COBER ET AL v. CONNOLLY ET AL

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District Court of Appeal, Third District, California.

COBER ET AL. v. CONNOLLY ET AL.

Civ. 6503.

Decided: January 17, 1942

Preston & Gibson, of Ukiah, for appellants. Hale McCowen, of Ukiah, for respondents.

In this action defendants appeal from a judgment quieting plaintiffs' title to certain real property situated in Ukiah, Mendocino County, California. The essential facts may be summarized as follows:

On October 30, 1929, the plaintiffs, husband and wife, executed their promissory note in the sum of $850, payable one year after date, together with a deed of trust of even date therewith and as security therefor, in favor of Keith C. Eversole, W. D. L. Held, and P. Connolly. Shortly thereafter the note, together with the deed of trust, was delivered to the defendant Mendocino County Title Company, trustee named therein, and in whose custody the documents remained thereafter.

In the year 1932 it appears that plaintiff Cober, and Eversole, then a practicing attorney and one of the payees of the note, agreed between themselves that Cober might liquidate this indebtedness by rendering services to Eversole in the way of job printing, newspaper subscriptions, publication of legal notices, and the use of hotel credit cards issued to Cober, all to be done and performed as Eversole might direct. This arrangement continued along over a period of some five years, according to the testimony of Cober, and the total of the services so rendered and credits received amounted to the sum of $1,255.97, which, it is claimed, paid the note in full.

The record shows, and it is not disputed, that the defendant Connolly did not participate in this arrangement, nor did he at any time receive any money, services, or goods of any nature, either from the plaintiff Cober or through Eversole as co–payee. It further appears that Eversole is insolvent.

Plaintiffs by this action sought to quiet their title to the property involved and to compel a reconveyance thereof by the defendant trustee. After trial judgment was rendered in their favor accordingly.

It is the contention of appellants that Eversole, in his dealings with Cober, acted as an agent for his co–payees, and that consequently he could not, as such agent, accept performance by Cober in any manner other than to receive payment of the note in cash. Section 1475 of the Civil Code provides as follows: “An obligation in favor of several persons is extinguished by performance rendered to any of them, except in the case of a deposit made by owners in common, or in joint ownership, which is regulated by the title on deposit.”

The law appears settled and it is conceded that one co–payee can accept payment for his fellow payee, the rule being based upon the proposition they are mutual agents of each other, at least impliedly, to receive or collect performance on behalf of either.

As to the question of whether or not a co-payee, such as Eversole, in this case acting in the capacity of an agent, could accept payment in goods or services in lieu of cash, the general rule appears to be that an agent who is authorized to receive payment has no authority to accept or receive anything in extinguishment of a debt other than money. 1 Cal.Jur. 722 and cases cited.

It is next contended by appellants that the respondent Cober cannot be entitled to credit for goods or services rendered to third parties. The record here discloses that of the total credits claimed by Cober only a portion thereof was rendered directly to Eversole, while the balance of the credits such as printing legal notices, newspaper subscriptions, etc., were rendered to third parties for which Eversole took credit. While generally a joint payee cannot direct or authorize payment to a third person without the consent of all co–payees (48 Corpus Juris 590; Moore v. Bevier, 60 Minn. 240, 62 N.W. 281) we do not consider that the facts here bring the case within such rule. Cober dealt with Eversole, and all services rendered were primarily for the benefit of Eversole who profited by reason thereof and was no doubt compensated therefor through his clientele.

Respondents herein, while conceding that a joint creditor in accepting performance is acting in the capacity of an agent for the others, and that the payees here were joint creditors, urge most strenuously that the question for decision is not dependent upon section 1475 of the Civil Code, but argue that section 1476 of the Civil Code is controlling. This section provides as follows: “If a creditor, or any one of two or more joint creditors, at any time directs the debtor to perform his obligation in a particular manner, the obligation is extinguished by performance in that manner, even though the creditor does not receive the benefit of such performance.”

This section of the code enacted in 1872 codifies the common–law rule, and we find no case wherein it has had the attention of the courts of this state. The issue, therefore, is whether section 1476 of the Civil Code permits performance to be rendered by paying something other than the consideration called for in the obligation, which in the instant case is money. (We are not here concerned with accord and satisfaction as will later be referred to.)

Respondents contend that the word “manner” is the important word in the section, and is defined by Webster's International Dictionary as “way of performing or effecting anything,” and by the Century Dictionary as “the way in which an act is performed, method of doing anything, mode of procedure in any case, or situation; mode, way or method”; and that “manner” embraces both method and mode, which of course is correct. It will be noted that the section states that if the creditor at any time directs the debtor to perform his obligation in a particular manner––the gist of the obligation and the important word therefore is the word “perform,” and to perform means to deliver or render the consideration mentioned in the obligation. Consequently the section must necessarily mean in what manner (which as we have seen includes the method and mode) shall the consideration called for be paid? For instance, a creditor may direct the debtor to remit money by mail, if the letter is lost the risk falls upon the creditor, as the posting of the letter as directed would constitute payment “even though the creditor does not receive the benefit of such performance.”

It will be observed that the last–quoted portion of the section, if applied here, could have no significance whatever, as the goods and services were accepted by the joint creditor and obviously some benefit was received.

In Kerr's Cyc. Codes under section 1476, Civil Code, the cases cited relate not to a substituted performance but to the manner in which the money or consideration is to be transmitted to the creditor. See, also, Annotations Field's Code of New York, section 702, which section contains the same language as our Civil Code, section 1476.

The case of Peck v. Lampkin, 200 Ala. 132, 75 So. 580, 581, cited by appellant, contains the following pertinent language: “But we apprehend that, if one of the joint obligees would accept property, other than money, in satisfaction, in whole or in part, of the jointly held demand, he, and the debtor as well, must be able to refer their act to some express previous authorization to that end by the co–obligee, or else present a ratification of the act by the co–obligee.”

As heretofore mentioned, we are not concerned with the question of an accord and satisfaction as that is covered in sections 1521–1524 of the Civil Code, but solely with whether or not this particular section (1476, Civil Code) in effect applies to the facts involved in the instant case.

We are of the opinion that it does not, for as already indicated, it relates to the manner of transmission of the consideration called for, and that question is not an issue here.

For the reasons stated the judgment must be reversed, and it is so ordered.

PER CURIAM.