Guerin v. American Smelting & Refining Co.

• Decision Date: 22 May 1925
• Docket Number: Civil 2249
• Citation: 28 Ariz. 160,236 P. 684
• Parties: MARY ELLIS GUERIN, Appellant, v. AMERICAN SMELTING & REFINING COMPANY, a Corporation; MICHAEL IRISH, PHIL C. BRANNEN, Administrator of the Estate of JOHN G. BAXTER, Deceased; JULIA BAXTER, JOHN J. BAXTER; GREGORY BAXTER, THOMAS P. BAXTER, ALEXANDER ROSSI; JOSEPH FLANNERY, Executor of the Last Will of WILLIAM REID, Deceased; and CONSOLIDATED NATIONAL BANK OF TUCSON, ARIZONA, a National Banking Association, Appellees
• Court: Arizona Supreme Court

236 P. 684

28 Ariz. 160

MARY ELLIS GUERIN, Appellant, v. AMERICAN SMELTING & REFINING COMPANY, a Corporation; MICHAEL IRISH, PHIL C. BRANNEN, Administrator of the Estate of JOHN G. BAXTER, Deceased; JULIA BAXTER, JOHN J. BAXTER; GREGORY BAXTER, THOMAS P. BAXTER, ALEXANDER ROSSI; JOSEPH FLANNERY, Executor of the Last Will of WILLIAM REID, Deceased; and CONSOLIDATED NATIONAL BANK OF TUCSON, ARIZONA, a National Banking Association, Appellees

Civil No. 2249

Supreme Court of Arizona

May 22, 1925

APPEAL from a judgment of the Superior Court of the County of Pima. Richard Lamson, Judge. Affirmed.

Mr James D. Barry and Mr. Gerald Jones, for Appellant.

Mr John B. Wright, for Appellees.

OPINION

ROSS, J.

The appellant, referred to herein as plaintiff, brought this suit against the defendants for an accounting of moneys received in the operation of a mining claim, claiming that she was the equitable owner of an interest therein, the legal title being in the defendants.

The defendants demurred to the complaint on the ground that on its face it appeared the action was barred by the statute of limitations. The demurrers being sustained, and the plaintiff choosing to stand upon the complaint, judgment of dismissal was entered. The appeal is from the order sustaining demurrers and from the judgment.

The complaint may be summarized as follows: The plaintiff by marriage at Tempe, Arizona, on February 14, 1907, became the wife of John Ellis, a British citizen, and with him went to Scotland, where he died November 20, 1909, leaving surviving him the plaintiff as his sole heir. John Ellis, through whom plaintiff claims, Michael Irish, and John G. Baxter (since deceased) for many years prior to November 20, 1909, were engaged in the joint enterprise of acquiring mining property as equal partners, and as such trusted and confided fully in each other. That at such date they had acquired and owned a large number of undeveloped mining claims, situate in Pima mining district, Pima county, Arizona, including a one-half interest (one-sixth each) in the Confidence mining claim, the notice of location of which was recorded in the office of the county recorder of Pima county, in Book GG, Records of Mines, page 400; the other one-half being owned by William Reid, now deceased, and Alexander Rossi, in equal parts. That shortly before April 1, 1914, Rossi and Reid optioned their interest in said mining claim to one E. G. Bush, who, together with Baxter in his own right and as the representative of Irish, went on to mining claim to explore it and to extract and sell ore therefrom, and continued such operations until on or about April 30, 1914. That on or about this last-mentioned date Baxter, Reid and Rossi relocated the Confidence mining claim under the name of the Minnie mining claim, and recorded the notice thereof with the county recorder of Pima county, in Book VV, Records of Mines, page 495, in which notice their interests were apportioned two-sixths to Baxter, one-sixth to Irish, one-fourth to Rossi and one-fourth to Reid. That the relocation was made without the plaintiff's knowledge or consent, and for the purpose of depriving her of any right, title, or interest in the Confidence claim. That the relocation was made as the Minnie for the purpose of concealing from plaintiff, and to prevent her from learning, that her interest in the Confidence had been relocated; the location notice making no reference to the Confidence claim. That on April 3, 1915, without plaintiff's knowledge or consent, Baxter, Irish, Rossi, and Reid made an amended location of the Minnie, in the same interests as above, and made no reference to the Confidence, which amended location was duly recorded. That on August 4, 1915, Bush took up his option of the Rossi and Reid interests and received a conveyance thereof with full knowledge of plaintiff's rights. That during 1914 and 1915 Baxter, Irish and Bush, as plaintiff is informed and beleives, realized from the operation of said mining claim net proceeds of $83,544.70 or thereabouts. That on July 19, 1915, Bush, Irish and Baxter contracted to sell same and the Portland mining claim (of no substantial value) to the American Smelting & Refining Company for $400,000, of which $100,000 was paid in cash and $42,453.62 in royalties from ores extracted from mining claim. That said company realized to itself, over and above all expenses of extraction and reduction, from the ores of mine, a sum in excess of $200,000, and quit and surrendered mine to Bush, Baxter and Irish in September, 1916, who thereafter operated it and realized from ores extracted, above costs, approximately $30,127.91. It is alleged that the American Smelting & Refining Company had knowledge of all the above facts.

On January 22, 1922, the plaintiff filed her original complaint against defendants, praying that they be required to account to her for her interest in the Confidence mining claim, and therein excuses her delay in not taking such step sooner, upon the following grounds: That at the time of her husband's death (1909) she was eighteen years old, unaccustomed to business, living in Edinburgh, Scotland, as defendants well knew; that in 1912 she employed, in Edinburgh, an attorney to make inquiries into property left by John Ellis in Arizona, who communicated with Baxter; that at that time the Confidence mining claim was of no known value; that in 1913 she consulted the American Consul at Edinburgh with the view of ascertaining, if possible, what property her deceased husband left in Arizona; that neither discovered nor informed her of any property that required her attention; that she had no means to come to the United States; that in 1916 she wrote defendant Irish for information, and received a reply in which he advised her that she could have no interest in mining claims in America because John Ellis was not a citizen of the United States; that she believed and relied upon said statement; that shortly after the mining claim was relocated as the Minnie the Great War broke out, and during its continuance it was practically impossible for her to attend properly to her business or to come to Arizona; that in 1918 her father tried to sell his property in Scotland to raise means to come to Arizona and examine into her business, but was unable to raise funds; that in December, 1919, she married in Scotland her present husband, Aclan Chiron Guerin, a resident and citizen of Australia, and moved to the latter country, where she has since resided with her husband; that she came to Tucson, Arizona, in November, 1921, and for the first time discovered the fraudulent transactions herein set forth; that during all of said period plaintiff knew of the intimate relations existing among Baxter, Irish and Ellis and had confidence in Baxter and Irish, and believed they would advise her should said mining claim become valuable by reason of the discovery of ore. When she discovered her confidence had been betrayed, she immediately employed an attorney and brought this suit.

It is claimed by the defendants, and that is the basis of their demurrers, that the cause of action alleged is barred by limitation of time, as provided in several paragraphs of the Statutes of 1913, to wit, 695, 697, 710, 711, 716, 882 and 889, but we do not deem it necessary to consider the effect of any of these statutes as a bar except paragraph 711, the applicable part of which reads as follows:

"There shall be commenced and prosecuted within three years after the cause of action shall have accrued, and not afterward, all actions or suits in courts of the following description:

"(3) Actions for relief on the ground of fraud or mistake. The cause of action in such case not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake."

The action is one to require an accounting for moneys realized from operating mining claim by defendants, and, while plaintiff's right to have such accounting depends upon whether she was the equitable owner of some interest in mine, the determination of that question favorably to her would not necessarily entitle her to the relief sought. As the title or interest claimed by plaintiff in mine is only incidentally involved, we will not undertake to decide whether she has lost such title or interest by limitation but will confine ourselves to a consideration of the bar interposed to the personal action for an accounting. The action is one for relief on the grounds of fraud, and is barred, regardless of the ownership of mine, if plaintiff discovered the facts constituting the fraud, or by the exercise of reasonable diligence might have discovered such facts, but did not commence and prosecute her action within three years thereafter.

An inspection of the complaint is enough to show that the Rossi and Reid interest could not upon any theory be impressed with a trust in favor of the plaintiff. No confidential or trust relation is alleged as existing between them and Ellis, and it is shown that their interests were not in any way enlarged or changed by the relocation, or that they ever received from the operation of the mining claim one cent more than they were entitled to receive.

While defendant Irish sustained a relationship towards Ellis forbidding him to take any advantage of the latter, it is shown that his interest in the Confidence mining claim and in the relocated Minnie was identical. He had a one-sixth interest in the Confidence, and his interest in the Minnie was a one-sixth interest and no more. He could not have profited by the relocation, and, unless it was shown that he obtained, by reason of the operation of the mine, an excess of one-sixth of the profits, he cannot be asked to account...