DAC Uranium Company v. Benton

• Decision Date: 28 December 1956
• Docket Number: Civ. A. No. 5368.
• Citation: 149 F. Supp. 667
• Parties: D. A. C. URANIUM COMPANY, a corporation, Plaintiff, v. Robert BENTON, Richard Brady, and Victor C. Herlacher, Defendants.
• Court: U.S. District Court — District of Colorado

149 F. Supp. 667

D. A. C. URANIUM COMPANY, a corporation, Plaintiff, v. Robert BENTON, Richard Brady, and Victor C. Herlacher, Defendants.

Civ. A. No. 5368.

United States District Court D. Colorado.

December 28, 1956.

COPYRIGHT MATERIAL OMITTED

Grant, Shafroth & Toll, Erl H. Ellis, Denver, Colo., for plaintiff.

Boyle & Witty, John M. Boyle, Salida, Colo., and Robert B. Keating, Denver, Colo., for defendants Robert Benton and Richard Brady.

John R. Wall, Pueblo, Colo., for defendant Victor C. Herlacher.

KNOUS, Chief Judge.

This matter arises upon the complaint of the plaintiff seeking declaratory and injunctive relief against the defendants. Jurisdiction of this Court was founded upon diversity of citizenship. Trial of the issues was had to the Court, and the matter now rests for final disposition.

A chronological summary of the facts as disclosed by the record of the action and by the testimony given at the trial is as follows: During July, 1955, the defendant Benton was in the employ of the defendant Herlacher who at that time was operating certain mining property not material here. Benton, with the defendant Brady, was then in the process of discovering and locating certain other mining claims known as the "Lightning Group," such claims being located in Fremont County, Colorado and being the subject matter of this action. On the basis of a verbal agreement between Benton and Herlacher, the latter moved certain of his equipment upon the "Lightning Group" claims and commenced exploratory work and work preparatory to mining operations thereon.

Thereafter, on August 1, 1955, Herlacher entered into an agreement with Benton and Brady, as follows:

"Agreement entered into by and between Victor C. Herlacher (leasee) and Richard Brady and Robert Benton (leasors).

"1. Leasors to retain 5% royalty on net mill returns and 5% of all bonus except freight bonus.

"2. Leasors to retain the development bonus.

"3. If the percentage of ore increases in value 1/3 above original shipment, leasors are to retain 10% after the first year.

"4. Lease to continue indefinitely as long as it continues six months of each year.

"5. This agreement concerns all mining claims situated in Section #11, Township #47, Range #11, Fremont County. This these claims are known as the lightning group."

The instrument was signed by the respective parties and recorded on August 18, 1955 in Fremont County. It is admitted that with the exception of paragraph 2 of the instrument, the defendant Benton dictated the document which was transcribed concurrently into its longhand form by a man accompanying Herlacher. Some time between August 10 and 14, 1955, Herlacher presented to Benton and Brady a formal mining lease prepared by an attorney, bearing date of August 1, 1955. The parties could not agree on this instrument, and it was therefore never executed.

On August 16, 1955 Location Certificates for Lightning Claims numbers 1 through 7 were filed of record in Fremont County. Each stated the respective lode to be discovered and located on August 9, 1955. A location certificate for Lightning number 8 was recorded September 23, 1955, and stated the date of discovery and location as August 9, 1955. These eight claims constitute what may be designated as the "Lightning Group." Brady and Benton are designated in each as the locators, but the certificates were prepared by a surveyor who affixed thereto the signatures of the two defendants.

About this time there arose some controversy between Herlacher and Benton and Brady over possession of the claims, and the former instituted an action in the District Court of Fremont County, Colorado, against the latter two, such action being numbered 7434 in that Court. The complaint in that action, hereinafter referred to as the Fremont County action, was filed August 19, 1955, and set forth the agreement hereinabove quoted, and alleged the interference by Benton and Brady with Herlacher's possession of the claims, and prayed for a declaration of the validity of the "lease" and for an injunction against Benton and Brady restraining them from any interference with Herlacher's possession of the claims. On the same date a temporary restraining order was issued by that court restraining Benton and Brady

"from in any manner interfering with plaintiff from operating the mining properties mentioned in the verified complaint herein and that said defendants be restrained from selling or conveying plaintiff's interest in said properties or the mining machinery and equipment or in any manner interfering with plaintiff's employees."

This restraining order on August 25, 1955, by stipulation was continued operative until further order of the court. On March 30, 1956, the court, acting upon the stipulation of counsel for the respective parties, dismissed the action with prejudice to plaintiff. Subsequently, the court denied a "Motion to Vacate and Set Aside Stipulation for Dismissal" filed on behalf of the plaintiff in that action, such denial being the subject of a review now pending in the Colorado Supreme Court.

Going back to the events of the summer and fall of 1955, the next occurrence material here was the execution on September 24, 1955, of a mining lease involving the "Lightning Group" from Herlacher, as lessor, to the plaintiff, D. A.C. Uranium Co., as lessee. The agreement was recorded October 10, 1955. The plaintiff here, as lessee under this agreement, went into possession on the day the instrument was executed, the defendants Benton and Brady receiving notice of such possession at its commencement.

D.A.C. remained in possession until the advent of winter weather forced it to close down operations on December 9, 1955. During that time it began mining operations and made further exploratory progress. The temporary restraining order in the Fremont County action against Benton and Brady having been dissolved on March 30, 1956, with the order dismissing that action as aforesaid, they returned in early April to the property and allege its repossession and consequent eviction of D.A.C. through their acts of replacing the plaintiff's signs with their own and by what may be termed "rummaging around" the property. This situation continued until early May when D.A.C., through its contractor, returned to the claims to begin spring operations. Disagreement between the plaintiff and the defendants Benton and Brady as to the right of possession brought on the instant action, which was begun by the plaintiff's complaint, filed May 14, 1956. On the same day a temporary restraining order was issued by this Court restraining the defendants from interfering with the plaintiff's possession of the "Lightning Group", and such restraining order by stipulation still remains in force and effect.

Thereafter, the plaintiff, through its contractor, worked the "Lightning Group" up until July, 1956. It has made two shipments of ore from the property, but the Atomic Energy Commission, having been advised of the instant litigation, has withheld any payments.

The plaintiff seeks a declaration of rights in the property, i.e., that Benton and Brady were possessors of the "Lightning Group" claims when they leased them to Herlacher, who in turn subleased or assigned his interest to the plaintiff, who is now in rightful possession of the property; and, further, it seeks a permanent injunction against the defendants Benton and Brady from interfering with its rightful possession. The defendants Benton and Brady allege that at no time was their interest in the "Lightning Group" leased by them to Herlacher, consequently the latter had nothing to give to the plaintiff, and that, therefore, they are the rightful owners of, and should be put in possession of the "Lightning Group". In reality, the defendant Herlacher, is allied with the plaintiff.

The Court is faced at the outset with the serious question raised by the defendants Benton and Brady in averment of res judicata. They allege that the dismissal with prejudice of the Fremont County action was in effect an adverse holding as to Herlacher's right of possession under the August 1, 1955 agreement, and therefore, this plaintiff, who is in privity with Herlacher, is either estopped or barred from relitigating the validity of Herlacher's possession under the August 1, 1955 agreement, which fact the plaintiff must affirmatively show to successfully support its own right under its agreement of September 24, 1955 with Herlacher.

There is no question but that the plaintiff is in privity with Herlacher as a successor in the latter's property interest.

While there is no formal proof of the fact contained in the record here, there is no controversy but that a review by writ of error is now pending in the Colorado Supreme Court from the order of dismissal with prejudice in the Fremont County action. From this situation there arises the immediate question of whether or not a judgment from which a review is pending is of the requisite finality to be available to support a defense of res judicata. Among the different jurisdictions there is a decided split of authority on the question. See Coppedge v. Clinton, 10 Cir., 1934, 72 F. 2d 531, 534-535, and cases cited therein, and annotation in 9 A.L.R.2d 984, et seq. In the instant suit, the answer must be found in the decisions of the Colorado Supreme Court. Coppedge v. Clinton, supra.

The question in Colorado has apparently never been finally determined. At 9 A.L.R.2d 996, the Annotator has this to say:

"The question discussed in this section has not been squarely decided in Colorado. It seems that the courts lean toward the rule stated herein. pending of an appeal from judgment prevents its operation as res judicata

"In Sylvester v. J. I. Case Threshing Machine Co., 1912, 21 Colo.App. 464, 122 P. 62, the court stated that the cases of Glenn v. Brush, 1876, 3 Colo. 26, and Denver & R. G. R. Co. v. Crawford, 1888, 11 Colo. 598, 19 P. 673, appear to sustain the

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