65 Minn. 508 | Minn. | 1896
In 1885 the Union Depot Street Railway & Transfer •Company of Stillwater, a corporation, was indebted to various persons in the sum of $42,920. Of this sum, $29,670 was due to the holders of •overdue interest coupons upon bonds which were already secured by the trust deed, hereinafter mentioned, of other property belonging to the corporation. One of these creditors, to the extent of $3,250, was this plaintiff, then president of the corporation.
At a meeting of the board of directors it was resolved that the president and secretary of the corporation execute and deliver to one "O. D. Baldwin nine promissory notes, in different specified amounts, ■but representing the total indebtedness as above stated, each paya
A very few days after this transaction, proceedings were had under G-. S. 1894, c. 76, whereby a receiver was appointed for the corporation, and its property placed in his hands. This was known to plaintiff. September 1, 1885, some four months after the note for $3,250 matured, Baldwin intervened in the receivership proceedings, by filing a complaint setting forth the execution and delivery of eight promissory notes, specifically describing each; alleging that he was the owner thereof, and that he had no security except the mortgage before referred to. No mention was made of the note for $3,250 in this complaint. His prayer for relief was that he might exhibit bis claims, and be permitted to share in the benefits of a general judgment to be entered in the proceedings.
March 5, 1888, upon due notice to all creditors of the insolvent, corporation, and without objection, the court entered a decree in which was recited the fact that a trust deed covered a large portion of property belonging to the corporation, that the balance of its real estate was included in the Baldwin mortgage, that he had intervened, that the court had acquired jurisdiction of all parties to the action, and the subject-matter, and that all parties consented thereto; ordering and adjudging that all of the insolvent’s estate be sold as one parcel or property, at not less than $100,000, free and clear of all liens of every nature, and of every creditor who had intervened, and that such liens stand against the proceeds of the sale, in lieu of the property itself. The decree recited, and it is not disputed, that at the hearing plaintiff was present, by his attorney, as the receiver of one of the creditors. Pursuant to the terms of this decree, a sale was made, and the property sold in one parcel to one Prince for the
A deed was made as ordered, and immediately thereafter Prince, the purchaser, sold and conveyed the entire property to the Stillwater Union Depot & Transfer Company. It issued bonds in a large sum, ■secured by a trust deed of its entire property, and these bonds have passed into the hands of various purchasers of the same. A receiver was subsequently appointed for its property, and said receiver and the trustee under the trust deed are the intervenors in this action.
It was stipulated on the trial that the intervenors, as well as the holders of the bonds, had no notice or knowledge of the existence of the note for $3,250, or of the Baldwin mortgage, except such notice or knowledge as might have been obtained by an examination of the records and files in the public offices, and such further notice or knowledge as they would have had, in the exercise of a reasonable .diligence, after an examination of such records and files. From the time of the sale down to the day of the trial of this action, the Still-water Union Depot & Transfer Company and its receiver remained in possession of all of this property, and carried on the business.
It appears that, very soon after the execution and delivery of this note for $3,250, it was indorsed without recourse by Mr. Baldwin to plaintiff, and delivered to another person for him. This person had agreed with plaintiff to procure the money thereon for him, but failed to do so, and in 1892 it was found among his papers, and then for the first time actually placed in plaintiff’s possession. He brought this action in 1893, alleging the payment of all of the mortgage notes except the one just mentioned, and, claiming to be the equitable owner of the mortgage, demanded its foreclosure by a sale of the mortgaged premises for the satisfaction of the amount due upon the note, with costs and disbursements. The court below, upon its findings of fact, ordered judgment in favor of the intervenors, and plaintiff appeals from an order denying a new trial.
The order must be affirmed.
When the time came for Baldwin to intervene in the proceedings, under chapter 76, he did so, still withholding from the public the fact that he held the security in trust for plaintiff and others. He filed a complaint in intervention, stating his claims under the mortgage to amount to $39,670, exclusive of interest, describing all of the notes except that now in question, which, as before stated, was the first mentioned in the mortgage, and was some time past due; exhibiting the mortgage as his property, but not referring to this note in any manner. From what appeared, it could not be presumed that it actually belonged to another party, or that it had been transferred by the mortgagee. Taking into consideration the fact that the note was long past due, the presumption would be, as was said by the court below, that it no longer existed as an indebtedness secured by the mortgage. If the mortgagee appeared to have elected to treat the note as no longer secured by the mortgage, or as no longer in existence as a debt, it is to be borne in mind that the plaintiff had previously, and without any restriction, so far as was known by the public, conferred upon him the authority so to do.
Again, it was shown that plaintiff had actual notice of the appointment of a receiver; that he had knowledge of the subsequent proceedings; that, as the receiver of another creditor, he was cited in, and, by his attorney, appeared upon the hearing of an order to show cause why the decree actually entered should not be made, whereby it was adjudged that the estate should be sold as one property, free and clear of all liens and incumbrances, including the Bald
If he was the owner and holder of the note before maturity, it would seem strange that he was not heard from at some time before the sale. His silence when he should have spoken can only be explained upon the theory that he relied upon receiving his money from the person to whom it appears he intrusted the note, with the assurance from him that the amount thereof should be forthcoming. If the note had not been indorsed to him by Baldwin when the latter intervened, the duty still devolved upon him to see that his interests were not sacrificed by the party in whose care he had absolutely and unqualifiedly placed them. Baldwin had the legal title to the mortgage. If he had foreclosed for the amount due on the eight notes which he presented in his claim in intervention, omitting to make any claim of indebtedness on the note for $.3,250, would the plaintiff be heard, as against purchasers of the premises in good faith, to assert that, with full knowledge of the transaction, he still retained a.lien on the same to the extent of the amount due on his note? Certainly he. would not, for. the purchasers would be protected against ■any equitable claim of the plaintiff to the mortgaged premises. See Solberg v. Wright, 33 Minn. 224, 22 N. W. 381. And, in principle, such a case would be identical with that at bar.
Further than this, Baldwin represented the plaintiff when he intervened in the receivership proceedings. The court, the receiver, and the public had been authorized, as well as invited, to deal with him as the absolute owner of the mortgagee; and, so far as was known, he was the only person who had any interest, legal or equitable, in it. Upon what ground can plaintiff now say that Baldwin did not and could not represent him, — especially in view of the fact that he knew just what was being done in the way of selling the property free and
To sum it all up, the plaintiff is conclusively bound by his own conduct in remaining silent when it was his duty to apprise the purchaser at the sale of his claim, if he had one, and is barred from now asserting a right to foreclose as an equitable owner of the mortgage, and as against those who have in good faith relied upon his failure to act when the circumstances required him to speak out. He conceded a material fact by his silence; he had knowledge of what was being done; the court, the -receiver, the purchaser at the sale, and his successors in interest, were induced to purchase because of plaintiff’s failure to assert a claim; and it is fair to infer that Ms silence was intentional, from the fact that he remained silent when he should have been heard, and, after the intervenors have for many years acted upon a belief that the lien of the mortgage was duly extinguished by the sale, attempts to enforce payment of the note. If Ms silence was not intentional, he was certainly culpably negligent. An estoppel in pais arises when one by his acts or representations, or silence when he should speak out, intentionally or by culpable negligence, induces another to believe that certain facts exist, and such other rightfully acts on the belief so induced, and will be prejudiced by permitting the party to deny the existence of such facts. That this is a case for the application of this doctrine is strikingly apparent.
Order affirmed.
Mitcbell, J., did not sit.