Bank of America Nat. Trust & Sav. Ass'n v. Vannini

• Decision Date: 22 March 1956
• Citation: 140 Cal.App.2d 120,295 P.2d 102
• Court: California Court of Appeals Court of Appeals
• Parties: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association, as Administrator with the Will Annexed of the Estate of Anna M. Bluett, deceased, Plaintiff, Cross-Defendant and Respondent, v. A. VANNINI and Providence Tuolumne Gold Mines, Inc., a corporation, Defendants, Cross-Complainants and Appellants, Irene Van de Carr, Cross-Defendant and Respondent. Civ. 16545.

Page 102

295 P.2d 102

140 Cal.App.2d 120

BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association, as Administrator with the Will Annexed of the Estate of Anna M. Bluett, deceased, Plaintiff, Cross-Defendant and Respondent, v. A. VANNINI and Providence Tuolumne Gold Mines, Inc., a corporation, Defendants, Cross-Complainants and Appellants, Irene Van de Carr, Cross-Defendant and Respondent.

Civ. 16545.

District Court of Appeal, First District, Division 1, California.

March 22, 1956.

Rehearing Denied April 20, 1956.

Howard C. Ellis, E. F. Delger, San Francisco, for appellants.

Donahue, Richards, Rowell & Gallagher, A. R. Rowell, Joseph A. Woods, Jr., Oakland, for respondents.

PETERS, Presiding Justice.

Plaintiff brought this action against defendants for $40,000 balance alleged to be due on a contract to purchase certain mining properties. Defendants answered and cross-complained, negatively and affirmatively pleading fraud on the part of plaintiff. The trial court sustained a demurrer without leave to amend to the third amended answer and cross-complaint. Plaintiff moved for judgment on the pleadings. The motion was granted. Defendants appeal from the judgment thus secured.

The controversy involves the purchase and sale of an abandoned gold mine in Tuolumne County. The pleadings show the following: This mine was owned by the Estate of Anna Bluett. In 1939 Ben F. Woolner was executor of that estate. On March 27, 1939, Woolner, as executor, acting under court authorization, entered into a written contract with defendant A. Vannini for the purchase and sale of the mine for $50,000 payable in accordance with the terms, covenants and conditions set forth in the agreement. One of these provisions was that Vannini agreed that within 6 months of the date of the agreement he would commence active preliminary work to unwater and clear the mine, and would perform a designated quantity of such work within the next 8 months. In addition to this required work Vannini was given the election to run an exploration tunnel into the mine to further determine whether he wanted to go forward with active mining operations. If Vannini elected to do this exploration he was granted an additional 3 months for this purpose.

Within these periods, totalling a possible 17 months, Vannini was given the option to buy the mine by notifying the executor and by paying the first $5,000 on the purchase price, or within the enumerated periods he could elect not to proceed by executing a quitclaim deed back to the executor. If Vannini elected to proceed, he was required to make the $5,000 payment above referred to, and within 5 years thereafter the balance of the purchase price became due and payable.

The pleading, without stating when, then avers that sometime thereafter Vannini elected to operate and purchase the mine, but by agreement with the executor and with the approval of the court the time for the payment of the original $5,000 was extended to July 1, 1946. On that date Vannini paid the $5,000 which made the balance of $45,000 due on July 1, 1951. Sometime after Vannini exercised the option to buy the mine, the exact time not being pleaded, he assigned his interest in the project to Providence Tuolumne Gold Mines, Inc., the other defendant.

On July 1, 1951, the balance of the purchase price was not paid. On November 2, 1951, Woolner, as executor, entered into an agreement with the two defendants to the effect that, with the approval of the probate court, defendants could pay $5,000, and thereafter $5,000 annually, or could pay a 15 per cent royalty from the gross revenues, whichever was greater, until the full purchase price was paid. Under this extension agreement if any annual payment on the purchase price was not paid within 90 days of its due date, the executor was given the election to declare the entire balance due, or to cancel the agreement and retain all sums paid as liquidated damages. On December 3, 1951, the probate court approved the extension, and a $5,000 payment was made by defendant mining company.

Under this extension agreement the next payment of at least $5,000 was due on December 3, 1952. Neither defendant made this payment. The Bank of America, it having been substituted as executor of the estate, waited the 90 days, elected to treat the entire balance as due, and on March 9, 1953, brought this action for the $40,000 remaining due on the purchase price.

Defendants answered and cross-complained. By stipulation a demurrer to these pleadings was sustained and an Irene Van de Carr brought in as a cross-defendant. Thereafter, defendants filed their first and later their second amended answer and cross-complaint. Plaintiff demurred. So far as the record shows, no hearings were had or orders made in reference to these demurrers. Defendants then filed their third amended answer and cross-complaint, and plaintiff again demurred. These demurrers to both the answer and cross-complaint were sustained without leave to amend. The order so providing contains a reference to 'Par. Five (5),' apparently referring to paragraph 5 of the demurrer which raised the statute of limitations. Thereafter, plaintiff moved for judgment on the pleadings. The motion was granted, judgment was entered accordingly, and defendants have appealed.

The question presented on this appeal is whether the third amended answer and cross-complaint alleges a valid defense and/or cause of action, good against a general demurrer. The answer and cross-complaint involved are predicated on the theory that defendants signed the agreements involved as a result of the fraud of Woolner, Irene Van de Carr and one John Chapman. In this connection paragraph II of the answer alleges, in part:

'On or before the 27th day of March, 1939, the defendants discussed with Woolner, Van de Carr and Chapman, the possibility of purchasing the mining property described in Exhibit 'A' which is attached to and made a part of the complaint herein. During the course of the aforesaid various conversations and discussions, Woolner, Van de Carr and Chapman, and each of them, asserted to defendants that the property described in Exhibit 'A' had been an active gold mine, from which large amounts of commercial gold ore had been extracted in years past; they further stated that the mining property described in Exhibit 'A', prior to the date thereof, and the Agreement marked Exhibit 'B,' also attached to and made part of the complaint herein, had been shut down and unworked for many years. Woolner, Van de Carr and Chapman, and each of them further asserted that the mining operations on the aforesaid property had ceased, owing to differences between the former owners of the aforesaid property and their manager, while the mine located on aforesaid property was in the midst of active and profitable operation. Woolner, Van de Carr and Chapman, and each of them, further asserted that the property described in Exhibit 'A' contained extensive gold ore already blocked out. They further represented that said blocked out ore was commercial ore and that in order to prevent it from being removed after it had been determined to close the mine, the shaft and timbering therein was destroyed but that said commercial ore would be found intact when the mine was dewatered, cleared and retimbered. That said statements were false, that the falsity of these statements was known, or that the statements were not warranted by the information of Woolner, Van de Carr and Chapman, and each of them, even though they may have believed the statements to be true. That such representations of fact were made in an effort to bring about the sale of said properties and did bring about the sale of said properties, * * *

'* * * immediatley after the execution of the Agreement marked Exhibit 'A,' operations were commenced to rehabilitate the mining property described therein. It was first necessary to repair the road and bridge leading to the mine so that the heavy equipment which was necessary for mining operations could be brought in; an adit was then commenced which was to be driven nearly a mile into the side of the mountain in order to tap the old workings of the mine and to drain off the 11 million gallons of water which inundated the old mining operations. When 900 ft. of this tunnel had been completed, all work on the mine had to be shut down due to Order No. L 208 of the United States Government, which banned mining operations for the duration of World War II. At the close of World War II, with the lifting of Order L 208, work was again begun, but it was then found that most of the equipment had to be replaced and that some of the work which had been done immediately prior to the war had to be redone, for the reason that part of the tunnel had caved, necessitating the replacing of timbers. By January of 1948 the tunnel had progressed into the side of the mountain some 2,000 feet, but because the operation had led to a badly faulted area, the State Safety Mining Engineer ordered the abandonment of this tunnel stating that it would be too dangerous to attempt to drain the 11 million gallons of water from the shaft through this means. a new tunnel was commenced and carried through to the old workings, through which the water was drained above said level, thereby making it possible to begin pumping the water which remained below that level. After all the water was removed, it then became necessary to extract approximately 50,000 tons of debris that clogged the old shaft and it was necessary to tram this debris a distance of nearly a mile. After the debris was removed, the old shaft was found to be badly caved necessitating its retimbering. In addition thereto, it was necessary, because of the request of the State Safety Mining Engineer, to replace the emergency raise in order to protect the workers who would be working in the old shaft. It was not until February 24, 1952, that the...