Chittim v. Belle Fourche Bentonite Products Company

• Decision Date: 23 May 1944
• Docket Number: 2274,2278
• Parties: MAY CHITTIM, VIRGINIA Z. HEJDE, CHARLES B. CHITTIM and FRANCIS HEJDE, Plaintiffs and Appellants, v. BELLE FOURCHE BENTONITE PRODUCTS COMPANY, A Corporation, Defendant and Respondent; MAY CHITTIM, VIRGINIA Z. HEJDE, CHARLES B. CHITTIM, and FRANCIS HEJDE, Plaintiffs and Respondents, v. BELLE FOURCHE BENTONITE PRODUCTS COMPANY, a Corporation, Defendant and Appellant
• Court: Wyoming Supreme Court

149 P.2d 142

60 Wyo. 235

MAY CHITTIM, VIRGINIA Z. HEJDE, CHARLES B. CHITTIM and FRANCIS HEJDE, Plaintiffs and Appellants, v. BELLE FOURCHE BENTONITE PRODUCTS COMPANY, A Corporation, Defendant and Respondent;

MAY CHITTIM, VIRGINIA Z. HEJDE, CHARLES B. CHITTIM, and FRANCIS HEJDE, Plaintiffs and Respondents, v. BELLE FOURCHE BENTONITE PRODUCTS COMPANY, a Corporation, Defendant and Appellant

Nos. 2274, 2278

Supreme Court of Wyoming

May 23, 1944

Appeal from District Court, Crook County; P. W. Metz, Judge.

Suits by May Chittim and others against the Belle Fourche Bentonite Products Company to quiet plaintiffs' title to certain bentonite placer mining claims, wherein defendant filed a counterclaim. From a judgment, plaintiffs and defendant appeal.

Affirmed.

For the plaintiffs and appellants in case No. 2274, and the plaintiffs and respondents in case No. 2278, there were briefs by Otis Reynolds, of Sundance, Wyoming, and Dan McCutchen, of Belle Fourche, South Dakota, and oral arguments by Mr. Reynolds.

POINTS OF COUNSEL FOR PLAINTIFFS

The Defendant was transacting business in Wyoming. It has never complied with the requirements of either the Wyoming Constitution (Sec. 5, Article X) or the State Statute (Sec 28-201, W.R.S. 1931).

The Defendant is a bentonite company. The acquisition of bentonite claims was the first and most important step in the corporate business. Through the years 1936 to 1941, Defendant undertook to do annual assessment work on twenty-three bentonite mining claims aggregating 2960 acres. The Company executed a lease on a royalty basis covering the exact lands involved under which they would receive a royalty of 40 cents per ton. The corporation carried on negotiations looking to a sale of its holdings.

The real test is, is the corporation engaged in the transaction of business, or any part of the business, for which it was organized or created? Ex Rel. Eaton v. Hirst, 53 Wyo. 163.

In purchasing, acquiring or dealing in real property within the State, a foreign corporation would undoubtedly be doing business there, within the meaning of regulatory laws, when the transaction is in fulfillment of its corporate purposes and a part of its ordinary business. 17 Fletcher Cyclopedia Corporations, Permanent Edition, Sec. 8486. Hoffstater v Jewell, 33 Idaho 439, 196 P. 194; E. C. Vogt, Inc v. Ganley Bros. Co. 185 Minn. 442, 242 N.W. 338; Greene v. Kentenia Corp. 175 Ky. 661, 194 S.W. 820.

A single transaction by a foreign corporation may constitute doing of business within the meaning of the foreign corporation law if such transaction is a part of the ordinary business of the corporation and indicates a purpose to carry on a substantial part of its dealings in the State. John Deere Plow Company v. Wiland (Kans.) 75 P. 863.

Where a construction company was engaged in enlarging and extending a canal in Park County, for a period of at least two months and in which a number of laborers were hired, and a great deal of material bought, the construction company was "transacting business" in Wyoming. Interstate Const. Co. v. Lakeview Canal Co. 31 Wyo. 191.

The acquisition and holding of real estate within a state and the management or development of such real estate is transacting business within the state within the meaning of the foreign corporation law. 20 Corpus Juris Secundum, 1829.

It is a cardinal principle of mining law enunciated by the United States Supreme Court and re-affirmed in innumerable decisions, that annual labor if done outside the physical boundaries of a mining claim must "facilitate the extraction of mineral." St. Louis Smelting Co. v Kemp. 36 L.E. 875.

The test is the value of work, not what was paid for it, or what the contract price was. Stolp v. Treasury Gold Mining Co. 38 Wash. 619, 80 P. 817; McKirahan v. V. Gold Mining Company (S.D.) 165 N.W. 542; Big Tree Min. etc. v. Hamilton (Cal.) 107 P. 301.

One of the leading cases on mining law and the forfeiture of claims is Cooper Mountain Mining & Smelting Co. v. Butte & Corbin Consolidated Copper and Silver Co. (Mont.) 104 P. 540, which states:

"The courts are reluctant to enforce forfeiture. He who claims such a penalty to defeat the title of his adversary must plead it specially, and, besides must establish it by clear and convincing proof. Nevertheless, when it appears, as in this case, that the representation work done was not done upon all the claims, but upon one only of the group for the alleged benefit of all of them, then the burden shifts, and the requirement that the work must be adapted to the development of all of the claims and was intended for that purpose must be met. This rule is recognized by all the authorities."

Sherlock v. Leighton, 9 Wyo. 303.

The Supreme Court of Wyoming has held time and again that the findings of the trial Court must stand where supported by substantial evidence, Peterson v. Johnson, 46 Wyo. 473, Kaleb v. Modern Woodmen, 51 Wyo. 116, and other Wyoming cases cited therein.

For the defendant and respondent in case No. 2274, and the defendant and appellant in case No. 2278, there were briefs by Preston T. McAvoy, of Newcastle, Wyoming; R. A. Smiley, of Belle Fourche, South Dakota; R. C. Hayes and Alex Rentto, both of Deadwood, South Dakota, and oral arguments by Mr. McAvoy, Mr. Smiley and Mr. Hayes.

POINTS OF COUNSEL FOR DEFENDANT

The lower Court will not be overruled on a question of fact, unless his findings are so clearly against the weight of evidence as to show evidence entirely disregarded. Kinney v. Barnheisel, 53 Wyo. 58, 77 P. 2d 807.

The lower Court's findings of fact will not be reversed unless overwhelmed by opposite testimony. Montgomery Ward v. Arbogast, 53 Wyo. 275, 81 P. 2d 885-892.

The law does not favor forfeitures. Because of this reluctance on the part of the law, ordinarily, the party claiming the forfeiture of a title must both plead it and establish it in clear and convincing proofs. Utah New Mercur Min. Co. v. South Mercur Min. Co. 128 P. 2d 269; In re Manse Spring, 108 P. 2d 311; City of Miami v. Miller, 4 So.2d 369.

Attitude of Courts on the subject of forfeiture is almost violent. Willet v. Baker, 133 F. 937; Karnes v. Flint, 269 P. 231, 232; 279 P. 732; Copper Company v. Kumbel, 147 P. 885; 40 C.J. 845.

One of the most famous mining decisions in the United States, Belk v. Meagher (104 U.S. 279, 26 L.Ed. 735) declares that the title of the owner of an unpatented mining claim has all the elements common to ownership of real property; that it descends, may be transferred by deed, may be mortgaged or seized on execution. The owner after location may do as he pleases with his title.

As to dummies: The eight locators were clothed by United States statutes with right to locate these lands.

The use of names of dummies is a fraud on the government, not upon the citizens who wish to locate, and the government only may complain. Smelting Co. v. Kemp, 104 U.S. 636, 654; 26 L.Ed. 875.

As to doing business in Wyoming: The exact limitation on the foreign corporations which do not accept the Constitution of Wyoming is, that they shall not be "permitted to transact busines in this state." Corporations 28-141. Also subject to punishment as for misdemeanor for attempting. No forfeiture of property rights is declared. Sec. 20, Chap. 62, Session Laws of 1939, page 71, clarifies the situation by providing that a non-complying foreign corporation transacting business shall be precluded from maintaining an action on such transactions. This is now the punishment.

Gould v. Tel. Co., 17 Wyo. 507, 101 P. 939; Interstate v. Lakeview, 31 Wyo. 191, 224 P. 850; State v. Hirst, 53 Wyo. 163, 79 P. 2d 489.

Ownership of land by a foreign corporation, lease of the same on shares and assignment of rent, do not constitute doing business in Texas. Wilson v. Peace, 85 S.W. 31.

The question is, what the corporation is doing, rather than what it could do. Leasing property, not doing business. U. S. v. Realty Co. 59 L.Ed. 825; Davies v. Mining Co. 286 P. 740; N. Y. Cent. v. Gill, 219 F. 184; Public Service Company v. Herold, 227 F. 500; Louisville Property Co. v. Nashville, 84 S.W. 810.

63 P. 583, contains a clear declaration of applicable mining law to outside work.

RINER, Justice. KIMBALL, C. J., AND BLUME, J., concur.

OPINION

RINER, Justice

The plaintiffs, May Chittim, and her husband Charles B. Chittim, Virginia Z. Hejde, and her husband Francis Hejde, in this review proceeding No. 2274, appellants, brought suit in the District Court of Crook County, Wyoming, against the Belle Fourche Bentonite Products Company, as defendant and respondent here, to quiet their title to certain bentonite placer mining claims located in said county. The plaintiffs, who will usually be thus designated hereinafter, alleged that the defendant, a South Dakota corporation, and subsequently referred to, for convenience, as the "Bentonite Company," or as the "defendant," claimed an interest or estate in the premises included in the said mining claims and that the assertion of this interest was entirely without right.

The Bentonite Company's answer to this suit was in the nature of a general denial and also allegations by way of counter-claim that its predecessors in interest had, prior to the location of the mining claims described in plaintiffs' pleading, and when the lands involved were public mineral lands of the United States subject to entry located according to law, all the premises thereafter embraced in plaintiffs' alleged mining claims as certain other mining claims, and the defendant had done the necessary annual assessment work thereon after acquiring by purchase the right, title and interest of said prior locators; also that as a consequence at the time plaintiffs made...