APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF GEORGIA.
MR. JUSTICE BREWER delivered the opinion of the court.
On April 10, 1884, appellants filed their bill in the Circuit Court of the United States for the Southern District of Georgia, praying for the foreclosure of a mortgage. The mortgagor and debtor was Daniel A. Jewell. The other defendants were alleged to have interests in the mortgaged
property. On October 29, 1885, a decree was entered dismissing the bill. The opinion filed at the time is reported in 25 Fed. Rep. 689. On December 30, 1885, a petition for rehearing was filed, which was granted; but on the 17th of June, 1886, a second decree was entered reaffirming the ruling in the first. Some question was made on the argument as to whether the amount in controversy at the date of either of the two decrees was over five thousand dollars. The amount alleged to be due was $4099.13, "besides interest, all of which, together with said debits and credits, will more fully appear by a reference to a copy statement of account, hereto annexed and marked 'Exhibit C.'" On reference to such exhibit, an account appears stating a balance due May 4, 1883, of $24,882.46. Thereafter certain credits are shown of dates June 5, 1883, January 1, 1884, and March 20, 1884.These credits, applied on the balance, reduce the amount thereof to the sum stated, $4099.13; and that final balance is approved by the assignees of Daniel A. Jewell, as the amount due, "exclusive of interest on the account, which they are entitled to from May 4th, 1883." Now, if interest be computed on simply this balance of $4099.13, at seven per cent, the then legal rate in Georgia, from May 4, 1883, to the date of the last decree, the amount would be less than five thousand dollars; but that is not the true method of computation. The balance due on May 4, 1883, was $24,882.46. Interest on that amount should be computed to the time of first payment, then the payment applied, (it exceeding the interest up to that time,) and a computation made of the interest on the balance to the time of the second payment, and so on. By this method of computation the amount due at the date of either decree would be in excess of five thousand dollars. This court, therefore, has jurisdiction of the appeal.
Upon the merits, it appears that Daniel A. Jewell was the owner of a cotton mill in Georgia; that he consigned its products to the appellants, commission merchants in New York city. This business had been going on since 1870. On January 17, 1878, Jewell, having drawn on appellants largely in excess of his shipments, was indebted to them somewhere in
the neighborhood of thirty thousand dollars. To secure them for these advances, he executed mortgages on several pieces of property owned by him in Georgia. Among these mortgages was one covering a tract of land of about 760 acres, known as the Hurt Place, and another of about 750 acres, a part of the Myrick homestead track. At the time of the execution of these mortgages a contract was entered into between the appellants and Jewell, by which the appellants agreed to hold the securities for three years; and also, among other things, stipulated that "the said Woodward, Baldwin & Co. further agree that the said Jewell shall have full right and permission to sell the property named in said deeds and make titles thereto, the proceeds of sale to go to the credit of the said Woodward, Baldwin & Co." This agreement was signed by both parties and witnesses before a notary public. In pursuance of the authority given by this stipulation, on February 8, 1879, Jewell conveyed to one Mary E. Daniel three hundred and fifty-three acres of the Hurt lands for the expressed consideration of one thousand dollars, and on February 1, 1882, conveyed the balance of the Hurt lands, as well as the Myrick tract, to Steth P. Myrick, for the expressed consideration of four thousand and thirty-nine dollars. The validity and effect of these two conveyances is the matter in dispute.
But one construction can be placed upon this stipulation. It gave to Jewell authority to sell and transfer title, discharged of the lien of the mortgage. It did not empower him to sell subject to the mortgage, that is, to transfer simply his equity of redemption, for that he had without the stipulation; and it cannot be supposed that a provision meaning nothing was deliberately inserted in the contract. Further, the provision that the proceeds should be applied to the credit of the appellants, makes it clear that they intended to give him power to transfer a full and unincumbered title. Neither can there be any doubt that Jewell understood that he could, and intended to convey a full, unincumbered title, and that the grantees supposed they were receiving such title. The deeds contain no suggestion of any incumbrance, and purport to transfer the title, notwithstanding the fact that there is no warranty
therein, and the parol testimony, so far as that is competent, establishes the fact that such was the purpose and understanding of all the parties. Nor was the duty cast upon the purchasers of seeing that Jewell appropriated the proceeds in accordance with the stipulation. That was a matter between Jewell and the appellants, and in respect to which they trusted him. Nor, further, can there be any substantial question that the parties acted in entire good faith. It is true that Jewell did not turn over the proceeds directly to the appellants, but, according to his testimony, he supposed that the appellants were abundantly secured by their mortgages on his other property. There was apparently good reason for this belief. He considered his factory, which was included in one of the mortgages, worth at least sixty thousand dollars, an amount sufficient to twice pay his entire indebtedness to appellants; and after he heard complaint from them in respect to the second conveyance, he shipped to them enough of the products of his mill to cover, as he thought, the money he had received.
As against this appellants urge that this contract was invalid as an authority to convey, because not executed before two witnesses; and in support of this two sections of the Code of Georgia are quoted, to wit, 2182 and 2690, Code 1873. The latter requires a deed to lands to be attested by at least two witnesses; and the former provides that "the act creating the agency must be executed with the same formality (and need have no more) as the law prescribes for the execution of the act for which the agency is created." But this contract was not the creation of an agency to sell lands belonging to the appellants. The title to the lands was all the while in Jewell. The instrument which Jewell executed was a mortgage, and, by section 1954 of the same code, "a mortgage" "is only a security for a debt, and passes no title." By section 1955 it is provided that "no particular form is necessary to constitute a mortgage. It must clearly indicate the creation of a lien, ...