O'Reilly v. Burns

14 Colo. 7 | Colo. | 1890

Richmond, C.

There is no controversy concerning the loan of the money; the execution of the agreement as above set forth; the execution and delivery of the deed from Burns to Finnerty; the receipt of the royalty of $1,200; the payment of money in and about the suit by Finnerty; and the execution and delivery of the deeds on the 13th of August, 1886, by both Burns and Finnerty, to David M. Hyman. The only controversy in this case is as to the effect of the addendum to the agreement of March 5, 1884, whereby an interest in the profits of the mine was conveyed by Burns to Finnerty.

It is fair to assume that this agreement, including the addendum, was made, executed and delivered at the same time. It appears to be attested by the same witness, and it is not disputed by any evidence or in the pleadings. “In the construction of this contract it is proper for the court to place itself in the position of the contracting parties at the time of its execution, and look at the occasion which gave rise to it; the relative position of the parties; their designs as to the objects to be accomplished.”

Viewed from this stand-point, the nature of the transaction appears to have been as follows: Burns desired a loan. Finnerty was able and willing to loan. Burns was anxious to secure the repayment of the principal loaned, and, to do so, agreed to make tlje conveyance of the interest in the mine, and also to assign an interest in a claim against the German National Bank. Both of these securities, it must be admitted, were questionable. From neither was it certain Finnei’ty would realize the money advanced. Both depended upon contingencies; and, as an additional inducement and consideration for the accommodation, Burns proposed to Finnerty to share equally with him the profits of the interest he should obtain in the Durant mine. Finnerty was, to the best of Burns’ ability, secured as to the repayment of the principal, and for the hazard of the loan was to be compensated by prospective profits in the mine. Payment of interest on the loan was not contemplated.

It is contended that this construction of the transaction cannot be sustained, as it is inequitable and unconscionable. The intention of the parties and the legal effect of the writings cannot thus be summarily disposed of. When the nature of the transaction is considered, and the uncertainty attending it, and the chance of losing the entire investment, the contract as above construed does not appear to have been unreasonable or inequitable. Were mining transactions, in regard to the acquiring of interests in undeveloped property, to be judged by results afterwards, instead of conditions as they existed at the time of the investment, many titles of far greater value than the one in question would be annulled for inadequacy of consideration, where the amount invested was much less in the first instance than in this case.

Finnerty, by the conveyance, took the legal title, subject to defeasance in the payment of the money loaned to Burns. Upon such payment the legal title of the entire interest was to re-invest in Burns, while Finnerty was for all time to receive the profits of one-half the interest, if there should be any, and the control and management was to remain in Burns. But such profits were to be net results, while Finnerty was not to be chargeable with any costs of development. After the payment of the $1,000, Finnerty’s interest was a demand for the further sum of $100 due, and an ownership of one-half of the profits resulting from the mining for all or an indefinite time, until the ore should be exhausted. In this view of the case, we do not consider the question which conveyance (Burns to Hyman, or Finnerty to Hyman) was prior in point of time, or whether they were contemporaneous, important. Each dealt for himself, and each had an assignable interest. By the deed of Burns he conveyed to Hyman his interest in the mines, to the ores mined therefrom, to the proceeds of the same, “and all his estate, right, title, interest, possession, claim and demand whatsoever, as well in law as in equity.” By the contract, executed by Burns to Hyman on the same date as the deed, he agrees or covenants that “he did convey said interest by way of mortgage to one Peter Pinnerty to secure a claim of $1,100; that he had repaid to said Pinnerty the sum of $1,000, and tendered him the balance; and that any other claim the said Pinnerty may set up to said interest is without consideration, fraudulent and void.” By the conveyance his entire interest in the property, legal and equitable, is transferred to Hyman. Hyman was substituted in his stead, and had succeeded to all existing equities in connection with Pinnerty; and, for further certainty or assurance in the contract, he set out and defined what the existing equities were between himself and Pinnerty. The deed and contract were ample to and did divest him of all interest, and invest Hyman, not only with the legal and equitable interest of Burns, but by the substitution a right to adjust the equities theretofore existing between Burns and Pinnerty.

On the same date, Hyman, through his agent in Denver, purchased and received a conveyance from Pinnerty of the entire interest, including unadjusted rights and equities existing between him and Burns. The transactions were separate and distinct; each dealing with his own interest regardless of the interest of the others.

By the two conveyances to Hyman, the titles were merged, and the equities merged and extinguished. Burns, having released to Hyman all his interest, had no further claim against or matters to adjust with Pinnerty. If Hyman saw fit, notwithstanding Burns’ agreement, to recognize a greater interest in Pinnerty than that asserted by Burns, and purchase and pay for it, it was entirely a matter of his own, in which Burns could have no interest, unless called upon by Hyman to make good his assertion of want of interest in Pinnerty, as stated in the contract. Pinnerty, at the time of the sale, and in making the conveyance, undoubtedly took into consideration the balance due him from Burns, the amount of royalty due for ore extracted, and the amount he was out for money advanced in litigation; and, in making his price in a lump sum, received what he considered compensation for his existing claims and interest in the property, and it was paid. Burns, by his conveyance and agreement, was estopped to deny that all existing rights and claims had not passed to Hyman. It follows that Burns had no right to participate in any way in the transaction between Mnnerty and Hyman, or the proceeds of it, and had no cause of action against Mnnerty. The transfer must be regarded as an assignment of all rights of action. We are therefore of the opinion that, at the time of the institution of this proceeding, Burns had no right of action against the defendant Mnnerty, and, in view of the fact that affirmative relief asked by the answer has been abandoned, the judgment should be reversed, and cause remanded, with instructions to the court below to dismiss-the action.

Reed and Pattison, 00., concur.

Per Curiam. For the reasons stated in the foregoing opinion the judgment is reversed, and the cause remanded, with directions to dismiss the action.

Reversed.

Mr. Justice Elliott, having presided at the trial below, did not participate in this decision.