Boston & Colorado Smelting Co. v. Reed

• Decision Date: 21 December 1897
• Citation: 48 P. 515,23 Colo. 523
• Parties: BOSTON & C. SMELTING CO. v. REED.
• Court: Colorado Supreme Court

48 P. 515

23 Colo. 523

BOSTON & C. SMELTING CO. v. REED.

Supreme Court of Colorado

December 21, 1897

Appeal from district court, Lake county.

Action by Clinton Reed against John C. Meagher and others to establish an interest in a mining lease. There was a judgment for plaintiff, and an order allowing defendant to make sales of ore. Sales were thereafter made to the Boston & Colorado Smelting Company, which paid into court the value of plaintiff's interest in the price. On a petition entitled in the original action an order was made requiring the smelting company to further account to plaintiff, and it appeals. Affirmed.

In an action pending in the district court of Lake county, brought by Clinton Reed, as plaintiff, against John C. Meagher et al., as defendants, for the purpose of establishing plaintiff's claim to an interest (alleged to be an undivided one-fourth) in a mining lease upon the Felicia Grace lode, a decree was rendered on December 24, 1884 adjudging that plaintiff was the owner of an undivided 7/32 in the lease, and a like share of the proceeds of ore extracted from the mine. Afterwards, and at the January term 1890, this court affirmed that decree. 14 Colo. 335, 24 P 681. While the case was in the district court, an interlocutory writ of injunction, at the instance of plaintiff, was issued, restraining the defendants from working the mine or selling ore until the determination of the suit. Subsequently, and on November 26, 1884, and before the trial of the action, by agreement of parties an order was entered modifying the previous restraining writ, which order covered both the ores theretofore mined and thereafter to be extracted, and gave to defendants the right to sell the same upon condition that the net proceeds of the share claimed by the plaintiff be left with the purchaser, 'subject to the further order of the court herein.' In pursuance of this permissive order, between December 6, 1884, and July 9, 1885 the defendants sold to the respondent herein, the Boston &amp Colorado Smelting Company, large quantities of ore from said mine, the defendants' share in the net proceeds of which was paid to them, and the 7/32 thereof, which was in dispute in this action, was retained by the company, as the order required. After the judgment was affirmed in the supreme court, and the remittitur sent down, the plaintiff in the action, on July 19, 1890, served upon the smelting company a notice that he would, on the 30th of July, 1890, make an application to the district court for an order upon the company to pay into court the money deposited in its hands under the said order of November 26, 1884. Under this application, on the 30th of July the court made an order decreeing that the smelting company forthwith furnish and file in the court a full and complete statement of account showing the amount of ore delivered by the defendants since the previous order of November, 1884, the value thereof, the amounts paid to the defendants from time to time, and the royalty to the lessors, and that, after deducting from the gross amount realized from such ore the cost of smelting, railroad charges, and royalty, to pay into court the amount of the net proceeds of petitioner's share. The smelting company, without making any objection thereto, filed in the court on August 7, 1890, its account and statement showing the net value of the 7/32 of the ore to be $17,923.53, and thereupon paid into court said amount of money (which apparently was thereafter turned over to the plaintiff), and received the following receipt, signed by the judge of the court: 'Office of the Boston and Colorado Smelting Company. No. 55,995. Argo, Colo., Aug. 7th, 1890. Received of the Boston and Colorado Smelting Company seventeen thousand nine hundred twenty-three 53/100 dollars, in compliance with the order of the district court of the 5th judicial dist. of Colo., dated July 30, 1890, being the amount retained by the B. & C. S. Co. under and in pursuance of the order of said district court dated Nov. 26, 1884, in the case of Clinton Reed vs. John C. Meagher et al. $17,923.53.' On the 10th of the following month plaintiff, Clinton Reed, entitling his pleading as in the above case, filed his petition, after service of notice on the smelting company, reciting the decree of the district court rendered in December, 1884, whereby he was adjudged to be the owner of a 7/32 interest in the said lease, and a like interest in the proceeds of all ores mined therefrom, and further reciting the order of November, 1884, that the ores might be sold to the said smelting company, alleged that ores were so sold to it in a large amount in excess of that theretofore (on August 7th) reported by the smelting company, to which he claimed to be entitled. The petition further alleged that said smelting company took and received the funds and the proceeds of the ore belonging to petitioner, so sold to it by the defendants, and appropriated the same to its own use; that such funds so received and appropriated by it were put into its general account, and mixed with its own funds and money, and became and were made part and parcel of the general funds, money, and capital stock of the smelting company, and were so treated and used by it; out of which the plaintiff alleged the company made large gains and profits. He therefore asks that the company be compelled to render an additional account, and show what gains and profits upon such fund the company has made, and, when ascertained, to pay the same over to him. The smelting company, appearing specially, filed a motion to strike the petition from the files, as well as to vacate all orders theretofore made by the court requiring it to account and pay into court the money which it had on hand claimed by the plaintiff, upon the ground that the court had no jurisdiction over the person of the respondent. This motion was overruled by the court, and the smelting company ordered to file its answer to the petition, which thereafter it did, in which it alleged that the account theretofore made by it was a true and just account, and set up the delivery to it by the judge of the court of the receipt (in words as hereinbefore set forth), claiming the same to be a full acquittance and discharge of said company of all demands of the plaintiff. It denied the appropriation of the funds to its own use, and denied the mingling of the funds with its own, or the receipt of any profits therefrom. It further alleged that it did not sustain in the said action the relation of receiver with reference to the funds in question, but acted merely and solely as a purchaser of the ore that was sold to it by the defendants in the original case under the order of the court to that effect. Upon a hearing of the petition a judgment was rendered against the smelting company in favor of Reed for $4,555.56, this being equal to interest at the rate of 5 per cent. per annum on the $17,923.53 during the time the same was in the possession of the smelting company. This was evidently upon the theory, adopted by the trial court, that the company occupied a trust relation as to the fund in question, and that it made use thereof while the same was in its possession, and derived a profit therefrom. The foregoing statement is deemed necessary, that the real question now before the court may be clearly understood. Without reference, however, to the pleadings which set up the history of the case as above summarized, the case was submitted to the court upon an agreed statement of facts, which, so far as material to the question involved here, is as follows: '* * * On August 7, 1890, pursuant to the order of July 30, 1890, of which a copy is above set forth, the said smelting company paid into court, upon the receipt of the judge thereof (of which a copy is herein above set forth), the said seven thirty-seconds (7/32) of the value of said ores, amounting to $17,923.53. During all the time from the date of the purchase of said ores to said 7th day of August, 1890, and while the said ores, or the proceeds of the said seven thirty-seconds (7/32) thereof, were in the hands of said smelting company, the said smelting company was carrying on the business of dealing in and smelting ores, and was using its funds in its said business, and was making a profit of five per cent. per annum, and no more, on all its funds invested in its said business. That the said seven thirty-seconds (7/32) of said ores became, upon the purchase thereof by said company, a part of the assets of said company, and the moneys owing therefor were then, and till August 7, 1890, remained, a part of the general funds of the company, and were used by it in the transaction of its business in the same way and manner that it employed its general funds and capital, from whatever source acquired. * * * The said 7/32 of said ore were not paid for by the smelting company at the time of purchase, because, and solely because, of the order of the court of November 26, 1884, and because by reason of said order it could not lawfully pay out said 7/32 of the value of said ores until August 7, 1890. The said smelting company at all times subsequent to the purchase of said ores kept on hand in its treasury more than the sum of $17,923.53, and was at all times prepared and ready to comply with any order of the district court of Lake county for the payment thereof. Dated this 28th day of November, 1892;' and signed by the respective parties.in a mining lease, and sales of ore were thereafter made, under permission of court, to a smelting company, which, by direction of court, retained for several years, subject to its further orders a portion of the price equal to petitioner's interest in the ore, and mingled it with its other funds, and used the whole at...