Kloppenburg v. Mays

• Decision Date: 08 March 1939
• Docket Number: 6554
• Citation: 88 P.2d 513,60 Idaho 19
• Parties: B. F. KLOPPENBURG, Respondent, v. JAMES W. MAYS, C. P. HOWES, and F. L. GREENE, Appellants
• Court: Idaho Supreme Court

88 P.2d 513

60 Idaho 19

B. F. KLOPPENBURG, Respondent, v. JAMES W. MAYS, C. P. HOWES, and F. L. GREENE, Appellants

No. 6554

Supreme Court of Idaho

March 8, 1939

CONTRACTS-RESCISSION-FRAUD-MATERIALITY OF REPRESENTATIONS-EVIDENCE-CONSPIRACY.

1. An agreement between two or more persons to do or accomplish something which is in itself lawful and does not contemplate or employ any unlawful means for its consummation and which does not injure or damage the prospective victim is not actionable and is not a "conspiracy."

2. An agreement can become a "conspiracy" only when it has for its purpose the doing or accomplishing something that is criminal or unlawful or some lawful thing in an unlawful manner.

3. Where optionee took from optionor an option on a mining claim and agreed to pay $8,334 in instalments of at least $25 per month and at the end of five years to pay all unpaid balance of purchase price and in meantime to do $500 worth of development work within one year and pay optionor 10 per cent of net receipts, option permitted assignment and optionee and his assignees did not refuse to live up to agreement optionor was not entitled to rescission of option because optionee represented that he was not acting for the assignees but was acting for a banker.

4. A false representation which causes no loss is not actionable.

5. A court of equity will grant relief where it is necessary for landlord to enter and inspect property or obtain information as to minerals being extracted, and in case of royalty contract, court will afford such relief and make such affirmative order as will fully protect landlord.

6. To entitle litigant to affirmative judgment for relief in case of alleged fraud, the fraudulent representations must have been of a material fact for purpose of inducing plaintiff to enter into contract and he must show affirmatively by preponderance of evidence that he has been injured thereby.

7. Equity will not do for a litigant that which he had the power to do and could have done for himself and declined or neglected to do when the choice and opportunity was his to protect himself.

8. Where optionor and optionee agreed upon terms of an option for sale of mining property and it was insisted upon by optionor and agreed to by optionee that owners of neighboring mining claims should have no interest in sale or option contract and thereupon written contract for sale was entered into containing provisions which referred to optionee and his assigns, and which did not prohibit assignment to owners of neighboring claims or to anyone else and fraud or deceit was practiced on optionor to prevent incorporation of such prohibition in written contract, optionor would not be relieved from terms of written contract since the omission if any, was due to his own negligence.

9. Fraud which will relieve a party who can read must be fraud which prevents him from reading contract sought to be avoided.

10. Fraud without injury is not sufficient on which to predicate a complaint for relief in equity.

11. It is common knowledge that miners do and are expected to go onto undeveloped and unworked mining claim for purpose of inspection and discovery if possible of the probable value of such claims and to determine whether they are worth anything.

12. Where owners of neighboring mining claims trespassed on plaintiff's claim and discovered vein or outcropping of ore and gave information regarding discovery to another who obtained option on plaintiff's claim without disclosing the discovery, the concealment of the information from plaintiff did not entitle him to rescission of the option and contract of sale of the mining claim.

APPEAL from the District Court of the Third Judicial District, for Boise County. Hon. Charles E. Winstead, Judge.

Appeal from judgment of rescission of contract of sale and purchase of mining claim. Judgment for plaintiff. Reversed and remanded with directions to dismiss action.

Reversed and remanded with directions. Costs awarded to appellants. Petition for rehearing denied.

Fisher & Coffin, for Appellants.

As a general rule to warrant relief on the ground of fraud either at law or in equity the party seeking it must have been damaged, or, as the rule is sometimes stated, he must have been misled to his hurt. (Pocatello Security Trust Co. v. Henry, 35 Idaho 321, 206 P. 175, 27 A. L. R. 337; Wright v. Spencer, 39 Idaho 60, 226 P. 173; Frank v. Davis, 34 Idaho 678, 203 P. 287; Breshears v. Callender, 23 Idaho 348, 131 P. 15; 12 R. C. L. 391, sec. 138.)

Custom or usage cannot control a plain, unambiguous contract. ( Gramkow v. Farmers' Cooperative Irr. Co., 47 Idaho 578, 581, 277 P. 431; Ehlinger v. Washburn-Wilson Seed Co., 51 Idaho 17, 1 P.2d 188.)

If a party can fully protect himself by inserting a stipulation in his contract at the time it is drawn, and negligently fails to do so, he is bound to assume any risk he might have provided against in the contract. (Ehlinger v. Washburn-Wilson Seed Co., supra; Jensen v. McConnell Bros., 31 Idaho 87, 169 P. 292; Solely & Sons v. Jones, 208 Mass. 561, 95 N.E. 94; Potts v. Riddle, 5 Ga.App. 378, 63 S.E. 253.)

Hawley & Worthwine, for Respondent.

Concealment by purchaser of facts known to him accompanied by fraud and falsehood justify rescission of contract. (Black on Rescission and Cancellation, vol. 1, sec. 67, pp. 156, 157, 158; Long v. Krause, 105 Neb. 538, 181 N.W. 372; 12 R. C. L., sec. 67, pp. 306, 307.)

Where a personal relationship is involved fraud is a ground for setting aside a contract. (Cohn v. Knabb, 105 Wash. 363, 177 P. 794; New York Brokerage Co. v. Wharton, 143 Iowa 61, 119 N.W. 969; Fox v. Tabel, 66 Conn. 397, 34 A. 101; 12 R. C. L., p. 391, sec. 139.)

False representation concerning financial ability is a fraud sufficient to cause a contract to be set aside. (12 R. C. L., secs. 76, 77, pp. 317, 318; sec. 80, pp. 320, 321; Wright v. Spencer, 39 Idaho 60, 226 P. 173.)

Since this was an action based on fraud evidence of custom and usage was admissible. (Shields v. Ruddy, 3 Idaho 148, 28 P. 405; Taylor v. Lytle, 29 Idaho 546, 160 P. 942.)

That the respondent might have added certain provisions to his contract is no defense to the fraudulent conduct of the appellants. (Goody v. Maryland Cas. Co., 53 Idaho 523, 25 P.2d 1045.)

AILSHIE, C. J. Morgan and Holden, JJ., concur. GIVENS, J., Budge, J., Dissenting.

OPINION

AILSHIE, C. J.

This is an appeal from a judgment of rescission of a contract of sale and purchase of a mining claim.

Respondent, a bachelor, native of Boise county, had resided in Boise basin for more than seventy years. He had engaged in all kinds of mining and was the owner of the Golconda, a quartz mining claim located in the Moore's Creek Mining District, and also owned a half interest in two other mining claims, the Golconda No. 2 and the Nevada. Respondent knew appellant Howes all his life and had known Greene for eight or ten years. Howes was the owner of some placer claims below the Golconda property, "in the same gulch." Greene was living about four miles from the Golconda mine in June, 1930. About that time he stayed at respondent's camp, helping respondent clean out a shaft, and later locating a claim of his own to which respondent had directed him, using respondent's tools. From that time until the fall of 1936 very little development work was done on the Golconda.

It is contended by respondent that Howes and Greene, during the summer of 1936, trespassed on the Golconda claim and discovered a vein or outcropping of ore which averaged from $ 40 to $ 100 per ton in value; that the trespass and discovery was not known by respondent until May, 1937. The Howes and Greene property is "possibly a mile and a half" from the Golconda property. Mays and Howes looked at the Golconda property and Howes and Greene suggested that Mays "might get that property, and suggested that they would like to have an interest in it." Mays, a stranger to respondent, thereafter went to respondent and negotiated for an option on the Golconda claim, representing that he wanted to secure a lease and option for "a bank or banker of Portland, Oregon." When questioned by respondent, Mays represented that Howes and Greene would have no interest in the lease or option.

After going over the matter somewhat in detail and discussing the price, the manner of making monthly installment payments, the amount of development work that should be done and the execution and delivery of a deed in escrow with the First National Bank of Boise, they prepared, executed and acknowledged a written instrument, embodying their contract. They did not employ anyone to write the contract for them but used a printed form of "Title Bond and Lease of Mining Property" in common use in the mining region and wrote in the blank places the specific terms of their agreement. No question arises here that any mistake was made in drafting the contract or that anything was left out through fraud or mistake that was to be inserted. The contract as completed is as follows:

"TITLE BOND

"KNOW ALL MEN BY THESE PRESENTS, That B. F. Kloptenburg of the County of Boise, and State of Idaho, is held and firmly bound unto James W. Mays in the penal sum of One Thousand Dollars lawful money of the United States, for the payment of which sum well and truly to be made we hereby bind ourselves, our heirs, administrators and assigns, firmly by these presents. Witness his hand and seal the first day of October A. D 1936.

"The conditions of the Above Obligations are such, That whereas the above bounded party of the first part, on the day of the date hereof have agreed to sell to the said party of the second part the following described property, to-wit: THE GALCONDA QUARTZ MINING CLAIM...