('dissenting). I am not satisfied with the reasoning of my majority associates in this case. It seems to me there is error in confusing “proof of actual agency by circumstantial evidence” with proof of “ostensible, agency.” The two things are essentially different. The rule of ostensible agency has its foundation in the doctrine of estoppel, and arises upon proof of circumstances which do not necessarily prove actual agency. Ostensible agency is proved by evidence which tenlds to: show that:
“The principal intentionally or by want of ordinary care causes a third person to believe another to be his agent who -is not really employed by him.” Civ. Code, § 1661.
*63.The-most careful scrutiny-of tire- record fails to showar scrap •of competent evidence, circumstantial or ■ direct, tending to show ■that Windherst had actual authority to receive -payments on any ■of the notes held by the plaintiff 'bank. Most of the evidence referred to in the majority opinion as circumstantial evidence tending to prove actual agency consists of statements alleged to have been made by- Windherst himself to defendants, ■and without proof of any knowledge thereof o<n the part of -plaintiff.- On the theory of actual agency such statements were absolutely incompetent under the elementary rule that agency cannot be proved by statements -o:f the alleged agent. . This evidence was objected to, and ilfcs reception is assigned' as error on 'this appeal. Calling this evidence “circumstantial” does not make .it competent. The extent to which evidence assumed to prove actual .agency is confused with evidence of ostensible agency is shown by ifche statement in the majority opinion: • •
“The fact that plaintiff 'wrote defendants making inquiry as ■to whether defendants had made -payments to- Windherst, and de-'fenda-nts answered -back that they had', and plaintiff made' no •reply or 'objection thereto,' was something 'clearly tending to- mis-leadi ’ defendants' in' the' belief that' páy-ments so máde were all right. '* * * Plaintiff could not' remain silent under those circumstances -and -not thereafter be bound by the acts of Windherst in receiving payments of principal and interest on any of said notes. * * '* Such circumstances' as- these were amply sufficient to warrant 'the' jury in finding that plaintiff cmiKorised Windherst to receive the payment"on the note-in question!” •
■ ; The undisputed evidence discloses that plaintiff had- never given Wind'hie'rslt possession of; any of the notes for collection or ’Otherwise until after they had been paid. It is equally. clear'that defendants ’knew prior to the intrusting their money to Windherst 'that he-'had either sold or-hypothecated'-the, notes',' - and that they Vireremotrin his posséssioh. T-t- is‘-'settled'-béyónd"controversy that, -where payment has been- tn-adé 'to- a" person- other thaii- the holder or person iñ possession: óf the "rióte, the burden is on'thé déféhd--'-arid1 'to prove that the''person''fór'whom' he made ¡the payment "was the' duly authorized, -¡dr ostensible agent of the bolder of-thé:'-rfófe, -cxr-;that tlié money 'actually"'reached his -hands,-of that the p’ay--tnenf'was ratified by“him.' Olson v. Day, 23 S. D. 150, 120 N. *64W. 883, 20 Ann. Cas. 516, note page 520, and' casefs cited. The record is wholly barren of direct evidence that Windherst had authority from plaintiff to collect any of the notes. The officers of the plaintiff bank absolutely deny that any such authority was ever given.
To my mind, the only question in the case is whether the evidence was sufficient-to justify the court in submitting to the jury the matter of ostensible agency. An ostensible agency arises when the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who is not really employed by him. Evidence as to the time and manner of payment of the other Windherst notes held by plaintiff bank would 'be competent, if sufficient to prove ostensible agency. On two prior occasions defendants, hacl placed in Windherst’s hands money ho be applied on these notes. It conclusively appears that the plaintiff bank had no knowledge of any of such payments to Windherst until the time it received the money from him, and that none of the notes were ever in his possession .or delivered to him by plaintiff until’ after payment and cancellation. It is perfectly clear, therefore, that any finding of ostensible agency on the part of Windherst must rest solely upon inferences to be drawn from these payments, and from appellant’s letter of March 2, 1914. So- far as material, the letter is as follows:
“Your note given to Mr. J. H. Windherst was due on the 2d of Feb. Owing to the illness of Mr. Windherst, I suppose, he overlooked the payment of the same. Since Mr. Windhersfs death I suppose that we will have to deal directly with each other, and as the property on which the: money was loaned is in your locality I think, you had better, make arrangements to take up the paper. The date of the last interest payment ils Eeb. 2, 1913.”
This letter can afford no evidence of ostensible agency,, for the simple reason that it was. not written until some five months after defenadnts hald delivered the $511.06 to Windherst, and therefore could not have caused or influenced, them to deliver the money to him. The only contention possible would be that the statements in.the letter might tend to proye that appeíl'ant. bank had theretofore, given Windherst actual authority, (to receive payments. I am* convinced, holwever, that, -under all the circumstan-cejs disclosed', the statements in this letter should not be held to afford *65any evidence whatever .tlialt appellant had given Windherst such authority. It must be borne in mind that appellant was a stranger to the defendants, and had a legal right to consider Windherst bound for payment of the indebtedness equally with the defendants. That appellant considered him one of its debitors, and looked to him for payment, is evidenced by the statement that:
“Owing to h.is • [Wind'llenst’s] illness, I suppose he overlooked the payment of the same.”
It cannot be contended, under the evidence in the record, that appellant, when this letter was written, had any knowledge that defendants had paid (this money to Windherst. It could not therefore be construed as meaning that Windherst had failed to pay over to the plaintiff money which he had received for it from the defendants. When the letter was written, Windherst was dead, and the most natural! thing the bank could do was to. go directly to the others obligated upon the notes, and say to them, as it 'did:
“I suppose we will have to deal directly with each other, * * * and think you had better make arrangements to take up the paper.”
These statements are susceptible of but one fair; interpretation or inference, which is that plaintiff, having dealt with Windherst before his death as one of its joint debtors, must now deal directly with Markwood and Erickson as its surviving debtors. There is no evidence in the record which, tends in the smallest -degree to prove that plaintiff ever intended, or 'by want of any ordinary care caused, defendants- to believe that Windherst was its agent authorized to collect these notes. The mere delivery of the canceled notes to Wiuherst after payment was not an act from which any such inference might be -drawn. If defendants had intrusted the money 'to a messenger who bad paid it to plaintiff and received the canceled notes, it would hardly be contended that .defendants, because of such acts, had been led to believe that plaintiff had authorized such messenger -to receive other payments. As is said in Hollinshead v. John Stuart & Co., 8 N. D. 35, 43, 77 N. W. 91, 92, 42 L. R. A. 659, on rehearing:
“ ‘The owner of the note was not the cause of his making the payments, and did not induce him to make them, hut he acted solely upon his own supposition that the mortgagee was himself *66the owner of the note and ’mortgage.’ * * * Respondent knew the note was negotiable, and that the quality of negotiability would adhere to it every minute until it reached maturity. He knew it was Intended to pass from owner to owner by indorsement, and that it was liable thus to pass at any moment, and he knew that the last person thus receiving it could require at his hands the full amount of the note. That the note belonged, or he thought it belonged, to the Globe Investment Company when one coupon matured, furnished him no warrant for believing, that it would belong to the same party when the next coupon matured, or ■when the principal fell due. He had in his own hands the means of absolute protection. He had only to see to it that he received his note when he paid his money. If he neglected this simple requirement, demanded not more 'by the law than by common prudence, he paid at his peril; and, if loss occurs, he must bear it.”
The fact that appellant, prior to the payment in controversy, had accepted .payments sent ito it by Windherst, their co-obligor, and had canceled and delivered to him the other notes, is wholly insufficient to establish either actual or ostensible agency, or to estop plaintiff from denying the authority of Windlherst to accept payment on its behalf. Hollinshead v. John Stuart Co., supra; Stolzman v. Wyman, 8 N. D. 108, 77 N. W. 285.
The decisions of this court in Reid v. Kellogg and McVay v. Bridgman, cited in the majority opinion, merely apply the rule of ostensible agency to facts wholly and' radically different from those in die case at bar, and, in my judgment, afford no support whatever for the conclusion1 announced.
As is said in Loizeaux v. Fremder, 123 Wis. 193, 101 N. W. 423:
“Negotiability being established, there results the rule that the debtor’s duty is to pay to the person who owns, the note at the time of payment, or to an agent of such owner actually authorized to receive payment; that no payment to any other person can be of any effect unless made in reliance upon the actual possession of the note, or upon words or acts of the owner so un-ambigously declaring the authority of such O'fher person to receive such particular payment' as to estop the owner from denying such authority. [The .italics are ours.] Possession of a negotiable in*67strument is generally the sole adequate evidence of apparent authority to collect upon which ¡the debtor has any right to rely, or can, without negligence, do so.”
This rule, it is said in the Loizeaux case, supra:—
“is so simple, and, once understood, furnishes so easy and sure a means for both debtor and owner to protect themselves against unauthorized acts of others, that it ought not Ito be weakened or confused. The holder can always be safe by retaining the instrument in his possession; the debtor by refusing payment without actual presentation. It is justified in application to negotiable paper distinctively from other property .by the very dominant purpose of easy and probable transfer at any moment, so -that what may be true as to ownership of such paper on one day is likely to have changed on the next. Of Ibhe probability of such change the negotiability of the instrument is a -continual warning.”
The rule thus announced has been adopted in nearly all the states either by judicial decision or statutory enactment. In this state it has been in force for many years' by express statutory declaration. Civ. Code, § 2227, subid. 2.
As to the burden of proof in such cases, see Olson v. Day, 23 S. D. 150, 120 N. W. 883, 20 Ann. Cas. 516, and note; Bull v. Mitchell, 47 Neb. 647, 66 N. W. 632; Jenkins v. Shinn, 55 Ark. 347, 18 S. W. 240; State Nat. Bank v. Hyatt, 75 Ark. 170, 86 S. W. 1002, 112 Am. St. Rep. 50, 5 Ann. Cas. 296; Cheney v. Libby, 134 U. S. 68, 10 Sup. Ct. 498, 33 L. Ed. 818; Winer v. Bank, 89 Ark. 435, 117 S. W. 232, 131 Am. St. Rep. 102.
As was said by the court in Loizeaux v. Fremder, supra:
“The strain, upon the human sympathies is frequently such .as to render difficult adherence to settled rules- of law, which in individual cases may seem to -cast the burden of the wrong on him who can least well bear it. Such rules, however, became established upon many and varied -considerations as likely, in the long run, ito approximate most nearly to justice, and to minimize ■the wrong as far as possible, and must be applied by a court until, if the desired results -are not -obtained, the lawmaking .po-w-er shall readjust them.”
I am forced to It-he conclusion that the trial court erred in overruling plaintiff’s motion for a -directed verdict at the -conclusion -of all the -evidence.
*68The aider and judgment of the trial court should be reversed.
GATES, J., concurs in the views expressed by SMITH, J.