telegraphic quotation of 97 cents for these warrants, and are Appeal from District Court, Cascade Coun- holding the same subject to disposal to other ty; H. H. Ewing, Judge. parties at our convenience."

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

STITUTIONAL PROVISIONS.

ative Measures, p. 10), providing for old age and Initiated Act Nov. 3, 1914 (Acts 1915, Initimothers' pension, if its language abolishing almshouses be construed to include state institutions, would violate Const. art. 22, § 15, providing for establishment and support by the state of refor the benefit of the insane, blind, deaf, and formatory and penal institutions and institutions mute, and other institutions required by the public good.

[Ed. Note.-For other cases, see Infants, Cent. Dig. 13; Dec. Dig. 12.] 3. COUNTIES

EGATED.

49-OFFICERS-POWERS-DEL

except those specifically granted by statute and County supervisors can exercise no powers in the manner fixed by statute.

[Ed. Note. For other cases, see Counties, Cent. Dig. §§ 56-60; Dec. Dig. 49.]

mation as to the obligations defendant was to [2. INFANTS 12-MOTHERS' PENSIONS-CONassume toward the obligee, substituted by plaintiff in his stead. If it be conceded that the German American Trust Company had been mentioned by plaintiff to the agent of defendant during his visit to Great Falls early in October, as is intimated in the letter of October 9th, there is nothing in the complaint disclosing what was said or what, if any, understanding was reached at that time. The telegram from defendant on October 8th, in reply to that of defendant, must be understood as a confirmation of the sale, subject to its approval of the written contract. Up to that point in the negotiations, a formal written contract had not been mentioned. In the light of plaintiff's telegram, indicating that he desired to enter into a formal written contract and asking further confirmation of the sale, the expression "subject to written contract," in defendant's re-ferred by statute upon municipal corporations is Where the method of exercising powers conply, is not to be construed as a demand for by statute specifically prescribed, the method is a formal written contract, but as a reserva- jurisdictional. tion of the right to reject the formal writing if examination of it disclosed terms which could not be accepted. When it ascertained that it was to assume contract relations with the trust company instead of plaintiff, it had the right to refuse to do so, as it did, and withdraw its offer because it had not been accepted absolutely and unconditionally according to its terms. And it does not aid plaintiff's case that he thereafter proposed to assume the position of obligee and accepted delivery of the bonds. The offer was then no longer open to acceptance.

There is some argument in defendant's brief by which it seeks to maintain the proposition that, looking to the correspondence as a whole, including the fact that the bonds were to be delivered in installments, it was the intention of the parties that they should not be mutually bound until they had embodied the result of their negotiations in a written contract. Whether this is so deem it unnecessary to decide, in view of the conclusion stated above that there was no contract.

The judgment is affirmed.
Affirmed.

SANNER and HOLLOWAY, JJ., concur.

(18 Ariz. 277)

we

-

STATE BOARD OF CONTROL et al. v. BUCKSTEGGE. (No. 1456.) (Supreme Court of Arizona. July 1, 1916.) 1. ASYLUMS 1 PUBLIC AND PRIVATE "ALMSHOUSE." An "almshouse" may be a public institution kept up by public revenues, or it may be an institution maintained by private endowment and contributions, where the indigent sick and poor are cared for without cost to themselves. [Ed. Note.-For other cases, see Asylums, Cent. Dig. § 1; Dec. Dig. 1.

For other definitions, see Words and Phrases, Almshouse.]

4. MUNICIPAL CORPORATIONS 78-POWERS -MODE OF EXERCISE OF POWERS.

[Ed. Note.-For other cases, see Municipal Corporations, Cent. Dig. § 182; Dec. Dig. 78.]

5. INFANTS 122, New, vol. 17 Key-No. Series-STATUTORY PROVISIONS-MOTHERS' AND OLD AGE PENSIONS.

Under Act Nov. 1914, providing for old age and mothers' pensions, abolishing almshouses in "in the absence of almshouses," the system does the state and establishing such pension system not take effect until after the abolishment of all almshouses.

6. STATUTES 111-TITLES

EMBRACED IN TITLE.

SUBJECT NOT

Such act, being entitled "An act providing for an old age and mothers' pension and making 13, providing that the subject of an act shall be appropriation therefor," violates Const. art. 4, § expressed in the title, since it provides, not only for the establishment of old age and mothers' statutory system of county hospitals and poor pensions, but also covers the abolishment of the farms, leaving the different counties without any means or provisions for the care of their indigent sick and poor, not entitled to pensions.

[Ed. Note. For other cases, see Statutes, Cent. Dig. § 140; Dec. Dig. 111.] 7. STATUTES 109 TITLES SUBJECT NOT EMBRACED IN TITLE.

Const. art. 4, § 13, requiring the subject of an act to be embraced in its title, does not require that a title of an act should minutely and in great detail describe the legislation proposed or be a complete index to the legislation. [Ed. Note. For other cases, Cent. Dig. §§ 136-139; Dec. Dig. 109.] see Statutes,

[Ed. Note.-For other cases, see Statutes, Cent. Dig. §§ 136-139; Dec. Dig. 109.]

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes