388
,lin
. , .' ; "
admiJldfltl'lt:fld .upOn, apd is gOOd. and sufficient rea,aontQ! the contrary, proportionate payments should lie made to all: creditoraentitled, to 'the common fundj and this is. especially ,true if ,th'erlHs reason to fear·that the fUl;l.d abletnay, not, be., sufficient 'to all dema,nds in full. We are not by:'tbe recQrdof the facts in this, caSe to determine 'whether the decree should .modified in this particular. It may :be' that the amount of funds under the control of the receivers and the, equities of the Ii1ppellees, as known to the court having immediateicharge of the"trust property, were such as to justify the order made in this particular. , Aa the time for Payment fixed in the de.cree has :already ,passed, a Dew order in this particular becomes necessary, which should be made byr,the C.Ourt below, and iQthe making of which due regard· should be, had: to the equities and rights of other creditora as the same may.bemadetQ:appear bl'lfpre the court. The decJ;ee, appealed from is therefore affirrued at cost of appellants, in so Hawards judgment for the sum therein named in favor of W: H. Cooper, & Son; and the: caUB.e is remanded to the court below, withinstruc.tions to enter.an order directing the mode and time. of pnyment,'8uchns the coutt" Dlay be advised is l'equired by the of the case. '_ " :' . ' .'
BIL'IJNGB
et' at.
'11. 'kPEN MINING
&:
Co. et al.
'(Circuit Court qf ..4ppea18, Eighth Circuit. ,July 5,1892.)
No.
so.
1.
MINING
An allen who, has expended tune, money, lind laboTin exploring for and locating on public landis. COnjointly with others, may hold his interest, or a mining' reoover :the sltlIle if deprived as against his colooators, and as against, all the worlciexcept the United ,S;ta:tes, though Rev. St. § 2319, confines the right of exploration; purchase,and odOupat1Qn of unsurveyed mining lands to citizens of the '(Jnited personlj whr;Ib,a.1e declarEid. intention to become citizens. I3,Y
0'
TO HqLD.
The q,uestion whether an allen can inherit an interest in a mining 'claim located . upon gove;l'nment lands is determined, not by the federal law, but by laws of the state the mine and under Acts Colo. Nov. 4, located in that state. Where perBonsliving in a foreign country or a distant state, and having no tni?duced to in a claim inadequate COl1s\<1er.atlOn, on the,' representation of the purchaser's have no real.·il1terest therein, and·that he desires the conveyances .,lihe pU11l0se of jhis0'f'n title against pend.ing .litigation, suell conveyance' will be set aside, thougn the were honestlY made· .. SAME."'.· . But where a person livt'rlg in, an adjOining state refuses to make adeed,onsuch representations, and caUlles, inq:uiries to be made in her behalf aud receives independent information. and then mukes a conveyance tor a much large,r consideration, she is concluded thereby, though the consider-ation is still inadequate. fora' 'i , " " . ' "
.um ,FEDERAL LAWS.
i"
S. CANCELLATION 011 DEED":"MIsBEPRESENTATIONB.
BILLINGS f1. ASPEN MINING 41: SMELTING CO·
839
.. Sum--LACHEs. A delay of three years after making the first-mentioned deeds did not, In snch case, constitute laches, it appearing that. soon executing the same, the grantors conveyed the same interest to a third person in trust to enable himto take proceedings for the recovery thereof, knowledge of which fact was promptly brought home to the purchaser, and tbat the delay of the trustee was not caused by the granto:rs. .. BAME--NECESSARY PARTIES.
The said trustee having entirely failed to take such proceedings, he should be made a in a suit brought by the grantors themselves to recover their interel\t, s,ince defendants are entitled to be protected by the decree against any subsequent'demand on his part.
7.
BA.ME.
I.
It was error to refuse a petition by the representative of a deceased daughter of the alien to become a party complainant, since the decree should be in such shape as to settle the rights of all parties claiming under such alien.
SAME--INNOCENT PURCHASER.
The purchaser having conveyed the title thus acquired to a corporation of which he was the president and principal stookholder, the oorporation was not an Innocent purchaser, especially as the records of the county 10 which the mine was located showed that the alien was one of the origlnallocators; and the fact that after his death one of his colocators published a notice to him or his administrators. notifying them to pay his sbare of the outlay expended for holding the claim, on pain of a forfeiture of his interest, could not render the corporation an innocent purchaser. it appearing that It must have known that the publication was against a dead man, and without effect.
.. SAME--NEOESSART PARTIES.
The fact that defendant corporation had conveyed a portion of the claim to another mining company did not render the latter a necessary party; for, while no decree could be entered affecting its rights, a, tinal determination could be had of all the Issues between the actual parties. In a suit to cancel conveyances of an interest ina mine, plalntUfs need not tender a return of the purchase money. where it appears that, In case of a decree In their favor, defendants would be required to Ilccount for past protlts far in excess of the purchase price; for such price C8Il be credited to them in the accounting, and their interest thus fully protected.
10.
CA.NOELLATIONOJ' DBED-TIINDEB OJ' PURCHASE MONEY.
Appeal from the Circuit Court of the United States for the District of Colorado. Reversed. T. A. Green and Nix &: l\Torlin, for appellants. George J. Boal, Aaron Heims, and T. H. EdsaU, (Geti. D. Reynolds, of counsel,) for appellees. Belore CALDWELL and SANBOUN, Circuit JUdgclS, and SHIRAS, District Judge. SHIRAS, District The bill in this cause was filed in the circuit court of the United States for the district of Colorado, for the purpose of asserting the rights of the complainants, as heirs at law of one William James Wood,to an interest in a mining property situated in Pitkin. county, Colo., and known by the name of the" Emma Mine." Previous to April, 1870, William James Wood resided at Owen Sound, in' Canada, being a subject of Grea.t Britain. On April 10, 1870, he came to the United States for the purpose of bettering his financial condition and prospects,leaving at Owen Sound his wife and family. save one son, George, who accompanied hi.m to the United States. The father and son went to Greenwood. county, Kan., in which county the father preempted certain of the public lands. and lived thereon for some time, going, thence to Colorado. On the 24tll day of April, 1880, the said' William J;Wood, Archie C. Fillk, and Andrew Kirkpatrick dillcovered
FEDERAL. REPORTER,
vol. 51.
,
':
as the "Emma Mineill aneJ caused· thee;ame to be duly surveyed,'imd the boundaries .of the claim to be marked with posts, and prepared and had filed in office ofPitkin county a proper location certificate, as required by the provisions of the statutes of the United States, the same being filed July 26, 1880. In October, 1880, Wood died at Leadville, Colo., intestate, leavingas his heirs his widow, Margaret, and his children, George, William H., Orman James, Matilda, Charles E., Thomas E., and Hiram A. In 1881, George Wood died in Kansas, leaving a widow, Margaret, survivillgl1im, who has since married James Cavner. Matilda Wood married William Scott, and died in 1882. Archie C. Fisk in the spring of 1883 caused to be published in a newspaper a notice addressed to William J. Wood and his administrator, stating that he had expended on said Emmll.lode $100 fOTwork and improvements done during the year 1882, and that repayment of his share must be made by said Wood within da,yEl or his interest would become the property of said Fisk. When this publication was made Fisk knew of the death of his colocator Wood, but he did not attempt to give notice to his heirs. On the the said Fisk conveyed his interest in the Emma 3d day of March, mine to on'eJohn. Hulbert, who made the purchase and took the conveyance for the use and benefit of Jerome B. Wheeler, who by other conveyances, not necessary to be stated in detail, had become possessed in the mine. of the title of Aclaim was asserted to the Wood interest through one Almira Brown, who claimed to be the widolV of Willi.am J. Wood, and who transferred an interest of one sixth to Emma Moody, wife of Henry Moody, and litigation was had over the claims thus asserted. It may be said, in passing, that the claim thus based upon the alleged relation of husband and wife b(ltween William J; Wood and Almira Brown seems to have been wnoltywithout foundation. By reason, however, of this and other litigation, Jerome B. Wheeler, in 1885, deemed it necessary to his claim to the mine by obtaining conveyances from the heirs of William J. Wood, and to that end James H. Devereux, agent for Wheeler, went to Owen Sound, Canada, with other parties acting in the samij interest, and that the widow of William J. Wood since his death intermarried with William Billings.. Henry Moody had gone to Owen Sound on the same errand, and it Q.ecame a race .of diligence as to which one should procure 11 deed or rell!ll1se from Mrs. Billings. The result was that Mrs. Billings executllil a release of her interest in the mine for the sum of $2.500 to David Robertson, 'o(Chicago, Ill., but in fact for the benefit of Wheeler, the deed hearing date April 15, 1885...Devereux then went to Chicago, and theresdCceeded in'getting a releasefrom James 0. Wood, or Orman J., as he\\'as . 'Christened, a son of William .. Wood, of his interest in the property for the ,s)lm of $230.. Through the agency of one P. J. Connor, acting of Wheeler, who went to Port Arthur, Canal]a, for that Ptlrpose,a deed was obtained from Charles E. Wood releasing his interest in the mine for the sum of $266.66.
lqCll,te(J, the mine ll.fterwardEl
BII.LINGS. tJ. ASPEN MINING & SMELTING 00.
341
On the 18th of April, 1885, Mrs. Billings executed a deed of har interest in the Emma mining claim to Richard J. Doyle, "to hold the same upon the trusts and according to certain terms which have been declared between the said party of the first part and second part hereto." In the month of May following James O. and Charles E. Wood executed deeds of like import to Doyle, covering their interest in said mine, all of which deeds were placed on record in Pitkin county, Colo. 'rhese deeds were executed because the grantors claimed that they had been misled in releasing their rights to Wheeler, and their purpose was to have Doyle act in their behalf in asserting their claim to the property. In November, 1885, Jerome B. Wheeler, with other parties owning interests in mining properties adjacent to the Emma mine, organized a corporation known as the Aspen Mining & Smelting Company, and on the 30th of November, 1885, Wheeler executed a conveyance of his interest and title in and to the Emma mine to said corporation. For some reason, not made apparent in the testimony, Doyle failed to bring any proceedings for the assertion of the rights of Mrs. Billings and her sons, and finally, in 1887, Mrs. Billings went to Colorado for that purposejand on the 14th of April, 1888, the present proceedings were insti-' tuted, wherein Margaret Billings, James O. Wood, Charles E. Wood, and Margaret Cavner are complainants, and the Aspen Mining & Smelting; Company, JeromeR Wheeler, Clinton Markell, Thomas E. Wood, William Wood, and Hiram A. 'Wood are named as defendants. It appearing that William Wood was insane, and that Hiram A. was a minor, for them, and filed William E. White was appointed guardian ad an answer in their behalf, claiming that each of the named parties was, and continued to be, the owner of an undivided one thirty-sixth interest in the Emma mining property, and therefore joined in the prayer of the bill for an accounting. Thomas E. Wood answered the bill, asserting that he was the owner of one thirty-sixth interest in said property, and likewise joined in asking for an accounting from Wheeler and the Aspen Company. At the November term, 1889, William G. Scott, as the representative of the interest of Matilda Scott, deceased daughter of William J. Wood, sought to be admitted as a complainant in the pro.ceedings, but his petition in that respect was denied; and at the same time, on motion of complainants, the bill was dismissed as to Clinton Markell. On the 10th day of May, 1890, the cause was finally heard upon the issues presented by the bill, the answers of Jerome B.Wheeler, Bod of the Aspen Mining & Smelting Company, the replications thereto, with the evidence adduced on behalf of all the parties, and on the 20th of October, 1890, a decree was entered dismissing the bill upon the merits. Thereupon the cause was appealed to this court by the complain.ants, and has been finally submitted, after full argument, by counselfor the respective parties. The first position taken by counsel for the defendants is that 'it is necessary for the heirs of William J. Wood to prove that when he joined with Fisk and Kirkpatrick in the location of the mine, in 1880. he had become a naturalizede,itizen of the United States or had properly de-
· FEDERAL lUWORTER,
vol. 51.'
,r;;'
elal'ed lliSrihtention to become snoh. By section '2319. oithe Revised Staluttis,itds enacted that "all valuable mining deposits in lands belonging to the United States, both, surveyed and unsurveyed, are hereby declared to be free and open to explorationandpurchase, and the lands in which they are found to occU'lJation and purohase.by citizens of the United States,and those who have-declared their intention to become such," etc., and the contention of counsel is that as it is not denied that, when Wood came to the United States in 1870, he was then a subject of Great Britain, his heirs must show that he had become a naturalized citizen of the United States, or had declared his intention to become such before the location of the Emma mine, in the spring of 1880, before they can assert title to the mine through him. It would certainly be inequitable to rule that if Wood were living his colocators, Fisk and Kirkpatrick, or anyone claiming under them, could deprive him of his interest in the mine simply because he was an alien. To hold that, after Wood had expenlled time. labor, and money in for and locating tbe mine conjoiutly with them, they could oust him therefrom, or refuse him the right of participating in the proceeds thereof. would be nothing short of legalized robbery. His alienage, if it existed when the mine was located,would not have the effrct of transferring his interest to his The UnUeLl States might, by proper proceedings, have deprived, him of benefits of the location made by him, but Fisk and Kirkpatrick could not avail themselves of the right of escheat belonging to the government. Thus in Craig v. Leslie, 3 Wheat. 563, it is said: co Now, what is the' sitnation of an alien ? He can not only take an Interpst in land, bllta freehold interest in the lantlitself, and may hold it 8l!'ainst all the world but the him, until office found, and he is not accountable for the rl¢,nts8nd profits previoll81y received." In v. De Valle, 1 Wall. 1, the question arose on the following facts: One Halsey by will devisE'd real property situated in Rhode Island to trustees fllr·the benefit of his daughter, Maria De Valle, who was a native and ,resident of Buenos Ayres, and upon her death the property was to go in fceto her children, provided they should, within five years alter inlonned ofthe decease of their grumllather. take up their permanent:residence in the United States; and in event of their tailure so to do, then,at'ter payment of certain legacies. the residue of the property was to be conveyed to one Cross upon certain conditions. A statute of Rhode Island provided that" courts of probate shall have power to grant petitions of aliens for leavA to purchase, hold, and dispose of real estate within thtJir respective towns, provided the alien petitioning shall, at the time of his petition, be resident within this state, and shall havemadedecluration, according to law, of his intention to become a -naturalized citizen of the United States." Cross filed a bill in equity in the circuitoourt for Rhode· Island 'against .the trustees and beneficiaries named in the will, setting forth that the i trusts in favor of Mrs. De Valle.' and her children had tailed by redsonof their alienage and inability to hold real eSUltein Rhode Island I it, not appearing that they or any of
BILLINGS'
v.
ASPEN MINING & SMJJ:LTING CO.
343
11.
tlitlm had ever petitioned for such right or declared an intent to become citizen of the United States; that consequently the devise in the will to him took effect when the will was probated, and relief in various forms was prayed. The supreme court held that Valle, notwithstanding her alienage, took an equitable life estate by the will, defeasible only by action of the sovereign, upon what was declared to be a familiar principle of law, to wit: "That an alien may take by deed or devise, and hold against anyone but the sovereign, until office found." In Osterman v. Baldwin, 6 Wall. 116. Baldwin, a citizen of New York, asserted a title to land in Texas acquired by purchase from the Galveston City Company in 1839, before the admission of Texas into the Union. The constitution of Texas prohibited aliens from holding real estate in that country, and this prohibition was relied on as a defense to the suit broughtby ;Baldwin in 1850 to establish his title to the lands. In deciding case, the court held:.. "It is true, as the defenrlants insist. that when the purchases were made by BaldWin, Texas was a country, with a constitution forbidding aliens to hold real estate. But the defendants cannot object on that ground. Until office found, Baldwin was competent to hold land against third persons. No one has any right to complain in a collateral proceeding if the sovereign does not enforce bis prerogative." Turning next to the provisions of the law of the state of Colorado, we find in the constitution of the state, adopted in 1876. the declaration that" aliens, who are or may hereafter. :become. ,bona fide residents of this state, may acquire, inherit, possess,enjoy, and dispose of property, real and personal. as native-born citizens." Article 2, § 27. By an act of the legislature adopted November 4, 1861, it was provided that- . "All aliens may take, by deed, will, or otherwise, lands and tenements, and any interest therein, and alienate, sell, aSsign, and trails ru it the same to their heirs, or any other persons. whether such, heirs or olher persons be citizens of the United States or not; and, upon the decease of any alien having title to or interest in any lands or tenements, sU,ch laud and tenements shall pails and descend in the same manner as if· such alien 'were a citizen of the United States. * * * The personal estate of an alien, dying intestate, who at the time of his death sllall reside in this state, shall be distributed in the same manner as the estate of natural-born citizens; and all persons shall be entitled to their proper distributive shares of such estate under the laws of this state, whether they are aliens or not." ; By an act approved April 2, 1887, (amended April 18, 1889,) nonresident aliens and foreign corporations and syndicates were prohibited from acquiring title to any body of agrioultural. arid, or range land exceeding 2,000 acres in quantity, but by section 5 of 'this act it was declared that "this act shall not be so construed as to prevent any nonresident alien * * * from acquiring the title to and possessing and working any of the mines in this state." It thus appears that, if Wood were living and had brought a proceed. ing for the enforcement of his title and right to an undivided one-third
344:
DnERAL REPORTER,
interest in the Emma mine against the present defendants, they could not object thereto, either under the laws of the United States or of thfl state of Colorado, on the ground that he was an alien, that being a privilege reserved to the sovereign only. At the time of his death he held ,and possessed a right and title indefeasible as against all the world, save the sovereign, and defeasible by the latter only by direct proceedings for that purpose. The title and interest thus possessed by Wood passed,At his death, to thoseiwho by the laws of the state of Colorado were capable of inheriting property in that state·. Thus, in U. S. v. Fo:r;, 94·U. S. 315, it is said: "The power of the state to regulate the tenure of real property within hel' limits, ,and the modes of its acquisition lind transfer, and the r"'s of its de. extent to which a testamentary disposition of it lllay be exercil.\ed.by owners, is, It is an established, principle of law, recogllizeq, ,arising the necessity of the case, that the dispo. sitiOll of immovable pl'operty, whether by deed, descent, or any other mode, is exclusively subjl'ct to the government within whose jurisdiction the pr<lp-erty·is,:situated. McCormick, v., Sullivant, 10 Wheat. 202. The power of theatate.in this respect folloW08 from hel' sovereignty, within her limits, as to. aU ,matters over whicb, jurisdiction has not been expressly or by necessary transfe,rredto the federal gl)vernment. The title and modes of dispollitionaf ,real property,within thestatf;'l. whether vivos or testamentary, are not matters placed under the'elmtrol of federal authority."
In'Haririck v. Patrick,'1l9U. S.l56, 7 Sup. Ct. Rep. 147, the general quegti'onwas ,consideroo. 'by ther!iupreme court in a case wherein the. defelldahtclaimed that he ,was the only heir having inheritable blood, fl.lld ther13fol'e was ehtitled to the realty in dispute as against the plainan alien. ,The land in dispute being situtiffs, they claUning atedin TeJl:as, the supreme court held that the question whether the. alien could inherit from the common ancestor depended upon the laws. ofthe state of TeJl:8B. Following theiJonstruction placed upon the vari. ous statutes of the state by the supreme court of Texas, it was held by the supreme court of the United States that the rule of the common are not deemed to be heirs at law, having no inheritalaw, that ble blood, was chiinged by the legislation of the state, which placed the alien npOn the S/tmefQoting as a citizen of the United States, and therefore the fact of alienage was not a bar to the vesting of the estate by descent. AstUreadyshown, bY' the laws of the ,state of Colorado it is expressly enacted that an alien may take the title, by deed, will,' 01' otherwise, to. propeJ.'tY, real and personal, and may transmit the same to his heirs, whE:>ther, such heirs ,be citizens or not,and in the distribution of estates. aliensahall stand upQnthe same footing as citizens ofthe United States. By section 910 of the Rev.ised Statutes of the United States it is provided that,"I;lOpOSsessor.y action between persons, in any court of the United States, for the recovery of any mining title, or for damages to, any such title, shall be affected by the fact that the paramount title to. thelanq.in which such mines lie is in the United States, bnt each r.ase shall be adjudged by ,theJaw of possession." The evidence in the Case:
BILLINGS tI. ASPENMINlNG &: SMELTING 00.
345
shows beyond controversy that Wood had become a resident of the state of Colorado, and was such at the time of the location of the mine and at the date of his death; and there is, furthermore, evidence tending to show that he had, while residinK in Kansas, declared his intention to become a naturalized citizen of the United States. If this was a proceeding on behalf of the government in the nature of office found, it would be necessary to consider this evidence in detail, as in that case Wood's rights would be dApendent upon the question whether he had in fact declared his intention to become a citizen; but, as we have already shown, that question is wholly immaterial in this collateral ceeding between private parties. It having been proven that Wood was in fact one of the original discoverers and locators of the Emma mine, it being so located upon the public domain of the United States, it follows, under the doctrine of the cases already cited, that no CIne could question his right therein on the ground of alienage, save the United States. As to all third parties, Wood was, at the time of his death, the owner of the undivided one third of this mining property; and his property rights, he dying intestate, passed at his death to such parties as by the laws of Colorado were recognized as his legal heirs. Being a resident alien of Colorado, his property, real and personal, passed one half to his widow, and the other half in equal shares to his children, the alienage of anyone or all of these parties not being, under the laws of Colorado, a bar to taking property by descent in that state. It thus appears that upon the death of William J. Wood, in October, 1880, his widow and children became lawfully vested with the title to an undivided one third of the mining property in dispute; and the next question to be considered is whether they, or any of them, have parted with or become divested of the title thus passing to them. It appears that Wood left surviving him, as already stated, a widow and seven children. It is not claimed that any conveyance, transfer, or release of the title or interest of Matilda, William H., Thomas E., or Hiram A. Wood was ever executed to the defendants or any of them. It is claimed, however, that the complainants, Margaret Billings, James O. Wood, Charles E. Wood, and Mrs. Cavner, formerly the widow of George Wood, have conveyed their interests and title to the defendants, or to other parties through whom the latter claim title, and the question to be determined is whether the conveyances made by these parties are valid and binding, or whether they were improvidently made, and under such circumstances as that the grantors can repudiate the same. The evidence introduced upon this branch of the case is very voluminous, and it will not be attempted to set forth the same in detail. We will consider, first, the conveyance executed by Margaret BiHings, formerly Mrs. Wood. It is not disputed that when she executed the deed in April, 1885, she resided at Owen Sound, Canada, and had no perilonal knowledge of the mine, its value or condition,nor of her actual title or interest therein. The evidence clearly shows that until Henry Moody and the agents of Jerome B. Wheeler visited her at Owen Sound .she had no knowledge of the fact that when her husband died he was
: ·,:nDERAL mII1tOltTER,:
voL ,51...
thEl owner iof an undivided orie.jthird interest in the \miniogproperty in dispu.te.An theinformatilQn:she bad ,upou;the: aubjectup tp the time she executed the deed of her interest ,was derived ftom tna statementS tnacile:lldl, her by those woo wareandeavorin,g to procure a COll" veyanceonher righteas cheaply' :aspossiblej and they knew·she had UP other, inforrnatio'nj and 'could not,8t Ow Sound, prooure information n fl'omamJy other plirty:or ,sonrce. All statements of fact made by them wereniade:fori thel,purposeof inducing her to execute the deed, and under suchciroumstancesthat it is not: permissible' for them to say that she, should 'noLha.ve,"relied on theUl;but should hl\verbaJe other and independenlinquiries aud ascertained the facts for herself. , The record eollta:ins the testimony of all the partieswhopartici pated in the negotiations resulting in the execuWmof the deed by Mrs. Billings. 'fhe general purport-of the whole can be fairly gathered from the evidence of WHliaixi M8IllSon',a witness called on behalf of the defendants. Thia gentleman! is, a; ,practicitlg solicitor residing at O,ven, Sound, and was had by ,Devereux ,vith, Mr. ,and" Mrs. ,Billings present when' the,' deed; wns. executed, :having,beenretaip,ed hyd:;levereux to prepare the deedarldsupervise its fotmal executi{)n. His testimony impressesusi fa.vorably in' respect to' (mndor and fairness, and, we feel entirely, justified rin relying upon his statemellts assqowing the general nature ofthe'representations made to Mrs. Billings, a,Jild which resulted in the 'exeoution, Q'fi the deed of ,her interest in the property., This wih ness testifiedfthat Deveteu:x stated:,'tohim, and the same to Mrs. Billings, thM Wood had, with ,othilrs, located the· mine, but that he had not paid his dues thereon, and consequently ,had been advertised out'; and,. further" that it was doubtful whether Wood had become .a. citizen of the United and hence the Woodheil's, inCluding Mrs. Billings, l1adoo interest or title inrthemine; thlltowing to other litigation the he represented were willing to pay a"reasonable sum for a conveyanceifrom the Wood heirs., although, ,they had, no legal claim to the property; that ,the mine was valuable, hut it was involved in litigation,and the ,conveyances from the Wood "heirs were desired for use in litigation.' It is entirely cIear from the testimony of this witness that the understanding he had of the matter was that the Wood heirs had ,no claim or right to the property, an(l that whatever Mrs., Billings could get was so much clear gain, or, to use the exact language orthe :witness, "From the facts that I know of the case, 1 believe that Mrs. Billings dropped into $2,500 that she would, not otherwise have gotten." ,From all the evidence introduced onbehlllf ofthedefendants, it isniade perfeotly plain that Devereux and those acting with him constantly insisted that the Wood" heirs had no right or interest'in,the,mine, and it is equally plain that Mrs. Billings finally consented to ,eX'6cutea deed because she belie'ved ,the representations thus made' were true. It is,under the circumstances of this case, immaterial .whetherDevereux knew,the'falsity of these statements or not. Even though: he then believed them to be true, yet as it now appears beyond. doubt ,that· these. statements were without foundation, and that DOW
BILLINGS V.
MINING &: SMELTING CO.
347
the Wood heirs held the title to one third of the property, equity will not permit the grantee in the deed to enjoy the benefits thereof when it appears that the was ind nced to execute it through a total misapprehension of her right and title, which misapprehension was r,.:lused by the represelltations of the grantee 6r his agents, even though such untrue representations were at the time made in good faith. In such case the inequity would exist, not in the making the representations originally, but in claiming the benefit thereof after discovery that the other party had been misled, to her injury, by relying on the statements made for the purpose of inducing action on her part, whlah now appear to have been wholly untrue. Thus in Wheeler v. Smith, 9 How. 55, it is held that where the parties stand in unequal position, and one party, reposing confidence in the statements made by the other, surrenders rights without a proper understanding of them, the conveyance thereof will be set aRide, even though there was no fraudulent intent on part of the person making the same. In Smith v. Richard8, 13 Pet. 26, the rule is stated to be that a material misrepresentation, if relied upon, will justify setting aside a contract, even though innocently made, because thereby the contracting party is misled to his injury. The facts of the case at bar bring the .same fully within the ruling ofthe supreme court in the case last cited, to wit, that a misrepre!'entation or mistake, innocently made, is ground for rescinding a contract, if the misrepresentation was about a material matter, if the other party relied thereon, having a right so to do, and was thereby misled to his substantial injury. Mrs. Billings testifies that she was induced to execute the deed and other papers demanded of her, because she was led to believe that she and her children had no right or title to the property in question, and the testimony of aU the witnesses confirms this. That the representations on this subject were made to her for the purpose of inducing her to release her rights is not questioned, nor that the same were in regard to a material matter. Devereux testifies that when he, acting for Wheeler, pro'Cured the execution of the deed and power of attorney by Mrs. Billings in April, 1885, the mine had then yielded over $300,000; and from the indications given by the are then in sight, in his judgment, (which after events more than justified,) it would certainly produce as much more,thus making the one-third interest belonging to the Wood estate worth in the neighborhood of $200,000, of which one half would belong to Mrs. Billings. If it be true, as testified to by Devereux, that he stated these facts in regard to the value of the mine to Mrs. Billings, it is made certain, beyond question, that she was induced to release her claim to this large sum for the comparatively RmaU amount paid her, because she placed confidence in the statements so persistently made to her that she .and her children had, in fact, 110 right or title in or to the mine or its products. Leaving out of consideration all the evidence on behalf of <lomplainants, and giving force only to that on behalf of the defendants, no other conclusion is possible than that Mrs. Billings was induced to release her right to the property in question because she was made to
348
FEDERAL REPORTER,
1*tli'eve;that she had no real or substantial interest therein, and this be-lief'was intentionally created by the statements made by the agents of the defendant Wheeler. When they were made, the parties acting for the defendant Wheeler welLknewthat Mrs. Billings had no information in regard to her rights, andcould not possibly obtain any from any source then within reasonable reach, and that she must, from the very necessities olthe case, rely upon'r:thetruth of the statements made to her. They cannot now be heard! to say that she should not have relied on the statements thus made her, 'orthatshe cannot complain of the injury caused her by the reliance she placed in the truthfulness of those who certainly did their utmost·to induce confidence on her part. Without further elaboration of· this point, we hold that the evidence requires us to find that Mrs. Billings'was misled to her serious injury when she was induced to deed away' her right and title to the mining property in dispute for a wholly inad.eqtlate sum, and that the circumstances under which this action on her part was procured were such as to justify the conclusion that she should not be held bound thereby. The deeds from the sons, James O. and Charles E. Wood, are voidable for the same reasons. They were clearly induced to execute them through the misrepresentations made them, and when they had no knowledge or just conception of the real effect of the action taken by the111 at the solicitation of the agents of the defendant Wheeler, as is ev· idenced 'by the small amounts they received for the deeds executed by them, being $230 in one case, Rnd $266.66 in the other. regard to thei<lOuveyance executed by Mrs. Cavner, who was formerly the widow of:George Wood, we think it must be held that she is bound thereby. '1'he>evidence shows that when she was asked to execute a di3ed for her:interest she did not rely wholly upon the statements made her by Devereil':t. She was then a resident of Wichita, Kan' t and she O'Onstl1ted with'attorneys at in her behalf to Lell:dville, Colo., and it was not until after the repljrhad been received that she consented to make a deed. She demanded and received $2,50G for her':interest, and we Cllnnot say that she was not induced so to do by the matters contained in the letter received by her attorneys, which is set forth at;length in the evidence. 1t clearly appears that she was not content t(l)"act· upon the statements made her by Devereux, but she sought other advice and other meaos of information; and we are not justified in holding that she can now claim that she was misled by any confidence reposed in the statements made by Devereux. The great length ·of this opinion compels us to deal very briefly with the other questions discussed by counsel. It is urged on behalf of the defendants· that the parties complainant have been guilty of laches in the institution of these proceedings, in that substantially three years were allowed to' elapse after the execution of the deeds made by Mrs. Billings and her sons before this suit was brought. Certainly, as against theminor and the son who is insane, such a plea is without force. On part of Mrs. Billings and her sons James and Charles, it appears that,
In
BILLINGS fl. ASPEN MINING & SMELTING CO.
349
in a few days after they had executed the deeds in question, they took action indicating clearly that they did not propose to acquiesce in the wrong done them, and the evidence justifies the conclusi.on that knowledge thetl"eof was promptly brought home to the defendant Wheeler. On the 18th of April, 1885, Mrs. Billings executed a deed of her interestin the mine to one Richard J. Doyle, which was duly recorded in Pitkin county, Colo., as were also deeds of like tenor executed by her sons Charles E. and James O. Wood and by Mrs. Cavner. The purpose of these conveyances was to enable Doyle to take proceedings for the recovery of their rights and interests. It is thus made clear that Jl.Irs. Billings and her sons did not remain silent until after developments hf!.d shown a great increase in the value of the property conveyed by but they asserted that they had been misled within a very few days, and took immediate steps looking to the enforcement of their rights, tq the knowledge of the defendant Wheeler. Why Doyle did not carry out the trust committed to him we cannot say, but it is clear that his failure to act was not caused by Mrs. Billings or her sons, aml, as the present action was brought before the statutory bar of limitations had become applicable, we do not find anything in the record calling for the application of the doctrine of laches. Neither do we think that the Aspen Mining & Smelting Company can be said to be an innocent purchaser for value of the interests of the Wood heirs in this property. That company was organized in November, 1885, Jerome B. Wheeler being the principal stockholder, an incorporatorand president of the comp\l-ny, and also the grantor to the company of whatever title it received' to the property.in dispute. The records of Pitkin county showed that William J. Wood was one of the original locators of the mine.. It is not made to appear in the pleadings or the evidence that the company was ignorant of the claims or rights ofthe heirs of William J. Wood. In the answer filed by the company, it is averred that Fisk published a notice in a newspaper at Pitkin, Colo., addressed to William J. Wood or his administrator, notifying them that payment must be made of their share of. the outlay for the. year 1882, or, in default thereof, Wood's interest would be forfeited to Fisk; and claim of title is based upon this averment. It cannot be questioned, however, that Wheeler and the company when they received deeds, the former from Fisk and the latter from Wheeler, knew that when this notice was published Wood was dead, and his title was vested in his heirs, whoever they might be, and tha,t .consequently the effort to forfeit Wood's by publishing a notice addressed to a man then known to be dead was wholly nugatory. To sustain the claim of being an innocent :purchaser forvaJue, it was incumbent upon the company to plead and prove the facts necessary to support the plea, and this it has not done. It is further 8uggtlsted that this proceeding cannot be maintained, because Mrs. Billings and her sons did not repay or tender back the money paid them by Wheeler befo,re bringing this suit. This point cannot be urged against the heirs, who received nothing from the de-
, ':rlilDERAiL ,ImJ>ORTER,
fendanU; and, as i against' Mrg)Billings arid Charles'E. and JameS 0. W()oc},we ;think the faots take the case out of the general rule invoked by defehdants. Where it> is sought to rescind 'a eontract and obtain a retranif6r!of property/thetpartyseeking such release m.1st, ordinarily, place, coal offer th9:other party in the same position he would have 'oocupie$iff tbeiconWttot 'luld'iPlot·been made. ) In the case at bar, s\:lcceediil obtaining the relief they seek, the defendant Wheeler wiUhave to aCC6unt fol' such sums belonging to the Wood inbe proven he received from such interest, and it cannot be he will be entitled to be actually paid allY sum 'whatever, by the complainantS, In the accounting that must bahad, Wheeler will be entitled to credit for the SU111Rpaid by him, and his rightsca.nbe,in thisparticnlar, fully protected in the final decree. ThackrriJl, v. Haas,l19'U. 8.499, 7 Sup. Ct. Rep. 311. , In argument, counsel 'for the defendants raise the objection that the proper parties are not before the court, in that the Compromise Mining Company, to whom the Aspen Company conveyed part ofthe Emma mine, is not made a defendant, and .further because Doyle,to whom Mrs. Billings and two of her: 'sons conveyed their title and interest in trust, is not a party. It appears that the Compromise Company claims title to some four acres ofthe Emma mine location under a conveyance from· the Aspen Comparly. Ofcollrse, any decree rendered in this cause as it now stands cannot affect the title of the Compromise Company; and, Hit is the purpose of complainants to asgert title to the realty conveyed, to the Compromise ,Company, that company should have been made a party deJendant hereto, in that the one hearing and decree should dispose/of the entire controversy. The rights, however, of the parties to the present proceeding, can be determined without the presence of the Compromise Company , and its absence, therefore, is not an insuperable objection the bill in its present form. We think, however, that Doyle should be made a party to the proceeding, in order that any right or claim he mllY have may be settled in the final decree. He CRn be made a party defendant, and, if he does not enter a voluntary appeamnce; service by publication can be had, so as to confer j,urisdiction over theprbperty upon the court. This is necessary for the proper protectiollofthe defendants. They should not be left subject to· be again called to account by Doyle, after meeting the claims asserted· by the widow and heirs of· Wood. As Mrs; Billings and her sons conveyed their ti11e to Doyle intrust, they should protect the defendants against any claim Doyle may assert, before they compel 1he defendants to account to them for the property transferred to Doyle intrust. The case should not he left in such'shape that, alter the defendantshave':been compelled to fUlly account to complainants, they may be again) called to account'by: Doyle as the grantee of complainants, ' and for the protection of the· defendants in this regard it is necessary that Doyle should be made a party to the suit. We are also of the opinion that the petition of WilHam G. Scott for leave to join in the bill
.t.l." SWITZER.'
351
as complaillant, representing the interest of Matilda Scott, should have been grantecl in order that;the 'one proceeding should settle the rights of all the parties claiming under William J .. Wood. The decree appealed from is "theJ:e(ore reversed at the cost of appellees,andthe cause is remanded to ,the circuit court,with instructions topermit G. Scott,as representative of Matilda Scott, deceased, to become acocpmplainant in the bill, and to require Richard J. Doyle to ,be made, a, defendant to. the proceedings, in order that any right or claim he may hold to the property in dispute may be settled by the final decre.e herein; and whepthese steps have been completed a decree be the deeds and powereof attorney executed by Margaret BiUings, James O. Wood, and Charles E. Wood to David ;II. Devereux, or other parties, purporting to convey Robertson, their interests in the mining property in the bill described, and which are set forth in the bill herein filed, Sf1.ici decree to declare anel establish the right and title of the widow andchildren of William J. Wood to the one ,thir9 of said Emma mining propE:lrty as against the defendants Jerome B. Wheeler and tlle,Aspen Mining & Smelting Company, and to direct a properaccountjng between parties upon the. basis of the rights thus decreed.. !. ',:
WENHAM: 'D. "Il
.
(Circuit Court, D. Montana. June 27, 1892.) PRINCIPAL AND AGENT-EXOEEDING AUTHORITy-RATIFICATION.
Plaintiff authorized defendant to purchase for him a half intllrest in a mining claim for SI,noo, and sent $500 to be used as a first payment. Defendant purchased the whole mine for $40,000. and took a deed in his own name. He then wrote plainexplaining ,what he had done, and saying he would make'a deed for one half on receipt of $1,500 more. Plaintiff answered, accepting the offer, ,and asked for a more specific description of, the property. but sent no more' money; Defendant testified that he never receivod this letter. but that he wrote another letter, stating that the money must be paid within a certain time. Plaintiff said be never received this letter. He waited 10 months, and then sent $1,000 instead of $1,500, asking defendant to state the balance due. Held, that defendant, as plaintiff's aA'ent, had 'exceeded his power in the purchase, and his action was binding without ratification; that the letter ·of acceptance, without sending money, was not a sufficient ratification. received.; and that the delay of 10 months was unreasonable; and defendant had a right to repudiate the agency, and hold the mine as his own.
In Equity. Suit by A. A. Wenham against William S. Switzer. Bill.dismissed. For report Qf decision on motion to strike depositions from the files, see 48 Fed. Rep. 612. Word, Smith &; Word, for complainant. A. H. Nelson, for defendant. KNOWLES, District Judge. Plaintiff in his bill of complaint charges that he and defendant entered into a contract by the terms and condiit was agreed that plaintiff and defendant were top\lrtions of