Vaughn v. Comet Consolidated Mining Co.

21 Colo. 54 | Colo. | 1895

Mr. Justice Goddard

delivered the opinion of the court.

The finding of the court below that the allegations of fraud were not sustained is amply supported by the testimony. It appears that the sale and transfer of its property by The Upper Platte Mining and Smelting Company to The Comet Consolidated Mining Company was made in good faith and principally for the purpose of providing for the payment of its indebtedness due the appellant and its other creditors. In and by the agreement entered into with Matthews, Webb and Dillingham, provision was made for the sale of 36,000 shares of The Comet Consolidated Mining Company’s stock for a sum ample not only to meet this indebtedness, but also to provide a capital to carry on the development of the property. The consummation of this purpose was prevented by the failure on the part of Webb, Matthews and Dillingham to carry out their part of the agreement.

Ib further appears that The Comet Consolidated Mining Company, in good faith, attempted to carry out the agreement on its part, and, after the default of Matthews, Webb and Dillingham, continued working the property and incurred an indebtedness aggregating upwards of $7,000, which it was unable to pay, and for which the property was after-wards subjected to sale under the Hudson and Frost judgments, and through which sales The Roswell Mining Company claimed its title to the property.

Appellant was notified in December, 1882, that such a transfer or disposition of its property was contemplated, and that, if consummated, the personal stock received by Sharp in the new company would be held as security for the payment of this indebtedness; and on March 27, 1883, he was notified that the transfer had been made, and that Sharp, in pursuance of his previous agreement, would assign as collateral security to him and the other parties holding the notes of The Upper Platte Mining and Smelting Company $20,000 worth of his stock in the new company. He made no objection to the transaction at that time, and afterwards, on May 19, 1884, attempted, in his suit against The Upper Platte Mining and Smelting Company, to subject the stock of The Comet Consolidated Mining Company, given as a consideration for the purchase of the property, to the payment of his claim; and aside from his levy of attachment also upon the property, gave no intimation of his intention to question the validity of the transfer until he commenced the present action, June 21, 1886. Under these circumstances, can the appellant invoke equitable aid in the enforcement of his legal remedy against the claims of those who, in good faith, and relying upon the validity of the title of The Comet Consolidated Mining Company, loaned money to, and performed labor for, that company? We think not. While it may be conceded that the conveyance of the title to the property by The Upper Platte Mining and Smelting Company to The Comet .Consolidated Mining Company, upon the terms and under the conditions it was made, although in the utmost good faith, would be inoperative as to a nonconsenting creditor of the former company, and the property transferred would still be subject to the payment of such creditor’s claim, and that The Comet Consolidated Mining Company itself might be held liable for the indebtedness of The Upper Platte Mining and Smelting Company to the extent of the assets transferred to it, yet, on the other hand, a creditor, by consenting to the transfer, or by such acquiescence therein as induced others to deal with The Comet Consolidated Mining Company under the belief that he had ratified the transaction and assented to the transfer, will be estopped from afterwards asserting his claim, to their prejudice. We think the appellant, if he did not expressly consent to the transfer of the property in question to The Comet Consolidated Mining Company, by his conduct in standing by and permitting said company to work the property and incumber it with debts for labor and materials for which it has been sold, is estopped from assailing the validity of the original transfer or the title conveyed by the sheriff’s deeds in pursuance of such sales.

But for a further reason we are clearly of the opinion that appellant cannot maintain this action. The Le Bert attachment was levied upon the property thirteen days prior to his levy. The judgment Le Bert obtained against The Upper Platte Mining and Smelting Company was assigned to Adler (for the benefit of Brown), and in pursuance of a sale under execution issued thereon, the property was sold and conveyed by sheriff’s deed to Roswell P. Brown, who afterwards conveyed the title so obtained to Welch, the principal stockholder in The Plymouth Rock Mining and Smelting Company.

We cannot agree with counsel for appellant that the purchase of the Le Bert judgment by Brown operated as a satisfaction and extinguishment of that judgment. The purchase of a prior charge or incumbrance upon property, by one who claims the ownership in fee, does not in equity merge such charge or incumbrance. The rule in such cases is well stated by Pomeroy, in his work on Equity Jurisprudence, section 791:

“ The equitable doctrine concerning the merger where the owner of the fee becomes entitled to the charge or incumbrance, may be stated as follows, substantially in the language of most eminent judges. Sir William Grant says: ‘The question is upon the intention, actual or presumed, of the person in whom the interests are united.’ Sir George Jessel says: ‘ In a court of equity it has always been held that the mere fact of a charge having been paid off does not decide the question whether it is extinguished. * * * If there is no reason for keeping it alive, then equity will, in the absence of any declaration of his intention, destroy it; but, if there is any reason for Iceeping it alive, such as the existence of another incumbrance, equity will not destroy it.’’ In short, where the legal ownership of the land and the absolute ownership of the incumbrance become vested in the same person, the intention governs the merger in equity. If this intention has been expressed, it controls; in the absence of such an expression, the intention will be presumed from what appear to be the best interests of the party as shown by all the circumstances ; if his interests require the incumbrance to be kept alive, his intention to do so will be inferred.”

In section 798, in stating the rule particularly applicable to the facts in this case, he says :

“ When an owner of the premises who is not personally and primarily liable to pay the debt secured, pays off a mortgage or other charge upon it, he may keep the lien alive as a security for himself against other incumbrances or titles, and thus prevent a merger. Whether he does so, is a question of intention governed by the rules laid down in the previous paragraphs.’

The intention of the parties purchasing the Le Bert judgment to prevent a merger is clearly evidenced by the terms of the assignment by which it was transferred. It therefore follows that whatever title remained in The Upper Platte Mining and Smelting Company to the property in question was, through these proceedings, subjected to sale under an attachment prior to that of appellant, and became vested, by the sheriff’s deed, in Brown, and through him in Welch or The Plymouth Rock Mining and Smelting Company, which had theretofore been vested with the title conveyed by the sheriff’s deeds in pursuance of the sales under the Hudson and Frost judgments.

We think, therefore, upon either of the foregoing propositions, the court below properly dismissed the action at plain- • tiff’s costs. The judgment is therefore affirmed.

Affirmed.