G.V.B. Min. Co. v. First Nat. Bank

• Citation: 95 F. 35
• Decision Date: 02 May 1899
• Docket Number: 507.
• Parties: G.V.B. MIN. CO. v. FIRST NAT. BANK OF HAILEY (BROWN et al., Interveners).
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

95 F. 35

G.V.B. MIN. CO. v. FIRST NAT. BANK OF HAILEY (BROWN et al., Interveners).

No. 507.

United States Court of Appeals, Ninth Circuit.

May 2, 1899

A. F Montandon, for appellants G.V.B. Min. Co. and Henry Aplington.

Lyttleton Price, for appellant First Nat. Bank of Hailey.

Arthur Brown, in pro. per.

Before GILBERT and ROSS, Circuit Judges, and HAWLEY, District Judge.

HAWLEY District Judge.

Pending the foreclosure suit of G.V.B. Min. Co. v. First Nat Bank, 95 F. 23, a receiver was appointed by the court to take charge of the proceeds of ore from the Red Elephant group of mines, then operated by Henry Aplington under a lease from the mining company. The amount of money from the proceeds of the ore thus extracted that came into the hands of the receiver was $7,617.34. Arthur Brown and Henry Aplington have each separately intervened in the suit of foreclosure, and claim the money realized from the proceeds of the ore thus extracted. Brown claims all of it. The court gave him one-third. He appeals from the order of the court refusing to give him the other two-thirds. Aplington admits that Brown is entitled to one-third, but claims the other two-thirds. The court refused to allow him any part of it. He appeals from this ruling of the court. The bank claims all of it. The court gave it two-thirds. It appeals from the order allowing Brown the one-third. 89 F. 449.

Who is entitled to this money? What are the facts?

1. Aplington claims the two-thirds by virtue of the lease which was given him by the G.V.B. Mining Company, the facts in regard to which are sufficiently stated in the statement of facts in the foreclosure suit, and in support of his claim asserts a right thereto on account of the time, labor, and expense by him incurred in working the mines, and producing the money from the ores extracted therefrom, which, he claims, were far in excess of the value of the money derived therefrom. It is clear that, as against the bank, he is not entitled to anything. The bank did not employ him. It had nothing to do with the leasing of the property to him. His rights in the premises depended solely upon the ground that Thurber would, under the name of the mining corporation, be able to defeat the lien of the bank's mortgage. He took his chances, and must abide the consequences which he voluntarily brought upon himself. When he took the lease, he had full knowledge of the bank's mortgage. He knew it was prior in time to any right or claim he had. The mortgage, having been declared valid, constitutes a prior lien upon the property. The bank had the right to have a receiver appointed to take all moneys from the proceeds of ore, and hold the same to abide the result of its foreclosure suit, and, if successful it was, as against Aplington, entitled to all the money.

2. The facts upon which Brown claims all the money are substantially as follows: Prior to September 22, 1888, G. V. Bryan, George W. Venable, and George H. Roberts were mining partners working the Red Elephant group of mines. About that time Roberts executed a deed of trust in favor of the First National Bank of Hailey to secure a promissory note in the sum of $1,500. Bryan and Venable thereafter bought the deed of trust from the First National Bank of Hailey, advertised the property for sale, and sold it on the 17th day of August, 1889. It was bought in for the benefit of Bryan and Venable, and they subsequently became the owners of the right purchased under that deed of trust. After August, 1889, Roberts was excluded from the property. Within six months after this sale, under the deed of trust as it is termed, Roberts conveyed and assigned all his rights, interest, equities, and accounts to Brown, who made tender of the amount due to Bryan and Venable, and demanded a conveyance of the one-third interest, and to have the title obtained by them by the foreclosure of the deed of trust set aside. Bryan and Venable refused to recognize Brown or any rights which he had in the property. Brown thereafter commenced suit in the district court of the territory of Idaho to set aside the pretended title in Bryan and Venable to this one-third interest, also claiming that there was a right of redemption, as in the case of any other sale, the tender having been regularly made upon the amount due upon said trust deed. The suit in the district court was decided against him. He then took an appeal to the supreme court, and succeeded in having the judgment of the district court set aside. The court, among other things, held that the one-third interest in the mines should be decreed to belong to the maker of the trust deed (Roberts) or to his assignee, Brown. Brown v. Bryan (Idaho) 51 P. 995, 997. The facts of the conveyance of the property by Bryan and Venable to the G.V.B. Mining Company, and of the subsequent acts of the parties, are sufficiently stated in the foreclosure suit, to which reference is here made.

In the supplemental transcript it appears, from the testimony of Thurber and Brown, that Bryan and Venable and the G.V.B. Mining Company had, at different times between 1889 and December, 1895, extracted over $500,000, in round figures, worth of ore, and that the actual profits from the same were over $100,000. This ore, it is claimed, had been extracted, and these profits realized therefrom, during the period when Roberts and his assignee, Brown, the intervener, were excluded from participating in the working of the mines. The suit in the state court, wherein Brown prays for an accounting between the parties, has never been brought to trial upon that issue, and the results that might finally be reached upon a regular trial are, under the facts established in the foreclosure suit, problematical, remote, and uncertain. But we shall assume, for the purpose of this opinion, that the intervener Brown has made out a prima facie case that the profits were as above stated.

Upon the state of facts disclosed by the record, we are of opinion that Brown is entitled to one-third of the money, on the ground that he must, in the light of the decision of the supreme court of Idaho, be treated as the owner of one-third interest in the property and proceeds. Is he entitled to the other two-thirds? His contention is that he is entitled to a lien upon the property, and funds obtained therefrom to secure his share of the profits derived from the working of the mines by Bryan and Venable and the G.V.B. Mining Company, because of his relation as a partner with them in the mines; and that the lien relates back, and took effect at the time Roberts was excluded from participating in the working of the property and sharing in the profits, and has continued in full force and effect to the present time, and is prior in right and time to the lien of the bank's mortgage.

In support of this contention, he relies upon the provisions of the statute of Idaho, which reads as follows:

'Sec. 3300. A mining partnership exists when two or more persons who own or acquire a mining claim for the purpose of working it and extracting the mineral therefrom, actually engage in working the same.

'Sec. 3301. An express agreement to become partners or to share the profits and losses of mining is not necessary to the formation or existence of a mining partnership. The relation arises from the ownership of shares or interests in the mine and working the same for the purpose of extracting the minerals therefrom.'

'Sec. 3305. One of the partners in a mining partnership may convey his interest in the mine and business without dissolving the partnership. The purchaser, from the date of his purchase, becomes a member of the partnership. ' Rev. St. Idaho 1887, p. 385.

The principles in relation to mining partnerships were ably discussed, and clearly stated, in Duryea v. Burt, 28 Cal. 569, 577, where it was held that, if two or more persons acquire a mining claim for the purpose of working the same and extracting the mineral therefrom, and actually engage in working the same, and share, according to the interest of each, in the profit and loss, the partnership...