Hamilton v. Ertl

• Decision Date: 20 March 1961
• Docket Number: No. 18574,18574
• Citation: 360 P.2d 660,146 Colo. 80
• Parties: Walter HAMILTON, Charles F. Rauman, Katheryn Arlene Dere, Christopher Columbus Dere, Charles Edward Dere, Donald Phillip Dere, Gerald Joseph Dere, Francis James Dere, David Daniel Dere, Dorothy Ann Rauman, and Walter Russell Rauman, Plaintiffs in Error, v. Tell ERTL, Defendant in Error.
• Court: Colorado Supreme Court

Page 660

360 P.2d 660

146 Colo. 80

Walter HAMILTON, Charles F. Rauman, Katheryn Arlene Dere Christopher Columbus Dere, Charles Edward Dere, Donald Phillip Dere, Gerald Joseph Dere, Francis James Dere, David Daniel Dere, Dorothy Ann Rauman, and Walter Russell Rauman Plaintiffs in Error, v. Tell ERTL, Defendant in Error.

No. 18574.

Supreme Court of Colorado, En Banc.

March 20, 1961.

Rehearing Denied April 10, 1961.

Charles F. Stewart, Frank Delaney, Glenwood Springs, for plaintiffs in error.

Cole, Mincer & Larson, Glenwood Springs, for defendant in error.

HALL, Chief Justice.

This action was instituted by Ertl under Rule 105, R.C.P.Colo., to determine interests in sixty-seven unpatented placer mining claims located in Rio Blanco County, Colorado. The claims were known as the Pueblo Group, Cedar Group, Nancy Group and Helen Agnes Group.

Trial was to the court and judgment entered December 2, 1957, quieting title in Ertl to all claims. The defendants who appeared in the trial court are here by writ of error seeking reversal.

Several parties named as defendants in the trial court did not appear there--among others, Cathedral Bluffs Realty Trust, herein referred to as Realty Trust, and Cathedral Bluffs Oil Shale and Refining Company, referred to as Refining Company.

The parties at a pretrial conference agreed that one Chris C. Dere, by deed duly executed September 29, 1920, and recorded in Rio Blanco County, Colorado, on October 4, 1920, became the sole owner of the claims involved.

Ertl claims ownership of a one-twelfth interest in the claims by virtue of a quitclaim deed executed by one Frank Sefcik in which Ertl is named as grantee. He claims ownership of the other eleven-twelfths interest on the ground that he, being a co-owner of the claims by virtue of the aforesaid quitclaim deed, performed the annual labor and made the annual improvements on the claims for the year July 1, 1952, to July 1, 1953, and had acquired the title of his co-owners through forfeiture proceedings conducted pursuant to and in compliance with Title 30, Section 28, U.S.C.A., which among other things provides '* * * Upon the failure of any one of several coowners to contribute his proportion of the expenditures required hereby, the coowners who have performed the labor or made the improvements may, at the expiration of the year, give such delinquent coowner personal notice in writing or notice by publication in the newspaper published nearest the claim, for at least once a week for ninety days, and if at the expiration of ninety days after such notice in writing or by publication such delinquent should fail or refuse to contribute his proportion on the expenditure required by this section, his interest in the claim shall become the property of his coowners who have made the required expenditures. * * *.'

Hamilton claims title to all of the claims, with the exception of a one-half interest in the Pueblo Group, through two quitclaim deeds executed by one G. C. Wiles (named as a defendant in the complaint but did not appear), both of which deeds were dated November 22, 1934, and recorded May 17, 1935 and June 19, 1935, respectively.

Plaintiffs in error, other than Hamilton, are the heirs of Chris C. Dere. They claim ownership of all of the claims, contending that Dere at the time of his death was the sole owner of all of the claims.

From the record before us one must conclude that for a period of over thirty years no one manifested any appreciable interest in the claims which now appear to have substantial potential value. There is nothing in the record to indicate that any assessment work was done on the claims for over thirty years.

On December 1, 1920, Chris C. Dere, then sole owner of all of the claims, and one G. C. Wiles, designating themselves as 'Subscribers,' executed an instrument labeled:

'Express Trust and 'Hulbert Plan' Voluntary Association of Trustees by Contract under the Common Law.'

In this instrument they adopted the trade name:

'Cathedral Bluffs Realty Trust:

Main Office, Chicago, Ill.'

and they, as 'subscribers,' purported to convey to said Realty Trust all of the claims herein involved (except twelve claims of the Pueblo Group), title thereto to be held as a trust estate by five trustees: Dere and Wiles, together with Henry Hulbert, L. A. Wiles and F. G. Hulbert. This instrument was recorded in Chicago, Illinois, on December 14, 1920. It has never been recorded in Rio Blanco County. It was signed by Chris C. Dere and G. C. Wiles, described as subscribers, by the five persons, including Dere and Wiles as trustees, and by:

'Cathedral Bluffs Realty Trust.

'G. C. Wiles, President

'L. A. Wiles, Secretary.'

Among other things, the instrument provides that the trustees shall issue 50,000 beneficial shares, each with a par value of $100 ($5,000,000), and directs that the trustees forthwith 'issue or allot' said shares in 'equal ratio' to Dere and Wiles in exchange for their services and the properties conveyed.

Simultaneous with the purported creation of this Realty Trust an almost identical instrument was drawn providing for 'The Cathedral Bluffs Oil Shale and Refining Company.' This instrument bears the same date, the subscribers and trustees are the same and the purposes of the trusts, if any, are the same or similar. However, it dealt with the twelve Pueblo Group claims not conveyed to the Realty Trust and provided for the issuance and forthwith delivery to Dere and Wiles of 2,000,000 beneficial shares of the par value of $1 per share ($2,000,000).

The record shows that shortly after creation of these so-called 'Hulbert Plan' trusts (Dere having by separate deeds conveyed to each trust the claims described therein), eleven persons met with Dere and Wiles in the Chicago office of one Frank Sefcik. At this meeting each of the eleven persons paid to Dere and Wiles $2,000 and in return therefor each received identical agreements signed by:

'Chris C. Dere and G. C. Wiles, Subscribers of all of the assets and owners of all of the beneficial shares of Cathedral Bluffs Realty Trust * * * parties of the first part'

wherein, among other things, it is provided that they in consideration of $2,000 in hand paid:

'do hereby sell, assign, convey and deliver * * * an undivided one-twelfth (1/12) interest in all * * * mining claims [inserted is a legal description of all of the claims deeded to the Realty Trust].'

Said agreement further provides:

'It is further understood and agreed by and between the parties hereto that unless mutually agreed upon at some future date, that there will be no beneficial shares offered for sale in the said Cathedral Bluffs Oil Shale & Refining Company and that the said party of the second part is an owner and shall hold a one twelfth (1/12) interest in said Cathedral Bluffs Oil Shale & Refining Company.' (Emphasis supplied.)

Uncontradicted testimony of Sefcik shows that within a year or two after the execution of the eleven agreements each of the eleven made one or more payments to Dere and Wiles of $400 or $500 to take care of the assessment work to be done on the claims.

There is nothing in the record to indicate that any trustee ever qualified, that any beneficial shares were ever issued, that any assessment work was ever done, that the trustees ever met, functioned as a group or made any accounting to anyone. From the record before us one might well conclude that the trusts existed on paper only.

On October 16, 1952, Sefcik by quitclaim deed conveyed to Ertl and of his title to all sixty-seven claims.

Ertl, during the summer of 1953, went upon the claims and expended the sum of $6,860.53 (an amount in excess of $100 per claim) in building roads on the claims, developing water sources and drilling of four holes for cores of the oil shale underlying the claims.

In July of 1953 Ertl, proceeding on the theory that he was a co-owner of the claims, owning a one-twelfth interest acquired from Sefcik, and having expended in excess of $100 in labor and improvements upon and for the benefit of each claim, caused to be published a forfeiture notice as provided by Title 30, Section 28, U.S.C.A. Any co-owner had the right to ward off forfeiture of his interest by contribution to Ertl of a portion of the total cost proportionate to his ownership. None exercised or offered to exercise this right.

The trial court found that Sefcik on February 7, 1921, in consideration of $2,000 by him paid to Dere and Wiles, became the owner of a one-twelfth interest in all of the claims as evidenced by the above mentioned agreement, dated February 7, 1921, and executed by Dere and Wiles. Hamilton and the Dere heirs contend that this finding is not supported by the record before us. Resolution of this question is the principal problem in the case.

We agree with the finding of the trial court. Careful analysis of the so-called trust agreement discloses the fact that Dere or Wiles relinquished little, if anything. The agreement goes so far as to grant to Dere and Wiles, or either of them, power to veto any action taken by the majority; other trustees could be removed, but not Dere nor Wiles, not even for fraud, malfeasance or gross neglect. They even provided that they should own all of the beneficial shares of both trusts. They owned everything of value and retained control of everything. Their sale of everything except a one-twelfth interest and pocketing of the $22,000 received, lends emphasis to the foregoing analysis.

In conveying to Sefcik and ten others they described themselves as subscribers of all of the assets and owners of all of the beneficial shares of the trust. No trustee appears to question their action and even if the other trustees were to do so, either Dere or Wiles could veto their action and make ineffective any such protest.

It is true that the Refining Company, owner of twelve Pueblo Group claims, does not as such purport to convey anything to Sefcik. However, Dere...