Henry v. Mayer

• Decision Date: 11 June 1898
• Docket Number: Civil 588
• Citation: 53 P. 590,6 Ariz. 103
• Parties: GEORGE W. HENRY, Plaintiff and Appellant, v. JOSEPH MAYER et al., Defendants and Appellees
• Court: Arizona Supreme Court

53 P. 590

6 Ariz. 103

GEORGE W. HENRY, Plaintiff and Appellant, v. JOSEPH MAYER et al., Defendants and Appellees

Civil No. 588

Supreme Court of Arizona

June 11, 1898

APPEAL from a judgment of the District Court of the Fourth Judicial District in and for the County of Yavapai. John J. Hawkins Judge. Reversed.

The facts are stated in the opinion.

J. F Wilson, W. H. Barnes, and F. A. Johnson, for Appellant.

Parties in chancery cases have no right to demand a trial by jury. It is a right which exists at common law, but does not extend to cases in equity. Walker v. Sedgwick, 5 Cal. 192; Cahoon v. Levy, 5 Cal. 294; Pacific Ry. Co. v Wade, 91 Cal. 499, 25 Am. St. Rep. 201, 27 P. 768, 13 L.R.A. 754; Cassidy v. Sullivan, 64 Cal. 266, 28 P 234; Bodely v. Ferguson, 30 Cal. 511; Fish v. Benson, 71 Cal. 428, 12 P. 454.

The agents represented that they were to receive a commission of five thousand dollars. In fact, they received twenty-five thousand dollars. This was fraudulent, and appellant should be allowed to recoup all above the five thousand dollars which was paid to agent as commission, and which therefore constituted no part of the purchase price.

Herndon & Norris, for Appellee.

OPINION

SLOAN, J.

-- The appellant brought this suit in the court below to obtain equitable relief upon the ground of fraud and deceit in the sale of certain mining claims situated in Yavapai County, on the part of certain of the appellees, and to be subrogated to the rights of the Henrietta Mining and Milling Company, one of the defendants in the action under the contract of sale of said mines. The record discloses that in April, 1893, the appellees Joseph Mayer, Joel B. Slack, and James H. Slack were the owners of the Silverton and the Yankee Girl mining claims, and the appellees A. L. Butler, John Kelley, Frank Bliss, and said Joel B. and James H. Slack were the owners of the American Flag, the Invincible, and the Germania mining claims, all situate in the Big Bug Mining District, said county of Yavapai; that on April 6, 1893, said Mayer and Joel B. and James H. Slack gave to one H. N. Palmer an option to purchase said Silverton and Yankee Girl mining claims, for sixty days, for the sum of fifty thousand dollars; that about the same time the appellees Butler, Kelley, Bliss, and said Slacks bonded the American Flag, Invincible, and Germania mining claims to said Palmer for the sum of ten thousand dollars until July 3, 1893. The option given by Mayer and the Slacks was extended by agreement until the twenty-sixth day of June, 1893. Early in June, 1893, one James Shirley obtained from Palmer a written option for the purchase of said mining claims for the sum of one hundred thousand dollars. Upon the procurement of said option, Shirley visited the city of Chicago, and there met one Spooner R. Howell and one Frank M. Bradshaw, who introduced him to appellant, George W. Henry. Shirley represented himself as the agent of the owners of said properties to sell the same, and that he was to receive no commission for making the sale of said mines; but in the event of his finding a purchaser or purchasers he would look to the latter for his compensation. As a result of Shirley's representations, Howell, Bradshaw, and Henry became interested in the purchase of said mines, and sent one F. W. Ihne, a mining expert, to Arizona with Shirley to make an examination and report as to their value. Ihne visited the mines, produced ore therefrom, had a mill-run made of fifteen tons of ore, and as a result of his investigations and tests made a report, in which he stated, among other things, that a large amount of development-work had been done, and that there was in sight in the mines 62,625 tons of ore, of an average value of fifty dollars, and aggregating in value the sum of $3,281,250. On the receipt of this report, Howell, for himself and his associates, Henry and Bradshaw, came to Prescott for the purpose of making the purchase of the mines. Howell was met in Prescott by Palmer and Mayer and negotiations were then begun between Howell, Mayer, and Palmer for the purchase of the mining claims by the former. Before these negotiations were ended Palmer's option had expired, and the subsequent dealings were had between Howell and Mayer. As a result of these negotiations, an agreement to purchase was entered into between Howell, acting for himself and his associates, and Mayer, by the terms of which agreement Howell agreed to purchase the mines for the sum of one hundred thousand dollars, of which sum twenty-five thousand dollars was to be cash, twelve thousand five hundred dollars to be paid in sixty days after the execution of the agreement, and twelve thousand five hundred dollars in four months from the date of the agreement, and the remaining fifty thousand dollars to be paid on or before March 1, 1894. Howell further agreed to erect a twenty-stamp mill for the purpose of milling the product of the said mines on or at a place adjacent to said mining claims to be by him selected, and to pay one half the gross proceeds derived from the working of said mines in the shape of ore, bullion, concentrates, or otherwise to said Mayer, which was to be credited upon the unpaid purchase money until the same should be fully paid. Howell was to have full possession of all the property sold, and the full right of mining and extracting ores therefrom during the life of the agreement. Mayer agreed to execute a good and sufficient deed to all of said property and place the same in escrow with the Bank of Arizona, in Prescott, to be by said bank delivered to said Howell, his heirs, agents, or assigns, when the full purchase price should be paid. One of the terms of said agreement reads as follows: "A failure or refusal of said second party [Howell], for ten days after notice in writing given to him or his agent, to comply with any one of the obligations on him herein imposed, shall work a forfeiture of all his rights under this contract; and all of the money which he shall have paid, and all of the improvements by him placed on or adjacent to said mines, including said mill and all of its connections, and all of said mines, said water-rights, and other appurtenances thereunto belonging, shall belong to and become the absolute property of said first party (Mayer), and there shall be no recourse on him, said first party; and said Bank of Arizona shall deliver to first party said deed left in escrow and this agreement." The date of this agreement was July 1, 1893. Prior to its execution Mayer had secured from the two Slacks an agreement to purchase their interest in the property for the sum of twenty thousand dollars, and from A. L. Butler, John Kelley, and Frank Bliss an agreement to purchase their interests for the sum of ten thousand dollars.

Howell in accordance with his agreement, on the date of the execution thereof, paid to Mayer the sum of twenty-five thousand dollars. Howell and his associates, Mayer, Bradshaw, and Shirley, and one L. J. Webber, organized the Henrietta Mining and Milling Company, whereupon Howell assigned all of his rights under said agreement to the company. Shirley was elected manager of the company, took possession of the mines, and began development-work and the construction of the mill. The latter was completed in December, 1893, and was operated by the company until January 4, 1894. During this time twenty-five thousand dollars, in addition to the cash payment, was paid, under the agreement to purchase, to Mayer, and about forty thousand dollars expended in the erection of the mill and in development work upon the mines. During the short time the mill was in operation prior to January 4th it was operated at a loss, and a debt of something like thirty-three thousand dollars was incurred. Early in January, 1894, Henry came to Prescott and arranged to pay the indebtedness on the property, bought out Howell's interest in the company for ten thousand dollars, and also the interest owned by Shirley and Webber, and entered into an agreement with Mayer, modifying the first agreement in the respect that the balance of the purchase money then unpaid, which was the sum of fifty thousand dollars, should be paid to Mayer from the product of the workings of said property, as follows: One half of the gross product of said mines after milling was to be paid to Mayer until he should have received the full sum of fifty thousand dollars, and the said mines were to be worked and operated until he was fully paid. Palmer was to receive the entire product and yield of said mines and mill, place the same in the Bank of Arizona, in Prescott, pay over one half of the same to Mayer from time to time, and the other half to be placed to the credit of the Henrietta Mining and Milling Company after paying the necessary and legitimate debts incurred in the working and operating of said mines and mill. He was to continue to have the right to so receive and pay out the proceeds of said mines and mill until said sum of fifty thousand dollars was paid to said Mayer. Under this agreement, Palmer took possession and control of the mines, mill, and property as manager, and continued to control and manage the same until the fifth day of May, 1894. During this time, from three to four thousand tons of ore were milled, from which was realized the gross amount of $18,179.95. One half of this amount was paid to Mayer by Palmer under the agreement, and the other half used in paying the expenses of the operation of the property. A debt of twenty-one thousand dollars was incurred by Palmer in his management of the property. No reports were made by Palmer to the company during his control of the same, although frequent demands were made upon him by Henry and the officers of the company for statements...