American Sulphur & Mining Co. v. Brennan

• Decision Date: 14 February 1905
• Citation: 79 P. 750,20 Colo.App. 439
• Parties: AMERICAN SULPHUR & MINING CO. et al. v. BRENNAN et al.
• Court: Colorado Court of Appeals

79 P. 750

20 Colo.App. 439

AMERICAN SULPHUR & MINING CO. et al. v. BRENNAN et al.

Court of Appeals of Colorado

February 14, 1905

Appeal from District Court, Mineral County.

Action by Dennis Brennan and another against the American Sulphur &amp Mining Company and others. From a judgment for plaintiffs defendants appeal. Reversed.

Chas H. Pierce and Morrison & De Soto, for appellants.

Richardson & Hawkins and Albert L. Moses, for appellees.

THOMSON P.J.

In about 1891 two brothers, named Pickett, discovered a deposit of sulphur in Mineral county, on land which they supposed belonged to the United States and open to occupation and purchase, and on which they made two placer locations, called the "Vesuvius No. 1" and the "Vesuvius No. 2." In 1900 T.S. Todd secured an option from the Picketts on these claims, under which he took possession of them. In April, 1891, Todd assigned his option to the American Sulphur & Mining Company, a corporation with headquarters in New York, and turned his possession over to it. Shortly afterwards the company took up the option, and received a deed to the claims from the Picketts. The grantors of plaintiffs had laid out a large sum of money in workings and improvements on the property, consisting of shafts tunnels, open cuts, and drifts, and the company continued the work after it took possession; expending some thousands of dollars in the development of the property. In 1894 Dennis Brennan, while prospecting in the vicinity of the Vesuvius claims, discovered some deposits of sulphur. He did not locate upon them or take any steps to secure title to them, but abandoned them. In July, 1901, he consulted an attorney in relation to his discovery of 1894. This attorney had transacted some business for the sulphur and mining company after it had taken possession of the Vesuvius claims. Brennan was advised by this attorney of the latter's connection with the company. He had discovered that its claims were probably on a school section, the title to which was in the state of Colorado, and not in the United States, so that title must come from the state, and not from the general government. Brennan then associated W.O. Statton with him, and employed the attorney to assist them in procuring leases on the land from the State Board of Land Commissioners. Application was accordingly made to the board by Brennan and Statton for leases on the E. 1/2 of section 16, township 39 N., R. 2 W., N.M.P.M., within which half section the Vesuvius claims were located. This section 16 was a school section. On the application of Brennan and Statton, and on their statements and representations in its support, leases were granted to them, in accordance with their application, for the term of eight years, and were executed accordingly. The date of the leases was September 6, 1901. About the 13th day of September, 1901, the company for the first time learned that its Vesuvius claims were situated within this school section, and that therefore no title to them could be obtained from the United States. On the 14th day of November, 1901, the company presented its petition to the Board of Land Commissioners for the cancellation of Brennan and Statton's leases on the ground of fraud in their procurement, and after investigation of the charge the board ordered the leases canceled. Shortly afterwards the same land was leased by the board to the company.

This action was brought by Brennan and Statton against the American Sulphur & Mining Company to divest it of its possession. The complaint set forth the fact of the occupancy of the land by the company, and its operations upon the land, and the leases granted to the plaintiffs, and prayed a perpetual injunction restraining the company from entering into or upon any part of the half section leased to them for any purpose whatever. The defendant answered, and also interposed a cross-complaint. In those pleadings it set forth the facts connected with its occupancy of the land, and alleged fraud and deceit in the procurement of the leases by the plaintiffs, and also alleged the cancellation of the leases by the state board. The plaintiffs replied to the answer and answered the cross-complaint. Among other things, the cross-complaint alleged that the plaintiffs, by themselves and through their attorney, in support of their application for the leases, stated that they did not know whether or not any persons other than themselves had done development work to the amount of $50, consisting of a shaft, open cut, adit, or tunnel, on any of the lots applied for, or whether any person other than themselves, at the time of the application or within 10 days, had been engaged in such work; that the premises had no known value for mining purposes; that no development had been done upon them by any one; and that the leases were desired for the purpose of prospecting. In their answer to the cross-complaint the plaintiffs admitted that at the time of their application they knew or had reason to believe that the defendant company was engaged in operating the Vesuvius Nos. 1 and 2 placers, and had on certain parts of them expended a large sum of money in their development and improvement, and that they made to the board the representations with which the cross-complaint charged them; but they denied that they knew the representations to be false. They alleged that, while they were cognizant of the fact and nature of the company's operations on the Vesuvius claims, they did not know that those claims were located on the ground covered by their leases.

By section 9 of article 9 of the Constitution, the Governor Superintendent of Public Instruction, Secretary of State, and Attorney General constitute the State Board of Land Commissioners, with power of direction, control, and disposition of the public lands of the state, under such regulations as may be prescribed by law. Section 3634 of Mills' Annotated Statutes authorizes the leasing of those lands by the board, and defines the terms of lease generally; making, however, separate provision as to lands in which mineral may be found. Section 3637 provides as follows: "Should any one apply to lease any of the lands belonging to the state upon which there are improvements belonging to another party, before the lease shall issue, he shall file in the office of the State Board of Land Commissioners a receipt showing that the price of said improvements, as agreed upon by the parties, or fixed by the state board, has been paid to the owner thereof in full, or shall make satisfactory proof that he has tendered to such owner the price of said improvements, so agreed upon, or fixed by the board." This provision makes it the duty of an applicant for a lease to exercise at least some diligence to discover whether another party is upon the land, and, if so, what has been done by him in pursuance of his occupancy; and, if improvements have been made by him, the payment or tender to him of the price of the...