Synnott v. Shaughnessy — 130 U.S. 572

Majority — Uamae J.

p. 572

SYNNOTT v. SHAUGHNESSY.

Syllabus

APPEAL FROM THE SUPREME COURT OF THE TERRITORY OF IDAHO.

No. 176.

Submitted January 26,1889.

Decided April 22, 1889.

In & suit in equity to set aside a conveyance of a silver mine in Idaho, as • induced by false and fraudulent concealment and misrepresentations, the court, after stating the pleadings and the facts, holds, that neither the law nor the equities are with the plaintiffs.

In equity. Decree dismissing the bill, from which the plaintiffs appealed. The case is stated in the opinion.

Mr. J. G. Sutherland and Mr. John R. McBride for appellants.

No appearance for appellee.

delivered the opinion of the court.

On the 24th of May, 1882, John Synnott and Peter Welch commenced an action in one of the territorial courts of Idaho Territory against Michael .Shaughnessy, to have annulled the sale of the Eureka Silver Mine, situated in Mineral Hill mining district, Alturas County, in that Territory, and to compel him to reconvey the same to them as vendors. In their com- . plaint the plaintiffs alleged-that on the 5th day of. July, 1881, they were the owners each of an undivided one half, and in the lawful possession, of the Eureka silver-mining claim, particularly describing it by metes and bounds, which they had located in June, 1880, and upon which they had developed a small seam or vein of galena ore, worth about $1000; that this vein was all of the ore which had been discovered by .them, or either of them, upon the mining claim up to that time, and that they were ignorant of the existence of any other vein or body of ore, and believed that all the value that was then attached to the mining claim arose from the' developments they had made upon the claim and the ore they had discovered,, and did not exceed $2500; that on or about the 3d of July, 1881, the defendant by his agents or employés, had discovered upon a part of the Eureka mining claim, remote from the places where the plaintiffs had been at work, a large and valuable vein, or body of ore, from eighteen inches to four feet in thickness, extending about seventy feet continuously along said vein, the existence of which rendered the mine worth at least $100,000, and of the existence of which these plaintiffs were wholly ignorant ; that the defendant, by his agent? -,and servants, intending to cheat and defraud these plaintiffs, fraudulently and falsely concealed and suppressed from them 'fhe knowledgé of the existence of such vein or ore body, and misrepresented theifacts concerning the same, and fraudulently, and falsely represented to them that no other ore body or vein of ore existed in the mining claim, except such as was known to these plaintiffs; that such false and fraudulent statements . were ioade by the defendant, his agent and employés,-in order to enable mm to purchase the mining claim at a price far below

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•its real value; that by means of such false and fraudulent concealment and misrepresentations these plaintiffs, who believed-the same to be true, were made to believe that no other body or vein of ore existed in the mining claim than that which was known to them, and that the real value of the claim was not more than $2200; that immediately prior to the discovery of the ore vein or ore body by the defendant, these plaintiffs had employed one Henry Porter as an agent. to find for them a purchaser of their claim at the sum of $2500, and- agreed' to pay him ten per cent of that sum if he should make a sale thereof at the price mentioned; that during such employment of Porter, and while he was endeavoring to obtain a purchaser for the mine;.he, himself, first made the discovery of the aforesaid ore vein and ore body, which -was unknown to these plaintiffs; that upon such discovery Porter concealed the same from the plaintiffs, and falsely and collusively and for a consideration paid to him by the defendant, to wit, $1000, informed the defendant of the existence of such large vein or ore body, and then and there, in violation of his employment by these plaintiffs, and in fraud of their rights, entered into the employment of the defendant, and undertook and agreed to assist him. in concealing from them the knowledge of the existence of the ore body he had discovered,. and in obtaining the mining claim from them at the price of $2200, which was greatly below its real value; that by reason of those false, fraudulent and collusive acts of Porter, as well as the misrepresentations and concealments of the defendant, these plaintiffs were induced to part with their property for the' sum of $2200, and to execute and deliver to the defendant a quit-claim deed of the Eureka mining claim, dated on the 5th day of July, 1881, which was afterwards duly recorded; that by reason of such conveyance thus fraudúlently obtained from them, and if the same.be not declared fraudulent, null and void, they will sustain great pecuniary loss and damage, to wit, $100,000; that since fhe conveyance to the defendant,of the mining claim he has been in the possession of the same, and has extracted and taken therefrom a large quantity of ore and has made large profits theréfrom, to wit, over $3000; and that the plaintiffs.are ready and

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willing and hereby offer to repay to the defendant the sum- of $2200, the purchase price of the mining claim, together- with interest from July 5, 1881, upon a reconveyance, of the mining property to them.

The prayer for relief was, (1) That the deed of July 5, 1881, be declared fraudulent, null and void, and set aside by the • court, and the defendant be decreed to reconvey the mining claim and premises to the plaintiffs upon their paying him the purchase price thereof, together with lawful interest -from the date of. the purchase; (2) that the- defendant be decreed to account to the plaintiffs for the net proceeds of the ore extracted by him from the mining claim since his purchase thereof, and upon such accounting be decreed to pay the same to the plaintiffs; (3) that' the defendant, his agents and employés, be enjoined and -restrained from interfering with the mining claim, or extracting or clearing away any of the ore therefrom; (4) that the plaintiffs be put in possession of the mining claim by the process of the court; (5)-That the defend-, ant be decreed to pay the- costs of this action; and (6) for other and further relief.

The answer of the defehdant denied specifically all the material allegations of the complaint, and set out in detail the circumstances attending the purchase of the mine, which, if proved, would establish his good faith in, such purchase; and the absence of any fraudulent acts on the part of himself or any of his agents connected with such transactions.

The cause having-been heard upon the pleadings and proofs, the court found the facts - in favor of the defendant, and entered a decree, in his .favor. Upon appeal to the Supreine Court of the Territory, that decree was' in all respects affirmed ; and an appeal from the latter decree brings the case here.

The findings of fact' by the trial court, and which were adopted by the Supreme Court of the Territory, are twenty in number, and elaborately set out all the facts, and circumstances attending the sale of the miné.- The material factSj as gathered from these findings, stated briefly, are as follows:

For some time prior to the 5th of July, 1881, the plaintiffs,

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Synnott and Welch, had owned the. Eureka mine,.and had lived in a cabin near by. They had done considerable work in developing it, and had found a small vein of ore, from which they had extracted, through several tunnels, about $1000 worth of ore, then lying on the premises. They were desirous of selling the claim, and entered into an agreement with one Porter, to pay him a commission • of ten per cent on' the sale thereof, in case he realized from such sale- $2500.

Under these arrangements Porter first applied to one John Gilman to purchase the claim, but no agreement was reached between them. Porter then, on the morning of July 5, 1881, tried to induce one E. A. Wall (who afterwards, acted as the agent of the defendant Shaughnessy) to purchase the claim. He informed Wall that he had a verbal option of purchase at the price of $2000, and- that his terms would be a com-, mission of $500, or one fourth of the claim, if’ Wall should purchase it. In the same' interview he stated to Wall that he thought he could show him something on the claim that would induce him to buy it. Porter then having disclosed to Wall that he had a further appointment with Gilman to resume negotiations regarding the claim, Wall declined to have any further” conference, or to make "any terms for the purchase,, so long as negotiations with. Gilman continued.

Porter then met Gilman, and they inspected the claim together. Porter showed him float ore which he had discovered at two places on the claim, one of which was on and about the path which Synnott. and Welch had usually travelled from their cabin to their work on the claim, and the other at a point about fifty yards from that path. Alter- this inspection Gilman went immediately to Synnott and Welch, and had further negotiations with them, but thgy failed- to agree on any tetms. Synnott .and Welch then informed- Porter that the^ were willing to sell the claim for $2000, but that in that case could not gllow him any commission.

On the evening of that day Porter again went to Wall,' and resumed negotiations. They went together over the Eureka claim, and Porter showed Wall the float ore he had found, and insisted on having one fourth of the claim for his option

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and for showing the float ore. Wall informed him that if he bought the claim it would be for the defendant Shaughnessy, who. might prefer to be the sole owner, and proposed that if Porter would allow him ten days to. decide he would either' allow him one fourth of the claim or pay him $1000, to which Portfer agreed, and at the end of that period, and after the purchase,, the $1000 was paid' to Porter accordingly^ After their examination of the claim Wall went with Porter to the cabin'of Synnott and Welch and informed them that he would buy the claim for $2000; to which they assented. Wall then told them to com¿ down to his office at Bullion and make out their deed, and they agreed to do so. AfterWall and Porter had left, Gilman returned and. resumed negotiations' with Synnott and Welch, finally offering them $1800 and one tenth of the proceeds of the claim, Or $2200 in money for the whole. He also informed them of the fact that Porter had discovered float ore on the place... After Gilman had gone away, Porter' returned to the cabin of Synnott and Welch, and the three went together--to Wall’s office. On the way they informed Porter of the offer made by Gilman, and intimated that they would expect the same from Wall, because they were poor, and could not afford to lose the $200, or pay any commission. On their arrival at Wall’s office, Porter informed Wall of Gilman’s offer, whereupon Wall told them that he would pay $2200 for the claim, adding with some asperity, that Gilman should not have it at any price. The deed from Synnott and Welch to Shaughnessy for $2200 was then drawn and executed and attested, and was acknowledged the following day.

- The day after the sale Porter did some work on- the claiip at one of the points where he had found float ore, and on th.3 following day Wall, as agent of the defendant, put miners at, work at one of the places where float-ore had been observed,., and in the course of a few days, by an open cut 20 by 25 feet, discovered a body of ore in place, which, when taken out, weighed 23 tons, and netted the defendant about $800. '

The ore exposed by Synnott and Welch was taken out and sóld by the defendant, netting him about $90. .

The defendant afterwards expended about $23,000 in' devel

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oping the claim, and discovered a large and valuable lode. He has sold ore from it to the amount of aboiit $3000. At the time this suit was brought he had opened negotiations for the sale of the claim at $150,000.

The plaintiffs in error rest their case upon two propositions,' viz.: (1) The defendant, with knowledgé of the existence of a. large “ body of ore ” in this claim, by his agent, who made the purchase, wilfully misled the plaintiffs in relation thereto, and induced them to sell for a price which they would not have sold for had they been truly informed*of the facts. (2) The defendant, by his agent (Wall), entered into an agreement to-pay the agent of the plaintiffs (Porter) a sum of money to conceal from his principals his knowledge of the existence of. a valuable body of ore, which he had informed the defendant’s agent of, and then procured a conveyance from the plaintiffs of the claim in fraud of their rights.

These two propositions, in our opinion, are clearly negatived by the 12th, 14th and 15th findings of fact, which are as follows:

“12. The evidence in the case does not show or tend to show that Wall or Porter or any other person had discovered or knew of the existence of any vein or lode of ore in place on the Eureka mining claim, other than such as had been found by and was known to Synnott and Welch, in their excavations, at any time prior to the sale and execution of the deed.”

“ 14. No false or fraudulent representations concerning the Eureka mining claim were ever made to said vendors or any one else by the defendant, or by any agent or employé of his.

“ 15. No concealment of any material fact concerning said mining claim was ever made by the defendant or by any agent or'.employe of his. Neither the defendant nor any agent of his had ever discovered or knew of the existence of any vein or lode on said claim (except such as Synnott and Welch had exposed by their tunnels) prior to the sale, nor' until some days had elapsed after the sale.”

In the assignment of errors, however, it is insisted that these findings are, not. responsive to the allegations of the complaint. It is said that the trial court did not make any

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findings on the following material issues: (1) It did not find as.to the value of th® ore body discovered in the Eureka-mining claim by Porter, and by him shown to Wall at the. time the purchase wasipade by the latter for the defendant; (2) it didmot find as' to the knowledge of the existence and extent of such-ore body by Wall, at the date last mentioned; (3) it failed to find whether Porter discovered any ore body, as alleged, and, if so, when, and what was its value and extent; wrhat concealments were practised by him upon the plaintiffs, if’ any ^ what knowledge defendant or his agent had of these -concealments; whether plaintiffs were offered or received the value of the claim at the time of - the sale thereof; what the defendant paid Porter the $1000 for; what the contract was between Porter and Wall; and what were Porter’s relations to the- vendors at the time of the sale.

We do not think there is miich force in this contention. It will, be, observed that the basis of this assignment of error is the assumption that Porter, as the agent of the plaintiffs, prior to the day the mine was sold, had discovered a valuable body of ore,'the knowledge of which he concealed from the plaintiffs, and imparted to the defendant.

This assumption, as shown by the findings, to which we are restricted, is entirely without foundation. Neither Porter nor the defendant or his agent, Wall, ever. discovered any vein or lode of ore on the claim at- any time prior' to the sale- thereof by the plaintiffs! The counsel for appellants contend that the court; in finding that Portér or Wall discovered no “ vein ” or “ lode,” did not find that they discovered no “ ore body.” We deem it sufficient to say that the .context of thp complaint shows that those terms were used- synonymously by the pleader, in the common parlance of miners, and not with reference to any technical distinction. The only. indications "of. any. such ore body or vein that had been found were simply a few small pieces of ore known as “float” ore, which did not of necessity indicate the existence of any large ore body. Further, the fact that Porter had found “ float ” ore on the claim was made known to the plaintiffs before they made the deed for ihe claim: Such purely surface indications, open to' all ordinary

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observers, and situated on or near the path along which the plaintiffs travelled in going to and from their work, must have been known to them, and are not such as to-be made the subject of concealment and misrepresentation. The fact, however, that there was' no such discovery of an actual vein or body of ore demonstrates that there could have been no such fraudulent and collusive concealment and misrepresentation, as to its limit and extent, as-is charged in this complaint. It required not only a considerable excavation; but also- a great outlay of money and great labor on the part of the defendant to develop the existence of a vein of ore.

This virtually disposes of both propositions advanced by the plaintiffs in support of their conf- Hon. That the defendant paid Porter $1000, there is no q on. But that such sum was paid him to conceal from the plaintiffs his knowledge of the existence of a large ore body on the claim could not have been true; for the findings state that he possessed no such knowledge. It is presumable that the. plaintiffs, as men of ordinary intelligence, must have known that Porter was to receive from the defendant, or his agent, Wall, a commission for his Avork in the transactions- connected with the sale of the mine; for the findings show that they did not pay him anything out of the sum received from such sale, as their agent, and informed him beforehand that Avhile they were willing to sell the claim for $2000, in that case they could not allow him any commission. It really could make no difference to the plaintiffs what he was paid, since they received' for the claim all they had asked for it, and in reality $200 more than they had, a • ícav hours before, agreed to take, and within $50 of what they would have got if Porter had made the sale under their first agreement with him.

There are no other features of the case that call 'for special mention.' In no aspect of it' do we think either the law or the equities are with the plaintiffs.

The-judgment of the Supreme Court of'Idaho is, therefore,

Affirmed .