Unformatted text preview: agent to obtain a loan, securing it with their real property, were
quoted at the beginning. The terms thereof are limited; the agent was thereby authorized only to
borrow any amount of money which he deemed necessary. There is nothing, however, to indicate
that the defendants had likewise authorized him to convert the money obtained by him to his
personal use. With respect to a power of attorney of special character, it cannot be interpreted as
also authorizing the agent to dispose of the money as he pleased, particularly when it does not
appear that such was the intention of the principals, and in applying part of the funds to pay his
personal obligations, he exceeded his authority. In this case, it should be understood that the
agent was obliged to turn over the money to the principals or, at least, place it at their disposal.
The plaintiff contends that the agent's act of employing part of the loan to pay his personal debts was ratified
by the defendants in their letter to him dated August 21, 1927. This court has carefully read the contents of
said document and has found nothing implying ratification or approval of the agent's act. In it the defendants
confined themselves to stating that they would notify their agent of the maturity of the obligation contracted
by him. They said nothing about whether or not their agent was authorized to use the funds obtained by him
in the payment of his personal obligations.
The plaintiff insists that the defendants should answer for the entire loan plus the stipulated interest thereon.
This court has already stated the manner in which the agent employed the loan, according to the
plaintiff. Of the loan of P28,000, the agent applied the sum of P10,188.29 to the payment of his
personal debt to the plaintiff. The balance of P17,811.71 constitutes the capital which the
defendants are obliged to pay by virtue of the power conferred upon their agent and the mortgage
In connection with the stipulated interest, it appears that the capital of P17,811.71 bore interest at 12 per
cent per annum from March 27, 1926, to September 30, 1936, equivalent to P22,460.56. All the interest paid
by the defendants to the plaintif...
View Full Document
- Fall '14
- gutierrez hermanos, B.A. Finance Corporation