Colorado Fuel & Iron Co. v. Chappell

• Decision Date: 12 December 1898
• Citation: 12 Colo.App. 385,55 P. 606
• Parties: COLORADO FUEL & IRON CO. v. CHAPPELL.
• Court: Colorado Court of Appeals

55 P. 606

12 Colo.App. 385

COLORADO FUEL & IRON CO. v. CHAPPELL.

Court of Appeals of Colorado

December 12, 1898

Appeal from district court, Arapahoe county.

Action by the Colorado Fuel & Iron Company against Delos A Chappell. There was a judgment for defendant, and plaintiff appeals. Reversed.

Chas. H. Toll, D.C. Beaman, and D.V. Burns, for appellant.

Yeaman & Gove, for appellee.

THOMSON P.J.

On the 10th day of November, 1894, the Colorado Fuel & Iron Company commenced its action against Delos A. Chappell to recover for the alleged wrongful conversion of a fund with which the defendant had been intrusted by the plaintiff's assignor. In due time the defendant answered. The plaintiff demurred to the answer, and upon the hearing of the demurrer the plaintiff took leave to amend its complaint. The amended complaint, which was filed on the 23d day of January, 1896 consisted of two counts, which appear to have been simply different forms of statement of the same cause of action. The defendant demurred to the first count and answered the second. The demurrer was sustained. The answer set forth six defenses, to the fourth and sixth of which the plaintiff demurred. The demurrer was sustained as to the fourth, and overruled as to the sixth. The plaintiff then filed its replication. A demurrer was interposed and sustained to the replication to the second defense. Thereupon the plaintiff filed its amended replication to that defense, which, on motion of the defendant, was stricken out, and judgment entered in his favor on the pleadings. The plaintiff has brought the case here by appeal.

Inasmuch as the only questions for determination here arise upon the pleadings, such examination of the averments of both parties as is necessary to an intelligent consideration of those questions must be made. Error is assigned to the ruling upon the demurrer to the first count of the complaint, but as, in our view, all the proof necessary to establish the cause of action there stated is also admissible under the allegations of the second, and as the defendant is not entitled to an opinion upon the question of its sufficiency, we shall leave it without further mention. The second count averred that the plaintiff was a corporation, brought into existence in pursuance of law by the consolidation, on October 21, 1892, of two corporations theretofore existing,--the Colorado Coal & Iron Company and the Colorado Fuel Company,--by virtue of which consolidation and of conveyances and assignments in conformity therewith the plaintiff succeeded to all the property, rights, and assets of the Colorado Coal & Iron Company. It stated that on the 26th day of September, 1887, a contract in writing was entered into between the coal and iron company as party of the first part and the defendant as party of the second part, the provisions of which, in so far as we deem it necessary to state them, were as follows: "Whereas, the party of the second part has, by a certain agreement entered into between said party of the second part and Dr. Beshoar, of Trinidad, Colorado, securing an option for the controlling interest in the stock of the Gray Creek Coal and Coking Company, said company being the owner of certain coal and other lands situated in Las Animas county, Colorado, and lying to the east and north and south of Engleville, and formerly known as the Beshoar or Four C's property; and whereas, the said party of the second part is desirous of having the said property prospected, developed, and worked by said party of the first part; and whereas, said party of the first part is desirous of obtaining a lease of said property: Now, therefore, in consideration of the sum of $1 paid to said first party by said second party, and in further consideration of the mutual covenants and agreements herein contained, the said first party hereby covenants and agrees with said second party that it will at once proceed to prospect said land with the view of determining the character and quality of the seam or seams of coal which may underlie said property, and it will prosecute said work of prospecting with all the diligence and energy of which such work is capable. (2) That in the event said first party shall find, as a result of said prospecting, that said land contains a seam or seams of coal of workable value, then it will proceed to develop the same by means of drifts, tunnels, or shafts, and will proceed to erect thereon suitable buildings, chutes, and all necessary appliances for conducting the operation of coal mining upon said land, as fast as said work can be reasonably and economically prosecuted. In consideration of which the said party of the second part agrees, in the event that, and as soon as, said party of the first part shall have expended in said prospecting and developing said lands, and in the erection of buildings, coke ovens, chutes, tracks, and all other appliances for mining coal and working said lands, and in the mining of coal from said lands the sum of $60,000, then said party of the second part is to have made, executed, and delivered to said party of the first part, by the Gray Creek Coal and Coking Company, a good and sufficient lease of said entire property." The complaint further averred that after the execution of this contract it was agreed between the parties that the company, instead of making the expenditures itself, should turn the money, or so much of it as might be required, over to the defendant, to be by him laid out in the manner provided by the contract, and on account, and under the direction and control, of the company; and that in pursuance of the contract and the subsequent agreement the coal and iron company, between October 7, 1888, and December 31, 1888, paid over to the defendant $58,751.06, to be by him expended in the manner provided by the contract; but that, instead of using the money in that manner, he wrongfully and unlawfully converted the whole of it to his own use. The answer stated, among other things, that on the 31st day of December, 1888, the coal and iron company and the defendant came to a mutual accounting concerning the matters stated in the complaint, which accounting covered all moneys received by the defendant from the company pursuant to the contract and the verbal agreement, and all moneys paid, laid out, and expended by the defendant for the company in pursuance of the contract and agreement; and that upon the accounting there was found to be due from the company to the defendant $3,452.21, which sum the company on the same day paid to the defendant in full settlement of all dealings and transactions between the defendant and the company under the contract and agreement. The replication admitted the accounting and settlement as stated in the answer, but averred that the settlement was brought about by the fraudulent conduct, concealment, and representation of the defendant, in this: that at the time it was made he represented to the company that he had...