Rogers v. Castle

• Court: Minnesota Supreme Court
• Writing for the Court: Dickinson, J.
• Citation: Rogers v. Castle, 51 Minn. 428, 53 N.W. 651 (Minn. 1892)
• Decision Date: 01 December 1892
• Parties: Josias N. Rogers v. Henry A. Castle et al

53 N.W. 651

51 Minn. 428

Josias N. Rogers v. Henry A. Castle et al

Supreme Court of Minnesota

December 1, 1892

Argued October 27, 1892

Appeal by plaintiff, Josias N. Rogers, from an order of the District Court of Ramsey county, Kelly, J., made March 16, 1892 denying his motion for a new trial.

Plaintiff and Samuel H. Marshall on February 15, 1887, owned the southwest quarter of section thirty-three, (33,) T. 30, R 20, in Washington county, subject to a mortgage to James L Devon for $ 3,375. They on that day sold and conveyed the land to James W. Jones for $ 10,000. He paid down $ 3,000 and assumed the mortgage to Devon, and gave his three notes, each for $ 1,208.33, for the residue, due in one, two and three years respectively. The three notes were secured by a second mortgage on the land. The first of these notes was paid, and one year's interest on the others. Marshall assigned his interest in these two notes to the plaintiff.

Henry A. Castle, Lane K. Stone, W. S. Morton and several others were partners in business dealing in real estate lying near North St. Paul. They called themselves a syndicate, and had offices in the German-American Bank Building in St. Paul. Jones and one Charles E. Stanton were their clerks, and purchases were made and titles taken for convenience in the name of one or the other of these clerks. This purchase was in fact a purchase by the syndicate. On July 26, 1887, the members requested Castle to take the title of their property and hold it for the partnership in the place of Stanton and Jones. He consented to do so, and on that day Stanton and Jones each conveyed to him. In the deed from Jones of this quarter section it was recited that the property was sold "subject to two mortgages, one for $ 3,375 to Devon, and the other for $ 3,625 to Rogers, which mortgages grantee assumes and agrees to pay." This deed and the others were sent by Jones to the registry at Stillwater and were recorded and returned to him, and were thereafter kept in the office safe, of which Jones held the combination. Castle never saw the deed and did not in fact agree to assume or to pay the mortgages; nor did he have notice until July, 1890 that such a clause was inserted in the deed. Jones knew it, but did not know its legal effect. Devon foreclosed his mortgage, and at the sale on October 26, 1889, the plaintiff bid in the land for the amount due to Devon and the expenses of foreclosure. No redemption was made from this foreclosure sale and plaintiff acquired the property. He then brought this action against Jones and Castle on the two unpaid notes of $ 1,208.33 each, and the clause in the deed to Castle, claiming that Castle by accepting the deed, had assumed to pay the debt.

The trial court found that at the time Jones executed the deed he knew it contained the clause that Castle assumed and agreed to pay the mortgages, but he had not directed it to be so inserted and did not understand the object had in inserting it in the deed, nor did he in fact know the legal effect of it. In causing the deed so written to be recorded, he was guilty of a legal fraud upon Castle. That Castle did not know that any deed had been executed to him by Jones until some time in the year 1890, and did not know the deed contained this clause or any words of like effect or import at any time earlier than the month of July, 1890. Upon learning that the deed contained this clause assuming to bind him to pay the debt, Castle without unnecessary delay repudiated the same, and denied his liability thereunder, and so informed Jones, the grantor. He also told the plaintiff that the deed was not authorized by him and was not accepted by him, and refused to pay the notes or either of them. The trial court also found that the deed was never delivered to Castle, and in the form in which it was drawn and executed was not at any time or in any manner authorized by Castle to be delivered to him, and was not at any time accepted by him and was never ratified by Castle in any manner after he knew its contents. That the clause was inserted in the deed solely by the mistake of the scrivener who drew it, and that it was not the intention of the parties thereto that Castle should assume the mortgage indebtedness.

The court ordered judgment against Jones for the amount of the notes but held that Castle was not liable. The plaintiff moved for a new trial, and being denied, he appeals.

Order affirmed.

T. R. Palmer, for appellant.

If the parties claiming delivery were transposed; if the value of the property instead of depreciating had increased, and the creditors of Jones were attempting to seize it as his, claiming the deed to Castle had never been delivered, and Castle was resisting the proceeding, claiming the deed had been delivered, the evidence in this case would establish a delivery of the deed beyond all question.

The evidence points conclusively to a delivery of the deed, but without the knowledge on Castle's part that it contained the assumption clause. When he learned the deed contained this clause, he denied that he intended to assume the mortgage indebtedness. But there is no evidence that he ever denied the delivery of the deed, or that he ever claimed the title was not vested in him. He simply objected to a part of the deed. Stevens v. Hatch, 6 Minn. 64, (Gil. 19;) Heiman v. Phoenix Mut. Life Ins. Co., 17 Minn. 153, (Gil. 127;) Thompson v. Easton, 31 Minn. 99; Gaston v. Merriam, 33 Minn. 271; Conlan v. Grace, 36 Minn. 276; Nazro v. Ware, 38 Minn. 443; Lee v. Fletcher, 46 Minn. 49.

Possibly if Castle had read the deed at the time it was made he would have declined to accept it. His failure to read the deed is of no consequence. He is bound by its provisions just as fully as if he had carefully read every word of it. Follansbee v. Johnson, 28 Minn. 311; McCall v. Bushnell, 41 Minn. 37; Cleaver v. Traders' Ins. Co., 71 Mich. 414.

Assuming that Jones did not understand the assumption clause would bind Castle to pay the indebtedness, that is a mere mistake of law on his part, and not such a mistake as the court will correct. Caldwell v. Depew, 40 Minn. 528.

No fraud was practiced upon Castle. Jones made no misrepresentation to him or his agents, did nothing to deceive them, and concealed nothing. Mistake or fraud must be clearly established before courts of equity will interfere. Castle's ignorance of the exact contents of the deed was due entirely to his gross carelessness. Long v. Warren, 68 N.Y. 426; Slaughter v. Gerson, 13 Wall. 383; Albany City Sav. Inst. v. Burdick, 87 N.Y. 40.

The court should have compelled defendant to elect on which of the two inconsistent defenses he would rely; whether on the mistake, or on the fraud of Jones in inserting the assumption clause. Derby v. Gallup, 5 Minn. 119, (Gil. 85;) Warner v. Lockerby, 31 Minn. 421.

There is no evidence to support the finding that Jones was guilty of a legal fraud.

Young & Lightner, for respondent.

The deed upon which is predicated the claim of personal liability against Castle was never authorized by him, delivered to him or accepted by him. It was executed by mutual mistake and without the knowledge on the part of either Jones or Castle that it contained the assumption clause.

The insertion of the assumption clause in the deed, even if it should be held that the deed was delivered, was a legal fraud, and imposes no personal obligation upon Castle. We do not mean to say that Jones knowingly and deliberately perpetrated a fraud. The evidence shows clearly that he did not know the legal effect of the deed, but it was a legal fraud on Castle to place upon him a personal responsibility which he never authorized or agreed to assume. Kilmer v. Smith, 77 N.Y. 226; Albany City Sav. Inst. v. Burdick, 87 N.Y. 40; Dey Ermand v. Chamberlin, 88 N.Y. 658; Kelly v. Geer, 101 N.Y. 664; Dunning v. Leavitt, 85 N.Y. 30; Crowe v. Lewin, 95 N.Y. 423; Flagg v. Munger, 9 N.Y. 483; Loeb v. Willis, 100 N.Y. 231; Bull v. Titsworth, 29 N.J.Eq. 73; Cordts v. Hargrave, 29 N.J.Eq. 446.

The deed to Castle was unauthorized, nor has it been ratified by Castle. The two essential elements of ratification are full knowledge of the facts and some positive act showing that the principal adopts his agent's acts. Humphrey v. Havens, 12 Minn. 298, (Gil. 196;) Jackson v. Badger, 35 Minn. 52; Combs v. Scott, 12 Allen, 493; Allen v. American B. & L. Ass'n, 49 Minn. 544; Culver v. Badger, 29 N.J.Eq. 74.

Any claim that Rogers may have is obtained through privity with Jones. As a matter of law he stands in Jones' place and has no greater rights than Jones would have against Castle. Maxfield v. Schwartz, 45 Minn. 150.

There is no claim that there has been any change of position on the part of Rogers based upon the existence of the deed in question, and there is therefore, nothing upon which to base an estoppel. Stuart v. Lowry, 42 Minn. 473.

The defenses of mistake, and fraud in law, were not inconsistent, and even if they were, it was a matter of discretion on the part of the court to compel defendant to elect in the midst of the trial.

OPINION

Dickinson, J.

This is an action to recover the amount of two promissory notes executed by the defendant Jones to the plaintiff and one Marshall, to whose rights the plaintiff has succeeded. These notes, with another which has been paid, were given by Jones for the purchase price of a quarter section of land at or near North St. Paul, in Washington county, which was sold and conveyed by Rogers and Marshall to Jones. Jones executed to the vendors a mortgage on this land to secure the notes. The controversy is as to whether the defendant, Castle afterwards assumed the payment of this mortgage debt, so as to have become personally liable therefor to the...