Cannon River Manufacturers' Ass'n v. First National Bank of Faribault

Gtlfillan, C. J. The plaintiff deposited with the defendant $6,666.67, accompanied with, and for the purposes expressed in, a resolution of its board of directors as follows: “Resolved, that the treasurer of this association forthwith deposit with the First National Bank of Faribault the sum of six thousand six hundred and sixty-six dollars and sixty-seven cents, ($6,666.67,) to be paid over to L. Z. Rogers, provided said Rogers shall, on or before March 15, 1885, deposit with said bank, for said association, a good and sufficient warranty deed, conveying free from incumbrance to said association, its successors and assigns, the Waterville mill property, described in a ■certain mortgage executed by William Clark to Luther Z. Rogers, and [397] recorded in the office of register of deeds of Le Sueur county, Minnesota, January 5, 1881, in Book “T” of Mortgages, on pages 476,477, and of lot No. 1, in section No. 22, town 109 north, of range No. 23 west; together with all tax certificates now held by said Bogers upon or concerning said lands above-mentioned, and a duly-certified copy of a resolution of the board of directors of the Wisconsin, Minnesota & Pacific Bailroad Company, releasing said association from all and singular the covenants and obligations of each and every agreement entered into between this association and the Minnesota Central Bail-road Company, (now the Wisconsin, Minnesota & Pacific Bailroad Company,) concerning the application of the proceeds of the land grant to said association.” And thereupon defendant gave plaintiff the following receipt: “Beceived of the Cannon Biver Manufacturing Association check of E. T. Archibald on First National Bank of Northfield for $6,666.67, the proceeds of which are to be held by us to be paid to L. Z. Bogers, subject to, and on performance by him of, the conditions and terms of the resolution of the board of directors of said Association, passed November 3,1884, a copy of which resolution accompanies said check. “November 3, 1884. T. B. Clement, “President First National Bank of Faribault.” As it is claimed by the plaintiff that the terms of this deposit, as expressed in the resolution, made it the duty of defendant, before delivering the money to Bogers, to see to it that his deed did in fact convey good title, free from incumbrances, — that is, that his title was good, and the lands free from incumbrances, — we will say, though perhaps not strictly necessary to the decision of the case in the view we take of it, that we do not think such to be the effect of the instrument. It is to be presumed that the plaintiff had agreed with Bogers •for the conveyance, and had satisfied itself that his deed of conveyance, such as the resolution describes, would give it what it desired. All that it could expect of the defendant was that it should see that Bogers should deposit (with the release and other papers specified) his warranty deed in terms conveying the land free from ineum398 brances. Tbe relation created between the parties was that of bailor and bailee, the defendant becoming a gratuitous bailee, receiving no compensation for, and having no interest of its own in the purposes of, the bailment. It accepted the bailment merely for the accommodation of the plaintiff, and in performing the purposes of the bailment it was responsible only for the care and diligence required of such bailees. It is, so far as this case requires, unnecessary to determine whether there was imposed on defendant the duty of slight diligence, or ordinary diligence, or the diligence of a good business man. It is not easy, nor generally profitable, to define or point out the somewhat hazy distinction between these several degrees of diligence. The action of defendant complied with the most exacting of them. On the 7th of March, 1885, Rogers tendered to the defendant a warranty deed, the tax certificates held by him, and a resolution of the board of directors of tbe railroad company referred to in plaintiff's resolution, releasing plaintiff from all claims of the railroad company under and by virtue of a certain resolution of the board of directors of its predecessor or grantor, and demanded payment of the $6,666.67. It seems conceded that the deed was defective in the description of one of the pieces of real estate described in plaintiff’s resolution, and also that the resolution of the railroad company did not cover all its claims against the plaintiff. The defendant, by its president, to whom such papers were presented, thereupon required Rogers to submit them to plaintiff, and he took them to the then secretary of plaintiff, who then had defendant’s receipt, and who retained the papers, indorsed on the receipt as follows: “Northfield, Minn., March 7, 18S5. “T. B. Clement, president of the First National Bank of Faribault, has delivered to me, L. Z. Rogers’ warranty deed, dated March 6, 1885, to the Cannon River Manufacturers’ Association, of the Water-ville Mill property, as acquired by foreclosure of the William Clark mortgage thereon, and of lot No. 1, section 22,109, 23, with tax certificates on said mill property, and the resolution of the Wisconsin, Minnesota & Pacific Railway Company, abrogating resolutions of Min [399] nesota Central Railroad Company, in settlement of this receipt, which is hereby surrendered. J. R. Sumner, “Secretary Cannon River Manufacturers’ Association.” —And delivered the receipt so indorsed to Rogers, and he delivered it to plaintiff’s president, and the latter thereupon paid the money to Rogers, acting in good faith, and under the belief that the papers were such as were required by the terms of the deposit, and were satisfactory to the plaintiff. On the 18th of March, plaintiff’s board of directors passed a resolution directing its secretary, Sumner, to return the papers to the defendant, and demand a return of the receipt. The only objections to the papers expressed in this resolution were that “Rogers was not legally seized of the lands,” and that “said release is informal and insufficient.” It appears that between the 7th and 18th of March the papers had been submitted to the regular legal counsel of plaintiff, and the resolution designated such counsel and another a committee to examine and ascertain if the instruments were in fact “a good and sufficient conveyance of said premises, and a good and sufficient release, in compliance with said resolution.” It is found as a fact that the resolution of release by the railroad company, though not in the. terms of the resolution making the deposit, was effectual for the purpose intended. What was the defect in the description of the land in the deed does not appear from the paper book, but it is found as a fact that it was not discovered by the plaintiff or Clement or Rogers, or known to either of them, till during the progress of the trial. It would seem a hard measure of care to apply to defendant to hold it liable for failing to discover defects in the deed that escaped detection by plaintiff and its lawyer, after it was submitted to him to ascertain its sufficiency. And although plaintiff’s secretary might not have authority to waive any of plaintiff’s rights, yet the defendant might, in the exercise of proper care, assume that he would know whether the instruments effected substantially what the plaintiff desired, or that, if he did not know, he would, before acting on the papers, consult those officers of the plaintiff who did know. We think any ordinarily careful business man situated as defendant was, [400] and having the same duty to perform, on receiving the receipt with the indorsement on it, would have done just as defendant did. Judgment affirmed.