| Ark. | Jul 14, 1919
(after stating the facts). It is first insisted by counsel for the defendants that the court erred in certain respects in its ruling on the pleadings. But little need be said in regard to this phase of the case. Chancery cases are tried de novo on appeal. The amended complaint is too long to set out at length in this opinion. We have carefully considered its provisions, however, and have reached the conclusion that the allegations are broad enough to warrant the relief granted by the chancellor provided they are established by a preponderance of the evidence.
Mabel A. Sanders lived in Los Angeles, California, and was on a visit to her brother in St. Louis, Missouri, ■when her connection with the transaction commenced. She had never heard of the Nakomis mine and did not know any of the parties connected therewith except her brother. She first said that her brother told her about a company in which he was the principal stockholder, leasing the land for one year and taking an option for the sale of it for the same time for the sum of $20,000. She stated that he told her that it would be a good way for her to make money quickly because his company would likely exercise its option during the year and that in that event she would receive $20,000 for the property less $2,000 commission, which would go to Berry. It is perfectly evident from her acts and conduct that she did not expect the lessee to exercise its option during the year. The lessee surrendered possession of the property to her soon after she purchased it and the same manager continued to operate the mine. The taxes were due just after she purchased the mine and the same manager attended to the payment of them for her. She made no effort to get the lessee to exercise its option to purchase at $20,000 or even for a reduced price. She acquiesced in it giving up its lease when by its terms it ran for a year. The lease was a profitable one to her and she could have compelled the lessee to have carried out the lease and operated it for the balance of its term. She knew her brother was the principal stockholder in the lessee corporation and was managing it and yet permitted it to surrender possession without an effort to induce it to exercise its option to purchase the property. If she had been induced by her brother to purchase the land upon the faith that his corporation would exercise its option to purchase during the term of its lease, it is perfectly natural that she would have made some effort to induce him to carry out his promise.
It is equally unreasonable to say that she bought it for an investment. She said that both her brother and Ley told her that it was a fine investment and that she thought there would be a good profit in the investment. At the same time she admits that she had been informed that the engineer on the property was wasting a large amount of money on it. She said that she acted independently in purchasing the property and made the deal directly with Mr. Ley at her attorney’s office. Her attorney was a stranger to her and was an attorney who some times transacted private business for her brother. She did not visit the mine either before or after its possession was surrendered to her by the lessee. She knew that a good deal of money had been wasted in operating it, and yet continued its operation under the same management. She returned to her home in California without ever going to see the mine. She says that she paid Ley the purchase price in cash. He was a stranger to her and this was a suspicious circumstance in itself. Ley immediately went to a distant part of the country and has not since returned to Arkansas. Berry was informed that there was a scheme on foot to cheat him out of his commission and immediately wrote to that effect to all the interested parties. Such a letter was written to the attorney of Mabel Sanders on the 29th day of December, 1915, and was duly received by him. He did not answer the letter until January 12, 1916, and asked for a delay until he could investigate the matter thoroughly. This was inconsistent with the statement of Mabel A. Sanders that she made the purchase direct from Mr. Ley without the help of her brother. If such had been the case it would have been easy for her attorney to have so replied at once. There would have been nothing to investigate. Mabel A. Sanders admits that her attorney sent her brother down to Yellville to examine the lease and option contract and papers deposited therewith for the purpose of seeing that the copies of them were true ones. As we have just seen, the circumstances all point to the fact that the lessee corporation did not intend to exercise this option and on that account it could make no difference to her about what the terms of that instrument might be. If the transaction with Ley was in good faith, she would acquire the title to the property. It is evident that an examination of these papers was made for the purpose of knowing exactly what the obligation of the parties to Berry might be. If Mabel A. Sanders was to receive in good faith the title of Ley to the property, it could make no difference to her what the papers placed in escrow in the Bank of Yellville contained, for even if the lessee corporation exercised its option to purchase she would only have to pay $2,000 commission to Berry and she knew that everything in excess of the price she was to pay for the property and the amount of Berry’s commission would be profit to her. It would make a difference to her brother, however, to know the exact terms of the option so that he would know definitely whether he could purchase the property in his own name and escape the payment of commissions to Berry. A. W. Sanders could not have purchased the property in his own name without violating the conditions upon which the lessee corporation was organized. Ley, Sanders arid Reiter all went down to examine the papers together. While there, Ley told the president of the bank, who was the brother-in-law of Berry, that the property was about to be sold and that Berry would get his commission right away. At the time Reiter came down to record the deed from Ley to Mabel A. Sanders, he told Berry that the deal was made with Mabel Sanders for the purpose of protecting her brother, A. W. Sanders, in the money that he had expended on the mine under' the management of Hamilton and G-oldman. He said that A. W. Sanders had been out something like $5,000 in this way. The deed to Mabel Sanders was executed on December 8, 1915, and this case was tried in the spring of 1919. During all this time, so far as the record discloses, Mabel Sanders did not visit the mine, or try to sell it, although she says she bought it for resale for a quick return on her money. She made no complaint to her brother that the option of his company to purchase was not exercised. Reiter was the trusted agent of her brother. Neither of them testified in the case. It is true the burden of proof was upon Berry to show concerted action and collusion on the part of the defendants; but the court is of the opinion that this has been done, and that the record, when read and considered from its four corners and viewed in the light of the attendant circumstances, shows that Mabel Sanders was a mere figurehead, and that the real transaction was with A. W. Sanders, the principal stockholder of the lessee corporation and the manager and director of its affairs and policies.
We think the charge of collusion between these parties to cheat Berry out of his commission is established by the facts and circumstances introduced in evidence, when considered in connection with their acts and conduct. The transaction was not regarded ended until Reiter had filed the deed for record. He and A. W. Sanders were active participants during the whole course of the transaction. Reiter was manager of the mine and the confidential agent of A. W. Sanders while his company was operating the mine. He went with A. W. Sanders to examine the escrow papers in the Bank of Yellville. He advised with the parties about the condition of the mine, He carried the deed from Ley to Mabel Sanders and filed it for record. He at once commenced to pay the taxes for her. The associates of A. W. Sanders became angry and charged him with bad faith when they found out about the conveyance to Mabel Sanders. This indicates a belief on their part that A. W. Sanders, the principal stockholder of the lessee corporation, was on a deal for the property under cover, and in violation of their rights, and did not intend that the lessee corporation should exercise its option to purchase the mine. Reiter continued right along in charge of the mine. Hence the court thinks that the declarations were made in the prosecution of the common object and before the termination of the unlawful enterprise. Therefore, so far as concerns the transaction for which the combination was formed, the parties were identified in interest and motive and what one said in the conduct of the matter may be used as evidence against the others.
It follows that the decree will be affirmed.