Alywin v. Morley

• Decision Date: 25 April 1910
• Citation: 108 P. 778,41 Mont. 191
• Parties: ALYWIN v. MORLEY et al.
• Court: Montana Supreme Court

108 P. 778

41 Mont. 191

ALYWIN v. MORLEY et al.

Supreme Court of Montana

April 25, 1910

Appeal from District Court, Silver Bow County; Jeremiah J. Lynch Judge.

Action by F. P. Alywin against E. A. Morley and others. From a judgment for defendant Estella Conroy against E. A. Morley and another, the latter appeal. Reversed and remanded.

Kremer Sanders & Kremer, for appellants.

Maury & Templeman and J. O. Davies, for respondent.

SMITH J.

On the 31st day of July, 1907, the plaintiff brought this action in the district court of Silver Bow county against the above-named defendants, and in his complaint he alleges that in the month of May, 1901, he, together with J. R. Davenport E. A. Morley, and Mrs. Minnie Bornholdt, entered into an agreement wherein they became mining copartners for the purpose of carrying on a leasing business on what was known as the tailings dump of the smelter plant of the Parrot Silver & Copper Company; that Morley had secured a lease or privilege to work the tailings and extract the valuable metals therefrom, and said lease or privilege became the property of the copartnership; that each of the parties owned a one-fourth interest in the copartnership; that Morley assumed and took active charge of the operations, and looked after the shipment and sale of the precipitates on behalf of the association; that, after conducting the business for some time, Davenport sold and conveyed his interest to the defendant Estella Conroy, and she became, by common consent of all the parties, a copartner in the business; that the agreement of copartnership entered into between the parties is as follows: "Butte, Montana, May 25th, 1904. Whereas, E. A. Morley has secured a lease from the Parrot Silver & Copper Company for the handling of the tailings at their smelting plant, and, whereas, the said E. A. Morley proposes to enter into an agreement with J. R. Davenport and others for the erection of a precipitating plant at the above mentioned tailings dump, it is hereby agreed between E. A. Morley and J. R. Davenport that the said J. R. Davenport is to furnish sufficient funds for the erection of a plant to be mutually agreed upon. It is also understood and agreed that the said J. R. Davenport is to be reimbursed for his outlay in the erection of the plant from the first clean-ups of precipitates. In consideration of this outlay the said J. R. Davenport is to receive one-fourth (1/4) interest in the net proceeds of the proposition, and is to have a voice in matters pertaining to the operation of the plant according to his holdings. The above mentioned E. A. Morley and others have made an outlay of about $500 in the erection of a plant on the above mentioned grounds, a portion of which will be used in the plant to be constructed, and it is understood and agreed that the said E. A. Morley and his associates are to be reimbursed from the first clean-ups the full amount of their outlay. It is also understood and agreed that F. P. Alywin and Mrs. Minnie Bornholdt are each a one-fourth (1/4) owner in the above mentioned lease and are parties of the above contract and agreement. [Signed] E. A. Morley. J. R. Davenport, Mrs. Minnie Bornholdt. Francis P. Alywin."

Plaintiff further alleges that before the commencement of the action the defendants Morley and Bornholdt excluded him from any participation in the business, and denied that he had any rights therein; that on the 24th day of December, 1906, he demanded of all of the defendants a full, true, and detailed account of the receipts and expenditures, and of all things pertaining to said leasing and precipitating business, and demanded a complete accounting and settlement of all of its affairs, and payment of any moneys due him therefrom, but that said demand has been refused. The complaint then alleges that the copartnership realized a large amount of money from the precipitating business in which it was engaged, and that Morley and Bornholdt converted the greater part thereof to their own use. An accounting is prayed for.

The separate answer of the defendant Estella Conroy reads as follows: "Comes now the defendant Estella Conroy, above named, and for her separate answer to the complaint of plaintiff on file herein alleges: (1) That this defendant is now, and ever since the 15th day of September, 1905, has been, a copartner with the plaintiff Alywin, above named, and E. A. Morley and Minnie Bornholdt of the defendants, above named, in and to that certain leasing business more particularly specified and set out in the complaint of the plaintiff on file herein and owning in said business a one-fourth interest therein. (2) That, notwithstanding her repeated demands from the defendants Morley and Bornholdt for an accounting in said business, the said Morley and Bornholdt have not accounted to her and will not account to her. (3) That the copartnership in said business has not been settled, and that this defendant is entitled to the sum of one thousand ($1,000) dollars from the defendants Morley and Bornholdt aforesaid by virtue of the profits accruing from said partnership business and to other sums. Wherefore, this defendant prays for an accounting on said partnership business, and for judgment against such of the parties hereto in such an amount as her right and interest shall appear, and for such other and further equitable relief as she may be entitled to in the premises." The defendants Morley and Bornholdt by their separate answer denied that Davenport was ever a partner in the business; denied that the privilege of working the tailings of the Parrot Company ever became an asset of any copartnership in which the plaintiff was a member; denied that either the plaintiff or Davenport ever owned a one-fourth interest in any property belonging to the association; admitted that Davenport sold his interest in the association to Estella Conroy; denied that the agreement between the parties, as set forth in the complaint, constituted a copartnership agreement or was ever intended as such. They alleged that on the 14th day of May, 1904, Morley and Bornholdt entered into a contract in writing with plaintiff as follows: "Agreement. Whereas, E. A. Morley has secured a lease from the Parrot Silver & Copper Company for the handling of the tailings at their smelter in Butte for profit, and whereas, F. P. Alywin has a process for leaching and precipitating which he claims can be used with success on the tailings above mentioned: Now, therefore, for and in consideration of the knowledge and use of said process, the said E. A. Morley hereby agrees to pay over to the said F. P. Alywin one-third of the net proceeds of the working of said tailings under the process put into use by the said F. P. Alywin. It is further understood and agreed that, should the process not prove profitable, the said F. P. Alywin is to stand one-third of the expense of putting in the plant and making the test. Signed and sealed the day and date above written. [Signed] E. A. Morley. F. P. Alywin. Mrs. Minnie Bornholdt." They then alleged that, pursuant to the provisions of the said contract, Alywin undertook to demonstrate and make a success of his alleged process for leaching; that Morley and Bornholdt advanced the sum of $700; that the process was a complete failure; that thereupon Alywin stated that he could procure a party to advance the money necessary for the erection and construction of a precipitating plant, and Morley and Bornholdt then agreed that, if he would procure such a party and devote his entire time and attention to the operation of the plant and make it a success, they would allow him to participate in the net profits of the plant substantially on the terms set out in the agreement last quoted; that Alywin agreed to this, and, pursuant thereto, sent the defendant Davenport to Morley's office for the purpose of entering into an arrangement; that "thereupon these answering defendants made to the said Davenport two propositions, namely; one proposition that he should put into the enterprise the sum of $2,000, and by the payment of said sum should be entitled to a one-fourth interest in the entire enterprise, and a second proposition that he should pay into the concern $2,000 for the erection of a plant, which said sum should be repaid to him, and thereafter he should receive one-fourth of the net profits of the precipitating plant, and should have no further interest in the enterprise except in the net profits of the operations thereof; that the said Davenport accepted the latter proposition, and thereupon the instrument set out in the complaint was drawn up by the defendant Morley;" that the parties to the first agreement always understood that Alywin's interest was contingent upon success and upon his continued operation of the plant, and that, in the event of his quitting the said plant at any time, his interest would cease; that on or about the 10th day of September, 1904, said Alywin quit and abandoned said enterprise, and then and there stated that he had no further interest in the said plant or in said enterprise. It is then alleged that on or about July, 1904, Alywin sold his interest in the enterprise to Davenport, and Morley afterwards bought the interest from Davenport.

For replication the plaintiff denied each and every allegation of the amended answer. As a separate answer to the affirmative matter set forth in the answer of Estella Conroy, the defendants Morley and Bornholdt denied that Conroy had any interest in the enterprise except a one-fourth interest in the net profits thereof. They denied that she was ever a copartner, denied that she had ever made a demand for an accounting, or that either of the defendants had ever failed or refused to account to her, but, on the contrary, they...