Hot Springs Coal Co. v. Miller

• Decision Date: 19 December 1939
• Docket Number: No. 1848.,1848.
• Citation: 107 F.2d 677
• Parties: HOT SPRINGS COAL CO. v. MILLER.
• Court: U.S. Court of Appeals — Tenth Circuit

107 F.2d 677 (1939)

HOT SPRINGS COAL CO. v. MILLER.

No. 1848.

Circuit Court of Appeals, Tenth Circuit.

November 2, 1939.

Rehearing Denied December 19, 1939.

Cyril W. Armstrong, of Chicago, Ill. (Charles E. Lane, of Cheyenne, Wyo., and Clarence P. Parker, of Chicago, Ill., on the brief), for appellant.

Allen A. Pearson, of Cheyenne, Wyo., for appellee.

Before LEWIS, BRATTON, and HUXMAN, Circuit Judges.

HUXMAN, Circuit Judge.

The McPherson Oil Company, a Delaware corporation, Hot Springs Coal Company, an Illinois corporation, and others, filed their bill of complaint against Albert C. Miller in the District Court of the United States for the District of Wyoming. The parties will be referred to herein as they appeared in the court below.

Plaintiffs in their bill of complaint sought to establish title and ownership in themselves to a coal mining lease and certain coal mining permits covering government lands in Wyoming. The bill charged that the lease and permits were issued and taken in the name of defendant, but that he was a constructive trustee and took and held them as agent and in trust for plaintiffs and that plaintiffs were the owners of the interest in such lease and such permits. Plaintiffs prayed that a court of equity decree that plaintiffs furnished the money with which defendant was able to obtain the coal permit and was enabled to operate a wagon mine on the premises, and that defendant, in procuring the coal permit and in operating the mine, acted as agent and trustee for plaintiffs; that a trust be declared; that plaintiffs be decreed to be the beneficial parties in interest in the coal lease; that defendant be required to assign and transfer to plaintiffs the coal lease and permit; and for an accounting.

Defendant denied that he held the lease and permit for the benefit of plaintiffs, and stated that in taking the permit and lease he was under no duty to take the same in the name of and for the benefit of plaintiffs. Defendant alleged that he offered to hold the same for the benefit of plaintiffs and their stockholders upon condition that plaintiffs furnish necessary funds to operate develop and prove the worth of the land; that plaintiffs failed, refused and neglected to furnish the financial assistance, and by reason of such failure it was necessary for defendant to carry on the development work at his own expense; that he had developed the property at an expenditure to himself of approximately $17,000. He prayed that the bill be dismissed and his title to the property quieted, but that in the event it be determined plaintiffs had an interest in the lease and permits, they be required to reimburse him by a day to be fixed for his expenditures, with interest thereon, and that in default of such reimbursement the entire interest, title and right of possession in and to the lands covered by the lease and permit be quieted and confirmed in him. A reply was filed by plaintiffs denying the allegations of defendant's answer and alleging that plaintiffs furnished the money with which the development had been done. The case was tried to the court and during the trial thereof a settlement was made by plaintiffs and defendant, through their attorneys, which was approved by the court.

On January 4, 1938, the court entered a decree reciting that the parties had agreed in open court that the plaintiffs McPherson Oil Company and Hot Springs Coal Company, corporations, were indebted to Albert C. Miller in the sum of $11,500; that in addition thereto defendant was the owner of $1,000 deposited with the Commissioner of the General Land Office of the United States of America in lieu of a bond; that the plaintiffs pay to defendant the sum of $11,500 on or before July 1, 1938, and that upon the payment to defendant of said sum and upon plaintiffs or either of them securing the release and refund of the $1,000 on deposit, or in the event they failed to secure the release, then upon the payment to defendant of the additional sum of $1,000, plaintiffs shall hold all the land involved in the coal permit and the mining lease in controversy, free and clear of any and all incumbrances except any royalties or other obligations to the United States government; that upon the payment of said sums of money by plaintiffs to defendant, plaintiffs shall become vested with the title to all the property in controversy and shall, upon making said payments, be entitled to the immediate possession thereof; that in the event plaintiffs, or any or either of them, fail to pay the amount found due the defendant on or before July 1, 1938, title to the coal mining permits and lease shall be and vest automatically in defendant, Albert C. Miller, free from any claim of plaintiffs or any of them, save and except certain personal property on the premises owned by plaintiffs.

The decree further recites that the court, having heard the stipulation, finds that it is just and proper and should be approved. The decree contained appropriate provisions to make effective the provisions of the agreement. The court in its decree reserved jurisdiction of the cause for the purpose of making any future orders as might be required.

On June 30, 1938, plaintiffs filed a motion asking that the decree be set aside, for the reason that plaintiffs' attorneys did not have authority to make or enter into the settlement; that the real estate involved in the permit constitutes the major portion of the assets of the Hot Springs Coal Company. By amendment to the motion further grounds were urged for vacation of the decree, namely, that the agreement violated the statutes of Illinois which require that a corporation cannot dispose of all its assets without complying with certain statutory requirements relating to the sale of the assets of a corporation.

This motion was heard by the court and on the 29th day of August, 1938, defendant filed his motion stating that plaintiffs had failed or refused to make the payments or any part of them provided for in the agreement incorporated in the decree of the court; that the time for payment had expired, and prayed for a final decree, quieting title to the property in controversy in defendant and against plaintiffs. On the 29th day of August, 1938, a final decree was entered by the court quieting the title of defendant in and to the lease and permits and barring plaintiffs from any right, title or interest in them. The notice of appeal recites that the appeal is taken from the decree of January 4, 1938, the order denying the motion to vacate and set aside the same, and the final decree of August 29, 1938.

The grounds urged for consideration for reversal of the decree are: 1st, That the attorneys representing plaintiffs did not have authority to make and enter the agreement; 2nd, That the decree is void because contrary to the Illinois statute prohibiting a corporation from selling and disposing of all of its assets without complying with certain statutory requirements; 3rd, That the court was without authority to make an alternative or conditional decree.

In its motion to vacate the judgment, plaintiffs contend that the attorneys for plaintiffs did not have authority to make and enter the agreement that was made. Plaintiffs were represented by two attorneys, Charles E. Lane of Wyoming, and Jacob Brisgall of Chicago, Illinois. The evidence establishes that after negotiations for a settlement had been completed, Mr. Brisgall called the president of the Hot Springs Coal Company and advised him of the proposed settlement. He did not inform him that in the event of plaintiffs' failure to pay the $12,500, title to the property in controversy would be quieted in defendant. The president was informed of all other terms...