Clarke v. Milligan

Gileillan, G. J. Since March 7,1892, there was a corporation, organized under the laws of this state, styled the “Kentucky Iron Company,” with its principal place of business at Duluth. May 20, 1892, there was another corporation so organized, styled [416] the “Virginia Iron Company,” with its principal place of business at Duluth, and on that day its stockholders adopted a resolution amending its articles so as to make its corporate name the “Kentucky Iron Company.” The amendment was certified in duplicate, and one sent to the secretary of state May 21st, the other filed for record, in the office of the register of deeds of the county, May 23d. This company purchased from Milligan certain real estate, which he conveyed to it in its (attempted) amended name of “Kentucky Iron Company,” by deed delivered to it, and by it caused to be recorded in said office May 24th. ‘ In executing and delivering and accepting, and causing to be recorded, this deed, the parties acted in good faith, and without knowledge or information that the name “Kentucky Iron Company” was borne by any other than the corporation which had purchased the land. May 25th the secretary of state returned to the Virginia Iron Company the duplicate certified amendment, for the reason that there was another corporation bearing the name “Kentucky Iron Company.” Thereupon, the Virginia Iron Company and Milligan applied to the president and secretary of the Kentucky Iron Company, explained the error that had been committed in respect to the deed; and thereupon, May 31st, to cure such error, said president and secretary, without express authority from the directors or stockholders of their company, executed in its name, as grantor, a quitclaim deed to Milligan, conveying (in terms) the land to him, and he thereupon conveyed to the Virginia Iron Company. •May 25th, plaintiffs transferred to the Kentucky Iron Company certain leases of mineral lands, and received from it, in payment therefor, shares of its capital stock, — being the first shares issued by it. Before making such transfer they made no inquiry, either of Milligan or of the Kentucky Iron Company, or any of its officers or agents, in respect to said land so conveyed by Milligan; but they had examined the records in the office of the register of deeds, and knew of the record of the first deed of Milligan. The action is to cancel the above deed to Milligan, and his deed to the Virginia Iron Company; to have the title to the land decreed to be in the Kentucky Ir,on Company, or plaintiffs’ shares in said‘company decreed to be a lien on the lands. [417] Of course, the first deed of Milligan did not pass the title to the Kentucky Iron Company,, because it did not purchase the land. It was not the intended grantee. The deed was not delivered to it, nor to any one for it, nor set apart or appropriated to its use. The only question, then, is, were Milligan and the Virginia Iron Company, or was either of them, estopped to deny that the deed passed the title to the Kentucky Iron Company by reason of the facts that it was placed on record; that plaintiffs saw it there, and were thereby induced to believe that company to be the owner of the land, and in consequence to exchange their leases for its stock? The parties having acted in good faith, and in ignorance of the fact that there was already existing, at the time of the attempted change of name, a corporation styled the Kentucky Iron Company, there could be no estoppel, except on the proposition that it was culpable negligence not to know of the existence of such other corporation, and not to know that the attempted change of name had failed. We do not think it was culpable negligence, such as will form the basis of estoppel. Moreover, the plaintiffs were not free from negligence. The records of deeds in the register’s office are kept for the infoimation of those dealing in real estate, — those proposing to purchase it or to take liens upon it, — not of those inquiring merely as to the solvency or 'financial standing of individuals or corporations.. One who, pursuing such inquiry, acts upon what he sees in the register’s office, without inquiring any further, does so at his own risk. In this case, if plaintiffs had inquired concerning this land, of the officers of the Kentucky Iron Company, with whom they were negotiating an exchange of their leases for its stock, at the time of such negotiation, they would undoubtedly have got such information as, followed up, wmuld have put them in possession of all the facts. To state the case most favorably to the plaintiffs, they were misled by their own negligence as much as by that of Milligan and the Virginia Iron Company. Order affirmed. Book, J., absent, sick, took no part. (Opinion published 59 N. W. 955.)