Merchants & Farmers State Bank of Grove City v. Olson

• Court: Minnesota Supreme Court
• Writing for the Court: LORING, Justice.
• Citation: Merchants & Farmers State Bank of Grove City v. Olson, 189 Minn. 528, 250 N.W. 366 (Minn. 1933)
• Decision Date: 06 October 1933
• Docket Number: 29,528
• Parties: MERCHANTS & FARMERS STATE BANK OF GROVE CITY, BY J. N. PEYTON, v. MELFORD OLSON AND ANOTHER

250 N.W. 366

189 Minn. 528

MERCHANTS & FARMERS STATE BANK OF GROVE CITY, BY J. N. PEYTON, v. MELFORD OLSON AND ANOTHER

No. 29,528

Supreme Court of Minnesota

October 6, 1933

Action in the district court for Meeker county by the Merchants & Farmers State Bank of Grove City, in charge of J. N. Peyton as statutory liquidator thereof, to determine adverse claims to real estate. There were findings, G. E. Qvale, Judge Judge, in favor of plaintiff, and defendants appealed from the judgment entered pursuant thereto after denial of their motion for a new trial. Reversed and new trial granted.

SYLLABUS

Escrow -- wrongful delivery by escrow holder.

1. Where a deed placed in escrow is delivered by the escrow holder either in violation of or without compliance with the terms of the escrow agreement, no title passes by such delivery.

Quieting title -- evidence -- admissibility.

2. It was error to exclude evidence of the nonperformance abandonment, and abrogation of a contract by the terms of which a deed, claimed to have been wrongfully delivered, was placed in escrow.

Quieting title -- evidence -- sufficiency.

3. Where a party to the action pleads full performance of the contract under the terms of which the grantee in a deed placed in escrow would be entitled to delivery thereof, no question of waiver of the performance of conditions by the grantor is raised thereby.

Escrow -- wrongful delivery by escrow holder -- estoppel.

4. The grantor in a deed placed in escrow or his successors in interest may be estopped as against the grantee or his successors from setting up a wrongful delivery of the deed by the escrow holder.

Escrow -- wrongful delivery by escrow holder -- estoppel.

5. If the circumstances which the defendant Melford Olson offered to prove with relation to the nonperformance, abandonment, and abrogation of the escrow contract to the knowledge of the plaintiff are found to be true, no estoppel would arise in favor of the plaintiff which would prevent a showing that the delivery of the deed held in escrow was wrongful.

Quieting title -- evidence -- burden of proof.

6. The possession by the grantee or his successor in interest of an acknowledged and recorded deed which had been in escrow placed the burden upon the grantor or his successor of going forward with the proof of wrongful delivery.

Landlord and tenant -- action by landlord to determine adverse claims -- estoppel of tenant.

7. In an action to determine adverse claims by a landlord against his tenant, the tenant is not estopped by his lease from denying his landlord's title. Such estoppel arises in an action where possession only is sought.

Court -- jurisdiction -- determination of title to real estate.

8. The probate court has no jurisdiction to determine title to real estate between heirs and strangers to the proceedings.

Evidence -- declarations of deceased grantor.

9. The trial court properly ruled out evidence of declarations of the deceased grantor whose deed had been placed in escrow, to the effect that the contract under which it had been so placed had been abandoned and that he had resumed possession and control of the premises.

Estoppel -- of mortgagor on issue disputing mortgagee's title.

10. While the mortgagor may be estopped by his covenants from framing an issue against his mortgagee disputing the latter's title, nevertheless he may testify in an issue between the mortgagee and others to facts which might support a finding hostile to the title of the mortgagee.

Victor E. Anderson, Samuel G. Gandrud, and F. C. Anderson, for appellants.

D. F. Nordstrom and C. A. Fosnes, for respondent.

OPINION

LORING, Justice.

In an action to determine adverse claims, the court made findings in favor of the plaintiff, and the defendants have appealed from a judgment entered after an order denying their motion for a new trial.

Both the bank and the defendant Melford Olson claim title to the land in controversy from Mads Olson, grandfather of Melford. The bank claims through a deed from Mads to his son Edwin, Melford's father, and one of these defendants, who lost whatever interest he may have had to the bank by foreclosure. Melford claims by devise from his grandfather. Edwin by his answer disclaims all interest in the property.

November 17, 1904, Mads Olson, who was then the owner of the land in controversy, entered into a contract with Edwin to convey to him this and other land, together with some personal property, upon the payment by Edwin of an agreed rental of $450 a year during Mads' lifetime and certain specified debts owed by Mads aggregating $3,150 and the performance of a contract for support and maintenance. The contract referred to these obligations as follows:

"It is agreed and understood that until the second party has paid all the above specified indebtedness, and until the death of the first party has faithfully kept and observed all the conditions of this agreement, then and not until then shall he have a conveyance of the above described 80 acres of land to him; and for the purpose of carrying out this agreement on the part of the first party he has executed a warranty deed of said lands to the second party and delivered the same in escrow in the hands of B. Bresden of Grove City, Minnesota, to be delivered to the second party immediately after the death of the first party, if all the conditions of this agreement have been fulfilled and kept by the second party; but if the said second party fails to fulfill all his said agreements, but defaults in the same or any part thereof, then said deed so left in escrow shall be null and void and shall not be delivered to him."

A deed was executed by Mads Olson to Edwin Olson and placed in escrow with B. Bresden, a business man of Grove City, Minnesota, who was at the time the president of the plaintiff bank. It is claimed by Melford that Edwin never paid any rent and that he farmed the land under the contract of 1904 for the three following years only; that thereafter the contract was abandoned and abrogated by mutual consent; and that Mads in 1908 resumed the farming of the land and paid all the obligations which Edwin had by the contract promised to pay. However, if this was done, the parties to the contract neglected to obtain a return to Mads of the deed held by the escrow holder. In August, 1910, Mads made a will which left the land in controversy to Melford, who was then a child three years of age. It is also contended by Melford that in March, 1913, shortly before Mads died, he leased the land in controversy, together with other land, to the defendant Edwin Olson, for two years, cash rental to be paid to the plaintiff bank in settlement of an obligation of Mads. Melford offered to prove that this lease was prepared and witnessed by the cashier and managing officer of the bank and that he took the acknowledgment. The trial court ruled out all of the evidence offered to prove the failure of Edwin to perform his contract and its subsequent abandonment and abrogation, as well as all evidence tending to show that the bank had knowledge or notice thereof.

Mads Olson died in March, 1913, and in March, 1914, the deed which had been made out to Edwin and placed with Bresden ten years before was recorded and sent to Edwin, but not at his request as far as the record shows.

January 22, 1925, the bank prevailed upon Edwin to give it a mortgage on the land involved to secure an indebtedness which Edwin already owed it. This mortgage was foreclosed in 1930, and the bank claims title by virtue of such foreclosure. It also claims to have made a farm contract or lease with Melford and a Nels Olson covering this land. This contract was not in evidence, and its terms are not in the record. Thereafter, in 1931, Melford, having learned of the devise to him, sought and obtained an amended decree in the proceedings by which his grandfather's will had been probated. The original decree had omitted this land for the reason that the court was informed that Mads had deeded the same to Edwin. The amended decree following the terms of the will gave Melford whatever interest his grandfather had in the land.

By its reply the plaintiff set up the contract of 1904 and alleged that Edwin had performed all of the conditions thereof and that the deed had then been delivered upon the death of Mads.

1. Where an instrument placed in escrow is delivered by the escrow holder either in violation of or without compliance with the terms or conditions of the escrow agreement, no title passes by virtue of such delivery, because in legal contemplation it is not effectual delivery and the grantee thereunder obtains no more right than he would have in the possession of a forged or stolen instrument. Henry v Hutchins, 146 Minn. 381, 178 N.W....