Butte Hardware Co. v. Cobban

13 Mont. 351 | Mont. | 1893

Lead Opinion

De Witt, J.

It is pleaded, it is adjudged by the court, it is not specified as error, and it is relied upon in argument on both sides, that the deed made by Largey, purporting to be the deed of the Butte Hardware Company, was and is void. We will therefore start with the foundation that the deed was a nullity. When that pretended deed was made, the Butte Hardware Company owned a one-eighth interest in the Yellow Jack mining claim. The deed, being to Schwab, Cummings, Hauser, and Fitchen, without describing the shares which the grantees were supposed to take, therefore purported to give Schwab and Cummings two thirty-seconds of the Yellow Jack mining claim. The deed being a nullity, Schwab and Cummings took nothing thereby. If that be true, Schwab and Cummings conveyed nothing to Cobban in October, 1889. This is clear enough, unless there is some estoppel.

It is contended that the Butte Hardware Company is es-topped because it did not file in the United States Land Office an adverse claim (Rev. Stats. U. S., § 2326) to the application for patent. But it does not appear that at the time of application for patent the Butte Hardware Company had or claimed any interest in the Yellow Jack mining claim, or that its grantors had an interest upon which they failed to file an adverse claim. The pretended deed from the Butte Hardware Company to Schwab et al. was made December 27,1884. The Butte Hardware Company acquired its title to the one-eighth interest in May, 1884. If the notice of application for patent had been admitted, it would have appeared that the Butte Hardware Company did not own an interest in the claim when advertisement occurred. But, it not being allowed in evidence, it nowhere appeared, nor, indeed, was it pleaded, that the Butte Hardware Company, at the time of advertisement for patent, was an owner or claimant in the premises, or could thereby be estopped by virtue of not filing an adverse claim to the application for patent.

Again, is the Butte Hardware Company estopped from claiming its title in two thirty-seconds of the Yellow Jack mining claim by virtue of Cobban buying the two thirty-seconds interest from Schwab and Cummings, grantees in the pretended deed of Butte Hardware Company to Schwab, Cummings, Hauser, and Fitchen, of December 27, 1884? Added to the fact that that was a void deed, absolutely, we are of opinion that Cobban was not an innocent purchaser for value. It sufficiently appeared that, before Cobban bought from Schwab and. Cummings, he was informed that if Schwab and Cummings had an apparent title to the two thirty-seconds interest on record, they had none in fact. Fitchen testified to this effect, although he was disputed by Cobban. Schwab and Cummings each deposed that he told Cobban that he had no claim to this two thirty-seconds interest. Cobban, however, said he would take a deed. He obtained quitclaim deeds from Schwab and Cummings. He paid five dollars for each — a grossly inadequate consideration, under the evidence. Cummings deposed that Cobban promised to give him more if he got any thing out of the claim. Under all these facts, it is apparent that Cobban was not an innocent purchaser for value, and that he had the amplest facts to put him on inquiry. ■Therefore, we arrive at this situation: By the receiver’s receipt, December 30, 1884, whatever right passed from the United States (and we will call it a title for the purpose of this decision) passed to Schwab,. Cummings, Hauser, and Fitchen. But at that time the Butte Hardware Company owned one-eighth of the possessory title, as against Schwab, Cummings, Hauser, and Fitchen, and still owns it. These four persons concede this. Cobban disputes it. But his grantors are Schwab and Cummings. They concede it, and Cobban is in no position superior to them, because he is not an innocent purchaser for value. Therefore, every one — Schwab, Cummings, Hauser, and Fitchen, in fact, and Cobban, in effect — concedes that the first four persons named hold in their names the receiver’s receipt for the Butte Hardware Company’s one-eighth interest of the Yellow Jack Mining claim. Under those circumstances, why should they not convey it? It is not a question of proving a trust, by parol or otherwise. The simple situation is: Four persons have iu their names title to real estate which belongs to another. They admit that fact, and Cobban is not a person to controvert it. It is our opinion that they are trustees, and should be, as they were, decreed to convey to their cestui que trust. There seems to be no occasion for the creating or declaring of a trust, or offering evidence that it was created or declared, or relying upon the deed from the Butte Hardware Company to Schwab, Cummings, Hauser, and Fitchen. The existence of the trust is uncontroverted.

The action is to quiet title and remove a cloud. Appellant claims that plaintiff was not in the possession of the premises, the two thirty-seconds undivided interest in the mining claim at the commencement of the action. (Code Civ. Proc., § 366.) His specification in this regard on motion for a new trial is as follows: “The evidence is insufficient to sustain the decision and the decree of the court, for the reason that the evidence establishes the fact that the defendant George A. Cobban was in possession of a portion, at least, of the premises in controversy at the time of the institution of said action, as was found by the court in its special finding No. 8.” Finding 8 is as follows: “Did said defendant Cobban, in pursuance of his purchase of said two thirty-seconds of said mining claim, enter upon a certain portion thereof, and construct and erect a house thereon? And was such house so upon said premises covered by it at the time that this action was commenced? Answer. He had built a foundation for a house, which foundation was partly upon a portion of said premises.” Appellant contends that this is a finding that respondent was not in possession of the premises, the subject of the action. The subject of the action was two thirty-seconds undivided interest in a mining claim. That defendant had put a foundation for a house partly upon the mining claim, we think, is not a finding that defendant was in possession of plaintiff’s claimed two thirty-seconds undivided interest in the premises, or, in effect, that plaintiff was not in such possession.

It is contended that plaintiff, as a commercial corporation, is not empowered to hold or claim au interest in a mining claim. It appeared that plaintiff was occupying a. portion of the surface of the claim w'ith a warehouse which it was using in its business. The defendant Cobban is not an appropriate person to raise that question. What Cobban claims as to title comes from plaintiff. If Cobban could be said to own any thing (which, as we have seen, cannot be said) he owned it from plaintiff as grantor behind Schwab and Cummings. (First Nat. Bank v. Roberts, 9 Mont. 331.) The judgment is affirmed.

Affirmed.

Pemberton, C. J., having been counsel in this case, does not participate in the decision.

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Concurrence Opinion

Harwood, J.,

concurring. — My concurrence in affirming the judgment of the trial court proceeds upon the ground that the facts shown give rise to a trust in the grantees of the patent in favor of the plaintiff for the eighth interest which it owned in said property when patent was issued therefor, and that appellant, Cobban, acquired his alleged claim thereto with knowledge of the equities existing in favor of plaintiff. For the purpose of this review the receiver’s final receipt has been regarded by both parties as equivalent to a patent, and therefore the case is considered as if patent had issued. It is not disputed that after patent was applied for and notice had run, plaintiff came into ownership of an eighth interest in said lode claim, nor that the Largey deed, purporting to convey plaintiff’s interest to Schwab, Cummings, Hauser, and Fitchen was void. But through the appearance of said void deed the United States government was induced to convey the whole of .said claim to the other co-owners above named, thereby carrying the legal title of plaintiffs interest to the grantees in the patent. Now, the title to plaintiff’s interest in said claim having passed away from it by the circumstance of said void deed being recognized as valid, the grantees of that interest became trustees thereof, holding the same for the use and benefit of the real owner the same as if the title, by mistake, had been conveyed and récorded in the name of a stranger. That trust is implied by operation of law upon the circumstances mentioned, and does not depend upon the alleged express agreement for reconveyance claimed to have been made by Largey on behalf of plaintiff at the time the void deed was executed, nor upon any action of Largey because liis attempted conveyance was ■void, as all parties admit, and in fact did not divest plaintiff of its interest. The void deed figured in the transaction as ■ the mere circumstance which misled the government to grant plaintiff’s interest, along with the rest of the lode, to the grantees above named. Plaintiff did not own or claim an interest adverse to any other claimants in said lode, but it owned an interest in conjunction with and recognized by the other claimants and patentees of said lode. {Hunt v. Patchin, 35 Fed. Rep. 816.) And plaintiff, having come into ownership after application of patent, for the sake of convenience in obtaining the patent, it was thought expedient by those assuming to act that plaintiff’s interest should be deeded over to the other grantees in the patent in order to make it appear to the government’s agents that the persons to whom the patent was issued were the owners of the whole of said claim. But that deed was void, and therefore when the patent was issued the legal title of plaintiff’s interest, which it had not parted with, was conveyed to the grantees named in the patent. It appears that the grantees in the patent, although made parties to this action, have never come in and denied the foregoing facts, and the record shows that Cobban obtained such conveyance for a mere nominal sum as consideration, and with knowledge of the facts upon which the law raises a trust in the patentees of said land in favor of plaintiff to the extent of its interest. (2 Pomeroy’s Equity Jurisprudence, § 1048.) So that Cobban is in no position to claim equities in his behalf which the grantees of said patent could not have invoked. It appears to me to be a case of constructive trust, arising by operation of law and should be executed as directed by the judgment of the trial court. (Hunt v. Patchin, 35 Fed. Rep. 816; Lakin v. Sierra Buttes G. Mining Co., 25 Fed. Rep. 337; Hardy v. Harbin, 4 Saw. 526; Wilson v. Castro, 31 Cal. 421; Salmon v. Symonds, 30 Cal. 301.)

The point is raised that plaintiff was not competent to receive and hold said interest in the mining claim, because the acquisition of such property was not specially within the scope of the object and purpose of the corporation, as expressed in its articles of incorporation. I do not think that point could be maintained so as to avoid the title of plaintiff to said property in favor of a stranger. A corporation organized for special purposes, specified in the articles of incorporation, might, in transacting that business, necessarily come into the ownership of property of a class not within the objects for which it was incorporated. The collection or enforcement of obligations due the corporation might necessarily, in the course of the transaction of its business, bring it into ownership of property, the acquirement of which is not within the special object and purpose for which the company was organized, as expressed in its articles of incorporation. But it would hardly be seriously urged in such event that the title of the corporation as to such property was void in favor of a stranger who undertook, unlawfully, to assume and hold the property in question. Of course, cases arise where agents of a corporation have been held liable to the stockholders or others interested and injured by a departure from the scope and purpose of the company in its transactions, but such complainants are not strangers or without interest in the conduct of the corporation. And the commonwealth may also interfere and forfeit the charter and wind up the affairs of the corporation in certain cases for abuse of its charter privileges by unlawful use or departure therefrom: But no cases have been cited, and probably cannot be found, where strangers have been heard to raise such a defense to their unwarranted claims upon the property of a corporation. To the contrary may be cited the following cases. (First Nat. Bank v. Roberts, 9 Mont. 331; National Bank v. Matthews, 98 U. S. 621; National Bank v. Whitney, 103 U. S. 99; Fortier v. New Orleans Nat. Bank, 112 U. S. 439; National etc. Mining Co. v. Clarkin, 14 Cal. 544; California State Tel. Co. v. Alta Tel. Co., 22 Cal. 398.)

I concur in affirming the judgment of the trial court.