Glass v. Templeton

• Decision Date: 05 November 1914
• Docket Number: No. 1172.,1172.
• Citation: 170 S.W. 665,184 Mo. App. 532
• Parties: GLASS et al. v. TEMPLETON et al.
• Court: Missouri Court of Appeals

170 S.W. 665

184 Mo. A. 532

GLASS et al. v. TEMPLETON et al.

No. 1172.

Springfield Court of Appeals. Missouri.

November 5, 1914.

On Motion for Rehearing, November 27, 1914.

1. MINES AND MINERALS (§ 58) — LICENSES — VALIDITY.

Where the holders of a mining license, who were required to pay a royalty of 20 per cent. to the landlord and 10 per cent. additional to the assignor of the license, represented to plaintiffs, who were acquiring an interest in the license, that the royalty was 20 per cent., the fact that plaintiffs asked the landlord as to the amount of the royalty does not defeat their right to rescind the contract for the misrepresentations, under the rule that he who makes an independent investigation cannot say that he relied upon misrepresentations.

2. MINES AND MINERALS (§ 58) — MINING LICENSES — VALIDITY.

Nor does the rule that where the means of knowledge are equally accessible to both parties there can be no fraud apply to such a case, where there was difficulty in ascertaining, even at the trial, the basis for the payment of the additional 10 per cent. royalty.

3. MINES AND MINERALS (§ 59) — MINING LICENSES — RESCISSION — LACHES

The fact that plaintiffs continued to operate the mine jointly with defendants for six months after first learning of the extra royalty was not such laches as barred their right to rescind, where the defendants, during all that time, were endeavoring to make some arrangement with their assignor, whereby the additional royalty payments would be avoided.

4. MINES AND MINERALS (§ 59) — MINING LICENSES — RESCISSION FOR FRAUD — LACHES.

A purchaser must exercise the right to rescind within a reasonable time after discovering the facts.

5. MINES AND MINERALS (§ 59) — MINING LICENSES — RESCISSION FOR FRAUD — ESTOPPEL.

Where the purchasers of an interest in a mining license joined with the vendors, who held the remaining interest, in the formation of a corporation to operate the mine, the fact that one of the purchasers, as an officer of the corporation, made a transfer on the books of the corporation of certain stock to an outsider, does not estop the plaintiffs from thereafter seeking to rescind the contract of purchase for fraud.

6. MINES AND MINERALS (§ 59) — MINING LICENSES — RESCISSION FOR FRAUD — EFFECT OF BANKRUPTCY.

Nor does the fact that the corporation had been adjudged a bankrupt defeat the purchasers' right to rescind as against the vendors, and to recover the property transferred in exchange for the interest in the license, since such rescission would be subject to the rights of the creditors in the bankruptcy proceeding.

On Motion for Rehearing.

7. JURY (§ 28) — RIGHT TO JURY TRIAL — WAIVER.

Where the parties waived a trial by jury and submitted the issues to the court, the right to a jury trial cannot be invoked by an objection to the introduction of any evidence for the reason that the bill did not state facts which authorized the court to take equitable jurisdiction, and that, therefore, a trial of the case would deprive the defendant of a trial by jury.

Appeal from Circuit Court, Jasper County; D. E. Blair, Judge.

Action by George H. Glass and others against L. D. Templeton and others. Judgment for plaintiffs, and defendants appeal. Affirmed, and motion for rehearing overruled.

George V. Farris and H. W. Currey, both of Webb City, for appellants. Spencer, Grayston & Spencer, of Joplin, for respondents.

STURGIS, J.

The defendants, claiming to own a mining license on eight mining lots in Jasper county, Mo., made a written contract with plaintiffs, who owned a mining plant and machinery located on other land, by which the plaintiffs were to remove this plant and machinery, and install and reconstruct it on defendants' mining lots, and thereby put their property in a condition to produce and clean mineral ores. Defendants represented, and the contract states, that they owned and held this license at 20 per cent. royalty on the ores mined and produced. The contract provides that, as soon as the mining plant and machinery is moved and reconstructed on defendants' lease, the defendants in payment therefor shall convey and assign to plaintiffs an undivided one-fourth interest in their lease. The plaintiffs moved and reconstructed the mining plant on the mining lots covered by defendants' license.

This is a suit to rescind said contract, recover the mill and mining machinery moved onto said lots, and recover the amount expended by plaintiffs in such removal and reconstruction, on the ground of fraud and misrepresentation inducing the making and carrying out of such contract. The fraud and misrepresentation claimed relates to the rate of royalty to be paid on the mineral ores mined on said land under defendants' license. Some time after the removal by plaintiffs of their mining plant onto these mining lots in question, the plaintiffs and defendants formed a corporation called the Texmo Mining Company, defendant herein, with themselves as stockholders and the mining license with the mining plant thereon as the capital stock; such property being conveyed to the corporation and the stock issued and held by plaintiffs and defendants in the same proportion as their agreed interest in the consolidated property — one-fourth of the stock belonging to plaintiffs and three-fourths to the defendants. The organization of the Texmo Mining Company was for mere convenience in carrying on the mining operations, and worked no actual change as to the interest of the parties between themselves.

The evidence clearly shows that, as soon as mining operations were actually commenced and ore produced, the owner of the first lease on the land, designated herein as landlord, under whom defendants and plaintiffs held these lots as licensees under the mining rules and regulations prescribed by such landlord, demanded and retained 30 per cent. royalty on all ores mined on the land. This the landlord continued to do so long as mining was done, and in fact until the Texmo Mining Company went into bankruptcy, ceased to mine these lots, and the mining license was forfeited. If it be true that plaintiffs were deceived and induced to make and carry out the contract as to moving the mining plant to these lots by defendants' representation that they held the right to mine same on a 20 per cent. royalty, and in fact could only mine thereon by paying a 30 per cent. royalty, no one will question the materiality of the misrepresentation, or indeed as to this being a material cause of the failure and bankruptcy of the company. Defendants' answer is a general denial, though several special defenses are urged here as being sustained by the evidence.

The evidence is quite conflicting in many respects, and, as the case is in equity, we should and have reviewed all the evidence, and have reached the same conclusion as the learned chancellor, who heard the evidence face to face with the witnesses. It appears that several parties, known as the "Burklin crowd," were the original licensees of these lots, or the ones of them containing the mineral deposits and on which the mining was done, and had agreed to sell their rights to defendants; but the sale had not been and never was fully consummated. As we understand it, the Burklin crowd had offered and gave an option to sell the license to defendants for $7,000 in cash; but this option expired, and a new deal was proposed at $8,000 on time and 10 per cent. of all ores mined to be applied in payment of this sum. This gave rise to the extra 10 per...