Schafer v. Olson

• Citation: 139 N.W. 983,24 N.D. 542
• Parties: SCHAFER v. OLSON et al.
• Decision Date: 13 February 1913
• Court: North Dakota Supreme Court

24 N.D. 542

139 N.W. 983

SCHAFER

v.OLSON et al.

Supreme Court of North Dakota.

March 15, 1912.

On Rehearing, Feb. 13, 1913.

Syllabus by the Court.

Plaintiff, a resident of Illinois, entered into a contract through correspondence, agreeing to sell to defendant Olson lands in this state; no place having been agreed upon for the closing of the deal. Defendant's agent, in a letter accepting plaintiff's offer among other things said: “We inclose a warranty deed which you can execute and have your Elkhart bank send to the People's State Bank of Lakota and we will take same up.” Plaintiff acted on such suggestion, and not only sent to the Lakota bank the deed, but also a sight draft for $4,200 in a letter containing specific instructions to deliver same on payment of such draft, and to remit by New York or Chicago exchange. Held, that the bank was plaintiff's agent for the collection of such draft and the consummation of the deal by the delivery of the deed.

One B., acting on defendant's behalf, gave to the bank a check drawn on B.'s account therein, in payment of such draft. Such check was accepted by the bank and the deed delivered, but no remittance to the plaintiff was made. B.'s account at the time showed a balance of about $8,000. Eight days thereafter the bank ceased doing business. Held, there being no proof that the bank was insolvent when the check was given and accepted, that the giving and receiving of such check constituted a payment of the draft.

Appeal from District Court, Nelson County; C. F. Templeton, Judge.

Action by William G. Schafer against Pontus Olson and another. From a judgment for plaintiff, defendant Pontus Olson appeals. Reversed, with directions.

Spalding, C. J., and Bruce, J., dissenting.H. A. Libby, of Park River (Scott Rex, of Grand Forks, of counsel), for appellant. Frich & Kelly, of Lakota, for respondent.

FISK, J.

This is one of those unfortunate controversies wherein one of two innocent persons must suffer for the default of a third person, and the crucial question for decision is, Whose agent, in the transaction between the parties, was such third person, plaintiff's or defendant's?

The facts necessary to a correct understanding of the points involved are as follows: On and prior to December 18, 1909, plaintiff, a resident of Springfield, Ill., being the owner in fee of the real property described in the complaint (a quarter section of land in Nelson county, this state), entered into an agreement to sell such land to the defendant Olson for the sum of $4,500. Such contract was entered into through correspondence; the plaintiff having written to Olson a few days prior to December 18th offering to sell the land to him at said price, the acceptance of which offer was communicated to plaintiff through a letter (Exhibit 1) written by one Thomas J. Baird to plaintiff, dated December 18th, as follows: “We are in receipt of your letter of the 13th inst. and herewith inclose you a check for $200 as part payment on the N. W. 1/4, 32-152-60. We also inclose you a warranty deed, which you can execute and have your Elkhart bank send to the People's State Bank of Lakota and we will take same up. If married you can fill in your wife's name. We sold this land to Mr. Olson for $4,500, you to pay us a commisison of $100, and Mr. Olson is to deliver your grain in the elevator free, which he will do as soon as possible. There will be $4,200 balance due you on this proposition, less abstracting. Send us abstracts of title at once. We inclose you a receipt, which please sign and return to us. Very respectfully, Thomas J. Baird.” On receipt of the Baird letter, plaintiff delivered such letter to his local bank at Elkhart, Ill., and also a duly executed warranty deed of this land running to Olson, and instructed such bank to forward such deed to the People's State Bank of Lakota, as suggested in Baird's letter.

On January 6, 1910, the Elkhart bank, through plaintiff's son as cashier, wrote the Thomas J. Baird Investment Company at Lakota as follows: “Gentlemen: I am this day forwarding by registered letter to the People's State Bank of your city warranty deed and abstract to the N. W. 1/4, 32-152-60, along with sight draft for $4,200, with exchange, advising them to deduct amount of abstractor's charge for recording the release of mortgage, which is the only item which does not appear on abstract, and otherwise there is nothing against the place whatever. Inclosed herewith you will also find receipt for $200 for first payment on this land. This deed has been in my possession for several days with instructions from my father to send it on, but I have been very busy and it has been neglected, which I regret. Very truly yours, W. F. Schafer, Cashier.”

And on said January 6th such Elkhart bank also wrote the People's State Bank of Lakota as follows: “Gentlemen: I am handing you herewith, at the request of the Thos. J. Baird Inv. Co., warranty deed to the N. W. 1/4, 32-152-60, along with abstract of title thereto and sight draft for $4,200, with exchange. There is a release of mortgage on record that is not shown on this abstract, the recording of which on this abstract may be deducted from the principal amount, but that is all, as there is nothing else against the place and hasn't been. Upon the payment of the above amount less the abstracting charge of that item, kindly turn the deed and abstract over to parties and make remittance in New York or Chicago exchange to me. Very truly yours, W. F. Schafer, Cashier.”

Thereafter defendant Olson, acting through Baird, procured a loan from defendant Lord for the sum of $4,000, giving a mortgage as security on this and another quarter of land, and the proceeds of such loan were deposited by the Baird Investment Company in the People's State Bank, and on January 18, 1910, such investment company gave its check, payable to the order of the People's State Bank, for the sum of $4,199.20, representing the balance of the purchase price due plaintiff on such deal, after deducting certain minor items of expense and the $100 commission which plaintiff was to pay Baird, and thereupon the People's State Bank received such check and delivered the warranty deed aforesaid, and the same was thereafter duly recorded. At the time such check was given, the Thos. J. Baird Investment Company had on deposit in the People's State Bank the sum of about $8,000. The testimony discloses that such check, was not charged on the books of the bank against the account of the Baird Investment Company, and that the bank never remitted to plaintiff or to the Elkhart bank for plaintiff, by New York or Chicago exchange or otherwise, the amount of the balance due plaintiff on such sale. Thereafter, and on the evening of January 26th, the bank closed its doors, and ever since has been in the hands of the State Bank Examiner, or a receiver appointed by the court in an action pending to wind up its affairs as an insolvent institution.

Plaintiff, by this action, seeks to recover such balance from Olson, and he is concededly entitled to recover unless the People's State Bank was his agent, and also unless the giving to, and acceptance by, such bank of the Baird check constituted in law a valid payment to him. Plaintiff had judgment in the lower court, and defendant Olson appeals.

There are but two points involved: First, was the People's State Bank the agent of the plaintiff to receive the balance due him of such purchase price and to make delivery of the deed, or was such bank defendant Olson's agent? And, second, if it was plaintiff's agent, was the payment by check as aforesaid a sufficient payment to bind the plaintiff?

[1] Conceding, for the sake of argument, all that respondent's counsel claim with respect to the authority of Baird to write the letter (Exhibit 1) as the agent of Olson, and consequently that the latter is bound by everything contained therein, still we find ourselves unable to agree with the conclusion of the trial court to the effect that the People's State Bank was Olson's and not Schafer's agent in consummating the deal. If the bank was Olson's agent to collect the purchase price and to deliver the deed, then Olson's agent, Baird, dealt with Olson's agent, the bank, in closing the deal. In other words, it was a one-sided transaction of Olson dealing with Olson; Schafer not being represented at all. Surely it cannot be contended that this important business transaction was consummated, or was to be consummated, except by the payment of the purchase price and the delivery of the deed; and how either could be accomplished, in the absence of plaintiff in person, save through an authorized agent, we are unable to understand.

The letter (Exhibit 1) contains this language: “We also inclose you a warranty deed which you can execute and have your Elkhart bank send to the People's State Bank of Lakota and we will take same up.” It is respondent's contention that this language amounts to a positive direction from Olson to Schafer to send the deed to such bank. We do not thus construe it. Olson, through his agent Baird, had no right to dictate where or how the deal should be closed, and of course Schafer knew this. Moreover, we think it manifestly clear that neither party thus construed such letter; but, on the contrary, it was intended merely as a suggestion of a convenient method of closing the deal. Schafer was at liberty to either act, or refuse to act, according to the suggestion; but having adopted and acted on the suggestion by sending the deed to such bank, together with a sight draft for the balance of the purchase price, and giving full and explicit instructions to such bank regarding what should be done, we must hold that he thereby made the bank his agent for such purposes. Instead of the bank being thereby “created by Olson an instrumentality for closing the deal,” it was created an instrumentality for such purpose by Schafer. Everything which the bank did...