233 Mass. 439 | Mass. | 1919
This is a bill in equity brought by the plaintiff to compel the defendant to assign to him two hundred and fifty shares in the capital stock of the Chile Exploration Company, being five per cent of the common shares in the capital stock of that company received by the defendant for certain atacamite lands at Chuquicamata, Chile, in accordance with the provisions of the concluding paragraph of the following letter: “London,
“It is further understood that you are to receive in the common shares of each company which takes over, through me, properties in Chile and Peru, other than Ferrobamba, brought to me by or through you, five per cent of such common shares as may come to me as profit by virtue of such taking over. Yours very truly, Albert C. Burrage.”
In two different places in his report the master has found that the Chuquicamata property, here in question was brought to the defendant’s attention by others through the plaintiff. Both findings have been attacked by the defendant. It seems to us that if these findings are open to attack a finding to the same effect would have to be made upon the subsidiary findings of fact made in the report. But in the view which we have taken of the case it is not necessary to come to a final decision upon that point. For we are of opinion, that if the two findings made by the master are to stand or if a similar finding is made by us, the plaintiff is not entitled to the shares he is seeking to recover in this suit.
The material circumstances which have given rise to the suit now before us so far as the legal aspects of the case go are as follows: The defendant is by profession a lawyer. After thirteen years’ practice he retired from the bar in 1897 and devoted himself to mining. Ten years later he conceived the idea that improvements could be made in the leaching process then in use by which copper is extracted from the ore. He hoped by these improvements to reduce the cost of extracting copper from ore to such an extent that low grade copper properties which up to that time had not been worked at a profit would become of value. For this purpose he engaged the services of a chemist Bradley by name. Being convinced of the ultimate success of the process being developed by Bradley, he determined, in 1909, to acquire large low grade copper properties which had been abandoned as unprofitable. In the winter of 1909 and 1910 the plaintiff made the defendant’s acquaintance in connection with certain mines
While in England the plaintiff devoted a good deal of his time to searching for mining properties of the kind the defendant wished to obtain. In the course of this search the plaintiff made the acquaintance of one Plews, who was the managing director of a company which owned á copper property in Chile, not at Chuquicamata. The plaintiff cultivated Plews’s acquaintance and told him that he was trying to obtain for another person low grade copper properties where there was a possibility of great tonnage. The defendant came to Europe in the summer of the same year and while he was there the plaintiff brought Plews and the defendant together. From an inquiry made by the defendant of Plews later on, the defendant learned of the atacamite properties here in question owned by Compania de Cobres de Antofagasta and by the Sociedad Explotodora de Chuquicamata. These properties consisted of about seven hundred and fifty-six acres, two hundred and thirty of which was owned by the Cobres company and five hundred and twenty-six by the Explotodora company. The plaintiff and the defendant were much together while they were in London. On the day before the defendant was to sail for home, the plaintiff suggested to him that he should employ him (the plaintiff) “regularly.” As a result of this suggestion the defendant wrote out and handed to the plaintiff on the morning of the day on which he left London to take the steamer for the United States, the letter the material part of which is set forth above. It is not necessary to state in detail what was done thereafter by the defendant personally and through others including the plaintiff. It is enough to say that on March 27 and April 3, 1911, the Cobres company and the Explotodora company executed formal options in favor of the plaintiff upon the lands at Chuquicamata owned by them respectively.
The defendant was satisfied that the properties owned by these two companies could not be operated successfully unless they were operated together and operated on a large scale; and in addition that a large water power would have to be obtained and brought from a distance to treat the ore by the Bradley process. Further he was of opinion that to make it a well rounded enterprise other adjoining mining properties of smaller extent would have to be obtained. These matters were matters which (among others) were entrusted by the defendant to the plaintiff during three months that he was in Chile, where he went on the defendant’s business in 1911.
With a view to procuring the necessary mining organization and the money necessary to carry the adventure through, the defendant had been in negotiation with Daniel Guggenheim, a member of the firm of Guggenheim Brothers of New York, during the year 1911. By January, 1912, the defendant was satisfied that the rights which he had acquired were actually worth at that time “far in excess of $20,000,000,” and on January 9 of that year he made a written offer to Daniel Guggenheim in substance to this effect: Daniel Guggenheim within ten days was to organize a corporation to be known as the Chile Exploration Company with a capital stock of ten thousand shares of $100 each, all of which was to be issued to the defendant in payment of the defendant’s
This offer was accepted. The Chile Exploration Company was organized. On January 17, 1912, the defendant assigned and conveyed to it all his right and interest: (1) in the option granted to him by the Cobres company; (2) in the option granted to him by the Explotodora company; (3) in two other options (covering smaller acreages) specifically described, and “also in and to all other options, denouncements, petitions, grants, concessions for mines, mill sites, limestone and salt areas, water springs, water power locations at or within fifty miles of Chuquicamata obtained by or for me, directly or indirectly.” Thereupon, drills were sent to South America and a thorough investigation made of the extent and character of the ore on these Chuquicamata mining properties. The result of this investigation was that on September 10, 1912, Daniel Guggenheim and the defendant, being then in Paris and acting on reports which had been made to them, determined that it was wise to exercise the options. On or about October 3, 1912, the title to the Cobres company property was taken over on payment to it of £90,000 paid and accepted in lieu of £50,000 and a ten per cent share in the capital stock of the company specified in the option, and on October 26, 1912, title to the Explotodora
In the course of a -conversation between the plaintiff and the defendant which took place in April, 1912, the plaintiff stated that he was entitled to an interest in the Chuquicamata property and the defendant stated that he was not. The defendant further stated that the plaintiff did not bring Chuquicamata to the defendant’s attention and knew nothing about it until he, the defendant, brought it to the plaintiff’s attention. The result of this and conversations which followed it was that on May 6, 1912, a new agreement was made between the plaintiff and the defendant. So far as is material to the questions which are now before us for decision that agreement was as follows: It contained a recital of the execution of the agreement between the plaintiff and the defendant set forth in the letter of September 14,1910; a recital of the fact that the plaintiff “did in the month of September, 1910, by means of certain reports submitted to him by others bring to the notice of said Albert C. Burrage a certain copper deposit owned by the Compania de Cobres de Antofagasta at Chuquicamata in the Republic of Peru in South America, and also later to other copper deposits in the Chuquicamata District known as the Aurelia, the Tres Marias, the Riquesa, the Rosario del Llano, the San Luis, the Flor del Bosque and other mineral deposits,” and a recital to the effect that the plaintiff and the defendant both desired to cancel said understanding and substitute therefor the following agreement, namely: That on the 6th day of May, 1913, the defendant should assign to the plaintiff “five per cent. (5%) of all securities, whether in the form of cash, bonds, preferred or common shares, accruing in any way to bim as net
On February 4,1913, the plaintiff then in England mailed to the defendant a letter dated and written January 17,1913, complaining of the defendant’s treatment of him in regard to Chuquicamata, charging the defendant with misrepresentation and concealment of facts and demanding of the defendant (so far as this case is concerned) five per cent of the common shares of the Chile Exploration Company and its successor the Chile Copper Company. On May 6, 1913, the defendant made tender to the plaintiff’s agent of $100,000. This tender was refused. This bill was filed on May 28,1913. The case was sent to a master on June 27,1913. The master’s report was filed on June 13, 1918, and a supplemental report (on the case being recommitted to him) was filed by the master on September 23, 1918. The case was reserved for the consideration of this court on the master’s reports and the defendant’s exceptions thereto. No exceptions were taken by the plaintiff.
The plaintiff contended before the master that the agreement of May 6, 1912, was not binding upon him because it was procured by false representations made by the defendant to him.
The first ground on which the plaintiff now contends that the agreement of May 6,1912, is not binding on him is that the relation between the plaintiff and the defendant was a fiduciary one and that the defendant failed to make the disclosures due to him from the defendant as one standing in a fiduciary relation to him. The master found in great detail what the defendant knew and what he did not know on May 6,1912, and what the defendant failed to disclose to the plaintiff at that time. It is not necessary to state these. findings in detail. It is enough to say that on these findings there was a failure on the part of the defendant to make such disclosures to the plaintiff as ought to have been made by the defendant if the defendant had stood in a fiduciary relation to the plaintiff. The ground of the plaintiff’s contention in this connection is that the concluding paragraph of the letter of September 14, 1910, made the plaintiff and the defendant joint adventurers and brought into being a relation between the plaintiff and the defendant by which the defendant held a fiduciary relation to the plaintiff. This contention is wholly without merit. Nothing is better settled than the doctrine of Denny v. Cabot, 6 Met. 82. And by the doctrine of Denny v. Cabot, five per cent of common shares provided for in the concluding paragraph of the letter of September 14, 1910, was compensation to be made by the defendant as employer to the plaintiff as employee in addition to his salary of $500 a month and his travelling expenses when away from Boston. Without question the case at bar comes within the decision in Denny v. Cabot, and that decision has been continuously affirmed by subsequent decisions of this court and never has been questioned. Bradley v. White, 10 Met. 303. Holmes v. Old Colony Railroad, 5 Gray, 58. Fitch v. Harrington, 13 Gray, 468, 474. Emmons v. Westfield Bank, 97 Mass. 230, 242. Ryder v. Wilcox, 103 Mass. 24. Haskins v. Warren, 115 Mass. 514. Commonwealth v. Bennett, 118 Mass. 443, 453. Zeigler v. Day, 123 Mass. 152. Partridge v. Kingman, 130 Mass. 476. Estabrook v. Woods, 192 Mass. 499.
The main reliance of the plaintiff in support of the contention that the defendant and the plaintiff were joint adventurers is to
The next way in which the plaintiff now seeks to get rid of his agreement of May 6, 1912, is that "the conditions entitling the plaintiff to a percentage of common shares of the Chile Exploration Company had been fully performed on May 6, 1912.” If that had been the fact, the result would have been that on May 6,1912, the defendant would have held in trust for the plaintiff two hundred and fifty of his five thousand shares of the Exploration company, the bargain of May 6,1912, would have been a bargain between a trustee and cestui que trust and on ,the facts found by the master as to the disclosure or rather non-disclosure on the defendant’s part the bargain could be avoided by the plaintiff. But we are of opinion that “the conditions entitling the plaintiff to a percentage of common shares of the Chile
On May 6,1912, the Chile Exploration Company had not taken over “the properties” of the Cobres company and the Explotodora company but options on those “properties.” The defendant’s promise of September 14, 1910, was to give the plaintiff five per cent of the common shares if any received by him “as profit” on a company taking over the “properties” brought to the defendant (inter alia) by others through the plaintiff. That meant and means that, if the defendant succeeded in making a profit in common shares by reason of “properties” brought to him by others through the plaintiff being taken over by a company, the plaintiff should have five per cent of such common shares. On May 6, 1912, “properties” had been brought to the defendant’s attention by others through the plaintiff but they had not been taken over by a company at that time. The transaction had not been carried to a conclusion and aprofit in common shares realized. The transaction at that time had gone no further than the preliminary stage of options having been obtained and assigned in order that a proper investigation might be made of the “properties” to determine whether the company would or would not take over the “properties.” Guggenheim, in consideration of the defendant giving him a half interest in the property, had agreed to advance the money to pay the defendant what he was out of pocket in obtaining the options and the money necessary to make the investigation which had to be made to determine upon the wisdom of taking over the “properties.” The machinery adopted by the defendant and Guggenheim to carry this agreement into effect was to organize a corporation to carry on the investigation, and that same corporation was to take over the “properties” in case the investigation showed that it was wise to do so. The plaintiff’s right to five per cent of common shares under the agreement of September 14, 1910, was not to come into existence until the options had been exercised and the “properties” taken over. If the agreement of May 6, 1912, had been made after October 26, 1912, when the “properties” of both companies had been con
Finally the plaintiff seeks to avoid the effect of the agreement of May 6, 1912, on the ground that the clause in that agreement by which the defendant agreed that if he “ shall not have given, assigned, transferred or conveyed his said options on said properties at said Chuquicamata or his interest therein” on May 6, 1913, then in that event the defendant would assign to the plaintiff an undivided one twentieth interest in all his said options on or interests in said properties or instead thereof at the sole option of the defendant an undivided one twentieth part of “the common shares of a corporation holding such options and interest, and the preferred stock of each corporation [which] shall represent at the par value thereof the actual money expended by said Albert C. Burrage for such options and interests, or relating thereto, or the optioning, examining, exploring and developing thereof.” The contention of the plaintiff in this connection is that the very insertion of that clause in the agreement was a misrepresentation because on January 17, 1912, the defendant had assigned all his options and interests in the Chuquicamata companies to the Chile Exploration Company. If a promise that if something shall not have taken place which has taken place is a representation that that fact has not taken place, it is hard to see why this is not a misrepresentation of fact. But there is no finding by the master that the plaintiff relied upon this misrepresentation (if it was a misrepresentation) in signing the agreement of May 6, 1912, and on the facts found by the master no such finding should be made by us. It is necessary for the plaintiff to prove that he did rely upon it to make out a right to avoid an agreement by reason of a
The result is that the plaintiff is bound by the agreement of May 6,1912. Under that agreement the defendant had the option of paying the plaintiff $100,000 or of transferring to him five per cent of the securities coming to him as profit from the exercise of the options. This payment or transfer was to be made on May 6, 1913. Before that date the defendant elected to pay the plaintiff $100,000. The plaintiff is entitled to a decree directing the defendant to pay him that sum forthwith. Under all the circumstances of the case no costs should be allowed to either party.
Decree accordingly.