James Sigafus v. Dudley Porter 21, 24 1899, 8

• Decision Date: 15 May 1899
• Docket Number: No. 8,8
• Citation: 21 S.Ct. 34,45 L.Ed. 113,179 U.S. 116
• Parties: JAMES M. SIGAFUS, Plff. in Err. , v. DUDLEY PORTER et al. Argued April 21, 24, 1899. Ordered for reargument
• Court: U.S. Supreme Court

179 U.S. 116

21 S.Ct. 34

45 L.Ed. 113

JAMES M. SIGAFUS, Plff. in Err.,

v DUDLEY PORTER et al.

No. 8.

Argued April 21, 24, 1899.

Ordered for reargument May 15, 1899.

Reargued November 15, 16, 1899.

Decided October 29, 1900.

Messrs. Edmund Wetmore and Henry B. Johnson for plaintiff in error.

Mr.Albert Stickney for defendants in error.

Mr. Justice Harlan delivered the opinion of the court:

This action was brought to recover damages for deceit alleged to have been practised by Sigafus, the plaintiff in error, upon Porter, Hobson, and Morse, the defendants in error, in the sale by the former to the latter of a gold mine in California, known as the Good Hope Consolidated Gold Lode Mining Claim (consisting of the San Jacinto and Good Hope Quartz locations), and as the Annex, adjoining the Good Hope mine on the south.

The complaint alleged that the defendant, Sigafus, was president of the Good Hope Consolidated Gold Mining Company, a corporation of California possessing the legal title to the property in question, and that with the exception of a few shares standing in the name of his son-in-law he owned its entire capital stock, and was in fact the sole beneficial owner of the mine and the lands and property appurtenant thereto;

That prior to December 28th, 1893, the defendant, representing his own interests and those of the company, as well as those of his son-in-law, and acting by one William H. Griffith, entered into negotiations with the plaintiffs for the sale of the mine, mining claims, and their appurtenances;

That in the course of such negotiations the defendant falsely and fraudulently, and with intent to deceive and defraud the plaintiffs, represented to them that the lands and mines and mining claims contained a large and valuable vein of gold-bearing ore, large and valuable deposits of gold, and that all of the gold-bearing quartz would average in milling more than $16 per ton;

That he laid before the plaintiffs a false and fraudulent report or statement in writing in regard to the lands and mines and mining claims, made by one Burnham, who was therein represented to be an independent and disinterested mining engineer and expert, and to have made a careful and complete examination in the premises, which report or statement in substance stated that the pay streak in the mine had an average width of 2 feet, that 2.434 tons of ore from the mine had been milled and yielded an average value in gold of $23.78 per ton, that the mine had been operated and the ore taken therefrom had been milled for two years or more and had yielded, in gold, an average of $23.78 per ton; that the value of the bullion produced from the mine for the twelve months ending with January, 1892, inclusive, was $57,879.78, and the total expense of production $15,500; that the estimated total bullion product from the mine after its discovery down to on or about February 1st, 1892, was $317,879.78; that beyond all doubt the ore averaged at least $18 per ton in gold; that the mine contained 44,733 tons of gold ore in reserve, of the net value of $805,186, and also 37,333 tons of gold ore in sight, of the net value of $761,094, and that the mines and mining claims had a very large prospective value in addition thereto; that the gold-bearing vein in the mine was a permanent and lasting one, and that the property under energetic management should produce from $30,000 to $40,000 per month net, and keep the development even with the output; together with other statements of fact in regard to the property, each and all of which were false and fraudulent, representing said report to be just, accurate, and true, although knowing the same to be false and fraudulent;

That, during the course of a mill run of the mine made by the plaintiffs for the purpose of testing the value of the ores contained therein, the defendant falsely and fraudulently, and with intent thereby to deceive and defraud them, placed and caused to be placed in and among the ores to be reduced in the mill run, exceptionally rich specimens of ore that were not part of the ordinary production of the mine, and placed and caused to be placed therein large quantities of exceptionally rich ore that had been mined on the premises, but reserved by him over a long period of time, and which contained gold far in excess of the average amount carried by the ore produced from the mine, and caused false and fraudulent representations to be made as to the amount of ore run through the mill at that time, understating the same, with the intent and result that a much larger production of gold might seem to be produced from the ore reduced than was just and true; and,

That the defendant falsely and fraudulently, and with intent thereby to deceive and defraud the plaintiffs, represented to them that certain portions of the mine, from which all the valuable ore had been extracted, were still solid and untouched, and blocked up the entrance to such excavations with timber, which he falsely and fraudulently stated was placed in the mine for the purpose of support, and that it was dangerous to remove the same, with the intent and result of thereby preventing the plaintiffs and their representatives from investigating the condition of the mine; and falsely and fraudulently, and with the intent to thereby deceive and defraud the plaintiffs, changed certain bullion returns as to past production, misstating the quantities of ore producing the bullion so as to show a much larger and richer production of gold from the ore mined than had in fact been made.

It was alleged that all these representations were made and all these acts were done and caused to be done in the full knowledge that they were false and fraudulent and calculated to deceive and defraud, and with the intent and result that the same should be communicated to the plaintiffs, and thereby deceive and defraud them, inducing the belief that the land, mine, and mining claim were worth at least the sum of $1,000,000.

The complaint further alleged that if said representations, reports, and mill run had been true and accurate, the property would have been reasonably worth $1,000,000, whereas, as the defendants knew at the time, it was worth practically little or nothing; that, relying upon the representations, reports, and mill run mentioned, the plaintiffs purchased the property for the sum of $400,000, paying $150,000 in cash, and executing notes and mortgages upon the property to the amount of $225,000, as part of the price; and had paid, laid out, and expended large sums of money on the property in the attempt to develop it.

The plaintiffs therefore claimed that they had suffered damage to the amount of $1,000,000, for which they prayed judgment.

The defendant denied each and every allegation of the complaint. He specifically denied that he ever made any representations to the plaintiffs, directly or indirectly, through Griffith or at all, in reference to the property, or that he ever sold it to or received any money from them on account of it.

It may be here stated that there was evidence in the case tending to show that the negotiations for the property were between the plaintiffs and Griffith, and it was a question whether Griffith was to be deemed in any sense an agent of Sigafus in the sale of the property to the plaintiffs. It was also a question whether the defendant did or caused to be done anything that was calculated to mislead and deceive, or did in fact mislead and deceive, the plaintiffs in their preliminary examination of the property by an expert, whereby they were induced to think that it had a value which, within the defendant's knowledge, it did not really possess.

There was a verdict in favor of the plaintiffs for $330,275. A motion for new trial having been denied, judgment was entered for the amount of the verdict. The case was carried to the circuit court of appeals, and that court, while sustaining the rulings of the trial court on questions involving the admission and exclusion of evidence, left certain points undisposed of in order that the question raised by them could be certified to this court. The circuit court of appeals—Judge Lacombe delivering the opinion of the court—among other things said: 'The only remaining assignments of error are the twenty-sixth, to so much of the charge as instructed the jury that the 'measure of damages is the difference between the value of the property as it proved to be and as it would have been as represented,' and the twenty-eighth, to the refusal to charge substantially that the measure of damages is the money plaintiffs had paid out for the mine with interest and any other outlay legitimately attributable to defendant's fraudulent conduct, less the actual value of the mine when plaintiffs bought it. In view of the recent opinion in Smith v. Bolles, 132 U. S. 125, 33 L. ed. 279, 10 Sup. Ct. Rep. 39, this court desires the instruction of the Supreme Court for its proper decision of the question arising upon these two assignments or error. A certificate in the form required by the act of March 3d, 1891, . . . has therefore been prepared and will be forwarded to the Supreme Court. The fact that instructions are thus desired as to a single question out of the many arising upon this writ of error affords no sufficient ground for withholding the decision of this court as to the other questions in the cause. Compton v. Wabash R. Co. 31 U. S. App. 486, 68 Fed. Rep. 263, 15 C. C. A. 397. This opinion is therefore placed on file, and when instructions are received as to the questions certified the cause will be finally disposed of.' 51 U. S. App. 693, 708, 84 Fed. Rep. 430, 439, 28 C. C. A. 443, 453.

This case was heard here upon the question certified from the circuit court of appeals. But after...