Elling v. Fine

• Court: Montana Supreme Court
• Writing for the Court: SANNER, J.
• Citation: Elling v. Fine, 53 Mont. 481, 164 P. 891 (Mont. 1917)
• Decision Date: 04 May 1917
• Docket Number: 3752.
• Parties: ELLING ET AL. v. FINE.

164 P. 891

53 Mont. 481

ELLING ET AL. v. FINE.

No. 3752.

Supreme Court of Montana

May 4, 1917

Appeal from District Court, Madison County; J. B. Poindexter, Judge.

Action by Mary E. Elling and others against Benjamin J. Fine. From a judgment for plaintiffs and an order denying new trial defendant appeals. Judgment and order affirmed.

S. V Stewart and Geo. R. Allen, both of Virginia City, and Walsh Nolan & Scallon, of Helena, for appellant.

Hartman & Hartman, of Bozeman, for respondents.

SANNER J.

In this case it is admitted by the pleadings, established by uncontradicted evidence, or found by the court: That the defendant, B. J. Fine (the appellant here), and one J. H Pankey were, on January 28, 1895, indebted to Henry Elling in the sum of $93,494.62, all incurred in the purchase, maintenance, and operation of certain mining properties situate in Madison county, among them ten unpatented claims and mill sites, referred to as the "Easton group," which are the subject of the present controversy. On that day Fine and Pankey executed, and a few days later delivered to Elling, an instrument, in form a deed absolute, conveying the properties so owned by them to him. At the same time and as part of the same transaction Elling (his wife joining) entered into a written agreement with Fine and Pankey, which agreement recited the execution of said deed and the desire of Fine and Pankey to have "the privilege of repurchasing" the Easton group, and provided that Elling would "resell and reconvey" the same to Fine and Pankey if they should on or before February 1, 1899, pay or cause to be paid to Elling "the sum of $93,494.62, together with interest thereon * * * at the rate of 10 per cent. per annum, and the necessary, proper, and legitimate expenses of operating, preserving, and maintaining the title and right to the possession of said property, * * * with interest on such amounts at the same rate." Other stipulations of this agreement are these: That Elling, if he worked the property, must do so "in miner-like fashion and in a manner conducive to the best interests of all the parties to the contract"; that any profits derived from such operations "shall be credited" on the sum fixed as the repurchase price (viz. $93,494.62); that the costs of improvement and operation "shall be a charge against the property and shall bear interest at the rate of 10 per cent. per annum" that Elling "shall keep a just, true, and accurate account" of his receipts from and expenditures on behalf of the property; that "either party to this contract may negotiate a sale" of the property, "but no sale can be made by either * * * without the consent of the other party in writing"; that if Elling "shall negotiate a sale * * * he shall receive one-third * * * of the proceeds over and above the sum of $93,494.62, with interest, * * * costs, and expenditures," but if Fine and Pankey should negotiate a sale, Elling "is to receive nothing" over and above said sum, with interest, costs, and expenses; that Elling must maintain and defend the title and possession of said property against all persons and protect it from waste or destruction; and that Fine and Pankey, or either of them, shall have the right "at any time and at all reasonable times to enter upon the premises for the purposes of examination and inspection." Elling went into possession immediately, and from that time remained in the sole and exclusive possession of the property, working and developing it until his death in November, 1900. Thereafter the executors of his will continued to possess, operate, and develop the property, until by decree of the district court of Madison county it was formally distributed to the plaintiffs as heirs at law and devisees of Henry Elling, since which time the plaintiffs have possessed, operated, and developed the same. During the period elapsing since January 28, 1895, said Henry Elling, his executors, and these plaintiffs have paid all taxes levied against said property, have made large expenditures in mining, developing, and improving the same, such expenditures over and above all receipts derived therefrom amounting in 1899 to $52,627.93, which, with the purchase price, made a total of $146,122.55 and all this without accounting to any one. Meanwhile, and on February 21, 1896, there was issued to Henry Elling, and on March 23, 1896, by him recorded, a patent from the United States granting the Easton group in fee simple to him. The value of this property was always speculative and fluctuating in character, never demonstrably greater than $93,494.62. With full knowledge of all that had been or was being done, Fine and Pankey stood by demanding no accounting, questioning no act, offering no repayment, nor, save some verbal declarations to strangers made by Fine shortly before the plaintiffs brought this suit in February, 1913, had he or Pankey asserted any claim to the property, and Pankey does not now assert any such claim. Fine's contention, as set forth in his counterclaim, is that the transaction whereby Elling became possessed of the property in question was intended as security for the repayment of the indebtedness then due from Fine and Pankey as above mentioned, and that said transaction therefore amounts to a mortgage, from which he ought now to be permitted to redeem by paying such sum as may, after accounting by the plaintiffs, be found to be still due. The trial court, though requested by both sides to find upon this contention, failed to do so specifically, but held that Fine is barred by laches from making this claim or asserting any right to or interest in the property, and also that his "cause of action set up in his counterclaim herein is barred by the provisions of the statute of limitations of this state" As the result plaintiffs were adjudged to be the absolute owners of the property and their title to the same was quieted as against Fine. Hence these appeals.

We may premise at the outset that, if upon the face of the instruments the transaction, made up of the deed and contract, clearly amounts to a mortgage, the judgment is wrong; for, "once a mortgage always a mortgage," plaintiffs had no title, and could get none by the failure of Fine to assert what was obvious on an inspection of the record. But such is not, upon its face, the effect of the transaction. The deed is absolute and conveys 27 separate lodes and mill sites. The contract bears date two days later than the deed, and Elling's wife joined in its execution. Of the 27 lodes and mill sites it covers and agrees to reconvey only the 10 comprised in the so-called Easton group. It contains no reference to a loan, no mention of any indebtedness, no engagement by Fine and Pankey to pay or do anything, although some of its provisions, such as those mentioned above, are remarkable; they are not necessarily inconsistent with its expressed purpose to confer upon Fine and Pankey an option to repurchase property theretofore conveyed by them absolutely to Elling. Prima facie the transaction was a sale to Elling with an option to Fine and Pankey to repurchase....