(dissenting).
I agree with Chief Justice START in his dissenting opinion.
The appellant having petitioned for a reargument', the court granted the petition in the following order, filed on April 10, 1899'.
PER CURIAM.In view of the facts that the question involved is an important one, that the precise ground upon which the decision was based was not argued by counsel, and was decided by a divided court:
It is ordered that a reargument be, and hereby is, granted of the single question whether the Security Bank of Minnesota took the policy in suit subject to the equities of the plaintiff. Ordered,.further, that the case shall be submitted on briefs, to be filed on or before June 15, next.
Hale & Montgomery, for appellant.
The policy was a nonnegotiable instrument, and was assignable like any other chose in action. See Hogue v. Minn. P. & P. Co., 59 Minn. 39. The bank had a right to assume that the policy was' lawfully transferred to Hadley for a valuable consideration, that Brown spoke the truth by his assignment, and that Hadley had a right to transfer it as collateral security for a loan. The rights of the bank do not depend on the actual title which Hadley had as .between himself and Brown, but on the act of Brown himself, which precludes him from disputing the title which he had apparently conferred on Hadley. This principle is not in conflict with G. S. 1894, § 5157. The rule grows out of the principle that where one of two innocent persons must suffer from the act of another, it must be the one who has permitted the act to be done. Cochran v. Stewart, 21 Minn. 434. Bush v. Lathrop, 22 N. Y. 535, is no longer authority'op the precise question therein involved. In McNeil v. Tenth, 46 N. Y. 325, and Moore v. Metropolitan, 55 N. Y. 41, the rule adopted by the majority opinion in the case at bar, as laid down in Bush v. Lathrop, was changed and modified, and it was held that where the owner of property confers on another an apparent title to or power of disposition over it, he is estopped from asserting his title as against an innocent third party who has dealt with the apparent owner in reference thereto without knowledge *of the claims of the true *424owner; and that the rights of such third party do not depend on the actual title or authority of the one with whom he dealt, but on the act of the owner, which precludes him from disputing the title or authority he has apparently conferred. See also Greene v. Warnick, 64 N. Y. 220; Moffett v. Parker, 71 Minn. 189; Davis v. Bechstein, 69 N. Y. 440; Weyh v. Boylan, 85 N. Y. 394; Fairbanks v. Sargent, 104 N. Y. 108, 116; Colebrooke, Coll. Sec. §§ 436-438; Jones, Pledges, § 466; Bigelow, Estop. 560, 561. The fallacy of the decision in the case at bar lies in attempting to discriminate between the different kinds of nonnegotiable choses in action, and to confine the rule which protects bona fide purchasers to those nonnegotiable instruments which are more generally sold and transferred in open market. Rapps v. Gottlieb, 142 N. Y. 164; Cowdrey v. Vandenburgh, 101 U. S. 572; International v. German, 71 Mo. 183; Woodruff v. Morristown, 34 N. J. Eq. 174; Plummer v. Peoples, 65 Iowa, 405; Wood’s Appeal, 92 Pa. St. 379; Brewster v. Sime, 42 Cal. 139, 146; Williams v. Fletcher, 129 Ill. 356, 366; Spooner v. Cummings, 151 Mass. 313; Horn v. Cole, 51 N. H. 287; Grocers v. Neet, 29 N. J. Eq. 449; Newton v. Newton, 46 Minn. 33, 37; MacLaren v. Cochran, 44 Minn. 255; Cochran v. Stewart, 57 Minn. 499, 509.
Smith & Smith, for respondent.
The bank was bound to make diligent inquiry as to the title and value of the paper before buying it, and was bound to make this inquiry of persons and parties interested in the paper. Cochran v. Stewart, 21 Minn. 435, 441; 2 Pomeroy, Eq. Jur. §§ 810, 813; Olds v. Cummings, 31 Ill. 188; Norton v. Rose, 2 Wash. (Va.) 233; Murray v. Lylburn, 2 Johns. Ch. 441; Mickles v. Townsend, 18 N. Y. 575; Walker v. Dement, 42 Ill. 272, 277; Robinson v. Jefferson, 1 Del. Ch. 244; Lane v. Smith, 103 Pa. St. 415, 420; Trustees v. Wheeler, 61 N. Y. 88. The burden of proof is on the purchaser of nonnegotiable paper to prove good faith and diligence. Devoe v. Brandt, 53 N. Y. 462; McLeod v. First, 42 Miss. 99; Lynch v. Beecher, 38 Conn. 490; Porter v. Parks, 49 N. Y. 564; Newton v. Newton, 46 Minn. 33, 38. The party asking the benefit of estoppel must have acted in good faith and with reasonable diligence, otherwise no equity will arise in his favor. Thorne v. Mosher, 20 N. J. Eq. 257; Royce v. Watrous, *42573 N. Y. 597; Wilcox v. Howell, 44 N. Y. 398; Moore v. Bowman, 47 N. H. 494; 1 Story, Cont. § 475; 2 Pomeroy, Eq. Jur. § 810. Defendant knew that he who purchases nonnegotiable paper takes it subject to the rights of parties to the paper. Walker y. Dement, supra; Kleeman v. Frisbie, 63 Ill. 482. To give the conduct or admission of a party the character of an estoppel, it must have been fraudulent in its purpose, or so unjust in its results as to make out against him a clear case of culpable negligence in not having contemplated it as a natural consequence. Sutton v. Wood, 27 Minn. 362; Combs v. Cooper, 5 Minn. 200 (254); Whitacre v. Culver, 6 Minn. 203 (297).
Defendant is estopped from urging' an estoppel in favor of the bank. Defendant cannot assert an estoppel in pais for some one else; to be available, it must be shown to have been made to affect the person who asserts the estoppel. Sutton v. Wood, supra; Reynolds v. Lounsbury, 6 Hill, 534; Dezell v. Odell, 3 Hill, 215; Pennell v. Hinman, 7 Barb. 644; Zabriskie v. Smith, 13 N. Y. 322, 338. The notice to defendant before it paid the money to the bank notified •defendant to pay the money at its peril. Arnold v. Hoschildt, 69 Minn. 101. Brown’s equities were prior and superior.
There is no ground for raising an estoppel against Brown to assert the truth. If the element of fraud is wanting, there is no estoppel. 2 Story, Eq. Jur. § 1543; Combs v. Cooper, supra; Califf v. Hillhouse, 3 Minn. 217 (311); Pence v. Arbuckle, 22 Minn. 417; 1 Herman, Estop. § 20; Davidson v. Young, 38 Ill. 145; Chandler v. White, 84 Ill. 435; Maguire v. Selden, 103 N. Y. 642; Empire v. Moers, 27 App. Div. (N. Y.) 464; Martin v. Zellerbach, 38 Cal. 300; Moffett v. Parker, 71 Minn. 139. The bank is amply protected by its other securities, hence on this ground the equity is in favor of Brown. 3 Pomeroy, Eq. Jur. § 1414. The bank took subject to every right of Brown. McDonald v. Kneeland, 5 Minn. 283 (352); Moffett v. Parker, supra; Johnson v. Carpenter, 7 Minn. 120 (176); LaDue v. First Nat. Bank, 31 Minn. 33; Tuttle v. Wilson, 33 Minn. 422; Way v. Colyer, 54 Minn. 14; Klatt v. Dummert, 70 Minn. 467; Seebold v. Tatlie, 78 N. W. 967; Thompson v. Allen, 12 Ind. 539; Haskell v. Brown, 65 Ill. 29; Bjork v. Bean, 56 Minn. 244. An assignee of a nonnegotiable chose in action takes it subject to all defenses to which it was *426subject in the hands of the original holder or assignor. 1 Pomeroy, Eq. Jur. §§ 700-715; 1 Beach, Eq. Jur. § 342; 1 Daniel, Neg. Inst. § 742; Bispham, Eq. (4th Ed.) § 170; 1 Parsons, Cont. (8th Ed.) 227; Willard, Eq. Jur. (Potter’s Ed.) 462; Snell, Eq. 92; 2 Spencer, Eq. Jur. 862, 863; Tiedeman, Eq. Jur. §§ 60-64; 2 Wharton, Cont. § 842, et seq.; 2 White & T. L. C. Eq. (pt. 2) 880-893; 2 Randolph, Com. Paper, § 657; 2 Story, Eq. Jur. § 1188; 1 Pomeroy, Eq. Jur. § 710; 2 Herman, Estop. § 1188; Wade, Notice (2d Ed.) §§ 79, 431-436; Benjamin, Sales (4th Am. Ed.) § 433; Olds v. Cummings, supra; Westfall v. Jones, 23 Barb. 9; 2 Am. & Eng. Enc. 1079; Clute v. Robison, 2 Johns. 594, 602; 2 Chitty, Cont. 1366; Willis v. Twambly, 13 Mass. 204; Smith v. Carder, 33 Ark. 709; Longan v. Carpenter, 1 Colo. 205; Murray v. Lylburn, supra; Norton v. Rose, supra; Robinson v. Jefferson, supra; Guerry v. Perryman, 6 Ga. 119; Jack v. Davis, 29 Ga. 219; Gray v. Thomas, 18 La. An. 412; Marvin v. Inglis, 39 How. Pr. 329; Cutts v. Guild, 57 N. Y. 229; Ingraham v. Disborough, 47 N. Y. 421; Schafer v. Reilly, 50 N. Y. 61; Littlefield v. Albany, 97 N. Y, 581; Walker v. Dement, supra.
There is nothing in the character of the assignment from Brown to Hadley to change the result. The legal effect of any kind of assignment, without limitation, is to transfer the title, and carries an implied warranty of title in the assignor and that the instrument is genuine and unpaid. Ledwick v. McKim, 53 N. Y. 307; Murray v. Judah, 6 Cow. 484; Thrall v. Newell, 19 Vt. 202; Ross v. Terry, 63 N. Y. 613; 15 Am. & Eng. Enc. 853; 6 Id. 656; Tiedeman, Bills & N. § 74. The attempted distinction cannot avail defendant under G. S. 1894, § 5157. La Due v. First Nat. Bank, supra; Way v. Colyer, supra; Tuttle v. Wilson, supra; State v. City of Lake City, 25 Minn. 404; 2 Chitty, Cont. 1369. See Warner v. Whittaker, 6 Mich. 132; Matteson v. Morris, 40 Mich. 52; Bobb v. Taylor, 56 Mo. 311; Chouteau v. Allen, 70 Mo. 290; Wells v. Clarkson, 2 Mont. 230; Sanborn v. Little, 3 N. H. 539; Williamson v. New Jersey, 29 N. J. Eq. 311; King y. Lindsay, 3 Ired. Eq. 77; Rayburn v. Hurd, 20 Ore. 229; Burkett v. Moses, 11 Rich. L. (So. C.) 432; Walker v. Sargeant, 14 Vt. 247; Hamilton v. Glenn, 85 Va. 901. If an equitable estoppel was available to the bank in the case at bar, it would have been available in all the cases above cited. The statute conferring special *427privileges on notes and bills of exchange is to be limited strictly to that class of instruments. 23 Am. & Eng. Enc. 357, 399; Cutts v. Guild, 57 N. Y. 229; Keech v. Baltimore, 17 Md. 32; Sutherland, St. Const. §§ 400-408.
The following opinion was filed on July 11, 1899:
PER CURIAM.After receiving and considering the additional arguments of counsel, Justices MITCHELL and BUCK adhere to the views expressed and the result reached in the opinion of the court heretofore filed, while Chief Justice STABT and Justice COLLINS adhere to the views expressed in their dissent, and are in favor of reversal, on the grounds therein stated. Justice CANTY, while still adhering fully to the position taken in the original opinion of the court upon the so-called doctrine of latent equities, is of opinion that the plaintiff, by reason of his conduct in allowing the policy, accompanied by an assignment absolute in form, to remain for 11 years in the possession of Hadley without taking any active measures to recover it, and in neglecting during all that time to pay the premiums necessary to keep it alive, is estopped by his laches and abandonment from now asserting any rights to or under the policy, or attempting to avail himself of its benefits which have been preserved by the expenditures of another. While Chief Justice STABT and Justice COLLINS are in favor of a reversal on the broader ground already stated, they also concur in the view of Justice CANTY, that the case should be reversed on the ground that plaintiff is equitably es-topped by his laches and abandonment from claiming the proceeds of the policy. The court is unanimously of opinion that the policy, being valid in its inception, was assignable to any one.
It follows that the opinion of the court, either unanimously or by a majority, is that:.
1. The policy was assignable by plaintiff to Hadley, and by Hadley to the Security Bank.
2. The assignment from Hadley to the Security Bank would be subject to the equities of the plaintiff, in the absence of facts creating an equitable estoppel against him; and the mere fact that the *428assignment from plaintiff to Hadley was absolute in form would not create such an estoppel.
3. But the laches of plaintiff, and his practical -abandonment of the policy by neglecting for 11 years to take active measures to recover possession of it, or to keep it alive by paying the premiums on it, but allowing it to lapse unless Hadley saw fit to pay the premiums at his own expense, would estop him from now claiming any rights under or benefits from the policy, as against Hadley or the bank.
If the findings of the trial court on the latter point were clear and positive there would be nothing to do but to order judgment for the defendant. But it is not clear from the findings, especially in view of the latter part of the so-called fifteenth finding, how far they were intended to go, or what was the precise ground upon which the court ordered judgment for the plaintiff. Therefore, under the circumstances, we are of opinion that the proper disposition of the appeal is to reverse, and order a new trial of the cause in accordance with this opinion. It is so ordered.