Loy v. Alston

Citation172 F. 90
Decision Date12 July 1909
Docket Number3,005.,2,972
PartiesLOY v. ALSTON et al. ALSTON v. LOY.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

(Syllabus by the Court.)

Mining partnerships may be formed (1) by the customary agreement of partnership, or (2) by the operation of a mine by some of the joint owners with the consent or acquiescence of the other joint owners.

The conveyance by one joint owner of his interest in the mine to a stranger does not dissolve the partnership in its operation; but the grantee becomes a partner in the place of the grantor, who ceases to be a member of the partnership.

Mining partnerships, see note to G. V. B. Min. Co. v. First Nat Bank of Hailey, 35 C.C.A. 515.)

A partner, who, in violation of a stipulation of a partnership agreement to the effect that the owner of the major interest should superintend and control the conduct of its business excludes him therefrom, and thereafter incurs losses by his own management of the partnership business, may not recover any share of them from the excluded owner.

A bill in equity dependent upon a former action, of which the federal court had jurisdiction, may be maintained in a national court, in the absence of diversity of citizenship and of a federal question: (1) To aid, enjoin, or regulate the original suit; (2) to restrain, avoid, explain, or enforce the judgment or decree therein; or (3) to enforce or obtain an adjudication of liens upon or claims to property in the custody of the court in the original suit.

One who has recovered damages on the ground that he has been induced by fraud to make himself liable to pay a promissory note is estopped from successfully invoking the maxim, 'He who comes into equity must come with clean hands,' to defeat the subsequent collection of the note in equity.

Courts of equity have original jurisdiction to offset judgments between the same parties.

Where one of the judgment debtors is a nonresident without leviable property in the jurisdiction, the remedy at law is not as prompt, efficient, and adequate as a decree of offset in equity.

A chancellor's recital in a decree that by agreement of parties in open court a certain relief was adjudged is presumptively correct, and, in the absence of any evidence to the contrary, it must prevail.

Where the enforcement of a levy upon property is stayed until the final hearing of a suit in equity while the security of the levy is preserved, and at the final hearing it is found that the judgment debtor must pay some part of the amount unpaid on the judgment, that debtor is liable for the costs of guarding and holding the property levied upon during the stay.

An order of the court, made after an appeal from such a decree and before the determination of the case on the appeal, to the effect that the levy be released, is error, because the bond on appeal was not conditioned to pay the judgment in case the appeal failed.

H. H Bloss and John T. Harding, for D. B. Loy.

Ralph E. Scofield (John L. McNatt, on the briefs), for W. W. Alston and E. R. Durham, U.S. Marshal.

Before SANBORN and VAN DEVANTER, Circuit Judges, and POLLOCK, District judge.

SANBORN Circuit Judge.

On June 29, 1906, W. W. Alston recovered a judgment in the court below for $6,500 and costs against D. B. Loy and L. A. Tooker, on account of fraudulent representations, which induced him to buy three-ninths of a mining lease in January and two-ninths of the same mining lease in April, 1905. He purchased the two-ninths of Loy, who was the cashier of the Miners' & Merchants' Bank of Aurora, and at the time of that purchase he and Tooker gave their note to that bank for $2,667, the proceeds of which were used either to pay for the interest purchased in the mine or for an interest purchased in a mill and mining plant, or for both. Tooker et al. v. Alston, 86 C.C.A. 425, 428, 159 F. 599, 602, 16 L.R.A. (N.S.) 818.

On December 8, 1906, the bank recovered a judgment against Alston in the circuit court of Jasper county in the state of Missouri, for $1,595.85, on account of the balance due on this note. In March, 1907, this judgment was assigned to Loy, and on April 28, 1908, there remained $817.75 and some interest owing upon this judgment. On that day Loy exhibited his bill in this court, in which he alleged that Alston owed him $3,034.45 on account of a partnership transaction between them and $835.35 on account of the bank judgment, that he had tendered and offered to pay to Alston the difference between the aggregate of these amounts and the amount of Alston's judgment against him, that Alston was not a resident of the state of Missouri and was insolvent, and he prayed that the amount which Alston owed him might be credited upon Alston's judgment against him in the court below, and that Alston might be enjoined from enforcing that judgment.

Upon the payment by Loy of $3,300, the difference between the aggregate amount of Alston's alleged indebtedness to him and the amount due on the judgment against Loy, the court below issued a temporary injunction against the collection of the remainder of Alston's judgment, and the suit then proceeded to final hearing, whereupon the court rendered a decree to the effect that Alston owed Loy nothing on account of the alleged partnership, that the $817.75 unpaid on the bank judgment be credited upon the judgment against Loy, that by agreement of the parties in open court Alston should make no further claim against the bank or its sureties on account of a certain attachment, and that Alston should pay the costs and expenses which had accrued upon a levy of an execution which he had caused to be made under his judgment against Loy. From this decree both parties have appealed, Loy because the court failed to allow him the amount which he claimed on account of the alleged partnership, and Alston because the court compelled him to credit Loy with the amount owing upon the bank judgment, deprived him of the costs accrued on his execution, and by an order made after the decree released his levy thereunder.

The claim of Loy is that he, Alston, and L. A. Tooker were partners operating the mining lease, five-ninths of which he and Tooker had induced Alston by fraud to buy, from January, 1905, until March, 1907, that this operation resulted in a loss of $4,184.06, which he paid, and that Alston owes him five-ninths of this amount, or $2,324.

A mining partnership differs in some respects from the ordinary commercial partnership. It may be formed, continued, and dissolved in either of two methods, (1) by the usual partnership agreement, or (2) by the joint ownership of undivided parts in a mine or lease, and by the operation of a mine or lease by some of the joint owners with the consent or acquiescence of the other joint owners. A commercial partnership is dissolved when one of the partners disposes of his interest, but a mining partnership, which results from the operation of a mine by some of the joint owners with the consent of the others, is not dissolved by the conveyance by one of these owners of his interest in the mine or the lease to a stranger; but the grantor then ceases to be a member of the copartnership, and the stranger becomes a partner in his place. The delectus personae which is an essential element of an ordinary partnership is not an indispensable attribute of a mining partnership. Bissel v. Foss, 114 U.S. 252, 261, 5 Sup.Ct. 851, 29 L.Ed. 126; Snyder on Mines, Secs. 1575, 1581; Taylor v. Castle, 42 Cal. 367, 370; Nisbet v. Nash, 52 Cal. 540; Charles v. Eshleman, 5 Colo. 107, 111.

The entire loss in the conduct of the partnership here in question occurred between January, 1906, and March 11, 1907 and Loy insists that he and Alston were then partners, both by virtue of his ownership of two-ninths of the mine during that time and also by virtue of an agreement of partnership between them. Was Loy a partner of Alston by virtue of his ownership of two-ninths of the mine during this time? Loy, Tooker, and Reed each owned three-ninths of the mining lease in January, 1905. They sold and Reed conveyed his three-ninths of this lease to Alston during that month. On April 13, 1905, Loy conveyed two-ninths of the lease to Alston and one-ninth of it to Tooker by the same writing, so that he parted with his entire interest by a single conveyance. On May 4, 1905, Tooker conveyed his four-ninths to his son Harry Tooker, and on December 11, 1905, Loy conveyed two-ninths of this lease to one Olney. These conveyances were all in writing and properly executed, and there are no other conveyances of any interest in the mine in evidence. The necessary result is that Loy parted with his entire interest in the lease in April, 1905. He then ceased to be a partner by virtue of any ownership in the lease, and Tooker and Alston became the sole owners and partners, and he never thereafter acquired any title whatever to any interest in the lease or in the mine. It is true, as counsel declare, that Loy and Tooker testified that there was an understanding that Loy should have Tooker's interest until the latter paid for it, and that he never did so. It is also true that Loy and the Tookers testified that Harry Tooker turned back to L. A. Tooker, and the latter turned back to Loy, two-ninths, or some other indefinite interest, in the lease after the conveyances to them had been made; but this testimony was the only evidence that Loy ever had any right or title to an interest in the lease after April 13, 1905, and it is clearly insufficient to overcome these indisputable facts: The recorded title was in others ever after April 13, 1905. Loy and Tooker induced Alston to purchase of Loy the two-ninths which he bought on that day by the representation that Tooker was buying Loy's other...

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