Federal Mining & Smelting Co. v. Bunker Hill & Sullivan Mining & Concentrating Co.

• Decision Date: 21 December 1909
• Docket Number: 424.
• Citation: 187 F. 474
• Parties: FEDERAL MINING & SMELTING CO. v. BUNKER HILL & SULLIVAN MINING & CONCENTRATING CO.
• Court: U.S. District Court — District of Idaho

187 F. 474

FEDERAL MINING & SMELTING CO. v. BUNKER HILL & SULLIVAN MINING & CONCENTRATING CO.

No. 424.

United States Circuit Court, D. Idaho, Northern Division.

December 21, 1909

John P Gray and F. T. Post, for complainant.

Curtis H. Lindley and Myron A. Folsom, for defendant.

DIETRICH District Judge.

The defendant by its answer having suggested that the January Mining Company, a corporation, ought to be made a party, upon motion of the complainant the cause was set down for argument, and has been submitted upon this objection only.

The suit is brought to quiet plaintiff's title to the San Carlos lode mining claim, situate in Shoshone county, Idaho and especially to certain extralateral ore bodies which it is averred are a part of the vein having its apex within the surface boundaries of the claim. The complainant is a corporation organized under the laws of the state of Delaware. The defendant, and also the January Mining Company are corporations organized under the laws of the state of Oregon. The original bill was filed on the 1st day of October, 1908, and upon the same day complainant filed in this court another bill against the defendant, involving a similar controversy, based upon its alleged ownership of what is known as the Overlap lode mining claim. Subsequently, on or about the 16th day of November, 1908, the January Mining Company commenced an action in the district court of the First judicial district of the state of Idaho, in and for Shoshone county, against the defendant, exhibiting a similar controversy, based upon its alleged ownership of what is known as the Republican Fraction mining claim. It so happens that the extended end lines of the San Carlos and Overlap claims, belonging to the complainant, and of the Republican Fraction, belonging to the January Mining Company, and of the Bunker Hill claim, belonging to the defendant, intersect, with the result that there is a segment, common to all of the extralateral planes, of which each of the three companies named claims to be the sole owner. A somewhat larger segment is common to the extralateral planes of the San Carlos, Bunker Hill, and Republican Fraction, and a still larger area common to the Overlap, Republican Fraction, and Bunker Hill. In each of the three cases the complainant prays, not only that its title be quieted, but that defendant be required to account and pay for the ores which, according to the averments, it has wrongfully extracted from the ground in controversy.

The amount and value of the ores for which an accounting is sought are not alleged in either of the bills in this court, but from defendant's answer it appears that in the state court the January Mining Company alleges the total amount extracted from the area common to the extralateral planes of the Republican Fraction and the Bunker Hill to be over $7,000,000. In the answer it is further averred that prior to the year 1905 the complainant here was the owner of the Republican Fraction as well as the San Carlos and Overlap claims, and that in that year it filed in this court a suit asserting extralateral rights pertaining to the Republican Fraction claim; the suit being somewhat similar in its scope to the suits now pending. Thereafter, and without a trial upon the merits, that suit was voluntarily dismissed, and the complainant caused the January Mining Company to be organized, and thereafter conveyed to it, for a nominal consideration, the Republican Fraction claim, together with all causes of action appertaining thereto against the defendant company. It is further alleged in the answer that the plaintiff owns all of the capital stock of the January Mining Company, and it is contended that in fact the January Mining Company was organized in the state of Oregon by the plaintiff, and the Republican Fraction claim conveyed to it for a nominal consideration, merely for the purpose of avoiding the jurisdiction of this court.

The defendant's point is that the January Mining Company should be made a party, and thus be compelled here to litigate its claims to the common segment, under the rule which requires a court of equity to decide upon and finally determine the entire controversy, and to do complete justice by adjusting all the rights involved in it, and also to make the performance of the orders of the court perfectly safe to those who are compelled to obey them. That this is the general rule, subject to certain exceptions, may not be doubted. Bates, Federal Equity Procedure, Sec. 39 et seq. Whether, in view of the fact that complainant seeks an accounting, and both it and the plaintiff in the suit in the state court are laying claim to the same fund, the January Mining Company should be regarded as an 'indispensable' party, as defined in Shields v. Barrow, 58 U.S. 130, 15 L.Ed. 158, and Williams v. Bankhead, 19 Wall. 563, 22 L.Ed. 184, need not be decided. If not 'indispensable,' it is a 'necessary' party.

The matter in dispute is a certain segment of mineral land, together with the proceeds of ores heretofore removed therefrom by the defendant, of all of which each of the three corporations claims ownership, to the exclusion of all rights and claims of each of the other two corporations. As to the accounting, it is admitted that unless by some arrangement, voluntarily entered into by the plaintiff, the court may retain control of the fund which may be awarded to the plaintiff until the suit in the state court is finally determined, and thereupon direct the payment thereof as the rights of the parties may appear, the defendant would, because of a possible adverse judgment in the state court as well as here, be subjected to the peril of being twice called upon to account for the same fund. Apart from this feature, the case might possibly be prosecuted in its present form without jeopardy to defendant, but, obviously, not within the principle epitomized in that familiar expression that 'courts of equity delight to do justice, and not by halves.'

One of the exceptions to the general rule that all persons interested in the controversy should be made parties to the suit is where the bringing in of a dispensable party would oust the jurisdiction of the court; and the plaintiff urges that the conditions here are such as to require recognition of this exception.

Referring to the familiar principle that, in determining whether the requisite diversity of citizenship exists, it is the duty of the court to align the parties upon the one side or the other, according to their real rather than their apparent interests, regardless of the places assigned to them in the pleadings as plaintiffs or defendants, plaintiff contends that, if the January Company is brought in, it must, for jurisdictional purposes, be deemed to be a coplaintiff, and therefore the court would lose jurisdiction; for we should then have, as parties upon opposite sides of the controversy, citizens of the same state.

This contention is based upon the assumption that because, as appears from the answer, the plaintiff controls all of the stock of the January Company, there can be no real conflict between them. But conflict of claims does not necessarily imply hostility of claimants. The January Mining Company is the owner of the Republican Fraction mining claim and all that pertains thereto. The property is held by it primarily for the benefit of its creditors, and secondarily for its stockholders. Its rights as an owner are not affected by the fact that all of its stock is possessed or controlled by a single interest, nor are its obligations thereby diminished and presumably it is in good faith seeking to establish its right to the segment in controversy for its own, and not for another's, benefit, thus fulfilling the obligations imposed upon it by law. Nor will it be presumed that the plaintiff, although controlling the stock of the January Company, will, by an abuse of power,...