Mound Mines Co. v. Hawthorne

Decision Date01 January 1909
Citation173 F. 882
PartiesMOUND MINES CO. v. HAWTHORNE et al.
CourtU.S. Court of Appeals — Eighth Circuit

J. E Robinson, for appellant.

Daniel B. Ellis (Henry T. Rogers, Lewis B. Johnson, Pierpont Fuller and George A. H. Fraser, on the brief), for appellee Hawthorne.

Ernest Morris (William W. Grant, Jr., on the brief), for appellee Hanington.

Before SANBORN and VAN DEVANTER, Circuit Judges, and WM. H. MUNGER District Judge.

WM. H MUNGER, District Judge.

On August 11, 1906, Mary L. Fletcher, being the owner of the real estate in controversy in this action, on that day entered into an agreement in writing to sell to the Griffith Mines Company, a corporation organized under the laws of Colorado, the said real estate, which agreement contained among other things, the following provisions:

'That the said party of the first part, for and in consideration of the covenants and agreements on the part of the said party of the second part hereinafter contained, and the payment to her by the said party of the second part of the sum of one dollar, the receipt of which is hereby acknowledged, agrees to sell and convey unto the said party of the second part, and said second party agrees to buy, all those certain lots and parcels of lands, * * * for the sum of five hundred ($500.00) dollars cash, and the said party of the second part, in consideration of the premises, agrees to pay said party of the first part the said sum of five hundred ($500.00) dollars in cash, for the above-described premises, six months from date hereof; the date of said payment being the 11th day of February, A.D. 1907. In the event of a failure to comply with the terms hereof by the said party of the second part, the said party of the first part shall be released from all obligations in law or equity to convey said property, and the said party of the second part shall forfeit all right thereto. * * * It is understood and agreed by the parties hereto that the stipulations aforesaid are to apply to and bind the heirs, executors, administrators, and assigns of the party of the second part, and that the said party of the second part is to have immediate possession of the said premises.'

Immediately after the execution and delivery of said agreement the said second party, the Griffith Mines Company, entered into possession of the real estate and constructed thereon valuable improvements, consisting of a concentrating mill, at a cost of approximately $15,000. The mill was not completed until about March 30, 1907. One W. D. Hoover was, at the time of the execution of the sale agreement aforesaid, president of the Griffith Mines Company, and continued as such up to the time of the instituting of this action. The Griffith Mines Company did not, on the 11th day of February, 1907, pay to Mrs. Fletcher the said $500, nor at any time since; nor did Mrs. Fletcher, in February, 1907, or at any time thereafter, make demand for the payment of said sum, or do any act indicating a forfeiture of the contract. On the other hand, her conduct and action thereafter, until in January, 1909, when she conveyed the premises by deed to appellant, indicated that she regarded said agreement of sale as still of binding force. In February, 1908, the Griffith Mines Company endeavored to negotiate a sale of the premises to the Mountain Mining Company, and for that purpose executed a conveyance to the Mountain Mining Company of the property in question and deposited such conveyance in escrow with the State Street Trust Company of Boston, Mass., to be delivered on or before April 1, 1908, upon the Mountain Mining Company performing certain conditions described in the escrow agreement. At the request of Mr. Hoover, president of the Griffith Mines Company, Mrs. Fletcher executed her deed to the premises in question to the Griffith Mines Company, which she forwarded to said State Street Trust Company, with a letter under date of February 21, 1908, in which she stated:

'Gentlemen: I herewith hand you, for the purpose of holding in escrow, under the terms of the escrow agreement between you and the Griffith Mines Company, my warranty deed to the Griffith Mines Company for the following described real estate: (Describing the same property mentioned in the sale agreement.) This deed to be delivered by you to William Tudor and Whitcomb, Reed & Co. for the Mountain Mining Company when the sum of $500 is received by you in payment therefor; and you are instructed to send to me the said $500 upon receipt thereof.'

Upon the trial of this case Mrs. Fletcher was called as a witness, and among other things testified as follows:

'Q. You knew that a mill had been built upon the lots, did you? A. After it was built; yes. Q. Did you understand that that made you perfectly secure so far as your $500 was concerned? A. I hoped it did. Q. Mrs. Fletcher, is it or is it not a fact that you were ready and willing at all times to convey this property to the Griffith Mines Com a¢ upon payment to you of the $500? A. Well, it was insomuch as Mr. Hoover was concerned in it. I always regarded it as a personal matter with Mr. Hoover. Q. You would, at any time that he might have requested it, have conveyed the property to the Griffith Mines Company upon the payment to you of the $500, without regard to any limitations fixed in any option agreement or escrow agreement? A. Yes, sir.' The whole tenor of the testimony goes to show that, because of the personal friendship existing between Mrs. Fletcher and Mr. Hoover, she would make a conveyance at any time that he might request. On October 23, 1908, a petition in bankruptcy was filed against the Griffith Mines Company, and on November 18th it was adjudged a bankrupt. Appellee Hawthorne was appointed by the court receiver of the bankrupt estate and afterwards duly elected trustee, and in both capacities took and held possession of the premises in controversy. From the time of the execution and delivery of the agreement of sale up to the time that the receiver in bankruptcy took possession of the premises, the same were in the possession of the Griffith Mines Company, the bankrupt. After the proceedings in bankruptcy were instituted, the Mound Mines Company, appellant, was organized and incorporated under the laws of the state of Ohio. In the expectation that it would be a purchaser of the bankrupt's estate at a sale thereof, it obtained, in January, 1909, from Mrs. Fletcher, a deed to the premises in question, paying her therefor $500; she making the deed at the instance of Mr. Hoover, who was a creditor of the Griffith Mines Company and expected to receive his pay as such creditor through said Mound Mines Company.

Upon proper application by the trustee, he was authorized to sell the property of bankrupt, including the property in controversy; the portion in controversy in this action being purchased by Robert W. Hanington, who has been permitted to intervene as appellee. After the sale to Mr. Hanington, he objected to the confirmation, for the reason that the conveyance by Mrs. Fletcher to the Mound Mines Company constituted at least a cloud upon the title. Thereupon the trustee filed his petition before the referee, setting forth the essential facts, and asking that the Mound Mines Company be required to convey said property to petitioner, upon payment of the sum of $500. An order to show cause was duly issued and served upon the Mound Mines Company, which appeared at the time stated before the referee and interposed objections on the ground that the court had no jurisdiction to determine the rights of the parties in a summary proceeding, and that the rights of ...

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