Tooker v. Alston , 159 F. 599 ( 1907 )

HOOK, Circuit Judge

(after stating the facts as above). The denial of defendants’ request for a .directed verdict in their favor is presented by the first assignment of error, and the question is whether the verdict against them is sufficiently supported by the evidence. There was substantial evidence of the following facts:

The Boston-Aurora Zinc Company, a Maine corporation, as the owner of 10 acres of land in southwest Missouri, executed a mining lease thereof, dated November 18, 1904, to Tooker, Loy, and Reed. It required the immediate commencement and continuance of mining operations in a minerlike manner and in good faith, the installation on the premises within 90 days of a 100-ton concentrating plant, which should remain thereon and be operated, and the payment of a royalty of 15 per cent.' Subject to these requirements and their continued observance, the lease ran for 10 years. It became effective May 13, 1905. Some years before there had been extensive mining operations on the leased ground at a depth of 120 feet below the surface, in part by means of a drift from adjoining property, and in part by a shaft- or shafts on the leased ground, penetrating the drift. A large area had been mined and the valuable ore extracted. The old drift was about 10 feet wide and from 25 to 40 feet in height. With the exception presently to be mentioned the mining operations had ceased about 5 years before the transactions between plaintiff and defendants, the mine had been abandoned as worked out, and the machinery and mining structures removed. In one place in the old drift, where it was about 40 feet in height, some mineral of value liad been left in tlie roof and in a leg supporting the roof. The roof at this point was about 80 feet from the surface of the ground.

Within the year preceding the transactions involved in this case a couple of miners sunk a shaft, the bottom of which, being about 80 feet from the surface, penetrated this mineral. The rights they had, though it does not appear what they were, were sold to Tooker and boy. From the bottom of the new shaft a drift was driven, resulting in the formation of a small chamber. During these operations the floor at the bottom of the shaft broke through into the old abandoned drift; the opening being about 3 feet in diameter. When defendants obtained the lease in November, 1904, they cast about to find a purchaser, and to make their proposition attractive it was necessary for them either to conceal the existence of the former mining operations or to minimize their extent and prevent those solicited to purchase from learning that in fact tlie ground had long since been practically abandoned for mining purposes. To this end the opening from tlie bottom of the new shaft into the old drift was concealed by boards upon which earth and mineral were thrown. It was represented that tlie new shaft was in virgin ground, in undeveloped territory, and therefore that the mine was of exceeding richness, requiring j-ears to exhaust. Not far from the top of the new shaft a considerable area of the surface, about 100 by 150 feet, had sunk because of the withdrawal of support in the abandoned workings, '['he extent of this depression was so considerable it became necessary to account for it, and it was represented to be a “blow-out,” a condition not infrequent in that mining country. A blow-out was understood to lie due to natural causes, and not to subterranean mining operations. Among those upon whom, these and other devices were practiced, and to whom tlie misrepresentations were made, was the plaintiff, a citizen of North Carolina, who as a traveling salesman visited the town in which defendants resided, and near which the mine was located, in January, 1905. Tlie plaintiff was without experience and wholly unfamiliar with mines and mining operations.

An agent of defendants, who says he was similarly deceived by them, engaged him in conversation, spoke of defendants’ mine, extolled its value, and introduced him to Tooker, who in turn induced him to visit the premises. Shortly before their arrival the sou of Tooker, who was at tlie surface, shook the rope, and, having attracted the attention of the two workmen who were in the old drift, told them that his father liad telephoned he was going to bring a man to look at the mine, and for them to come up into the new shaft and fix it up. One of these men testified that this was the agreed plan, and that they were working there merely for tlie purpose of keeping tlie lease alive; that tlie defendants said tiiey desired to sell, and not to work, the mine. The two workmen came up, placed the boards over the opening, and scattered some earth around the edges. They washed the walls off with water to give the ore an attractive appearance. Shortly afterwards the plaintiff went down the shaft, accompanied by the superintendent of an adjoining mine, to whom Tooker had introduced him. Tooker remained on the surface, as was his course on other occasions when he took prospective purchasers there. The superintendent said: “It just looks bully. It is just dandy — a bully good mine, or looks like it.” When they returned to the surface, plaintiff asked him his opinion, and he replied: “It is a fine thing, if it is in solid ground.” Tooker thereupon replied, “There is no, question about it. It is in solid ground.” Whilst plaintiff was in the town Tooker so attended him that he had little opportunity to secure disinterested advice. Tooker was more active than Loy; but the latter was cognizant of what was being done and assisted when occasion required.

Various misrepresentations were made of the richness of the mine, its value, and what could be done with it, for which,' if alone regarded,, an action might not have been maintained (Sawyer v. Prickett, 19 Wall. 146, 22 L. Ed. 105; Gordon v. Butler, 105 U. S. 553, 26 L. Ed. 1166; Union Pacific v. Barnes, 12 C. C. A. 48, 64 Fed. 80; Kimber v. Young, 70 C. C. A. 178, 137 Fed. 744); but they are adverted to here for their relevancy to the entire transaction. They represented to plaintiff that Reed was a farmer living 25 miles distant in the country that he was an undesirable partner, because he would not assist in putting up the mill required by the lease; and that his third interest could be bought'for $4,000. Plaintiff was dissuaded from visiting Reed and trying to buy for a less sum. They also represented that they could incorporate, and that the property would stand a large capitalization. Finally plaintiff purchased the Reed interest, paying Loy, who assumed to act for Reed, $4,000 for it. The plaintiff then left, and did not return until April. During his absence Loy wrote him that he had put a price of $25,000 on the property. Plaintiff wired in reply his interest was not for sale. When he returned Loy refused to incorporate, and Tooker proposed to plaintiff that they buy Loy out. This was done, and plaintiff paid Loy $4,000 for two-thirds of his third interest; it being understood that Tooker purchased the remainder of Loy’s interest at the same rate.

Though the bill of sale to plaintiff and Tooker recited the payment of $6,000, it is questionable whether Tooker’s purchase was genuine, since at the time of the trial Loy appears to be still associated with Tooker in control of the property. Neither of them testified at the trial, and their versions of the transactions do not appear. Probably part of the $4,000 paid by plaintiff was for Loy’s interest in an old mill bought and removed "to the leased ground; but it appeared that as the result of both transactions plaintiff paid at least $7,000 for a five-ninths interest in the mining lease. There was also substantial evidence that the leasehold interest was practically worthless. The life of the lease depended upon continued mining operations conducted in a minerlike manner and in good faith, and also upon the continued maintenance and operation of a 100-ton concentrating plant on the premises. It is not as though plaintiff’s interest were in the land itself, in which event he might safely await the invention of new processes for the profitable reduction of low-grade ores or await discoveries of other veins of mineral in the ground. There was proof that the mine had been abandoned as worked out and no longer profitable, and that the mining, upon the results of which defendants relied, was the removal of mineral left in the old workings to support the roof. After a year’s experience the most favorable showing of defendants was that the mine was “holding about even.” It appeared, however, that they were in debt, and some of their bills were four or five months past due. The plaintiff, relying on what was said and done by defendants, suffered a loss of the difference between what he paid and the value of what he got at the time lie got it. Sigafus v. Porter, 179 U. S. 116, 21 Sup. Ct. 34, 45 L. Ed. 113; Smith v. Bolles, 132 U. S. 125, 10 Sup. Ct. 39, 33 L. Ed. 279. It was also shown that defendants, shortly before meeting plaintiff, attempted to deceive two other men, Stone and Moulton, by the same devices, but failed.

In conclusion: There was substantial proof that defendants fraudulently concealed and disguised the physical condition of the property in question; that, having done so, they made false statements, not promissory in character, nor of mere opinion, but as to existing facts within their knowledge, of which plaintiff was ignorant; that the statements were material, and were made with intent that plaintiff should rely thereon and be deceived; that plaintiff did rely thereon, and was deceived into paying over $7,000 for that which was of, little or no value. Under familiar rules of law, such proof required submission of the case to the jury, and was sufficient to uphold their verdict for the plaintiff. There were evidences upon the surface of the ground of prior mining operations, which, had they been pursued by plaintiff, would have led to knowledge of the real condition of the property. The general rule is that a purchaser must exercise common prudence, and if he fails to avail himself of the ordinary means of information the law gives him no redress. Andrus v. St. Louis Smelting Co., 130 U. S. 643, 9 Sup. Ct. 645, 32 L. Ed. 1054. But defendants cannot invoke this rule, because of their active efforts to conceal the condition of the mine, to thwart investigation and inquiry, and in misrepresenting the significance of conditions that were apparent. Such conduct brings the case within the salutary exception designed to avoid encouragement to fraudulent and deceitful practices. Strand v. Griffith, 38 C. C. A. 444, 97 Fed. 854; Henderson v. Henshall, 4 C. C. A. 357, 54 Fed. 320. See, also, Stewart v. Wyoming Ranche Co., 128 U. S. 383, 9 Sup. Ct. 101, 32 L. Ed. 439. It was no defense that part of what plaintiff was induced to purchase bv defendants’ fraud and deceit belonged to another party. Sigafus v. Porter, 28 C. C. A. 443, 84 Fed. 430.

The next four assignments of error relate to the refusal of the trial court to give certain instructions requested by defendants. The instruction set forth in the first of these was fully embodied in the general charge. The court was not required to repeat it, or to give it in the language of counsel. By the instruction In the next one counsel sought the declaration of a rule that if the plaintiff made an investigation himself, and consulted with others as to the condition of the mine or its value, there is a presumption of law' that he acted upon information so gained, and not upon the representations of defendants. There is no such presumption of law. In Sioux Nat. Bank v. Norfolk State Bank, 5 C. C. A. 448, 56 Fed. 139, this court held that it was not a defense that plaintiff also made some'other examinations and inquiries, if the conduct of defendants was a material, though not the sole, inducement to the transaction in question. In the case at bar the tidal court charged the jury that it was incumbent upon the plaintiff to show that he relied upon defendants’ representations, believed them to be true, and, so believing, acted thereon. In another the instruction asked and refused was that the jury should find for defendants unless it appeared that the mine was worthless. Obviously this is not the law. The instruction set forth in the fifth assignment was that the jury should “disregard the testimony set out in the deposition of John B. Stone.” This, also, was rightly refused. It was not denied that the deposition was properly taken upon sufficient notice. The real point of defendants’ objection was that Stone was allowed to testify that, shortly before the transaction with plaintiff, defendants attempted to induce him to purchase an interest in the lease, and in doing so made the same representations and used the same devices for concealment, which he described. Without considering other reasons for sustaining the action of the court, it is sufficient to say that Stone’s testimony was relevant and material. Exchange Bank v. Moss, 79 C. C. A. 278, 149 Fed. 340, and cases there cited.

In view of familiar and oft-repeated rules of practice, needing no citation of the authorities, the remaining five assignments of error may be disposed of by describing them briefly. The sixth assignment challenges as an entirety a substantial part of the court’s charge, embracing different rules applicable to different phases of the case. The seventh is as follows:

“The court erred in the entire charge to the jury, and for purposes of abbreviation it will not be copied in this assignment of errors.”

In the eighth, complaint is made in general terms of the admission of the testimony of three witnesses upon various subjects. In the ninth, it is said that the court erred in entering judgment on the verdict in favor of plaintiff, when by the law of the land the judgment ought to have been for the defendants. And the tenth is that the court erred in overruling defendants’ motion for a new trial.

The judgment is affirmed.