Deep River Gold Mining Co. v. Fox

• Decision Date: 31 December 1845
• Citation: 4 Ired.Eq. 61,39 N.C. 61
• Court: North Carolina Supreme Court
• Parties: THE DEEP RIVER GOLD MINING CO. v. RICHARD FOX.

4 Ired.Eq. 61

39 N.C. 61

THE DEEP RIVER GOLD MINING CO.

v.RICHARD FOX.

Supreme Court of North Carolina.

December Term, 1845.

It is a well established principle in Equity, that an agent cannot make himself an adverse party to his principal, while the agency continues; he can neither make himself a purchaser, when employed to sell, nor, if employed to purchase, can he make himself the seller. In both cases, he is but a trustee for his principal.

But the rule applies only to agents, who are relied upon for counsel and direction, and whose employment is rather a trust than a service; and not to those, who are merely employed as instruments, in the performance of some appointed service.

Courts of Equity should be very cautious in granting injunctions to stop mining operations, because such stoppage is alike opposed to public policy, and to the private justice due to the party, who might ultimately be found to be the owner. The better course is not to prevent the working of the mine, but to appoint a receiver.

The cases of Bissell v. Bozman, 2 Dev. Eq. 160, and Falls v. McAffee, 2 Ired. 239, cited and approved.

This was an appeal, both by the plaintiffs and the defendant, from certain interlocutory orders made by the Court of Equity of Guilford County, at the Fall Term, 1845, his Honor Judge DICK presiding.

The bill charges, that the plaintiffs, by an Act of the General Assembly, passed in the year 1835, were incorporated by the name of the Deep River Gold Mining Company, and as such were organized and commenced business in the year 1835, and continued to carry it on until finally suspended. The officers of said company at the time the bill was filed, consisted of a President, Granville Sharp Patterson, and four Directors, to-wit: Roswell A. King, Lemuel Lamb, Joshua Phillips and Henry Ogden, all of whom were duly chosen, according to the act, and of whom, Roswell A. King alone lived in North Carolina. The others in New York and Philadelphia. That, by the provisions of the act of incorporation, all the property of the company is made liable to be sold for its debts, and that process, to subject it to such sale, may be served on the President or any Director or Stockholder. To carry on their operations, the bill charges that the company purchased, from Roswell A. King and others, several contiguous tracts of land, which were valued at the time at $200,000, and, at which price, they were taken as stock. When the company commenced operations, the defendant, Fox, was appointed the agent to manage and carry on the business at a salary of $1500 per year, and one F. Wilkerson was appointed their clerk at a salary of $400. The lands were found, upon examination, to abound in copper and gold ore, each very rich. Large quantities were sent to England and sold at a high price. The purpose of sending the ore to England was to ascertain its value, and to enable the company, by a sale of stock, to carry on their operations more extensively and profitably. Sales were effectuated upon certain terms, and in consequence of a misunderstanding between the company and the English purchasers, the business of the company was suspended. The agent, Fox, was, by letter dated the 1st of January, 1839, informed of this fact, and directed to discharge all the hands except two or three to take care of the property, and by letter, dated in the April following, and addressed to him, he was notified his services and Wilkerson's were no longer needed, and requiring him to forward a full statement of the situation of the firm, and the said Fox, subsequently, agreed with the plaintiffs to continue to act as their agent, at a salary of $100 per annum. This new arrangement was finally closed or made at a meeting of the board, held in May, 1841, at which the defendant was present. The bill charges that, while Fox was so acting as their agent, he caused process to issue against the company, returnable to the August Term, 1841, of the Court of Pleas and Quarter Sessions of Guilford County, and obtained a judgment at the November Term following, for the sum of $1166 36, which he claimed to be due for his said salaries as agent. Upon this judgment execution issued, returnable to February Term, 1842, and was levied on all the property of the plaintiffs in the County of Guilford, including the several tracts of land, so purchased and held by the company; that a sale took place at May Term, 1842, when the defendant purchased the whole of the lands at the price, in the whole, of $1,265--the several tracts having been sold separately, and being worth the amount at which they were taken as stock. The bill further states, that, at the meeting of the board in May, 1842, the defendant presented his account against the company, and made a representation of their affairs, at the same time stating the quantity of ore that was raised and on the surface of the mine, and which he agreed to take at the price of $500, deducting which from his account, would leave a balance in his favor of about $1000. He was fully informed of the causes which produced the suspension of the mining business, and of the embarrassed state of the plaintiffs' affairs, and in consequence thereof, promised not to press his claims, but that they might be paid at the convenience of the company. The bill charges, that the writ or process in the suit was not served on the President, but on Roswell A. King, one of the Directors, who lived in North Carolina, and while said Fox continued the agent of the company and was living on the land, and that no notice was given to the plaintiffs (except by the service) of the issuing of the writ or the obtaining of the judgment or the sale of the land, and that the judgment was taken by default, and without an appearance for them or defence. It charges, that it was the duty of the defendant to have taken care of the interest of the company, and to have notified the Board of Directors of the existence of the suit and its progress. The bill charges, that in the sale of the ore, lying on the ground as set forth, they were grossly deceived by the defendant, both as to the amount of the ore and its value, and that the defendant well knew both the amount and value, being an experienced miner, and that it was worth more than what the company owed him, and that, from it and from ore subsequently raised by him from the mines, preceding the sale to him by the Sheriff, he actually realized the sum of $6000, deducting all expenses; and it calls for an account of the ore and its proceeds. The bill further charges, that, if all just accounts were taken between the plaintiffs and the said Fox, it would appear, that, at the time he took his judgment and sold the land, they owed him nothing, and that, at the sale, the defendant announced that nothing would be taken at the sale in payment by the purchaser but gold and silver, whereby purchasers were prevented from bidding, and the property of the plaintiffs was sacrificed, through the negligence and fraud of the defendant, who was their agent. The bill then charges, that as early as May, 1841, the defendant had formed the design of defrauding the plaintiffs out of their property, and, with that view, in his conversations depreciated the mines and the ore; that the plaintiffs were ignorant of both, living at a great distance from North Carolina, and that they had implicit confidence in the mining skill and honesty of the defendant, but that, since his purchase, the mines have turned out to be extremely valuable, as proved by letters written by the said defendant in 1845 to John Rutter. It then charges that the defendant has little or no property, except that obtained from the mines, and that he is still working them, and prays an injunction; and, accordingly, an injunction was granted.

The answer admits the incorporation of the company, their regular organization, and the acquisition by them of the land, as stated in the bill. It admits the employment of the defendant as their agent at the salary of $1500, that the business of mining was suspended at the time specified and his dismissal from his agency in April 1839, and denies, that, after that time, he acted as their agent, but that he did agree, for the sum of $100 a year and the use of the land, to take care of the property of the plaintiffs. It admits that he did sue the company for money that was justly his due, and did obtain a judgment and caused the execution to be levied on the land and became himself the purchaser, and that the defendant now holds the Sheriff's deed for it and claims it as his own, and denies that his judgment was taken by default, but states that at the return term of the writ the plaintiffs were represented by counsel, who entered the pleas of the general issue, payment, and set off, release, and accord and satisfaction.

The answer alleges, that, in compliance with the directions contained in the letter of April 1839, he caused the clerk of the company, Mr. Wilkerson, to make out a full statement of the affairs of the company, from the commencement of operations to the time of suspension, which, together with an inventory of their effects in Guilford County, was by him laid before a board of the company, which was held in Philadelphia, in May, 1839, with which account and inventory they were well pleased. At this meeting he exhibited to the company his account and demanded what was due him for his services; it was admitted to be just, but he was informed by the board, that they had no funds. It was then proposed to him, that he should take care of the land and property for the company, for which service they would allow him $100 a year and let him have the use of the land, pay him then $100 of his account, his travelling expenses, and remit him, in the course of two or three weeks, $800 more on his account. He returned to North Carolina, but never received the money promised, except the $100. The defendant denies he then...