Cannon River Manufacturers' Ass'n v. Rogers , 1892 Minn. LEXIS 96 ( 1892 )

Gilfillan, G. J.

All the defenses set up in this case, except that based on the estoppel claimed, were disposed of upon the former appeals, reported in 42 Minn. 123, (43 N. W. Rep. 792,) and 46 Minn. 376, (49 N. W. Rep. 128,) and on the last trial were withdrawn from the jury, only the estoppel claimed being submitted to them. It is therefore unnecessary to allude to the facts upon which those defenses rested, unless so far as may be proper in considering the question whether upon the issue of estoppel there was evidence •enough to justify its submission to the jury.

By reference to the case as reported in 42 Minn. 123, (43 N. W-Rep. 792,) it will be seen that the cause of action grew out of the following facts: The plaintiff, on or about November 3, 1884, deposited in the First National Bank of Faribault $6,666.67, to be paid to the defendant, provided that he, on or before March 15, 1885, deposit with the bank, for plaintiff, a warranty deed conveying to itr free of incumbrance, certain real estate, and a certified copy of a resolution by the board of directors of the Wisconsin, Minnesota & Pacific Railroad Company, releasing plaintiff from the covenants and obligation of each and every agreement between plaintiff and the predecessor of said railroad company concerning the application of the proceeds of the land grant to plaintiff. March 7, 18S5, defendant deposited with the bank a deed for the real estate, he not having title to it, though he supposed he had, and a certified copy of a resolution by the railroad company, claimed not to be in accordance with the conditions of the deposit of the money, and procured the officers of the bank to pay the money to him. March 18, 1885, plaintiff’s board of directors passed a resolution refusing to receive the papers deposited in the bank by defendant, and directing its secretary, who, without authority, had received them, to return them to-the bank, and, accordingly, on the 21st they were tendered back to the bank, which refused to receive them. A copy of this resolution was immediately served on defendant. April 6, 1885, plaintiff commenced an action against the bank to recover the money, and that case on appeal is reported in 37 Minn. 394, (34 N. W. Rep. 741.) Defendant knew of and assisted in the defense of that action. This-action to recover the money was commenced April 20, 1886. December 23, 1885, defendant, having acquired title to the real estate he was to convey to plaintiff, tendered it a deed conveying the property to it, which deed it refused to accept.

As we held when the case was first here, (42 Minn. 123, 43 N. W. Rep. 792,) defendant had no right to tender performance after March 15th of the condition on which the money in bank was to be paid to-him, and that any such tender would be of no effect unless accepted. But it was also said, in substance, that, if plaintiff accepted a part of what defendant was to do, it could not afterwards repudiate what it had accepted, and recover the money, if defendant was willing, even after March 15th, to make good the remainder. And we suspect this expression suggested the idea of the estoppel. There is no claim that plaintiff is estopped to deny anything except that it had accepted the release by the railroad company. The claim is that by its acts and declarations the plaintiff induced defendant to believe that it had accepted the release, and that, acting upon that belief, and because of it, he secured, at great expense, the title to the land he was to convey to plaintiff. This title was procured prior to December 23, 1885, so that whatever could be claimed to work an estoppel must have taken place between March 18th and that time. Unless it be the resolution of plaintiff’s board of directors, hereinafter referred to, and the contract made pursuant to it, no affirmative corporate act or declaration of plaintiff is shown which it is claimed would justify a belief that it had accepted the release. But conversations with each of four of the plaintiff’s five directors, — one of them the secretary, and another its treasurer, — to the effect that plaintiff did not insist on the time of performance by defendant, and that, if it had the titles and the release, so that it could devote the money in its' hands to improvements upon the stream (the Cannon river) near Faribault, instead of to improvements further up, as plaintiff had agreed with the railroad company to do, it was all plaintiff desired, were proved. There is no question that a corporation, as well as a natural person, may, by its acts and declarations, estop itself to deny the existence of certain facts. But to work such estoppel the acts must be done or the declarations made just as its contracts must be made, — by its authorized officers or agents. There is no evidence in the case that any one of the four directors had any authority to make or vary on behalf of the corporation any contract in the matter between plaintiff and defendant, or to waive any of its rights in respect to such a contract. So far as appears, the directors could act for the corporation only when met together as a board, and there can be no presumption that either the secretary or treasurer had, as 3uch, authority to make, vary, or waive rights under contracts of the corporation. As the corporation could be bound, by estoppel or otherwise, only by the acts or declarations of its officers or agents authorized to bind it, the conversations we have referred to could not be the basis of an estoppel. In submitting the question •of estoppel to the jury, the court below charged that the corporation was not bound by the acts or declarations of any but officers or agents authorized to do such acts or make such declarations, but seems to have assumed erroneously that those conversations could have some binding effect on it, or could be taken in explanation of its corporate acts, as showing the reason or motive for them, although the conversations with no one of such directors were ever communicated to the board of directors, nor even to any other director. The declarations were either corporate utterances, or they were in the nature merely of hearsay. And the court was further in error in assuming that the reasons of each of two of the directors not disclosed to the board nor to any other director could be taken in explanation •of the action of the board in passing a certain resolution. The reason or motive for passing a resolution might be shown by the discussion had at the board, but certainly not by the secret operation ■of the mind of individual members.

The resolution and contract, which it is claimed were corporate acts that might be considered on the issue of estoppel, came about in this way: In April, 1884, the plaintiff made a contract with the Polar Star Mill Company, which had a dam on the stream below the point where, under its contract with the railroad company, plaintiff had bound itself to expend the proceeds of its land grant, by which ■contract the mill company agreed to raise its dam, and procure condemnation of the land needed for the additional flowing, and the plaintiff agreed to furnish the funds needed to pay the damages awarded to the landowners. In May, 1885, the plaintiff’s board of ■directors passed a resolution to make a contract, and a contract was accordingly made between plaintiff and the mill company, modifying the contract of April, 1884. The chief modification consisted in an .agreement of plaintiff to pay the mill company a specified gross sum in lieu of its former agreement to pay the damages awarded to the landowners. The resolution for the contract of May, 1885, is not in the record, but the contract is. It makes no allusion to any release by the railroad company, nor to any contract with that company, nor to the source from which the money plaintiff was to pay was expected to come. How that contract, merely modifying in that manner an obligation assumed by plaintiff before the transactions between it and defendant, could be relied on for the purpose of an estoppel, as indicating to defendant that plaintiff had accepted or intended to accept the release which, by resolution of its board of directors on March 18th, it had expressly rejected, especially as it was asserting such rejection in the action against the bank, this defendant defending that action, is impossible for us to see. It appears in the case that after February 7, 1885, plaintiff did no work and spent no money on the part of the stream where, under its contract with the railroad company, it had bound itself to expend the proceeds of its land grant, but has expended all its funds below that part of the stream. This is also relied on to support the estoppel, the argument being that, taken in connection with what was said to him by the four directors, the defendant might infer that plaintiff discontinued its expenditure on the part of the stream specified in its contract with the railroad company because it deemed itself released from that contract. It would not be safe to build an estoppel on a party’s inference as to the fact. No reason is shown why plaintiff did not continue its work on the upper part of the stream. It is left to conjecture or guess. If conjecture were to be indulged in, it would be as reasonable to suppose that it did not continue that work because the question whether it was released from it was in litigation.

There was no evidence of any corporate act, declaration, or omission that would justify leaving it to the jury to find an estoppel.

Order reversed.

(Opinion published 53 N. W. Rep. 759.)