204 F. 166 | 8th Cir. | 1913
The Silver King Mining Company, a corporation of the state of Utah, and the Silver King Consolidated Mining Company, a corporation of the state of Wyoming, were equal owners and tenants in common of the Vesuvius mining claim, which was situated in the state.of Utah, from 1901 until June 19, 1907. During that time the King Company secretly extracted from that claim and sold a large amount of valuable ore without accounting to its cotenant for any of it, and on June 19, 1907, it sold and conveyed all its property to the Silver Coalition Mines Company, a corporation of the state of Nevada and the defendant below, and in part payment for that conveyance the Coalition Company agreed to pay all the outstanding debts and obligations of its grantor, the King Company. The Coalition Company then secretly extracted ore from the Vesuvius claim and sold it, without accounting to its cotenant for this ore or its proceeds. On February 24, 1908; the Consolidated Company of Wyoming conveyed all its title and interest in the Vesuvius mining claim, and in its cause of action against the Coalition Company on account of the extraction of the ores by the King Company and by it, to the Silver King Consolidated Mining Company of Utah, a corporation of that state and the complainant in this suit. On May 26, 1908, the latter company exhibited its bill in equity in the court below against the Coalition Mines Company of Nevada, and prayed, among other) things, for an accounting and recovery of one-half of the value of the
(A) The defendant insisted by demurrer and motion in the court below, and still insists, that the King Company was an indispensable-party to the cause of action to recover the value of the ore which its grantor, prior to the latter’s conveyance on June 19, 1907, extracted and sold; but the Circuit Court overruled that contention, and its ruling is specified as error.
Why is that corporation an indispensable party to this suit? Counsel for the defendant answer: Because the amount of the claim for the extraction of the ore taken by the grantor, the King Company, was unliquidated. But how can its liquidation in a suit between the creditor and the grantee alone radically and injuriously affect the interest of the grantor? Because, say counsel, in separate actions against a grantor and grantee, founded on the obligation of the former, different juries or courts might find different amounts recoverable, and because the grantor could not maintain an action against the grantee alone to enforce the latter’s promise. Let the propositions that different courts and juries might find different amounts recoverable, and that the grantor could not maintain an action against the grantee alone to enforce the latter’s promise, be conceded. Nevertheless the grantor cannot be injuriousljr affected by the creditor’s suit and recovery against-the grantee. The grantor was liable to a suit by the creditor on its obligation before the creditor’s suit against the grantee was instituted, and if it is still subject to such a suit its liability is no greater since the suit and the decree against the grantee than it was before that suit was commenced. Counsel argue that if the creditor first recover a judgment of $100,000 against the grantor on its obligation, and subsequently recover a judgment-of $200,000 against the grantee in an action on the grantee’s promise to pay the grantor’s obligation, the grantee would be subject to two judgments on the sáme promise — one for $100,000 in favor of the grantor on a suit which it might bring against the grantee, and one in favor of the creditor for $200,000. But the grantee could suffer no legal injury from the judgment for $100,000, because its payment of the judgment of $200,000 against it in favor of the creditor would discharge it from all liability on the judgment for $100,000 on the same obligation, on the ground that a party is required to make but one satisfaction of the same claim.
Counsel say that if the plaintiff, the creditor, should subsequently bring an action against the King Company, the grantor, and recover one-half the amount awarded by the final decree herein, the grantor could not recover of the grantee more than one-half the amount which the grantee is adjudged to pay to the creditor, and yet the creditor could recover of the grantee twice as much as it could from the grantor. But the creditor would not recover, nor would the grantee be required to pay, more than the just amount of its liability, and no one would be injuriously affected; for, against the mere supposition of counsel that a subsequent judgment for one-half the amount fixed by the decree in this, case may be recovered by the creditor against the grantor, the amount adjudged by the decree of the court below in this ■suit, after full hearing, must be presumed to be right and just. Counsel contend that if the creditor should subsequently recover a judgment against the grantor on its obligation for double the amount fixed by
On the other hand, the facts disclosed by the record satisfy that the grantor, the King Company, has no such interest in the subject-matter of the controversy in this suit that a final decree cannot be rendered between the creditor, the plaintiff, and the grantee, the defendant, without radically and injuriously affecting the interest of the grantor, or without leaving the controversy in such a situation that its final determination may be inconsistent with equity and good conscience. They convince that a decree between the creditor and the grantee, just and equitable to the latter, can be made and ought to be made in this suit, which will not in any way injuriously affect the interest of the grantor, the King Company, and that the latter is not an indispensable party to this suit. There was no error in the ruling of the court below to this effect. Keller v. Ashford, 133 U. S. 610, 626, 10 Sup. Ct. 494, 33 L. Ed. 667; Barker v. Pullman’s Palace Car Co. (C. C.) 124 Fed. 555, 559, 570; Dancel v. Goodyear Shoe Machinery Co. (C. C.) 137 Fed. 157, 158, 159, 160, 161; s. c., 144 Fed. 679, 680, 75 C. C. A. 481, 482.
(B) It is specified as error that the court below held that the defendant grantee was liable to account to the creditor, the plaintiff, for the one-half of the value of the ore extracted by the grantor from the common property of the grantor and the Consolidated Company of Wyoming prior to June 19, 1907. The promise of the defendant, evidenced by the deed of all the property of the grantor which the grantee accepted, was to pay therefor, among other things, $3,750,000, and “all the outstanding debts and obligations of the grantor.” The grantor owed its cotenant and creditor one-half of the value of the ore it had extracted from their common property. It was under a legal obligation to account for and pay to its cotenant one-half of that value, and without the aid of the ingenious arguments of counsel it would be difficult to perceive any reason why this obligation did not fall within the terms of the grantee’s contract.
Counsel contend, however, that it does not do so because the word “debt” is without definite meaning in the law, and in this contract it.
The grantee was a new corporation, formed apparently to succeed to the rights of the grantor, to take all its property, and to acquire other interests. Most, if not all, of the stockholders of the grantor received stock of the grantee in payment of their respective shares of the $3,750,000 paid by the grantee for the grantor’s prop*
Counsel invoke the general rule that the purpose of all interpretation of the words and terms of a contract is to ascertain the sense or meaning in which the parties to it used them when their minds met upon the stipulations of the agreement, and they then argue that inasmuch as the grantee was aware of three or four of her obligations contracted by the grantor, and was ignorant of this one, the parties to the contract intended to exclude it from the meaning of the words “all the debts and obligations of the grantor.” But the words and terms of this agreement are clear, and their meaning is not doubtful. It is ambiguous words and terms of doubtful meaning in a contract only that are susceptible to interpretation by the situation of the parties and the circumstances surrounding them when they made them. The secret intentions of parties to a contract, the words and terms of which are clear, free from ambiguity, and inexpressive of the intention, may not be imported into it by construction. Cold Blast Transportation Co. v. Kansas City Bolt & Nut Co., 114 Fed. 77, 80, 52 C. C. A. 25, 28 (57 L. R. A. 696). And:
‘•Where, without fraud, accident, or mutual mistake (and none of these lias been pleaded, or proved in this case), the written contract purports to be a memorial of the transaction, it supersedes all prior representations, proposals, and negotiations, and is conclusive evidence that it embodies such of these as were ultimately intended to become parts of the agreement, and that all others were rejected as not expressing the final intention of the parties. * * * The law controlling the operation of a contract is deemed to be, and usually is actually, within the contemplation and intention of the parties, as much as file words in which it is expressed, and becomes' equally an*174 essential part of it. * * * For this reason the rule that a written contract cannot be varied by parol extends to the legal import or intendment of the contract, as well as to the terms or words in which it is written.” Union Selling Co. v. Jones, 128 Fed. 672, 676, 63 C. C. A. 224, 228; Elliott on Evidence, pp. 646, 647.
By the plain terms of the contract the grantee agreed to pay all the debts and obligations of the grantor. It was not a contract to pay all the debts and obligations of the grantor listed or named in the agreement, for none was listed or named, nor all except those unknown to the grantee, nor all the debts and obligations of 'the grantor except the obligation to pay for one-half of the ore which the grantor extracted from the Vesuvius claim; and because the grantee, at the time it made the contract with the grantor, had the opportunity to require the insertion of any of these limitations and exceptions it desired in its contract, and it did not do so, but permitted and induced the grantor to join in and perform it in reliance upon the grantee’s promise' to pay all its debts and obligations without exception, it is now estopped from importing into its promise by construction any of these limitations or exceptions. Insurance Company v. Mowry, 96 U. S. 544, 547, 24 L. Ed. 674. This is a natural, reasonable, and righteous conclusion. This agreement by the grantee to pay all the debts and obligations of the grantor was a natural and reasonable requirement of the grantor, which was parting with all its property, with all its means to pay its debts and obligations; and the evidence of the situation, knowledge, intention, and circumstances of the parties which- counsel for the grantee have produced, if' admissible and carefully considered, as it has been, would fail to convince that these parties ever intended that the conveyance should be made without such a contract. The obligation of the grantor to account for and pay to the predecessor of the complainant the value of- one-half of the ore extracted by the grantor from the Vesuvius claim fell far within the terms and meaning of the agreement of the grantee to pay all the debts and obligations of the grantor.
The next contention is that the creditor, the complainant, cannot maintain this suit on the contract of' the grantee, because the grantor itself could not have maintained it. But for the reasons already stated the grantor could have maintained a suit upon the contract of the grantee, in the absence of fraud, mutual mistake, accident, or rescission, and none of these has been pleaded or proved in this case. Moreover, while the general rule is that the suit of a creditor against the grantee, founded on’the latter’s promise ,to the grantor, is subject to the same defenses as the suit of the grantor would have been, the exceptional facts of this case place the creditor in a much stronger position than the grantor itself would have had. The assignor of the complainant was a creditor of the grantor when the conveyance of all its" property to the grantee was made, and the complainant.has succeeded to all the rights of its assignor. A “transfer of property by a debtor with the reservation of an interest therein to himself” is always fraudulent and voidable by his creditors as
In the case at bar, most, if not all, of the stockholders of the grantor took stock of the grantee in exchange for their stock in the grantor, and in consideration of this exchange caused all the property of their corporation to be conveyed to the grantee. If, therefore, as counsel for the grantee argue, the grantee did not make a valid agreement with the grantor to pay its obligation to the assignor of the complainant, the conveyance of the grantor’s property to the grantee was fraudulent as to the assignor and is fraudulent as to the complainant, and on that ground the grantee is liable to pay the claim of the complainant, for the property of the grantor which the grantee received was worth much more than the amount of this claim. The contention that the grantor may escape liability here, either because the grantor could not maintain an action upon its promise, or because the obligation of the grantor to account and pay for the ore was not within the terms of the promise, cannot be sustained.
Finally, it is insisted that the creditor has no right of action on the grantee’s promise to the grantor to pay the creditor’s claim because it does not appear that this contract was made for the creditor’s benefit, and that it was the party intended to be benefited thereby. The following language of Judge Folger is quoted from Simson v. Brown, 68 N. Y. 355:
“It Is not every promise made by one to another, from the performance of which a benefit may inure to a third, which gives a right of action to such third person; lie being neither privy to the contract, nor to the consideration. The contract must be made for his benefit as its object, and he must be the party intended to be benefited.”
Many authorities are cited that have repeated or approved this statement of the law. Austin v. Seligman (C. C.) 18 Fed. 519, 522; Sayward v. Dexter, Horton & Co., 72 Fed. 758, 764, 765, 19 C. C. A. 176; Constable v. National Steamship Co., 154 U. S. 51, 74, 14 Sup. Ct. 1062, 38 L. Ed. 903; American Exchange National Bank v. Northern Pacific Ry. Co. (C. C.) 76 Fed. 130; Central Trust Co. v. Berwind-White Coal Co. (C. C.) 95 Fed. 391; Electric Appliance Co. v. United States Fidelity & Guaranty Co., 110 Wis. 434, 85 N. W. 648, 53 L. R. A. 609, 613; Parker v. Jeffery, 26 Or. 186, 37 Pac. 712; Burton v. Larkin, 36 Kan. 246, 250, 13 Pac. 398, 59
That,’ however, is a moot question in this case. It is unnecessary tó consider or discuss it, and it is here dismissed, because this is a suit in'equity, and not an action at law. In such a suit it is sufficient that the grantee has agreed with the grantor to be primarily liable for the latter’s obligation to the creditor, so that, as between the patties to the agreement, the first is the principal and the second the surety. The creditor of the surety is then entitled in equity to be substituted in his place, and to maintain his suit against the grantee to the same extent as the grantor could have maintained it, and it is immaterial whether the contract was made and intended for the benefit of the creditor or of the grantor, for the creditor has all the rights of both to enforce the obligation of the grantee. Keller v. Ashford, 133 U. S. 610, 623, 10 Sup. Ct. 494, 33 L. Ed. 667, arid the. authorities there cited; Barker v. Pullman's Palace Car Co. (C. C.) 124 Fed. 555, 568, 569; Willard v. Wood, 164 U. S. 502, 519, 520, 17 Sup. Ct. 176, 41 L. Ed. 531; Johns v. Wilson, 180 U. S. 440, 447, 448, 21 Sup. Ct. 445, 45 L. Ed. 613. There was no error in the decision of the court below that the grantee, the defendant, was liable to account and pay to the creditor, the complainant, for the half of the value of the ore extracted by the grantor from the Vesuvius claim*|jrior to June 19, 1907, and that the complainant could maintain this suit. in equity to ■ enforce that accounting and payment on the promise of the grantee to the grantor to pay all the latter’s debts and obligations.
(C) THe court below found that the value-of one-half of the ore extracted from the Vesuvius claim by the defendant and its grantor was’$516,264.47, and that the complainant was entitled to recover from the defendant this sum and interest thereon ■ at 8 per cent. per. annutn from January 1, 1906, which, amounted - in the aggregate to $735,045.87- on April 17, 1911, when the decree for that amount was rendered. The complainant and defendant complain of this amount,' the' former that it is too small, the latter that it is too large, and by, numerous specifications'of - err'or’challenge the controlling facts which' the court found and’ used to ascertain' it.' As’ the defendant
The court below was compelled to ascertain the amount and value of this ore from more than 4.C00 printed pages of evidence. It found Erom this evidence these facts: The extent of the excavation in the Vesuvius claim was 573.937 cubic feet. After the excavation was made there remained in the cavity 435,350 cubic feet of caved and waste material, and 31,551 cubic feet of like material had been removed, so that the entire amount of this material was 466,901 cubic feet. This material, when it was in place in the cavity, occupied only one-half of the space which it filled after it was extracted, or only 233,450 cubic feet. Deducting this amount from the 573,937 cubic feet in the excavation, there remained 340,487 cubic feet of the cavity which must have been originally occupied by the ore which the defendant removed. This ore was of two classes: There were 18,916 tons of ore of the first class, from which the defendant realized $60.07 per ton, in all $1,136,284.12. The cost of mining, tramming, and smelting this ore was $6.33 per ton, or $119,738.28, which left the net proceeds from it $1,016,545.84. There were 14,187 tons of second-class ore. whose net value was $3.53 per ton, in all $50,080.11. The sum of $1,016,545.84 and $50,08041 is $1,066,625.95. The cost of the work done by the defendant within the Vesuvius claim in developing the ore was $34,097. Deducting this amount from $1,-066,625.95, there remains $1,032,528.95, the total net value of the ore taken from the Vesuvius claim by the defendant. Oue-haif of this amount, or $516,264.47, and the interest thereon, is the amount which the court found from these facts the defendant owed the complainant for its share of this ore.
An exhaustive consideration of the record and the briefs relating to the defendant’s specifications of error in regard to these findings has failed to convince that through any mistake of fact or error of-law the court below has made any finding or reached any conclusion too favorable to the complainant. Turning to the specifications of the complainant, there is convincing evidence that there was a space in the openings out of and directly connected with the excavated stope in the Vesuvius claim which contained 22,168 cubic feet that was not included in the 573,937 cubic feet of excavation on which the finding of the court below is based, and one of complainant’s specifications is the exclusion of these 22,168 cubic feet. But because there is persuasive evidence that there was only a small percentage of the material taken from these openings which contained any ore, that these openings were made in the course of the work of developing the ore body and determining its extent, and not in the work of stoping for ore, and that the larger part of the material taken from them was never placed in the stoped cavity, but was taken to the surface and thrown away before the cavity was made, the record fails to prove that the court below made any mistake in this exclusion.
The complainant specifies as error the addition by the court of 31,551 cubic feet of waste material removed from the cavity in 1909 to the 435,350 cubic feet of filled material which the court found in the cavity, on the ground that this added material was removed after the measurement of the filled material on which the court relied had • been made, so that this addition gave the defendant credit for it twice. This specification is well founded. The evidence convinces that the-court fell into the mistake here charged, and on account of it the amount which the court found the defendant owed the complainant should be increased $23,908.07.
These and other authorities have been examined, but they fail to disclose any settled rule of law to the effect that a cotenant, who lawfully extracts the ore from the common property and sells it, is deprived, in his accounting with his cotenaut, by his preconceived intent to appropiiate all the proceeds thereof to himself, of any allowance for the necessary and reasonable expense of extracting, preparing, and marketing the ore. In Sweeney v. Hanley, 126 Fed. 97, 103, 61 C. C. A. 153, 159. and Foster v. Weaver, 118 Pa. 42, 12 Atl. 313, 4 Am St. Rep. 573, cotenants who had first fraudulently obtained from their fellows conveyances of their shares of the common property, and thereafter had extracted the mineral from it, were denied an allowance for their labor and expense. The courts held that the complainants were entitled to the enhanced value of their shares of the' mineral extracted and sold by the defendants while the complainants were fraudulently dispossessed by them, without any deduction or allowance for the labor and expense of mining or marketing. In those cases the intentional and fraudulent dispossession of the defendants was first effected, and it characterized and rendered unlawful the subsequent acts of the defendants. In the case in hand, however, the intent of the defendant to appropriate all the proceeds of the ore to 'its own use did not render its entry upon the common property, .or its extraction and preparation of the ore for market, unlawful. In this extraction, preparation, and sale it was not a trespasser. It was not acting without right. It was the owner of one half of every particle of the ore in its own right, and of the other half when extracted as trustee for its cotenant. It had the right to extract and sell the ore, in order that it might obtain its share of its value; and if it had accounted for and paid over to its cotenant in due time its part of the proceeds of the sales, no one would be so bold as to claim that it was not entitled to a just allowance for the reasonable expense of mining it, preparing it for the market, and selling it.
It is conceded that there is convincing evidence in this record that the defendant had the intent, before it extracted any of this ore, to appropriate it all to itself; that it entered secretly, and carefully con
The general and just rule is that a cotenant, in exclusive possession of mining property, who extracts and sells the ore, may charge against its proceeds the reasonable and necessary expense of its extraction and marketing. Bindley on Mines, § 790, p. 990; Appeal of Fulmer, 128 Pa. 24, 18 Atl. 493, 15 Am. St. Rep. 662. The chancellor below was of the opinion that the application of this rule to the accounting in this case would yield a just and equitable result, and our review of the evidence and the arguments has led to the same conclusion. There was neither error nor mistake in allowing to the defendant the reasonable expense of mining, tramming, milling, and sampling the ore.
The defendant took this ore from the mine between 1902 and May, •1908. It extracted the larger part of it between 1904 and 1908. The
There are many specifications of error of each of the parlies to this suit which have not been discussed in this opinion, but there is none which has not received examination and reflection. This is a suit in equity, and the consideration and decision of the questions this appeal presents is a trial of this case de novo. Upon a review of the entire case, the conclusion of this court is that the decree below, modified by the correction of the slight mistake which has been noted, is well sustained hy the evidence, reasonable, and just.
Uet the case, therefore, be remanded to the court below, with directions to modify the decree by increasing the amount of the adjudged recovery by $34,034.46, which is the sum of $23,908.07 and interest thereon from January 1, 1906, to April 17, 1911, and let the decree, so modified, be affirmed.