Gamble v. Hanchett

34 Nev. 351 | Nev. | 1912

By the Court,

Norcross, J.

(after stating the facts):

A full understanding of this case has made it necessary to make a preliminary statement of more than ordinary length. The case as submitted to this court, after fifteen years of proceedings in the district courts of the state and the Circuit Court of the United States, is comprehended in twelve volumes of some five thousand printed and typewritten pages, and the many legal questions raised are illuminated by hundreds of pages of printed briefs. Fortunately there are few, if any, material facts in the case that may be considered from the viewpoint of conflicting evidence. While a number of depositions were offered in evidence, the main questions involved upon the merits are settled by a consideration of the written contracts entered into and the correspondence had between the several parties. All of the correspondence between the parties does not appear to be in the record, owing to the fact, doubtless, that some letters may have been lost or mislaid during the many years which elapsed before the trial was actually reached, but in the main the correspondence is in the record, and enough appears to clearly show the true status of affairs existing between the several parties which forms the subject-matter of this action.

The case is a novel one, and it is virtually conceded that there is no precedent for such a suit, but it is also conceded that, if the judgment has equity to support it, the mere novelty or lack of precedent would afford no good reason for not affirming the judgment. The insurmountable obstacle in the way of affirming the judgment, however, lies in the fact that it cannot stand the test of an application of equitable principles, but, upon the contrary, is absolutely unconscionable. The effect of this judgment is to give respondents possession of what is regarded as one of the most valuable mines in this state, and not only this, but permit them to reap the benefit of the development of this property made at the vast expense of others, acquire absolute title to eleven-fifteenths of the mine and pay for the same out of the damages to be exacted from appellants for working the property after the present owners acquired possession. And these valuable rights are to be given to the respondents Gamble, Chadbourne and Wrights, because of the fact that, during all or the major portion of the time from March 9, 1893, to September 7; 1894, a year and a half, either Gamble or J. B. Wright held an option to purchase the Silver Peak mining properties, which options they utterly failed to comply with, and the further fact, if it be a fact, that the option and extensions thereof subsequently obtained by L. J. Hanchett, and which, also, were not fulfilled, were in equity obtained for the benefit of Gamble, Chad-bourne, and the Wrights. Strong indeed would have to be the proofs of fraud upon the part of J. I. Blair or the Silver Peak Mines, or their successors in interest, that would justify the taking of this great property by respondents, practically without the direct payment of a dollar, and the ousting of others who, by the investment of vast capital, have created a great mine out of a property which Gamble repeatedly stated to the representatives of the Silver Peak Mines, during the time of his option, was not worth to exceed a hundred thousand dollars in its then condition, which was described in one of his letters, as being "worked-out stopes, valueless dumps, and barren croppings,” but a mine which was deemed of such value, at the time this appeal was taken, that respondent asked the lower court to fix a $1,000,000 bond as a condition of staying the execution.

If property has been acquired by fraud, or in utter disregard of the rights of others, and such property subsequently becomes of great value, the person defrauded would not for that reason alone be debarred from recovering possession, even though he reaped an increment entirely disproportionate to any efforts put forth by himself. Such, however, is not this case. There is no proof in the record, worthy of the name, of any fraud committed by John I. Blair or the Silver Peak Mines in their dealings with the respondents in this case, while the Silver Peak Gold Mining Company, the present owner of the property, is shown to have purchased it upon the faith of certain judgments rendered by the Circuit Court and the Circuit Court of Appeals of the United States. It is true that respondents contend that these judgments are not binding upon them for the reason that they were not made parties to the suits in question, that a lis pen-dens was on file in the office of the recorder of Esmeralda County before the suits in which they were entered were instituted, and that these federal judgments and the decisions upon which they are based are erroneous, and that we should now so hold, but, even if this contention could be concurred in, we do not think the judgment even then could be sustained for these reasons. Gamble knew at least as early as the date of his letter to Canda of December 12, 1894, that Hanchett was not considering him in on his option, yet he did not attempt to establish his rights by legal proceedings until March 2, 1896, nearly a year and three months later, after the Hanchett option had by its terms expired and the latter was holding by virtue of an extension which had partially expired. Chadbourne does not appear in the action as a complaining party until the filing of the second amended complaint, July 6, 1899, over three years later. J. B. Wright or his heirs never did appear as complaining parties, and it is manifest, it seems to us, that as to the Wrights the further impediment exists to any right of recovery in their favor on account of the fact that Wright assigned the option in his name to Hanchett, requested the Silver Peak Mines to deal with Hanchett, and accepted whatever interest he had as subordinate to Hanchett. Even if it could be said that the judgments obtained by Blair and the Silver Peak Mines against Hanchett were not binding on Gamble or Chadbourne, they certainly should be held to be binding on any interests which Wright had under the Hanchett option. For nearly four years after the filing of the "second amended complaint,” nothing appears to have been done by the plaintiffs Gamble and Chadbourne to press their suit to conclusion. In the meantime great changes were transpiring, not only in regard to this property, but in relation to the whole mining industry of the state.

Gamble and Chadbourne, if they were diligent in looking after their interests, could not have been unaware of the litigation between Blair and the Silver Peak Mines on the one hand and Hanchett on the other, involving the termination of the Hanchett option. It is true they were not made parties to those actions, and were not compelled to intervene to protect their rights, but it is equally true that Gamble had previously urged the Silver Peak Mines to repudiate its contract with Hanchett, and give another option to Gamble, who claimed to have parties with ample capital ready and anxious to take an option on the property and carry it into execution. If the record contains' any evidence of an attempt upon the part of Gamble to obtain an option on this property after Blair or the Silver Peak Mines had undertaken to terminate the Hanchett option and recover possession of the property, it has not been called to our attention, nor have we discovered the same. If Gamble wanted Hanchett eliminated, as he said he did, and had financial backing sufficient to carry out a similar option, as he claimed to have, and really wanted to get possession of the Silver Peak mining property, a more opportune time was presented after the Silver Peak Mines had begun litigation to oust Hanchett than existed when he asked the company to repudiate their written agreement with Han-chett, which Canda frankly and properly informed him could not be done. It may be claimed by counsel for respondent that these observations have no place in this case, that respondents were not bound to have taken any such course, or bound to make any showing that, if they had another option, they could have made any better success of interesting capital than they made during the year and a half that they did have an option, or could have carried out the Hanchett option if they had had it. But they are in a court of equity asking practically that a mine, made immensely valuable by the efforts and money of others, be practically given them, a situation which requires the existence of the utmost good faith upon their part, ability, and readiness to perform during the time specified in the contract and an absence of laches. The showing in all these respects is woefully lacking.

In the case of Johnston v. Standard Mining Company, 148 U. S. 360, which was -a bill in equity to establish the ownership of the plaintiff in one-fourth of a mining claim, and for a decree that the defendant be required to execute a deed of the same, and to account to plaintiff for one-fourth of the net proceeds of the mine, an interlocutory decree was entered, substantially in accordance with the prayer of the bill, and an accounting ordered. The defendant immediately applied for a rehearing, and the case was reheard without reference to the grounds relied upon in the petition for rehearing which did not raise the question of laches when the case was again taken under advisement, and the court later delivered a second opinion, dismissing the bill upon the ground of laches. Thereupon plaintiff filed a petition for a rehearing upon this question which was denied without argument, and plaintiff then appealed to the Supreme Court of the United States where the judgment was affirmed. From the opinion affirming the judgment of dismissal we quote the following:

" It was not until April, 1885, more than a year after the Fulton Mining Company had obtained a patent to* the property, that he made a formal demand upon Chat-field, and on August 1, 1885, filed his first bill in the Circuit Court of the United States to establish his title to a quarter interest in the lode. This suit does not seem to have been prosecuted with much diligence, since it was allowed to linger for nearly a year, and was then dismissed, apparently, for a want of jurisdiction appearing upon the face of the bill. It has been frequently held that thé mere institution of a suit does not of itself relieve a person from the charge of laches, and that if he fail in the diligent prosecution of the action, the consequences are the same as though no action had been begun. (Hawes v. Orr, 10 Bush, 431; Erhman v. Kendrick, 1 Metc. (Ky.) 146, 149; Watson v. Wilson, 2 Dana, 406; Ferrier v. Buzick, 6 Iowa, 258; Bybee v. Summers, 4 Or. 354, 361.) * * *

" The duty of inquiry was all the more peremptory in this case from the fact that the property of itself was of uncertain character, and was liable, as is most mining property, to suddenly develop an enormous increase in value. This is actually what took place in this case. A property which, in October, 1880, plaintiff sold to Chat-field upon the basis of $4,800 for the whole mine is charged, in a bill filed October 21, 1887, to be worth $1,000,000, exclusive of its accumulated profits. Under such circumstances, where property has been developed by the courage and energy and at the expense of the defendants, courts will look with disfavor upon the claims of those who have lain idle while awaiting the result of this development, and will require not only clear proof of fraud, but prompt assertion of plaintiff’s rights. (Felix v. Patrick, 145 U. S. 317, 334; Hoyt v. Latham, 143 U. S. 553, 567; Hammond v. Hopkins, 143 U. S. 224; Great West Mining Co. v. Woodmas Mining Co., 14 Colo. 90.)

"The language of Mr. Justice Miller in Twin Lick Oil Company v. Marbury, 91 U. S. 587, 592, with regard to the fluctuating value of oil wells, is equally applicable to mining lodes: 'Property worth thousands today is worth nothing tomorrow; and that which today would sell for a thousand dollars at its fair value may, by the natural changes of a week, or the energy and courage of desperate enterprise, in the same time be made to yield that much every day. The injustice, therefore, is obvious of permitting one holding the right to assert an ownership in such property to voluntarily await the event, and then decide, when the danger which is over has been at the risk of another, to come in and share the profit.’ We think it is clear that the plaintiff did not make use of that diligence which the circumstances of the case called for, and the decree of the court below dismissing his bill is, therefore, affirmed.”

Chief Justice Fuller, writing the opinion for the court in Willard v. Wood, 164 U. S. 524, stated it to be "the recognized doctrine of courts of equity to withhold relief from those who have delayed the assertion of their claims for an unreasonable length of time may be applied in the discretion of the court, even though the laches are not pleaded or the bill demurred to. ” Further on, the opinion states: "The mere fact that the bill was left on the files would not, in itself, relieve from the effects of laches, for failure in diligent prosecution may have the same consequences as if no suit has been instituted. (Johnston v. Standard Mining Co., 148 U. S. 360, 370.) * * * The changes which the lapse of time had wrought in the value of the property and in the situation of the parties were such as to render it inequitable to decree the relief sought as against Bryan.”

Cyc. says: "In the case of a mere option or other unilateral contract, or where the remedies are not mutual, delay is regarded with special strictness.” (36 Cyc. 727.)

In Hoyt v. Tuxbury, 70 Ill. 332, the court said: "The rule, time and again, announced by this court, is that a party cannot call, as a matter of right, upon a court of equity to specifically enforce the performance of a contract; that its exercise rests in the sound discretion of the court, in view of the terms of the contract of the parties and surrounding circumstances. A party demanding its exercise is bound to show that he himself has always been ready, willing and eager to perform, on his part. (Phelps v. Ill. Cent. R. R. Co., et al., 63 Ill. 468; Stow v. Russell, 36 Ill. 18; Board of Supervisors v. Henneberry, 41 Ill. 179.)”

"Where the contract is in anywise unilateral,” says Fry, in his work on Specific Performance, sec. 732, "as, for instance, in the case of an option to purchase a right of renewal, or any other condition in favor of one party, and hot of the other, then any delay of the party in whose favor the contract is binding, is looked at with special strictness.”

In the case of Ally v. Deschamps, 13 Ves. 225, Ld. Ch. J. Erskin said: "It would be dangerous to permit parties to lie by with a view to see whether a contract would prove a gaining or a losing bargain, and according to the event, either to abandon it or, considering the lapse of time as nothing, to claim a specific performance, which is always the subject of discretion.”

In Kelly v. C. P. R. R. Co., 74 Cal. 557, the court said: " It is well settled that a court of equity may refuse specific performance of a contract which it could not set aside. Where the aid of a court of equity is sought by way of specific performance of a contract, the principles of ethics have a more extensive sway than where a contract is sought to be rescinded. (Kerr on Fraud and Mistake, Am. ed. 357, 358.) It is an acknowledged rule in equity jurisprudence that a party entitled to a specific conveyance of property will not be "permitted to hold back from an assertion of his rights, and speculate upon the possibilities of such changes as may decide whether it would be to his interest to have the conveyance made; but he is required to be vigilant and prompt in the assertion of those rights, and if changes have occurred during this lapse of time in the value of the property to be conveyed, a court of equity will always refuse its aid, and leave the party to seek redress at law. (DeCordova v. Smith’s Admx., 58 Am. Dec. 136.) ”

This court by Hawley J., in Lang Syne Mining Co. v. Ross, 20 Nev. 139, 19 Am. St. Rep. 337, said: "We are well aware that the value of mining claims is ordinarily of a very fluctuating character; that, as stated by the Supreme Court of the United States in Twin Lick Oil Co. v. Marbury, 91 U. S. 592,'property worth thousands today is worth nothing tomorrow, and that which would today sell for a thousand dollars at its fair value may, by the natural changes of a week, or the energy and courage of desperate enterprise in the same time, be made to yield that much every day. The injustice, therefore, is obvious of permitting one holding the right to an ownership in such property to voluntarily await the event, and then decide, when the danger which is over has been at the risk of another, to come in and share the profit. ’ In such cases the courts have repeatedly declared that the party claiming the rights to the property must 'put forward his complaint at the earliest moment,’ and that he 'is bound to act with reasonable diligence as soon as the fraud is discovered. ’ There is nothing that can call forth a court of equity.into activity 'but conscience, good faith, and reasonable diligence.’ It does not affirmatively appear upon the face of the complaint in this action that, at the time of the discovery of the fraud, the plaintiff considered that the property was worthless; that it kept silent, waiting for the defendant Ross to develop the mine; and that then, after the value of the mine had been established by his labor, expense, and hazard, the plaintiff commenced this action, 'to rob him of the fruits of his industry and enterprise. ’ It may be that, upon issues of facts and proofs made upon the trial, such a state of facts may be presented. But our decisions upon the questions of law raised by the demurrer must be governed solely by the sufficiency of the allegations of the complaint. We have no right to anticipate what the evidence will be.”

See, also, Stevens v. McChrystal, 150 Fed. 85; Taylor v. Langwith, 14 Pet. (U. S.) 172; Crandall v. Willig, 166 Ill. 240; Gentry v. Rogers, 40 Ala. 442; Henderson v. Hicks, 58 Cal. 371; Fry on Specific Performance, 732; Pomeroy on Specific Performance, 407. s

That the doctrine of laches is particularly applicable to mining transactions which undergo frequent and great fluctuations in value is generally conceded. As to such properties, parties interested are required to be active and vigilant in asserting their rights. (McKenzie v. Coslett, 28 Nev. 65, 93; Waterman v. Banks, 144 U. S. 395; Twin Lick Oil Co. v. Marbury, 91 U. S. 587; Galliher v. Caldwell, 145 U. S. 368; Johnston v. Standard Mining Co., 148 U. S. 368-371; Patterson v. Hewitt, 195 U. S. 309, 321; Curtis v. Lakin, 96 Fed. 251; Pomeroy on Contracts, 384, 385; Settle v. Winters, 2 Idaho, 199, 10 Pac. 216; Durant v. Comegys, 2 Idaho, 936, 28 Pac. 425; Idaho Gold M. Co. v. Union M. & M. Co., 5 Idaho, 107, 47 Pac. 95; Williams v. Long, 139 Cal. 186, 72 Pac. 911; Green Ridge Fuel Co. v. Little, 119 N. W. 698, 700, 141 Iowa, 221; Gaines v. Chew, 167 Fed. 630, 635; Standiford v. Thompson (4th C. C. A.) 135 Fed. 991; Fry on Specific Performance, 1082.)

It is contended by counsel for respondents that appellants are not in position to claim laches upon the part of respondents, for the reason that they either acquiesced in the delay or were directly responsible for a material portion thereof by moving the case into the Circuit Court of the United States, but, conceding that the appellants were responsible for this latter delay, they can hardly be chargeable with the delay for the nine or ten years preceding.

While we think this case could be disposed of upon the application of the doctrine of laches, the importance of other questions involved, in view of the earnestness of the contentions of the respective parties, warrants a determination of the primal question of respondents’ rights to recover, irrespective of the question of laches.

Counsel for respondents in their brief say: "Although this suit does not count on fraud as its foundation, fraud is nevertheless charged by necessary implication, for it is only because of the fraudulent acts of the defendants, in collusion with Hanchett, that the plaintiffs have been deprived of the rights which they are seeking to enforce herein. ”

It is the theory of respondents that all of the various options, whether held by Gamble, Wright, or Hanchett, should be regarded in effect as one continuing option; that Gamble, Chadbourne, and Wright were partners in these options; and that the Silver Peak Mines were aware of this partnership relation and executed the option to Hanchett with full knowledge of its existence and with knowledge of the fact that Hanchett was virtually the agent of the partnership, and that Hanchett in effect took the option in trust for Gamble, Chadbourne, and Wright.

Just what was the relationship existing between Gamble, Chadbourne and Wright relative to any of these options is not shown by any written evidence other than the receipt of date October 30, 1893, by the terms of which Gamble agreed "to transfer to said Chadbourne and Wright a one-third interest each in such bond as I may acquire.” In the depositions of Gamble and Chad-bourne, taken some thirteen years after the events had transpired, is testimony to the effect that they had a partnership arrangement by oral understanding for the purpose of exploiting the Silver Peak Mines. In Gamble’s original complaint made when his memory should have been clearer as the relations of the parties he alleges that after he had secured the option of November 13, 1893, he submitted the same to Chadbourne and Wright who then and there "agreed that they would join the plaintiff, in the formation of said corporation, and in consideration of the assignment to said corporation of the said contract, dated November 13, 1893, between the said 'Silver Peak Mines’ and the plaintiff, that they would, in accordance with the said contract, furnish to said corporation a subscribed capital stock of $200,000, and would actually pay into the treasury of said corporation the sum of $30,000; and the said plaintiff and the defendants then became and, until the assignment from the said John B. Wright to L. J. Hanchett hereinafter alleged, remained copartners in said, contract, each owning and being entitled to one-third of all the net profits of said contract.”

The agreement, as alleged, was never complied with by Chadbourne and Wright, or either of them, for they failed to furnish the prereqisite stock subscription or actually pay into the treasury any money. Just how such an arrangement could be construed into a partnership relation is not clear. There is evidence tending to show that these parties were working in concert trying to get others interested in the property through these options who would supply the necessary money, and that this situation existed after the subsequent option was obtained in the name of Wright. Had the Wright option been carried out, Gamble and Chadbourne doubtless would have been entitled to share in the profits of the venture. But neither this nor any other option was ever carried out. More actual effort appears to have been put forth by Hanchett to carry out the option obtained in his name than was ever put forth by Gamble, Chadbourne, and Wright. Declarations oral and written made by Gamble to Canda of what he could and would do were most promising, but when it came to a matter of performance there was always a failure of anything tangible. One thing is evident from the evidence in this case, and that is that Gamble, Chadbourne, and Wright either did not have the money themselves to put into the venture, or did .not propose to risk any considerable amount thereof to carry out the options, and further, at the time they secured these options, they had nothing more in view than making an effort to interest the capital of others, and that, if they were successful in this purpose, they were to make their profits thereby.

It is clear, we think, from the evidence that Gamble, Chadbourne, and Wright were simply trying to promote a mining enterprise upon the money of others, which they were unable to obtain, and that the real status of the situation is not materially different from that of mining promotions generally which result in failure, with the exception that in this case the promoters are seeking now to acquire the benefits of some one else’s money and enterprise.

It is one of the main contentions of respondents that the Silver Peak Mines was aware of the existence of the partnership alleged to exist between Gamble, Chadbourne, and Wright, and entered into the Hanchett option with full knowledge of this partnership and in fraud of their rights.

The only evidence in the record as to knowledge upon the part of the Silver Peak Mines of the alleged partnership relations existing between Gamble, Chadbourne, and Wright, in addition to the correspondence, is contained in the depositions of the said Gamble, Hanchett, and C. J. Canda relative to the negotiations which led up to the execution of the second Gamble option and the options to Wright and Hanchett. In considering the testimony contained in these depositions, it should be borne in mind that the depositions were taken some thirteen years after the events to which they relate had transpired. The memory of the witnesses in a number of instances is shown to have been defective when compared with the written evidence made at the time, and, wherever it is in conflict with such documentary evidence, we believe the latter evidence should control. There is apparently nothing in the correspondence that would indicate a desire upon the part of the writers to give a false color to the situation as they understood it, and we do not understand there is any such contention in this case.

The depositions appear to to have all been taken upon the motion of .the plaintiffs, and upon the trial the direct and redirect examinations were offered upon the part of plaintiffs and the cross and recross-examinations were offered upon the part of the defendants.

Relative to the negotiations for the option of November 13, 1893, from Blair to Gamble, which is the time claimed that Gamble informed C. J. Canda of the existence of the alleged partnership between himself, Chadbourne, and Wright, the testimony in the case is substantially as follows:

Direct examination of Gamble: Q. State what occurred between you and him (C. J. Canda). A. I submitted letters to him from different people out here, Mr. Frank S. Chadbourne, Mr. J. E. Doolittle, D. A. Bender, J. B. Wright, and maybe some others; I cannot recall them.

' Q. What became of those letters? A. I left some with him, and some I have left.

Q. What did you do with them? A. I gave them to him; he read them all.

Q. What did you ask him to do, if anything? A. I asked him to make a new contract with me, extend that contract there, and make some modifications in it, which was finally done with John I. Blair.

Q. Did you see John I. Blair? A. No, sir.

Q. What did Mr. Canda say about it when you asked him for an extension ? A. He granted it to me.

Cross-examination of Gamble: Q. Was the extension of the contract made for the benefit of yourself, or for the benefit of all the parties just named? A. For the benefit of all.

Q. Were their names subscribed to the contract? A. No, sir; but Mr. Canda had assurances from them and a proposition signed by them. He has it now.

Q. What sort of a proposition? A. A proposition that they would take the mine up under the following conditions and would furnish the money to finance it.

Q. Was your name mentioned in these negotiations? A. Yes, sir.

Q. Can you produce any letters to that effect? A. I did hot need to have any letters when I was right there during the negotiations myself. I would not write them a letter when I was there myself.

Q. Was Mr. Wright and Mr. Chadbourne and yourself present when these matters were talked over in New York? A. No, sir.

Q. Were they talked over in the presence of Mr. Canda, or any one of the Silver Peak Mines? A. No one but myself.

Q. Did you tell Mr. Canda that Mr. Wright and Mr. Chadbourne were interested with you? A. Yes, sir.

Q. How do you explain the fact that Mr. Wright and Mr. Chadbourne were not made parties to the original contract and its extensions? A. I have not any explanation to make. I do not khow why they did not do it. I went off on the warpath myself.

Q. Why did you go off on the warpath? A. Well, I had an idea, at the last end of it, that Mr. Wright had taken the stand against me.

Q. Then, before the consummation, or before the first contract with Mr. Wright, you and Mr. Wright were not friendly? A. No, sir; that is not so. It was right the contrary. We were friendly. We were friendly all the time until Mr. Hanchett came into. it.

Q. I asked you concerning the negotiations for the extension of the original contract wherein you said Mr. Wright and Mr. Chadbourne were not present and that those negotiations were effected personally by you with Mr. Canda. Is that correct? A. Yes, sir.

Q. I ask you again now to explain why it was that Mr. Chadbourne and Mr. Wright were not made parties to the contract, if they were interested with you? A. Well, I cannot tell you further than I had taken the contract in my own name for the benefit of the others that were originally interested with me in the first place, and when I went back the second time I explained to Mr. Canda who the parties were, and he exacted to know who were associated with me, if they were originally interested with me, and I furnished him letters from Mr. Wright and Mr. Chadbourne stating they were interested with me and had formed a partnership to take that matter up.

Q. Have you any of those letters? A. No, sir. Mr. Canda has them.

Q. Have you a copy of those letters? A. No, there might be copies in Mr. Wright’s copy-book. There were a lot of Mr. Wright’s copy-books burnt. I never had those books.

Mr. Platt — I would like to see those copies.

Mr. Baker — We are doing everything we can to get them.

Direct examination of C. J. Canda: Q. What brought about the change in method as between the original agreement or option given Mr. Gamble and this one, Plaintiffs’ Exhibit 2? A. Well, if I remember correctly, Mr. Gamble did not represent that he had any funds of his own. He was endeavoring to bring about a sale or purchase of the company’s part of this property, and he had to have some assistance, and he represented he would take in other people with him.

Q. Did he mention in that connection at that time Mr. Chadbourne’s name and Mr. Wright’s? A. I can’t remember at this moment, but he did say Mr. Chad-bourne; I can’t remember whether he said anything about Mr. Wright.

Q. Do you remember whether he said anything about Mr. Wright or not? A. He may have done so, I could not say. I am 68 years old, or was yesterday, and I am not as lively in my memory as I was years ago. ■ * * *

Q. Do I understand you to say that it is your recollection that, when Mr. Gamble came here in the fall of 1893, he did mention to you that Wright was interested in the matter with him or not? A. I don’t remember about that.

Q. Did you say he mentioned who Mr. Chadbourne was? A. Yes, and the letters so show.

Q. Look at your letter of May 4, 1894, to Mr. Wright, a copy of which I hand you, and see if that does not refresh your recollection as to whether or not Mr. Gamble also mentioned Mr. Wright at that time? A. If this is a copy of the letter, I presume that is so.

Q. Does the reading of that letter bring the matter back to your mind at all? A. Excepting as it states it in the letter.

Q. It does not refresh your memory otherwise. A. No.

There appears to have been no cross-examination of C. J. Canda on this point. Relative to the negotiations which led up to the execution of the first option given to J. B. Wright the testimony is as follows:

Direct examination of L. J. Hanchett: Q. State your business, if any, with Mr. C. J. Canda in the month of January, 1894. A. I went there to get an extension of' the bond Mr. Gamble had on the Silver Peak Mines, to have it extended to Mr. Gamble, Mr. Wright and Mr. Chadbourne. * * *

Q. State what you said to Mr. Canda at the time you first met him in relation to this extension. A. I asked him for an extension for those people in order for them to handle the property.

Q. What did Mr. Canda say in reply to your request? A. Well, he objected to extending it, but he did extend it, my recollection is, thirty days.

Q. Did you say to him for whom you were acting, whether for yourself alone or for somebody else? A. I had no interest in it at all, but only acted for other parties. He knew that. We talked that all over. He advised me as to what I thought they could do in handling it. My recollection is I got an extension, and then a second extension some time in April of sixty days more. Then I got the extension in Mr. Wright’s name.

Q. In April? A. I think so, for Mr. Gamble — there were three, but I made the change myself. Mr. Canda and myself talked it over, and we thought they had a better chance to handle it, if Mr. Wright handled it himself, because he was in with the railroad people, and thought they could get Charlie Crocker in with them— Fred Crocker they called him then.

Q. Did Mr. Canda know that Mr. Wright was interested with the railroad company ? A. He knew all about it, and talked to me about it, and told me just what had been done. We talked about it several times. He knew it was Mr. Gamble, Mr. Wright and Mr. Chadbourne. Then after the extension he knew it was Mr. Wright and the other two with him. * * *

There appears to have been no cross-examination of Mr. Hanchett on this point.

Direct examination of C. J. Canda: Q. Do you remember that it was in the contract? A. I don’t remember that it is there, but it answers the purpose. On thinking the matter over, my memory is that Mr. Hanchett wrote to me that Mr. Gamble was entirely out of it, and still I would not go on with him until his contract had expired.

Q. He couldn’t very well get out of it until February 1st, could he? A. He meant that he was not going to come up to time, and he didn’t.

Redirect examination of C. J. Canda: Q. Recurring for a moment to the circumstances preceding and surrounding the making of the agreement of February 2, 1894, as I recall the sequence of events the options which preceded that expired on February 1, 1894? A. Yes, the one with Mr. Gamble.

Q. Is it not a fact that prior to February 2,1894, you saw Mr. Hanchett and negotiated with him with respect to the contract or option which was executed on February 2, 1894? A. Nothing in a conclusive way.

Q. It was not concluded? A. No, sir; I told him I would not do anything until that Gamble contract had expired.

Q. That is, you told him you would not give him a contract? A. No, sir; would not have two contracts in existence with two people covering the same property at the same time.

Q. But the negotiations must have preceded February 2d, must they not? A. I don’t know that they did.

Q. What do you say in that regard whether that was so or not? A. I don’t know what you mean by negotiations. I did not make him any terms of any kind, nature or shape.

Q. No conversation about the matter of making a contract? A. I may have told him that contract would expire on a certain date, and after that we would deal with him. He told me very distinctly that Mr. Gamble was entirely out of it; that Gamble could not pay his share.

Q. He said that in connection with the February 2d contract? A. Before we made that contract. You can understand I was very particular that I was not going to have claims of two different people out.

Q. And also two writings covering the same property ? A. Yes, at the same time.

Q. So that whatever was done you postponed the signing of any writing until after February 1,1894? A. Making any agreement. I would not commit myself in any way until after that writing of Mr. Gamble had expired.

Q. Is it your best recollection now that you did talk with him about the contract before February 2d, or not? A. Certainly, he wanted the contract.

Q. So that you must have talked with him before that time? A. Yes, but he very well understood I was committed to him in no way from any talk I had with him until the Gamble contract had expired.

Q. Was there any negotiation after February 1st, between you and him, or was it simply a matter of signing the contract? A. Then we had to agree. I would not agree before. After that we had to agree. The contracts were very much on the same line.

Q. Were there any specifications or terms of the contract left open ? A. There were none of them fixed.

Q. You had not arranged what contract you would give him? A. No, and, as I believe, I told him on the contrary I would not do it.

Q. And you did not consider the question of the form of the contract you might give him after February 1st? A. I don’t remember that we did. I didn’t promise him any.

Q. Whatever contract you might give him, you did not consider the terms of it in any way? A. I don’t remember that I did, and I don’t believe I did. I was very particular on that particular point, although he assured me that Mr. Gamble had no interest whatever and would have none.

Q. Then, as I understand your testimony, it is that, so far as you now recall everything leading up to the making of the contract of February 2, 1894, preparation of the contract and execution of the contract, all transpired on that day — transpired after the first? A. I would not say on that day. It might have been later than that.

Q. And the plaintiffs’ Exhibit 3 had not been prepared prior to February 2d? A. I don’t believe it had.

Q. Have you any distinct recollection about that? A. I am perfectly positive it had not. * * *

Q. Did you tell Mr. Hanchett that you would give a contract similar to the Gamble contract of November 13, 1893, to Mr. Wright as soon as the Gamble contract expired, if nothing was done about it? A. I told him distinctly I would not do anything until the Gamble contract expired. I would not be committed to giving him anything in any way at all after that.

Q. Did you tell him after it expired you would give him something? A. I expected to do something and he expected me to, but I was under no obligation to give it to him.

Q. You did not tell him you would do it after the other contracts expired? A. No, sir.

Q. Had you .sent the contract, Plaintiffs’ Exhibit 3, to Mr. John I. Blair before February 2, 1894? A. I don’t think so.

Q. Are you absolutely certain of that? A. I am quite certain of it because of the situation at that time.

Q. Did I understand - you that the only point upon which you are absolutely clear with respect to the transaction evidenced by the contract of February 2, 1894, is that you committed yourself with respect to it in no way until after February 1, 1894? A. That is the fact.

Q. Do you recall anything else in connection with the matter except that one fact? A. In a general way the contract was made, and in fact, also, that Mr. Gamble would have no interest whatever with him.

Q. That Mr. Hanchett told you? A. Yes, his contract would expire sure.

Q. Those are the only two things you remember distinctly in connection with the transaction? A. In a general way, I met Mr. Hanchett and talked with him. I remember that he came specially on behalf of Mr. Wright.

Q. Do you remember anything else? A. In a general way I remember about it.

There appears to have been no cross-examination of Mr. Canda on this point.

Relative to the Hanchett option the testimony is as follows:

Direct examination of L. J. Hanchett: Q. Have you stated now all the extensions you got.from Mr. Canda in the name of Mr. Wright? A. I think so.

Q. Do you recall an extension in June? A. Well, I got an extension, and my recollection is, I got an extension of thirty days the last of January; and at the expiration of that I got an extension of sixty days again.

Q. What happened at the expiration of those sixty days, or about that time? A. Well, I took one in my own name. * * *

Cross-examination of L. J. Hanchett: Q. Was that bond given to you individually,,Mr. Hanchett? A. Yes.

Q. For and on your own behalf? A. Yes, sir; I do not recall any other name but my own. George Crocker’s might have been in there, but I do not think so. * * *

Q. Did you have any interest with Mr. Gamble, Mr. Wright and Mr. Chadbourne in the contract which you secured in your own name? A. Well, I took the contract and calculated to carry it through in my own name. I told Mr. Wright I would do what was right between Mr. Gamble, Mr. Chadbourne and himself on the contract.

Mr. Platt — You of course represented to Mr. Canda and the Silver Peak Mines people you were taking this contract in your own name and for your sole and exclusive benefit? A. The last contract?

Q. Yes, sir. A. Yes, sir.

Redirect examination of L. J. Hanchett: Q. Do you remember any such correspondence between Mr. Wright and Mr. Canda by telegram (telegrams of Wright and Canda of September 5, 1894), and letter as well which led ultimately to your taking this contract in your own name? A. I do not. I talked with Mr. Wright about it, and Mr. Wright read me several telegrams and several letters with Mr. Canda. I do not reipember what they were now.

Q. You notice the telegram from Mr. Wright, as appears from the exhibit mentioned, was dated September 5th and the reply of Mr. Canda was also dated September 5,1894; that it appears in testimony by Mr. Canda that he did receive from you a letter dated September 8, 1894, which I have j ust read to you a copy of a moment ago; that there was a reply from Mr. Canda to that letter of yours of September 8, 1894, Mr. Canda’s reply being dated September 9, 1894; now, calling your attention to these various dates, can you state whether or not the change of the contract from the name of Mr. Wright to yourself did not come about at the suggestion of Mr. Wright? A. Well, I could not tell you how it came about.

Recross-examination ofL. J. Hanchett: Q. Do you know as a matter of fact whether the contract given to you individually was an extension of the Wright contract or not? A. It was not. It was given before the Wright contract expired, signed by Mr. Canda, and left there until the expiration and then sent to me.

Q. Then I am to understand it was a separate and distinct contract to you individually and had no reference to any preceding contract entered into between the Silver Peak Mines and Mr. Wright or Mr. Gamble or Mr. Chad-bourne? A. The last contract was.

Q. Did you represent to Mr. Canda before you secured your last contract with the Silver Peak Mines Company that Mr. Gamble and Mr. Chadbourne were associated with you as partners in that contract? A. I did not. I represented to him that I was going alone on the last contract.

Q. Did you represent to Mr. Canda or the Silver Peak Mines Company that Mr. Wright was associated with you in that last contract? A. No, sir; I did not represent to him that any one was associated with me.

Cross-examination of Mr. Canda: Q. I call your attention to Plaintiffs’ Exhibit 36, your letter of September 19, 1894, to J. B. Wright; is that the letter in which you instructed Mr. Wright not -to deliver to Mr. Hanchett until his contract of June, 1894, was returned? A. Yes, sir.

Q. Now at the time of writing that letter to Mr. Wright .and sending the contract with Mr. Hanchett, had you any information that Mr. Gamble had any interest whatever in the proposed contract with Mr. Hanchett? A. None whatever. On the contrary, I was informed by Mr. Han-chett that he did not.

Q. That he had no interest? A. Had no interest. I asked him.

Q. And at the time of sending that letter of September 19th, had you any information that Mr. Gamble had any interest in the contract therein referred to then existing between Silver Peak Mines and Mr. Wright? A. No, none whatever.

There appears to have been no direct examination of Mr. Canda on this point.

It will be observed that, according to the testimony of Mr. Gamble given on direct examination relative to securing his second option of November 13, 1893, he gave to Canda letters from at least two parties other than Chadbourne and Wright, to wit: J. E. Doolittle and D. A. Bender. These are two of the parties Gamble had informed Canda were interested with him in his letter of August 28, 1893. Gamble also states he may have given him letters from other parties at this time. None of these letters, either originals or copies, appear to have ever been found. What Mr. Gamble may have referred to in his testimony as a "proposition signed by them * * * that they would take up the mine under the following conditions and would furnish the money to finance it,” was the proposition contained in his own letter of October 10, 1893, in which he says: "We will give you $500,000, payable $100,000 per year, and will erect mill and hoisting works, etc., all to revert to you in case we do not fill the contract. If you think favorably of this proposition, Messrs. Tarpey and Chadbourne will go to New York to confer with you.” As will be seen from the correspondence set out in the statement of the case, this proposition led up to Mr. Gamble going to New York and ultimately obtaining the option of November 13, 1893.

Gamble further on in his cross-examination states that he furnished Canda with "letters from Mr. Wright and Mr. Chadbourne stating they were interested with me and had formed a partnership to take that matter up.” No such letters appear in the evidence, and if Mr. Gamble’s recollection is correct it is strange he did not refer to them in his letters to Canda of December 12 and 30, 1894. Gamble testified: "I asked him (Canda) to make a new contract with me.” As to why Wright and Chad-bourne were not made parties to the contract he said he could not tell further than that he had taken the contract in his own name for the benefit of the others.

Relative to the execution of the Wright contract of February 2, 1894, Hanchett testified that he talked the matter over with Canda, and that Canda "knew it was Gamble, Wright and Chadbourne. Then after the extension he knew it was Wright and the other two with him.” Upon the other hand, Canda testified that Mr. Hanchett told him that Gamble was out of it; that he could not pay his share.

Relative to the Hanchett contract, both Hanchett and Canda agree that Hanchett told Canda that he was alone interested in the option, and that he was taking it for his sole use and benefit. This testimony, like the other, should, however, be considered in the light of the correspondence at the time.

Taking all of the evidence in the case, we think it cannot be said to be established with any degree of certainty that Canda was informed of the alleged partnership relations existing between Gamble, Chadbourne and Wright as such partnership is sought to be established in this suit. That Canda knew that Wright and Chadbourne would be interested in aiding Gamble -to carry out his second option there can be no question; but that they would be interested in any different way than a number of others whom Gamble had informed Canda were interested with him, such as D. A. Bender, M. F. Tarpey, Jeff Doolittle or Frank McLaughlin, does not appear to have been impressed upon Canda. The character of the second Gamble agreement and the first Wright agreement with Blair sheds possibly a little light on this question. These agreements were simply a guarantee upon the part of John I. Blair that, if a corporation was formed with a certain subscribed capital, the Silver Peak Mines would enter into a contract with such corporation. Neither Gamble nor Wright were supposed to be able to finance the proposition alone, and it was expected they would interest others with them. In fact, the representatives of the Silver Peak Mines were most anxious that they should do so, which accounts for the solicitude of Canda to know who Gamble’s or Wright’s or Hanchett’s associates were; but it is a far-fetched proposition to try to bind the Silver Peak Mines by any claim of knowledge of a partnership relation existing between certain ones of these various associates mentioned.

Certainly we think vast property rights ought not to be lost upon the bare oral testimony of witnesses as to their recollection of conversations had many years previous, when all the surrounding circumstances and documentary evidence in the case fails to furnish any corroboration of such testimony, but, upon the contrary, tends strongly to establish the very opposite as the real fact. Under such a condition as to the evidence as a whole, the only safe rule is to hold parties to the written agreements as they made them.

Even if it were conceded that Gamble and Hanchett made the statements' to Canada, as testified to, which, to say the least, were very indefinite, there is no evidence whatever that Canda ever communicated the same to Blair or any of the other officers of the Silver Peak Mines. As the alleged partnership relation was an immaterial matter so far as the Silver Peak Mines was concerned in the making of these options, there was little or no reason why Canda should have communicated such a fact to his fellow-officers. Canda was particular upon his part to deal with but one person as a performing party, and it follows, in the absence of any proof to the contrary, that the Silver Peak Mines was dealing with but one performing party at a time.

When we look to the correspondence between the parties, we find nothing that warrants an inference that Canda was ever informed of any alleged partnership relations. In Gamble’s letter to Canda of December 12, 1894, Gamble proceeds to tell Canda of the agreement or relations which existed between himself, Chad-bourne, and Wright, as though the facts were entirely new to Canda, as they probably were. In Gamble’s letter to Canda of December 30, 1894, Gamble says: "You say I did not post you. * * * It appears from your letters that you did not understand that I owned any interest in the contract after it was given to Wright. I now tell you that I did. * * * Of course, you did what you thought was right in transferring the contract to Hanchett.” * * *

In Gamble’s letter to Canda of January 11, 1895, he says: "These men were my partners, and I do not'see how they can make a contract on one side, without telling me, and then declare me out.” In none of these letters is there an intimation that Canda had any previous knowledge of any alleged partnership relations existing between Gamble, Chadbourne and Wright; but, on the contrary, the expressions used are strongly evidentiary that Gamble knew that Canda had no such knowledge. Ganda’s letter to Gamble of date January 17,1895, is also significant, wherein he says: "I do not see what more I can say to you than I have in my late letters, unless it is to add that it does not seem fair after you had abandoned, apparently, all interest and had failed to answer my letters, that you should appeal to me now to assist you in a matter over which I have no control. ”

Again in Canda’s letter to Tarpey of October 7, 1895, appears the following: "I do not see, under the circumstances, what claims Mr. Gamble can have on Mr. Han-chett, particularly as before entering into arrangements with Mr. Hanchett I notified Gamble that his friends were not going on with the business. ”

There is nothing in the evidence warranting any conclusion of fraud or bad faith upon the part of the Silver Peak Mines towards Gamble or his associates. Gamble’s letters and his original complaint are full of charges of bad faith towards himself upon the part of his alleged partners, but in none of his letters nor in the original complaint is there an intimation of such a charge upon the part of the representatives of the Silver Peak Mines.

With the contention of respondents, that in law their several options to Gamble, Wright and Hanchett should be regarded as one continuing option, we are unable to agree. The relationship of respondents towards the several contracts may have been substantially the same, but outside of the fact that one option followed the other and was of a similar nature, there is nothing else warranting treating all these transactions as one and the same rather than several independent agreements.

Two separate and distinct agreements were entered into with Gamble, and when his second option expired the Silver Peak Mines were not satisfied to give him another option, but instead gave one to Wright. Wright transferred his option to Hanchett and requested the Silver Peak Mines to deal with him. Hanchett informed the company when he asked for an option in his name that he would take care of Wright and any others who were disposed to do their part on the financial end. It was well recognized by the Silver Peak Mines, when all these contracts or options were entered into, that the person who held the option would have to interest capital to assist him, but the company was particular to deal only with that person that it believed most likely to raise the necessary capital.

The Silver Peak Mines was particular in all its transactions not to have two options in existence at the sáme time, as is shown when the Wright and Hanchett options were executed.

"Where the parties to a contract have given it a particular construction, such construction will generally be adopted by the court in giving effect to its provisions. And the subsequent acts of the parties, showing the construction they have put upon the agreement themselves, are to be looked to by the court, and in some cases may be controlling.” (9 Cyc. 588.)

An examination of the letters between Canda and Gamble, and particularly those written by Gamble, shows clearly, we think, that the parties themselves considered each several option as a separate and independent agreement, so far as Silver Peak Mines was concerned, regardless of what understanding respondents may have had among themselves. A few extracts from Gamble’s letters will, we think, show this quite clearly.

From Gamble’s letter of December 12, 1894, we quote: "After you had given the contract to Mr. Hanchett, Mr. Wright told me that he was satisfied that Mr. Hanchett could not raise the money and that Mr. Crocker would not advance it. Of course, I can hold Mr. Wright and Hanchett by law to give me the interest agreed upon. * * * Mr. Tarpey will take the contract with the purpose of fulfilling its requirements, and with me organize a good company, and would have done so at the time the contract was given to Hanchett. * * * I could have carried out the contract now granted upon your property had I obtained it. * * * I desire you to understand that as soon as you granted Wright the contract I lost my power and was obliged to see them abuse your confidence. * * * Just learned that Hanchett is in New York City. Make him put up or give up the contract. We will put up the money.”

From his letter of December 30,1894, we quote: "They were still afraid of me and even after the contract was transferred to Hanchett he came here and told me that my interest was all right. * * * It appears from your letters that you did not understand that I owned any interest in the contract after it was given to Wright. * * * Of course, you did what you thought was right in transferring the contract to Mr. Hanchett, as Mr. Wright asked you to do so. * * * If you conclude that Mr. Hanchett cannot go on and you will give me the chance, I will have one of the richest firms on this coast make an application for the contract.”

From Gamble’s letter of January 16, 1905, we quote: "These people got in on my contract, that is I took Wright in and he took H. in, otherwise H. could have had no interest, as I would not have had anything to do with him, therefore I do not intend to allow H. to tell me I am 'out’ — I shall tie him right up, and then we shall see who is telling the truth. * * * Mr. King and associates are willing to equip the property as I have told you. Now if H. and Wright are so fair and they have no one to back them, I would think they would say, 'We cannot fulfil the contract;’ and so return it to you.”

One cannot read the letters, telegrams and contracts which Ganda wrote or negotiated as the representative of the Silver Peak Mines without being impressed with the strict business methods which characterized his actions. There is not the slightest warrant for a charge of fraud or double dealing upon the part of the Silver Peak Mines. The company had a property to sell, and they gave written options thereon, none of which were ever complied with by the optionees, and it and its successors in interest ought not now be placed in the position of forfeiting the greater portion of this property upon any showing made by the evidence in this case.

Whatever rights Gamble, Chadbourne, or the Wrights had, they were subordinate to those of Hanchett, and were effectually cut off by the judgments obtained in the federal courts and relied on as a defense in this .action. This view of the case makes it unnecessary to determine other questions raised, including that of considering the correctness of the various judgments rendered in the federal courts in the actions to which Hanchett was made a party.

While it may be conceded that the judgments rendered in the federal courts, and relied on by the appellants, would not be binding in the state courts in so far as they affected rights of persons who were not made parties to those actions, and whose rights were not subordinate to the rights of Hanchett, it is worthy of note that, in the recent opinion of Morrow, J., speaking for the Circuit Court of the United States, in the ancillary action brought in that court to enjoin the enforcement of the judgment •in this case, in the opinion ordering a temporary injunction, it was said:

"Now, the question is whether this present suit is ancillary to the original foreclosure suit in this court, or is it an original suit? I am clearly of the opinion that it is ancilliary to the foreclosure suit. It is an action brought to protect the judgment of the circuit court in the foreclosure case. It has no other purpose. I have already stated that Hanchett was made a party to the foreclosure suit. He came in and made his answer, and in his answer he set up the agreement under which he claimed to have the right of possession of this mining claim, and there was a decree in that case adjudging that Hanchett and all persons claiming under him were without right or title or interest in the claim. That was a direct adjudication not only upon Hanchett’s right, but everybody claiming any right under the agreement of September 7, 1894. The option granted in that agreement had been exercised by Hanchett and exhausted. It makes no difference whether Hanchett was a partner or agent of parties who now seek to exercise the option provided in the agreement. The agreement is indivisible and has been discharged and is at an end. This court so held in its decree. Will this court now protect that decree? I do not see how it can do otherwise.”

While not probable, it is true, as contended by counsel for respondents, that the conclusion of the federal court might be changed on the hearing for a permanent injunction, in the event this court affirmed the judgment of the lower court. We need not speculate upon this proposition here, nor should it, of course, have any bearing upon what should be the duty of a state court in a casé where it deemed the judgment of a federal court erroneous in a case not binding upon parties before it, but, as we have hitherto pointed out, we consider these judgments binding upon the respondents for reasons independent of those considered in the opinion of Morrow, J.

Having reached the conclusion that the judgment in this case is without substantial evidence to support it, the judgment and order appealed from should be reversed.

Certain preliminary objections were interposed to a consideration of the transcript, but, upon examination, and without considering the contention of appellant that respondents have waived any right to object to the transcript, they are found to be without merit.

The objection that there is no statement on appeal from the judgment has no support, for the reason that counsel stipulated that the statement on motion for a new trial should also be considered a statement on appeal. Besides, the statement on motion for a new trial is ample for a consideration of all the questions involved.

The objection that the statement contains no certificate to the effect that it contains all the material evidence in the case is not well taken. Without considering the sufficiency of the certificate, it is enough to say that, under the statute, the statement is "presumed to contain all the evidence and other matters pertinent to the proper presentation of the question or questions involved in said appeal or motion, unless the contrary affirmatively appears in such statement.” (Comp. Laws, 3864.)

The judgment and order appealed from are reversed.

Sweeney, C. J.: I concur.

[Note — Petition for rehearing pending in the foregoing case.]

Case Details

Case Name: Gamble v. Hanchett

Court Name: Nevada Supreme Court

Date Published: Apr 15, 1912

Citation: 34 Nev. 351

Docket Number: Nos. 1888 and 1917

Court Abbreviation: Nev.