Lightner Mining Co. v. Lane

This is an action hy the owner of a mine, against the owners of an adjoining mine, to recover the value of certain ore alleged to have been extracted by the defendants from the mine of the plaintiff.

The plaintiff claims the ownership of a mine known as the Lightner mine. The defendants are the owners of the Utica mine, which adjoins the end line of the Lightner mine, and lies

1. The plaintiff did not obtain possession of the Lightner mine nor any right or interest therein until November 21, 1896. The defendants claim that there is no evidence that any of the ore in question was extracted by the defendants after that date, and, hence, that no damage accrued to the plaintiff. This claim is without support. The fact that the body of ore above mentioned was taken at some ■ time by the defendants from the Lightner mine through the drift extending into it from the underground workings of the Utica mine was established beyond all reasonable doubt. V. W. Miller, who was the foreman in charge of the work in the Utica mine from October, 1893, to October 24, 1897, testified that the ore between levels 2 and 3 in the Utica mine was stoped out during that period; that the north wall, next to the Lightner mine, was carried up perpendicular "from No. 3 level, and that “the north line of that stope was entirely within the Utica boundary line given to us.” He was a witness for the defendant. Other witnesses for the defendant gave similar testimony. It was shown also that the boundary line had been correctly given to them and was marked on the wall of level No. 2. If the jurors believed this testimony, as they had the right to do, they could come to no other conclusion than that the extension of the excavation into the Lightner mine was made after the completion of the stopes described by Miller—that is, after October, 1897. Many other circumstances, which we need not here rehearse,

2. It is next contended that the plaintiff had no interest in the Lightner mine sufficient to give it the right to sue for the value of ore extracted therefrom. Prior to November 21, 1896, and on that date Alice L. Eastland was the owner in fee of the mine. On that day a written agreement between her and the plaintiff was executed by them. Thereby she agreed to sell said mine to the plaintiff at the price of one hundred thousand dollars, of which fifty thousand dollars was to be paid by the plaintiff out of half of the gross proceeds of the mine after the year 1897, and the other fifty thousand dollars out of sales of plaintiff’s capital stock. It further provided that plaintiff should diligently proceed to sink a shaft thereon to the depth of five hundred feet and erect hoisting works thereat; that it should have the right to take and hold possession of the! mining claim and to mine ore therefrom, and that it should work the mine diligently until the price was fully paid. It also stated that a deed of conveyance of the mine from Mrs. Eastland to the Lightner. Mining Company was on the same day signed and acknowledged by her and deposited in escrow with a third person, and that the same was to be delivered to the company upon payment of the purchase price. The deed was signed and delivered in escrow, as stated, and the plaintiff immediately took complete possession of the mine under the agreement. It has been in exclusive possession thereof ever since, and has proceeded to develop and work it. The deed was not delivered out "of escrow until September 2, 1902, which was after this action was begun. A clause of the agreement provided that if the vendee at any time failed, for three months, to perform any covenant therein, the vendor, after ten days’ notice, might cancel the contract and take possession of the mine. No such default occurred.

It is a well-settled proposition that the proper party plaintiff in an action for trespass to real property is the person in actual possession. No averment of title in plaintiff is necessary. (1 Chitty on Pleadings, 63; Heilbron v. Heinlen, 72 Cal. 371 , [ 14 Pac. 22 ]; Strohlburg v. Jones, 78 Cal. 383 , [ 20 Pac. 705 ];

3. The defendants next claim that the action is barred by the statute of limitations, particularly by section 338 of the Code of Civil Procedure. The action was commenced on July 10, 1902. The jury found, specially, that the ore for which the recovery was allowed was removed from the plaintiff’s mine, by defendants, prior to July 1, 1899. By subdivision 2

The plaintiff insists that an exception exists in cases where the trespass is fraudulently concealed by the perpetrator from the knowledge of the owner of the land and that in such cases the period of limitation does not begin to run until the aggrieved party discovers the trespass, or with reasonable diligence might have discovered it. It is also contended that the case, as made by the pleadings and the findings of the jury, does not fall strictly within the class described in subdivision 2 of section 338, but that it is governed by subdivision 4, which reads as follows: “4. An action, for relief on the ground of fraud or mistake. The cause of action in such case not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” The plaintiff did not discover the trespass, nor did it have any reasonable means of making such discovery, until June 1, 1901, when its own workings encountered the wrongful excavation of the defendants.

It was the settled rule in actions at law that the plaintiff’s mere ignorance of the existence of the injury complained of, or of the facts constituting such injury, or of the identity of the person liable therefor, until the period of limitation had passed, will not prevent the running of the statute. This rule has been followed in this state in several cases in which the point that there was fraud involved in the cause of action itself, or a fraudulent concealment thereof, was not raised or considered. (Gale v. McDaniel, 72 Cal. 334 , [ 13 Pac. 871 ]; People v. Melone, 73 Cal. 574 , [ 15 Pac. 294 ]; Paige v. Carroll, 61 Cal. 211 ; Lattin v. Gillette, 95 Cal. 317 , [ 29 Am. St. Rep. 115 , 30 Pac. 545 ]; Lambert v. McKenzie, 135 Cal. 100 , [ 67 Pac. 6 ].) In the last-mentioned case the court said : “It is not true that, where damages result from negligence, the cause of action arises upon the date of the discovery of the negligence, or of the negligent person. It is the date of the act and fact which fixes the time for the running of the statute. . . . And so throughout the law, except in cases of fraud, it is the time of the act, and not the time of the discovery which sets the statute in motion.” (Italics ours.)

The following declare that such fraudulent concealment delays the running of the statute until the injured party discovers, or with reasonable diligence might have discovered, the facts constituting the injury and cause of action: Porter v. Smith, 65 Ala. 169 ; Snodgrass v. Bank, 25 Ala. 161 , [ 60 Am. Dec. 505 ]; Tillson v. Ewing, 87 Ala. 350 , [ 6 So. 276 ]; Moses v. Taylor, 6 Mackey (D. C.) 281; Traer v. Clews, 115 U. S. 537 , [ 9 L. Ed. 467 , 6 Sup. Ct. 155 ]; Rosenthal v. Walker, 111 U. S. 185 , [ 28 L. Ed. 395 , 4 Sup. Ct. 382 ]; Bailey v. Glover, 88 U. S. 346 , [ 22 L. Ed. 636 ]; Sherwood v. Sutton, 5 Mason, 143, [Fed. Cas. No. 12,782]; Campbell v. Vining, 43 Ill. 525 , (reprint ed. 473); Cook v. Chicago etc. Co., 81 Iowa, 551 , [ 25 Am. St. Rep. 512 , 9 L. R. A. 764 , 46 N. W. 1080 ]; Carrier v. Chicago etc. Co., 79 Iowa, 86 , [ 6 L. R. A. 799 , 44 N. W. 203 ]; District v. French, 40 Iowa, 601 ; First Mass. T. Assoc. v. Field, 3 Mass. 201 , [ 3 Am. Dec. 124 ]; Homer v. Fish, 1 Pick. (Mass.) 438 , [ 11 Am. Dec. 218 ]; Welles v. Fish, 3 Pick. (Mass.) 75 ; Shelby Co. v. Bragg, 135 Mo. 298 , [ 36 S. W. 600 ]; State v. Hawkins, 103 Mo. App. 255 , [ 77 S. W. 98 ]; Bowman v. Sanborn, 18 N. H. 206 ; Way v. Cutting, 20 N. H. 190 ; Quimby v. Blackey, 63 N. H. 77 ; McDowell v. Potter, 8 Pa. St. 190 , [ 49 Am. Dec. 503 ]; Campbell v.

The leading cases in favor of the running of the statute in the foregoing list are Troup v. Smith, Somerset Co. v. Veghte, and Clarke v. Reeder. The argument is simple and is the same in all of them. It is most forcibly and elaborately stated in Clarke v. Reeder. It is, in brief, that the statute of limitations makes no exception, in actions at law, in regard to fraud or fraudulent concealment, and that the courts are bound by the terms of the statute and cannot add to it, or declare an exception which would nullify it in its application to cases properly embraced in its terms.

The leading cases declaring that a fraudulent concealment stays the operation of the statute are Bailey v. Glover, Sherwood v. Sutton, Lewey v. Frick Co., and Bulli C. M. Co. v. Osborne. In Bailey v. Glover, the supreme court of the United States, by Justice Miller, says: “We are of the opinion that the weight of judicial authority, both in this country and in England, is in favor of the application of the rulé to suits at law as well as in equity. And we are also of opinion that this is founded in a sound and philosophical view of the principles of the statute of limitations. They were enacted to prevent frauds; "to prevent parties from asserting rights after the lapse of time had destroyed or impaired the evidence which would show that such rights never existed, or had been satisfied, transferred, or extinguished, if they ever did exist. To hold that by concealing a fraud, or by committing a fraud in such a manner that it concealed itself until such a time as the party committing the fraud could plead the statute of limitations to protect it, is to make the law which was designed to prevent fraud the means by which it is made successful and secure. And we see no reason why this principle should not be as applicable to suits tried on the common-law side of the court’s calendar as to those on the equity side. . . . We hold that when

There is perhaps no better statement of the rule and the reasons for it than, the above. The precise question was decided in this state in the early case of Kane v. Cook, 8 Cal. 449 . It was an action by a consignor against the consignee to recover the price of goods sold by direction of the consignor. It was held to be an action at law. The consignee had not reported the sale. Field, J., delivering the opinion, reviews at considerable length the conflicting decisions then existing on the question and concludes as follows: “In this diversity of opinion on the question, we are free to adopt that rule which will best tend to advance justice, and prevent the perpetration of fraud; and we therefore hold, that in all cases a fraudulent concealment of the fact, upon the existence of which the cause of action accrues, is a good answer to the plea of the statute of limitations. By the system of practice adopted in this state, there is no replication to the answer. The fraudulent concealment cannot, therefore, be replied to by pleading, but it may be established by proof on the trial, and will then just as effectually avoid the plea of the statute. In the present case the plaintiffs are residents of New York; they looked to their consignee in California to acquaint them of the sale of their goods; his delay of three years to impart any information cannot -be reconciled with honest intentions, but necessarily leads to the conclusion that the sale was concealed for a fraudulent purpose.”

This decision has never been questioned. It was rendered in 1857. Although it has not been cited, it has been followed in principle in subsequent cases. (See Christensen v. Jessen, and other cases hereinafter cited.) The statute then in force contained the provision now found in subdivision 4 of section 338 concerning actions for relief against fraud, but the decision was not avowedly based upon that provision, nor was it referred to. It was put upon the general ground that the rule was applicable to any statute of limitations, although not containing any express exception in relation to fraudulent concealment.

The evidence is sufficient to show a fraudulent taking and fraudulent concealment of this character. The mine of the plaintiff adjoined that of the defendants on the end lines. Defendants sunk a shaft in their own mine to a depth of five hundred and thirty feet about two hundred and ninety feet from plaintiff’s line and by means of cross-cuts therefrom to the vein and drifts therein beneath the surface to plaintiff’s boundaries, they secretly, knowingly, and willfully took from plaintiff’s mine ore of the value found by the jury. The plaintiff had no knowdedge or means of knowledge of this. The circumstances justified the inference that the defendants concealed it from, plaintiff, and prevented it from becoming generally known. The limit of their mine was plainly marked by their own engineer in the first drift which reached plaintiff’s bounds, known as No. 2 level. Defendants inadvertently took several hundred tons of ore from plaintiff’s mine through this drift, and, upon discovering that fact, explained the matter to plaintiff stating that it was a mistake, and

It may be added that they also make a case coming within subdivision 4 of section 338 of the Code of Civil Procedure, relating to.actions for relief against fraud. It was directly decided by this court in Christensen v. Jessen, 40 Pac. 747 , that this subdivision applies to all actions for relief against fraud, whether such actions and the relief asked be legal or equitable according to the ancient classification. This case was decided in Department and a rehearing was refused by the court in Bank. It is not reported in full in the official volume. (See 107 Cal. xvii.) This rule has been applied in Lataillade v. Orena, 91 Cal. 577 , [ 25 Am. St. Rep. 219 , 27 Pac. 924 ]; Hayes v. Los Angeles Co., 99 Cal. 74 , [ 33 Pac. 766 ]; Gregory v. Spieker, 110 Cal. 150 , [ 52 Am. St. Rep. 70 , 42 Pac. 576 ]; Archer v. Freeman, 124 Cal. 258 , [ 57 Pac. 474 ]; Simpson v. Dalziel, 135 Cal. 600 , [ 67 Pac. 1080 ], and Marston v. Kuhland, 151 Cal. 102 , [ 90 Pac. 188 ], each of which would have been classed as an action at law, when there were separate courts for law and’ equity cases. It appears to be settled in this state that if fraud enters into a cause of action, the latter clause of this subdivision will apply and the cause of action will not be deemed to have accrued until the facts are discovered, regardless of the form or character of the action. This is not at all inconsistent with the rule followed in Murphy v. Crowley, 140 Cal. 141 , [ 73 Pac. 820 ], and other similar cases, holding that where the action is one for which the statute of limitations prescribes a longer period than three years, section 338 will not control and the period specially provided will be given.

Here the discovery was made but thirteen months before the action was begqn, the plaintiff was not put on inquiry, and

The rule of practice stated in Kane v. Cook, 8 Cal. 449 , still prevails. Under it, the fraudulent concealment could be proven without being pleaded. The secret and fraudulent taking was sufficiently alleged.

Upon this branch' of the case,, the question whether the ore was taken by the defendants, themselves, or by their agents without their knowledge or consent, is immaterial, provided it was taken willfully, intentionally, and secretly. The fraud of the agents will be imputed to the principal for the purpose of preventing the running of the statute of limitations whether the principal was aware of it or not. The injustice of allowing such fraud to become successful by reason of lapse of time and concealment, is an injustice to the owner, and it is precisely the same in effect and extent whether the fraud is that of the principal or his agent. The principal, having received the benefit of his agents’ fraud, has no equity in his favor.

The defendants contend that the evidence shows that plaintiff was put on inquiry as to the existence of other trespasses than.that on level No. 2, which defendants had admitted, and that with reasonable diligence it could have discovered, at least as early as 1897, the trespasses now complained of. But, as we have shown, some of the defendants’ own agents in charge of the mine declared that these trespasses had not occurred at that time. After the trespass on level No. 2 was admitted, in 1897, the officers of plaintiff visited defendants’ mine and were conducted through it by defendants’ superintendent. They saw the admitted trespass and were shown into level No. 3, where the trespasses complained of here were made, but they were not shown or informed of those trespasses, if, indeed, they then existed, and they did not see them. The only information they had after that visit consisted merely of vague rumors. Under the circumstances, we are of opinion that the finding of the jury on this point cannot be disturbed.

4. The next question presented is that of the measure of damages. Twelve thousand tons of ore were taken from plaintiff’s mine by the defendants. From this, after milling it at their own expense, defendants obtained gold of the value of fifty-four thousand dollars. The cost of mining and milling

Plaintiff’s counsel concede the rule to be that if the invasion of the mine by defendants was the result of honest mistake and inadvertence, the measure of damages would be the value of the gold less the cost of mining and milling, but they say that -if it was intentional and with knowledge of plaintiff’s rights, the defendants are chargeable with the value of the gold after reduction, without any deduction for expenses of mining and milling. The authorities sustain the latter proposition. (4 Sutherland on Damages, secs. 1126, 1127, 1128; 2 Sedgwick on Damages, secs. 500 to 504.) The objection of the defendants is that to allow damages in excess of the value of the ore as it lay in the mine is to give plaintiff the benefit of defendants’ labor without any equivalent in return, and is, in effect, punitive damages, allowable only where there is oppression, fraud, or malice, and which will not be given against principals for the fraud of their agent, unless such fraud was known to the principals, or was authorized or ratified by them. The authorities last cited assume that such enhanced damages are punitive in character.

Under the rules laid down in the Civil Code, it must be conceded that the plaintiff can be allowed the benefit of defendants’ work in mining and milling the ore, only upon the theory that it is given as a punishment of the defendants. The general rule of damages in tort is declared to be “the amount which will compensate the injured party for all the detriment proximately caused thereby, whether it could have been anticipated or not.” (Sec. 3333.) For the wrongful, conversion of personal property the damage allowed is its value “at the time of the conversion,” with interest, or, if “the action has been prosecuted with reasonable diligence,” the highest market value at any time between the conversion and the verdict, without interest, at plaintiff’s option. (See. 3336.) Treating the case as one for the conversion of chattels, the conversion was complete when the defendants had mined the ore and mingled, it with ore from their own mine. Its. value at that time would not include the cost of milling. No evidence was given as to the cost of mining alone. The subse

We do not find in the evidence any substantial proof that the defendants had any knowledge of the trespass complained of, or of its fraudulent character, at the time of its occurrence, or that they either specifically or by general directions or suggestions authorized it. The management and supervision of the defendants’ mining operations appear to have been committed to the defendant, C. D. Lane. Defendant Hayward was consulted, but he seldom visited the mine. Lane was in the mine in 1897 after the admitted trespass on level No. 2 occurred, and he immediately noticed it and condemned it. He gave instructions to those in subordinate control that they must mark the boundary in the levels, so that the men would know

Plaintiff argues that the' defendants ratified the wrongful and fraudulent acts of their agents by the denials thereof in their answer to the complaint, and their failure to investigate the matter or make restitution, after they were informed of the facts by the service upon them of a copy of the complaint. Where a party is sued, he has the legal right to make such defenses as he believes he can establish by proof. It is true, as we have said, that there is sufficient evidence' to sustain the verdict of the jury holding that the ore in question was taken after November 21, 1896, when plaintiff first acquired an interest in the Lightner mine. But it must also be admitted that, although sufficient to raise a conflict, this evidence is not particularly strong or convincing, and that the defendants produced ample evidence to show their good faith in denying the trespass in issue and pleading the statute of limitations. The jury gave cre'dit to the opposing testimony as to the date of the taking, but there is nothing in the case that would authorize the conclusion that the defendants alleged these defenses in bad faith, or that the pleading thereof should be taken as evidence of ratification of a fraudulent act which they obviously expected to prove had not been committed against the plaintiff at all. There may be some circumstances that would arouse a suspicion of knowledge on their part prior to the filing of their answer, but there was no substantial proof thereof. The service of the complaint in the former action in 1897 for the admitted trespass cannot serve as such proof, for the plaintiff’s case rests entirely upon the theory that the ore in question here was taken subsequent to that date, and after the defendant Lane had given positive instructions to the men at the mine not to trespass again. There is no proof of knowledge, authorization, or ratification.

The result is that the verdict for fifty-four thousand dollars

5. Some of the instructions given by the court are contrary to the conclusions above stated, and are, as we conceive, erroneous. But in view of the special findings of fact by the jury, we do not think any of them can be considered as affecting the right of the plaintiff to recover the twenty-seven thousand? dollars found to be the actual compensatory damages. Instruction 22 was to the effect that the statute of limitations for an underground trespass did not begin to run when the trespass was committed, but from the time of the discovery thereof by the injured party, or from the time when with ordinary diligence he might have discovered it. It omits the elements of secrecy and of fraud in the trespass and fraudulent concealment thereof by the trespasser, and, for that reason, it is erroneous. But the jury, in answer to interrogations, expressly found that the trespass was made by defendants, secretly, knowingly, willfully,' and intentionally, and that the defendants, with knowledge thereof, concealed the trespass from the plaintiff. As we have before stated, for the purpose-of staying the statute of limitations, the defendants are chargeable with the fraud and fraudulent concealment of tbeir agents, although it may never have been brought to their personal knowledge. The finding of the jury, therefore, establishes, for the purposes of our review of the ease, the fact that the trespass was fraudulently made and fraudulently concealed, and, hence, that the statute did not begin to run until the discovery was or should have been made, as stated in the instruction.. Under these circumstances, the giving of the instruction was-not prejudicial, since the jury have found the additional facts, which should have been contained in it to make the instruction correct. This was held in Lowe v. San Francisco etc. Co., 154 Cal. 578 , [ 98 Pac. 678 ]. There were other instructions suggesting the same view, and, upon the same ground, they must be considered as immaterial and harmless.

One of the instructions objected to was to the effect that if the jury should find that the ore taken by defendants from the Lightner mine was partly extracted before the Lightner Company entered into possession under its purchase and partly afterward, the burden rested upon the defendants to show

Instruction 9 was to the effect that “the right of the plaintiff to recover is not at all affected by the fact that the trespass was not ■willful.” This would be technically correct if it méant only that the plaintiff could recover compensatory damages for a trespass not willfully made. The right to recover exemplary damages would be affected by the fact that the trespass was willful, if by. a willful trespass is meant a fraudulent or malicious trespass. But the right to recover compensatory damages is not affected by the fact that the trespass was not

The case appears to have been fully and carefully tried and we do not find any error which substantially affects the right of the plaintiff to recover the twenty-seven thousand dollars, found to be the value of the ore taken, as it lay in the ground before it was mined. Substantial justice demands that instead of reversing the cause for a new trial, the plaintiff be at least given an opportunity to accept the part of the damages as to which the verdict is not vitiated by the errors aforesaid. (See Salstrom v. Orleans etc. Co., 153 Cal. 558 , [ 96 Pac. 292 ].)

It is therefore ordered that in the event that plaintiff, within thirty days from the date of the filing of this opinion, file with the clerk of this court its written consent to a modification of t\e judgment by the deduction of twenty-seven thousand dollars therefrom, leaving the same to stand for the remaining twenty-seven thousand dollars and costs of suit, said judgment be modified accordingly, and the order denying a new trial shall be affirmed; such modified judgment to bear interest at the legal rate from the date of the entry of the original judgment of the superior court; but that if such consent is not so filed within said time, the judgment and the order denying a new trial shall be reversed.

Sloss, J., Angellotti, J., Henshaw, J., Melvin, J., and Lorigan, J., concurred.

On January 8, 1912, the supreme court in Bank made the following order in the foregoing appeal:

The plaintiff having consented thereto in open court, it is

Rehearing denied.