Hanley v. Sweeny

• Decision Date: 06 May 1901
• Docket Number: 615.
• Citation: 109 F. 712
• Parties: HANLEY v. SWEENY et al.
• Court: U.S. Court of Appeals — Ninth Circuit

109 F. 712

HANLEY v. SWEENY et al.

No. 615.

United States Court of Appeals, Ninth Circuit.

May 6, 1901

John R McBride and M. A. Folsom, for appellant.

W. B Heyburn, E. M. Heyburn, and L. A. Doherty, for appellees.

Before GILBERT, ROSS, and MORROW, Circuit Judges.

ROSS Circuit Judge.

This was a suit in equity, brought by the appellant, as complainant, to obtain a decree annulling two certain deeds made to the defendants Charles Sweeny and F. Lewis Clark,-- one by the administrator of the estate of one David McKelvey deceased, under an order made in a proceeding in mandamus for an undivided one-third interest in the Skookum mine, situated in Shoshone county, Idaho; and the other by the complainant himself to the defendants Sweeny and Clark for an undivided one-eight interest in the same mine. The complainant also, by his bill, asked for an accounting of the profits derived by the defendants from working the mine, and also sought an order appointing a receiver to take possession of and operate the property pending the litigation. The claims of the complainant in respect to the two interests rest upon distinct and independent grounds. The one-third interest belonged to David McKelvey during his life. The record before us shows that that interest was first appraised in the proceedings had in respect to the estate of McKelvey at $3,000, and that the complainant, Hanley, and the defendants Sweeny and Clark all wanted to get it. The Chemung Mining Company is also a factor in the case. That company was incorporated under the laws of the state of Washington by the defendants Clark and Sweeny and one W. E. Goodspeed, who, it appears from the evidence in this case, was a clerk in their office at Spokane; its articles of incorporation bearing date August 5, 1896, and its capital stock being declared to be $2,500,000, divided into 500,000 shares of the par value of $5 each. On the 11th day of August, 1896, an agreement in writing was entered into between the complainant, Hanley, as party of the first part, and the defendants Clark and Sweeny, as parties of the second part, and witnessed by W. E. Goodspeed, by which Hanley, in consideration of the sum of $5,000, paid and to be paid in certain specified amounts and at certain specified times, undertook to sell to Clark and Sweeny an undivided one-fourth interest in those certain mining claims described as follows, to wit: 'The Jersey Fraction Mining Claim, the Lily May Mining Claim, the Carriboo Mining Claim, the Good Luck Mining Claim, and the Butte Mining Claim, all situate at Wardner, Yreka mining district, Shoshone county, Idaho, and west of the Last Chance Mining Claim;' the agreement proceeding to provide as follows:

'The party of the first part also agrees that all of the titles to these properties shall be cleaned up by him, and that said properties shall then be deeded to the Chemung Mining Company, of Spokane, Washington, the owners of which shall be as follows: Chas. Sweeny, one-half interest of said company; F. Lewis Clark, one-fourth interest of said company; and Kennedy J. Hanley, one-fourth interest of said company. The parties hereto agree to set aside one-fifth of their holdings of the stock of said company, respectively, to be used for treasury purposes. The money to clean up the title of the said properties, not to exceed the sum of five thousand dollars, to be furnished by the parties of the second part in sums as required under the direction of Chas. Sweeny.'

The undisputed evidence in the present case is that of the 500,000 shares of the stock of the Chemung Mining Company Hanley owned 100,000 shares, Clark and Sweeny 300,000 shares, and that 100,000 shares were held as treasury stock of the company. The Skookum was a neighboring mining claim, the interest of the McKelvey estate in which, the evidence leaves no room to doubt, Hanley, Clark, and Sweeny wanted to acquire, and wanted to get for as near nothing as possible. This is shown not only by the testimony of each of them, but by documentary and other evidence that we find in the record, a part of which will be mentioned. The order of the probate court under which the McKelvey interest in the Skookum mine was undertaken to be sold and conveyed by the administrator of the estate is referred to in the brief of appellant's counsel, and in parts of the record, as having been made December 5, 1896, although the order itself appearing in the record purports to have been made November 30, 1896. Clark and Sweeny were the principal officers of the defendant Empire State-Idaho Mining & Developing Company, of which one W. Clayton Miller was resident manager and consulting engineer. A. G. Kerns was the attorney of the Chemung Mining Company. On the 14th day of December, 1896 (but a few days after the making of the order by the probate court of Shoshone county for the sale of the McKelvey interest in the Skookum mine), Clark wrote to Miller as follows:

'I have tried for three days to get you by telephone, but have failed. After full consultation with Mr. Hanley, it seems to me, if he can buy McKelvey's claim on the Jersey for about the sum net to us, viz. $400, that he expects to get it for, it better be done now on general principles, and to get through with it; and if at the same time he can, by paying $100 or so, obtain an option on one-third of the Skookum at about $700, so much the better. It does not seem to me, however, that we better put off too long in getting the Jersey interest cleaned up. I should not want to enter into an agreement to buy the Skookum, but would be willing to pay one hundred dollars or so to get an option on the interest. If you and Mr. Hanley think best, however, to postpone the Jersey matter, I shall be satisfied to rest upon your judgment.'

Following this letter in the record, but without date, is the following:

'My Dear Kerns: Mr. Clark appears to have changed his mind, and I think now the best you can do is to put Kennedy (Hanley) onto the best and quickest way for him to close for the interest at his bid. He should, at the proper time, put it in as writing. As to Skookum, find out, and let me know; but do nothing now. Miller.'

Immediately following is this telephone message from Clark to Hanley:

'Mr. Miller telephoned, requesting that you immediately telegraph or telephone Cunningham (who was the administrator of the McKelvey estate) withdrawing your bid on the Jersey tract. By so doing Miller says we can get a reappraisement to better advantage. Please comply. Just withdraw your bid, and give no reasons. You can telephone me at my house, 255, after 6:30 p.m.'

At the time of the making of the order by the probate court of Shoshone county authorizing the administrator of the McKelvey estate to sell its interest in the Skookum mine, that interest stood appraised at the sum of $3,000. Hanley had bid therefor the sum of $700. The statute of Idaho provided that no bid should be accepted which was less than 90 per cent. of the appraised value of the property. No other bid appearing to have been made, the McKelvey interest in the Skookum mine was again appraised in February, 1897, and that time at $760. The administrator of the estate again published and posted notice that he would sell the interest on May 1, 1897, and invited bids therefor. In his return to the probate court of the sale made by him, the administrator, after setting out the notices that he caused to be published and posted. stated:

'That on the 1st day of June, 1897, this administrator received an offer or bid of seven hundred dollars for the undivided one-third interest in the Skookum lode mining, situated in Yreka district, Shoshone county, state of Idaho, from the Chemung Mining Company. That being the only bid filed with me, and that being the highest and only bid for the same. Did on said day sell said real estate to the said Chemung Mining Company, the purchaser thereof, and request that said sale be confirmed; and, further, that the court fix a date and place for a hearing upon said sale.'

This return was made and filed June 15, 1897, but was not verified, as was required by the Idaho statute. On the 18th of June following, an order was made by the probate court designating June 30, 1897, at 10 o'clock a.m. of that day, at its court room in the town of Murray, Shoshone county, as the time and place for the hearing of the return at which any person interested might appear and file written objections to the confirmation of the sale. That hearing was continued to July 26, 1897, on which day Hanley and the administrator appeared in court, as also W. W. Woods, who had theretofore been the attorney for the administrator in the matter of the estate of McKelvey. Hanley's testimony is to the effect that, after the making of the $760 appraisement, and after the publication of the notice of sale pursuant to that appraisement, he presented to the administrator a bid of $700 for the McKelvey interest; but such a bid, if made, does not appear among the files of the estate in the probate court, and has not been produced. As a matter of fact, however, the night before the 26th day of July, 1897, Hanley gave to the administrator $750, which he said was a raise of $50 on his bid. The paying of this money in advance of any confirmation of the sale, and before the petition of the administrator for its confirmation to the Chemung Company had come on for hearing, is one of the many peculiar circumstances attending the attempted disposition of the McKelvey interest. Concerning what took place the next day, July 26th, when the matter of the sale came up before the probate court, there is some conflict in the testimony. The bid of the Chemung Mining Company was submitted to the administrator by A. G. Kerns, its attorney,...