Goldfield Consol. Mines Co. v. Richardson

• Decision Date: 01 February 1911
• Docket Number: 1,104.
• Citation: 194 F. 198
• Parties: GOLDFIELD CONSOL. MINES CO. et al. v. RICHARDSON et al.
• Court: U.S. District Court — District of Nevada

194 F. 198

GOLDFIELD CONSOL. MINES CO. et al. v. RICHARDSON et al.

No. 1,104.

United States Circuit Court, D. Nevada.

February 1, 1911

W. H Bryant, for complainants.

Robert L. Hubbard, for respondents.

FARRINGTON District Judge.

It appears from the bill that each complainant owns valuable gold mines in Goldfield Mining District, Esmeralda county Nev. These mines join, and form one continuous tract of about 473 acres. Running through this land are a number of veins rich in ores, valued at from 50 cents to several dollars per pound. This ore is of a 'peculiar nature, and readily distinguishable from all other ores' found in the district or elsewhere in Nevada; the distinguishing characteristics are alleged to be well known to each defendant. Each complainant has a large number of employes engaged in working these properties. In spite of every precaution some of these employes from time to time steal ore in varying quantities, usually small, and carry it out of the mines when they quit work. It is further alleged that 'the respondents are engaged in the pretended business of operating assay offices in the town of Goldfield, but, as a matter of fact, they do not operate assay offices, but mere fences, where the employes of the complainants sell and dispose of the ore stolen from employers; that prior to the bringing of this suit several million dollars' worth of ore had been stolen in this way from the complainants; that said thefts, at one time, were carried on much more extensively than at present, but that during the year 1909, notwithstanding all the precautions plaintiffs could adopt, their employes have taken not less than $160,000 worth of ore, and sold and disposed of the same to the respondents; that the complainants are the producers of all the high grade ore produced in the Goldfield district and all high grade ore bought by the respondents has been stolen from one or the other of the complainants, which fact is well known to said respondents; that the sums taken by each employe and sold are small in amount, and it is difficult, if not impossible, to detect them in the taking or the sale to the respondents; that the expense of bringing a multitude of suits for each individual offense would be far beyond any recovery that might be had; that the respondents threaten to continue in their business and will continue to purchase ore from employes of the plaintiffs; that there is no other remedy save and except a bill in equity to enjoin the respondents from carrying on their pretended business of assaying, and to enjoin them from purchasing any ores stolen from the complainants' property.'

Pending the hearing of complainants' application for an injunction pendente lite, it was ordered that defendants should not purchase any ore without first notifying complainants, or some one of them, thus affording an opportunity to examine and inspect the ore offered. In due time all the respondents except W. F. Lautzenheiser, H. T. Lautzenheiser, and E. R. Wick appeared and demurred to the bill. Want of equity and misjoinder of parties, both plaintiff and defendant, are the objections urged in each demurrer.

In support of the application for an interlocutory injunction, testimony was offered to show that for two years prior to the suit practically all ore mined and produced in Goldfield district came from properties owned by complainants. The only other producing mine in the district was the Daisy from which the shipments were small, and, as a rule, low grade. Inconsiderable quantities of ore had also been taken from the Black Butte, Belmont, Gold Bar, and Great Bend. Ores mined by complainants, save occasional lots shipped to smelters, are treated in mills at Goldfield operated by complainants themselves. Large quantities of ore were stolen from the complainant companies by their employes. The thefts were frequent, but the amount taken in each case was usually small. This practice has continued, despite all efforts to check it. Prior to this suit, and in the year 1909, the several respondents shipped out of Goldfield through different agencies, in the neighborhood of $100,000 worth of bullion as follows, to wit:

George Richardson, between January 9th and November 2d, inclusive . . . $67,849 46

M. J. Smith, between January 11th and September 23d, inclusive. . . 8,476 64

John Pankey, between January 23d and July 8th, inclusive. . . 1,313 69

Daniel Lane, between June 2d and September 7th, inclusive. . . 6,241 38

Carlton Aguilar, between June 11th and September 23d, inclusive 3,849 29

Alfred Held and A. M. Schwalbach, between January 16th and October 11th, inclusive. . . 12,740 78

Charles Robb, George Rumsey, and Joseph Gruebecker, between January 5th and October 1st, inclusive. . . 6,736 44 The respondents admit purchasing ore, but each, except Mr. Smith and Mr. Held, declares that he never purchased any ore which he knew had been stolen. Mr. Smith states positively that he never bought any stolen ore, and so does Mr. Held, but elsewhere in the affidavit of each is the statement that he never knowingly bought stolen ore.

Much testimony has been offered tending to show that complainants' ores have a characteristic appearance by which they may be readily distinguished. This respondents deny. They testify that complainants' ores can only be distinguished from other ores by microscopical examination or chemical analysis. Each respondent also testifies that he has conducted a legitimate business, openly and without secrecy; that he had fully complied with the Nevada statute of March 29, 1907, which requires a record to be kept of all ore purchased; and also that none of complainants have ever attempted to examine such record. Each defendant declares that he has no secret understanding or agreement with either or any of his codefendants in relation to the purchase or shipment of bullion. I conclude from the testimony that a large part of the bullion disposed of by respondents in 1909 was obtained from ores taken out of complainants' mines. No ore during that time was purchased by either or any of them from complainant companies, or from the Daisy Mining Company, or from any authorized agent of any of said companies.

The evidence convinces me that complainants' ores were stolen; that defendants purchased ore which could have come from no other source than complainants' mines, and through the hands of dishonest employes; and, while it may be necessary to submit Goldfield ores to a chemical analysis or microscopical examination to determine their source with absolute certainty, still complainants' ores have an individuality sufficient to put an experienced dealer in ores of that district on his guard.

It is not clear that any defendant purchased any particular lot of ore knowing positively at the time that it had been stolen, nor is it likely that any one of respondents actually witnessed such a theft. Possibly accurate, positive knowledge was avoided when the circumstances were such as to arouse suspicion. However, after considering and reconsidering all the testimony, I am forced to the conclusion that defendants could not have acquired all of complainants' ores which came into their possession innocently. The facts certainly justified the issuance of the temporary restraining order, and fully warrant its continuance pending the suit, unless the demurrers are well founded. Every person who, for his own gain, receives or purchases ore, knowing it to have been obtained by embezzlement or larceny, is, under the Nevada statute, guilty of a crime. Upon conviction he may be imprisoned for a term not exceeding five years, or by a fine not exceeding $1,000, or by both such fine and imprisonment. He cannot, however, be confined in the state prison unless the value of the property stolen is $50 or more; if the value is less than $50, he will be punished as provided in cases of petit larceny. This fact does not prevent complainants whose ores have been lost through innumerable petty thefts committed by their employes, with secrecy and cunning sufficient to outwit all watchfulness and precaution, from invoking the aid of a court of equity to suppress the business of purchasing such stolen ores. True, a court of equity is in no sense a court of criminal jurisdiction; but, nevertheless, such a court has the undoubted right to interfere by injunction where property rights are threatened with irreparable injury, for which there is no adequate redress in a court of law. In such cases the only function of equity is the protection of property; it does not interfere with the enforcement of the criminal law. Criminal prosecution is not designed to redress private wrongs; it cannot restore to complainants any equivalent for the lost ores. A familiar application of this principle is seen when the powers of such a court are exerted to prevent acts of criminal violence in the course of labor troubles. The injunction is issued, not because the acts are criminal, but because they are destructive of property rights. In re Debs, 158 U.S. 564, 15 Sup.Ct. 900, 39 L.Ed. 1092; High on Injunction, Sec. 1415h; Fetter on Equity, p. 9; Nashville, etc., Ry. Co. v. McConnell (C.C.) 82 F. 65, 87; People v. Tool et al., 35 Colo. 225, 86 P. 224, 229, 231, 6 L.R.A. (N.S.) 822, 117 Am.St.Rep. 198; Hamilton Brown Shoe Co. v. Saxey, 131 Mo. 212, 32 S.W. 1106, 52 Am.St.Rep. 622, 626.

Some four years ago the Goldfield Mohawk Mining Company filed a bill in this court in which it was stated that the defendants had in their employ a large force of miners engaged in the extraction of ores from property in Goldfield leased by the complainant to the defendants; that the miners were stealing ore; and that defendants had not and would not take proper precautions to...