Bergstrom v. Pickett

• Court: Minnesota Supreme Court
• Writing for the Court: HALLAM
• Citation: Bergstrom v. Pickett, 148 Minn. 224, 181 N.W. 343 (Minn. 1921)
• Decision Date: 11 February 1921
• Docket Number: No. 22021.,22021.
• Parties: BERGSTROM et al. v. PICKETT et al.

148 Minn. 224

181 N.W. 343

BERGSTROM et al.

v.PICKETT et al.

No. 22021.

Supreme Court of Minnesota.

Feb. 11, 1921.

Appeal from District Court, Hennepin County; W. W. Bardwell, Judge.

Action by Nanna M. Bergstrom and another against Helen E. Pickett, the Mercantile Exchange Company, and others. Judgment for plaintiffs, and defendant Company appeals. Affirmed.

Syllabus by the Court

Defendant Pickett procured plaintiff to exchange a piece of real estate for the stock and fixtures of a grocery store, Pickett agreeing to give a mortgage back on the real estate in case the stock failed to inventory a certain amount. Plaintiff was put in possession of the grocery stock and his deed was put in escrow, to be delivered only after full settlement with Pickett. The deed was delivered before full settlement and Pickett conveyed the real estate to a purchaser who had notice of the facts.

The delivery of the deed passed no title. As against Pickett or any purchaser from him with notice, plaintiff had a right to have it canceled.

It was not necessary that plaintiff offer to return before bringing a suit for cancellation.

Selling from the stock and replenishing it in the usual course of business, the stock being kept of equal value and character, did not, as a matter of law, amount to a ratification of the fraud or bar plaintiff's right to a decree of cancellation.

The issue of defendant's right to specific performance was not pleaded or litigated or raised in the trial court and it will not therefore be determined on appeal. L. W. Crawhall, of Minneapolis, for appellant.

Frank E. Clinite, of Minneapolis, for respondents.

HALLAM, J.

[1] 1. This is a civil action to cancel a deed executed by plaintiff to defendant Helen E. Pickett, and alleged to have been delivered without authority, and also to cancel subsequent conveyances to defendant Eastman and defendant Mercantile Exchange Company.

In November, 1918, plaintiffs owned a lot in Minneapolis on which was situated a duplex dwelling. The property was of the value of $4,700. It was subject to a mortgage of $2,000. Defendant R. C. Pickett owned the stock and fixtures of a grocery store in Minneapolis. An agreement was made by which Pickett agreed to give plaintiffs the stock and fixtures of the store in exchange for the equity in plaintiffs' lot and duplex. The agreement stipulated that the fixtures were of the value of $1,200 and the stock of $1,500. There was an understanding that Pickett owed outstanding accounts to the amount of about $800 and that Pickett was to place a second mortgage on the duplex when acquired to raise money to pay them. It was agreed that, if the stock should inventory less than $1,500, Pickett would pay plaintiffs the difference and would give plaintiffs a third mortgage on the duplex to secure such payment.

Plaintiffs were put into possession of the store. They executed a deed of their duplex property to defendant Helen E. Pickett and deposited it with defendant Lauderdale in escrow with instructions not to deliver it until the stock should be inventoried, and if the inventory should fall below $1,500, then not until Pickett should make settlement of the difference.

The stock inventoried about $800. Fixtures of the value of $75 proved not to belong to Pickett. Plaintiffs were unable to get a settlement from Pickett. Notwithstanding this, defendant Lauderdale, in order to permit the Picketts to give a mortgage for $850 to raise money to pay the store debts, delivered plaintiff's deed to a party who was willing to advance the money and permitted him to record it. Thereupon the Picketts, without making settlement with plaintiffs, conveyed the duplex property without consideration to defendant Eastman and procured her to convey it to defendant Mercantile Exchange Company in exchange for some lots. There is evidence that this company had knowledge of plaintiff's rights. About the middle of December, plaintiffs first learned that their deed had been recorded. They then consulted an attorney. Plaintiff Carl tried to find Pickett, but could not. About this time he met Mr. Riley, the representative of the Mercantile Exchange Company and told him he was still the owner of the duplex and Riley told him, ‘Well we will fight it.’ On January 27th plaintiffs commenced this action.

The court ordered judgment that the deed to Helen E. Pickett and the other subsequent deeds be canceled; that the Mercantile Exchange Company be decreed the owner of the stock and fixtures on condition that said defendant pay to plaintiff $850, the amount of the mortgage placed on their property by the Picketts; and that on failure to make such payment plaintiffs may sell the stock and fixtures, retaining sufficient to repay said sum of $850, the excess, if any, to be paid to the Mercantile Exchange Company.

R. C. Pickett's fraud is admitted. None is charged against the other defendants, but it is claimed, and the court found, that defendant Lauderdale delivered the deed deposited with him without authority and that defendant Mercantile Exchange Company was charged with notice of that fact. The court further found that plaintiffs were still in possession of the fixtures and of the stock, save as sales had been made from the stock in the regular course of trade, and that the stock had been replenished so that it was of equal value with the stock delivered to p...