Action on a promissory note for $10,000 executed by defendants, payable to plaintiffs, Walter Turck and his wife. Trial was to the court which made and filed findings of fact and conclusions of law in favor of the defendants. The judgment dismissed plaintiffs' complaint on the merits. Plaintiff Walter Turck has appealed contending that the evidence does not support the findings of fact and the court erred in its conclusions of law.

Seefeldt is a building contractor in the city of Beaver Dam. In the course of his operations from time to time he required financing and not long before the episode now in question Verne Knoll, an attorney of Beaver Dam and a friend of Seefeldt's, had procured two construction loans for him from a man named Klatt. Presently, Seefeldt had commenced building two houses. His own resources would provide about 40 per cent of the construction costs and he foresaw that he must borrow money to complete them. He asked Knoll to arrange another construction loan from Klatt, the security being a mortgage on the two houses and the money to be released to Seefeldt as construction progressed. Klatt was not interested but Knoll knew a farmer, the plaintiff Walter Turck, who had money to lend and for whom Knoll had recently arranged a mortgage loan to a third party. Knoll proposed to Turck that he lend Seefeldt $10,000 to be secured by a mortgage on three completed houses which Knoll exhibited to Turck. One of these was Seefeldt's home and the others were dwellings which Seefeldt had built but which he had disposed of. Seefeldt knew nothing of this representation. Turck was satisfied with this security and the next day, October 25, 1950, he joined Knoll who took him to Seefeldt at the site of the new construction. Knoll introduced Turck to Seefeldt and told Seefeldt that Turck was the person who was supplying the money. Then the record, as summarized by appellant, shows (Seefeldt testifying):

"We discussed the fact that the houses weren't very well along and that arrangement would again be made that the money would be turned over to Verne to be paid out in instalments as the work progressed. Mr. Turck was just right with us in a group. We discussed the amount, the interest, and the length of time. There was discussion that I wanted $14,000 but the loan was to be for $10,000. I still needed $14,000; I couldn't build the houses without that amount; Mr. Knoll said that he was busy and perhaps would not be able to take care of it for me when I needed the money, that federal restrictions made it a little harder to find money, that it would be smart business to take the $10,000 now, and that he felt sure that at some later date if the houses weren't sold he would be able to provide $4,000 through himself or his mother. There was discussion that the two houses were to be security for the loan. There was no discussion as to other security. Mr. Turck agreed to take the $10,000 loan. He suggested that we make arrangements to handle the procedure in Mr. Knoll's office. He (Knoll) produced forms, a note and a mortgage form, which I signed. The forms were not filled out. They left with the understanding that they were going to my home to get my wife's signature on the mortgage. That evening Mr. Knoll told me over the telephone that the arrangements had all been completed, that the money had been received."

On a discovery examination before trial Seefeldt testified (similar summary):

"There was very little discussion with Turck; he stood more or less on the side lines and when we had gone through the questioning he would merely nod his head. There was no discussion between Turck and myself. The note was supposed to run one year; that was my understanding with Knoll — one year or less. He was doing this as a business enterprise and if we sold the house I wouldn't want to be stopped from selling it. I didn't call Turck's attention to either of the lots. I had no discussion at all with Turck that day. The understanding was with Knoll and it was on those two pieces of property. I had no discussion then or before or after with Turck. I didn't exhibit any property to Turck. There was other talk between myself and Knoll that it was understood that it was to be held in escrow."

Knoll then produced a blank note (and possibly a mortgage form) which Seefeldt signed and returned to him. Turck and Knoll went next to the Seefeldt home where Knoll asked Mrs. Seefeldt to sign the note (but not the mortgage), after which Turck and Knoll went to Knoll's office where Knoll filled in the blanks in the promissory note, and wrote out a check for $10,000 naming himself as payee. Turck testified that he wanted to make the check payable to Seefeldt but Knoll persuaded him to do otherwise and Turck signed it as prepared by Knoll. The note was then exchanged for the check. Turck testified that Knoll was to get the mortgage drawn up and signed and record it for him and to see to it that it was a first mortgage. Turck went back to Knoll's office several times afterward for the mortgage but it was never ready. Seefeldt testified that he went to the office and asked to see the mortgage two or three weeks after October 25th. Knoll was not there but a Mr. Wells in the office showed it to him. It had not been signed by Mrs. Seefeldt and it pledged the three completed houses, not the two under construction, as authorized by Seefeldt, and Seefeldt complained of this "mistake" to Wells but not to Knoll who absconded about this time.

Knoll cashed Turck's check the same day he received it and immediately converted the proceeds to his own use. Seefeldt's building operations had not advanced far enough to require money up to the time when Knoll ran away so he had not asked Knoll for any instalments and he never received any. Knoll never recorded the mortgage and it has disappeared. There is some doubt whether it was signed by Seefeldt and no doubt that it was not signed by his wife. The action is brought on the note, alone.

The trial court made extensive, detailed findings of fact. The crucial ones are:

"10. That the plaintiff, Walter Turck, understood at the time he deposited the money with Verne H. Knoll that the mortgage had not, at that time, been signed, but that Verne H. Knoll was to prepare the mortgage to accompany the signed note, have it completed by the defendants and then have it recorded; that he, Walter Turck, would call at the law office of Verne H. Knoll for the mortgage in a week or two when the mortgage had been recorded.

"11. That the mortgage was never completed nor recorded; however, Verne H. Knoll misappropriated the entire sum of ten thousand dollars ($10,000) on October 25, 1950, the same day said sum of money was turned over to him by the plaintiff, Walter Turck.

"12. That the plaintiffs relied upon Verne H. Knoll to withhold disposition of the loan fund until such time as the security therefor had been executed by the defendants.

"13. That the plaintiffs relied upon Verne H. Knoll to see to it that the mortgage given was a first mortgage and that an abstract was furnished by the borrower.

"14. That Verne H. Knoll received the sum of ten thousand dollars ($10,000) from the plaintiffs with instructions to release the money upon completion and recording of the mortgage, and the plaintiffs delegated the responsibility of releasing the money upon fulfilment of this condition to Verne H. Knoll.

"15. That the defendants never authorized Verne H. Knoll to receive or receipt for the proceeds of the loan."

Additional fact will be stated in the opinion.

BROWN, J.

Findings of fact by the trial court are not to be reversed unless contrary to the great weight and clear preponderance of the evidence. MacPherson v. Strand (1952), 262 Wis. 360, 55 N.W.2d 354; Estate of Schaefer (1952), 261 Wis. 431, 437, 53 N.W.2d 427. The appellant submits that the findings are not supported by the evidence. The foregoing statement of facts, culled from the record, and the reasonable inference therefrom, which the trial court was privileged to draw, affords the findings the necessary support. We do not imply that if the trial court had found otherwise, as appellant insists it should, such findings could not stand, but only say that the findings actually made are not against the great weight and clear preponderance of the evidence. Appellant lays stress on Frisch v. Shankwitz (1932), 209 Wis. 76, 244 N.W. 564, a case in which the facts have considerable resemblance to the one at bar, though with important differences; notably that the note and mortgage in that case were ready for delivery and that the person whom the defendants unsuccessfully sought to charge as principal had not engaged the embezzler to perform any services for her and was not even aware of his activities. But the striking feature of Frisch v. Shankwitz, supra, as applied to the present case, is that even there this court said page 80, "It is very apparent that this controversy involves merely a question of fact and that that question was peculiarly one for the trial court to determine."

So it must be here. There is evidence that Knoll and Seefeldt, in Turck's immediate presence, went over the terms of a construction loan, with the lender's money to be held by Knoll and released to Seefeldt as construction progressed and the value of the security increased; that the security was the two houses being built, whatever Knoll may have told Turck in Seefeldt's absence; that Turck listened to the discussion and assented to the details by nodding his head. Upon this theory of the case there was at least an escrow of the funds in the hands of Knoll and it is clear that if an escrow agent embezzles funds before the time has come to release them he has embezzled the money of the depositor. 19 Am. Jur., Escrow, p. 437, sec. 19; Anno. 39 A.L.R. 1080; Hildebrand v. Beck (1925), 196 Cal. 141, 236 P. 301, 39 A.L.R. 1076; Foster v. Elswick (1928), 176 Ark. 974, 4 S.W.2d 946, 57 A.L.R. 1244. Furthermore, if it can be successfully contended that under any circumstances Seefeldt authorized Knoll to receive Turck's money for him, that authority was limited to the fulfilment of the conditions of the loan. To Turck's knowledge these contemplated the delivery of security to the lender. There is nothing in the record that permits even the conjecture that Knoll was authorized or that Turck believed he was authorized to ignore the requirement of collateral and, as Seefeldt's agent, transform the transaction, for the time being at least, into an unsecured loan. If Turck was willing to go ahead on that basis, persuaded by Knoll and relying on him to procure the Seefeldt mortgage later, as Turck testified was the fact, it was he, not Seefeldt, who authorized the change and conferred on Knoll a new agency to see it through. Turck's money was thus embezzled by Turck's agent and Seefeldt is not to be charged with the loss.

The court's conclusions of law were to the effect that Knoll's status was that of a loan broker, not an agent authorized by Seefeldt as a principal to accept payment on his behalf; also, that payment made to Knoll by Turck before the note and mortgage were ready for delivery (and therefore before Seefeldt had any right to the money) with reliance on Knoll to procure a mortgage, was at Turck's risk; and that the loss consequent upon the embezzlement of the payment by Knoll before the execution of the mortgage and before Seefeldt had acquired any right or title to the funds must be borne by Turck.

We have some doubt that the evidence permits a finding or conclusion that Knoll was merely a broker without authority to accept a payment as agent for Seefeldt at a time when Seefeldt should be entitled to the money under the terms of the loan as discussed by Seefeldt and Knoll in Turck's presence and assented to by Turck. We have no doubt that the evidence supports the findings and conclusions that Knoll had no authority, real or apparent, to act for Seefeldt under the changed conditions of the transaction as Turck and Knoll carried it out. Under such circumstances the risk of loss of the payment made to Knoll by Turck must be borne by the appellant.

By the Court. — Judgment affirmed.