Patrick v. Bowman

• Citation: 13 S.Ct. 866,37 L.Ed. 790,149 U.S. 411
• Decision Date: 24 April 1893
• Docket Number: No. 157,157
• Parties: PATRICK v. BOWMAN
• Court: United States Supreme Court

149 U.S. 411

13 S.Ct. 866

37 L.Ed. 790

PATRICK

v BOWMAN.

No. 157.

April 24, 1893.

This was a bill in equity originally filed by Bowman in the circuit court of St. Louis, and subsequently removed to the circuit court of the United States, against William F. Patrick and James M. Patrick, to rescind a sale made October 19, 1882, by Bowman to William F. Patrick, his then partner, of a five forty-eighths

The facts of the case were substantially as follows: In February, 1882, Bowman, then a resident of St. Louis, Mo., and temporarily in Leadville on legal business, as attorney of William F. Patrick, was introduced by one William H. Wilson, a mining promoter, to one Stebbins, who, with others, owned two adjacent mining claims in Leadville, known as the 'Col. Sellers' and 'Accident' claims, upon which no shaft had then been sunk to mineral, and it was then unknown whether the property had any value. The owners were looking for some one who would sink a shaft for a share in the property. Bowman, at Stebbins' request, visited the property, was pleased with it and its surroundings, and soon afterwards asked Patrick to join him in sinking the shaft. The result was that on February 17, 1882, an agreement was entered into between Stebbins and the other owners of the mine upon one part, and Bowman and Patrick upon the other, by which the latter undertook, in consideration of an undivided one-half of the property, a deed of which was deposited in escrow, to sink a shaft on the property to limestone in place or bed rock, if pay mineral should not be sooner found, and to obtain patents from the United States to said property, and further agreed to commence work in sinking the shaft within 30 days from the date of the contract. It seems the mineral in that district lies in nearly horizontal bodies, at the contact between porphyry and limestone; the porphyry being the overlying rock, and of varying thickness. The shaft was to be sunk through the surface earth and gravel, known as 'wash,' and the porphyry. The indications are generally apparent in the shaft, if there be an ore body below, and it be near; the porphyry becoming iron stained, and sometimes small seams or stringers of mineral are found in the porphyry leading to the mineral body below.

Bowman and Patrick were, between themselves, to be equal partners in the venture, each paying half of the expenses. Patrick, living at Leadville, was to superintend the sinking of the shaft, and keep Bowman advised of all that should happen in the partnership venture. In March, 1892, and for some time afterwards, Patrick was indebted to Bowman for money advanced by him on account of certain legal business then in his charge. Bowman returned to St. Louis, and did not meet Patrick again until June 19th, when they had a settlement, at which Bowman exhibited a willingness to sell out his interest to Patrick. A correspondence, both by letter and telegram, began soon after that date, which is fully set forth in the opinion of the court, and which resulted in a deed by Bowman of his entire interest in the property.

Upon the hearing in the circuit court upon pleadings and proofs, a decree was entered setting aside the sale, and adjudging that William F. Patrick refund the sum of $57,099.69, the amount of profits received by him on Bowman's interest to March 19, 1889, the date of the final decree. 36 Fed. Rep. 138. From that decree, Patrick appealed to this court.

C. C. Parsons, for appellant.

E. McGinnis, for appellee.

Mr. Justice BROWN, after stating the facts in the foregoing language, delivered the opinion of the court.

This case turns upon the question whether the correspondence between these parties subsequent to the execution of the contract of February 17, 1882, and the conduct of Bowman in that connection, indicated a completed understanding between them, prior to the discovery of ore in paying quantities, that Patrick was to purchase Bowman's interest.

The theory of the plaintiff in this connection is that Patrick, being present on the spot, and having the sole charge and management of the sinking of the shaft, was bound to keep the plaintiff advised of the progress of the work, and the prospects of the mine, pending the negotiations for the purchase of his interest, and that, having failed to apprise him of the discovery of a large body of ore on the 31st of August, the sale subsequently made was fraudulently procured, and should be annulled. The defendants do not dispute the legal principle laid down by this court in Brooks v. Martin, 2 Wall. 70,—that where one partner is present, in sole charge of the business, while the other is at a distance, in order to sustain a sale of the absent partner's interest, it must be made to appear that the price paid approximates a fair consideration for the thing purchased, and that all the information in the possession of the purchaser necessary to enable the seller to form a sound judgment of the value of what he sells should be communicated by the buyer to him. Defendants, however, claim that the parties had reached an understanding as to terms and conditions of the sale before the discovery of the ore, and that William F. Patrick was under no obligation to apprise plaintiff of this fact; that, even if the plaintiff had a right to rescind the sale, he did not act with sufficient promptness; and that his failure for four years to institute these proceedings should debar him from a recovery.

The nature of the defense in this case requires a statement somewhat in detail of the succession of events following the contract of February 17, 1882, and of the correspondence between the parties. Bowman seems to have left Leadville the day following the execution of the contract with the understanding that Patrick should remain there, and superintend the opening of the shaft—in short, that he should be the resident partner of the enterprise. He and Bowman were each to contribute one half, and to have an equal interest in the venture. On March 25th, Bowman sold to James M. Patrick, brother of the defendant, William F., one third of his half interest, in consideration of Patrick paying one third of Bowman's share of the cost of sinking the shaft; Bowman agreeing to make all necessary advances for the first year, and Patrick agreeing to repay him the sums so advanced. Bowman did not return to Denver until early in May, having in the mean time received several letters from William F. Patrick, giving a general idea of the progress of the work, and of certain litigation connected with the property.

At this time Wilson claimed that he had introduced Bowman to Stebbins, and had been instrumental in procuring for Bowman the contract for an interest in the property, and that, in fairness, Bowman should let him have a share in this contract. Bowman assented to this, and assigned to Wilson a one fourth interest. At this visit, too, a settlement seems to have been had, in which it was agreed that Bowman would owe Patrick $288.70 if Wilson paid his assessment, and $465 if he did not; and, as Patrick says, 'the understanding between Mr. Bowman and myself was that I was to draw for either $465 or $288.70.' Wilson's time to pay would expire May 18th. On May 13th, Patrick drew on Bowman for $465. This draft was presented for payment on May 15th, when Bowman telegraphed to Patrick: 'Must know Wilson's conclusion. Rebates not satisfactory. Answer at once,'—and on the same day wrote to Patrick as follows: 'Wilson made a claim * * * for an interest in the Col. Sellers and Accident. I yielded to his request. * * * He named the interest, and promised his share of the money. You were to collect of him, or forfeit his claim for nonpayment. Your brother's interest I agreed to carry, and am willing to; but now you draw on me without collecting of Wilson, or securing his relinquishment. This much I expected you to do. I have telegraphed you, but can get no answer. I leave in an hour for Chicago.'

The parties did not meet again until June 19th, when Patrick went to St. Louis to talk over the Col. Sellers matters, and at this interview they had a settlement of their accounts up to May 8th, in which a balance of $288.69 was found due from Bowman, for which he gave his note to Patrick, who had it discounted at once for its face. Of this $288.69, the sum of $245.75 was for James Patrick's share of the expenses, which Bowman was to advance for him, and for which amount James soon afterwards gave his note to Bowman.

In the mean time and on May 11th, Wilson had assigned his interest to John Livezey. These assignments to James Patrick and Wilson left Bowman the owner of ten forty-eighths of the contract, or five forty-eighths of the entire property, which was the interest he subsequently conveyed to William F. Patrick. Up to the time of this interview of June 19th, nothing, apparently, had been said with reference to a sale. But at the time of this settlement it seems that Bowman, who appeared despondent, suggested to Patrick that he thought he only ought to do a little work every 10 days as specified in the contract, to prevent its becoming forfeited, and that that would keep it alive. Patrick says: 'He made me a proposition at that time, as I remember, after I secured this note, if I would surrender the note he would surrender all his right, title, and interest under that contract to me; and I told him at the time that I had about all that I could carry, and I didn't think I could afford to take it, but thought I knew a man out west who I thought would take it, and that on my return I would speak to him in regard to it.'

At this interview, Bowman told him that he was going to leave in a few days for Bayfield, Wis., and gave him that as his post office address during the summer. Patrick started back for Leadville that evening, and on arriving at Denver wrote Bowman at St. Louis, under date of June 22d, as follows: 'In regard to your interest in the Col. 'In regard to your...