Ojus Mining Co. v. Manufacturers Trust Co.

• Decision Date: 24 February 1936
• Docket Number: No. 7679.,7679.
• Parties: OJUS MINING CO. v. MANUFACTURERS TRUST CO. et al.
• Court: U.S. Court of Appeals — Ninth Circuit

82 F.2d 74 (1936)

OJUS MINING CO. v. MANUFACTURERS TRUST CO. et al.^*

No. 7679.

Circuit Court of Appeals, Ninth Circuit.

February 24, 1936.

James F. Ailshie, Jr., Dean Driscoll, and Sam S. Griffin, all of Boise, Idaho, for appellant.

Leonard G. Bisco, of New York City, and Hawley & Worthwine, of Boise, Idaho, for appellees.

Before WILBUR, DENMAN, and MATHEWS, Circuit Judges.

MATHEWS, Circuit Judge.

Appellant brought this action against appellees for damages in the sum of $217,534 for the breach of an alleged contract. At the close of appellant's evidence, appellees moved for a directed verdict, on the ground, among others, that the alleged contract had not been proved. The trial court granted the motion, directed a verdict for appellees, and thereupon entered judgment in their favor. This appeal is from that judgment.

The complaint alleges, in substance, that appellee Manufacturers Trust Company (hereinafter referred to as the trust company) was the owner of a certain mining property known as the Lincoln mine, consisting of five claims situate in Gem county, Idaho, the title to which appeared of record in the name of appellee Alexander Lewis; that on November 21, 1931, appellee Lewis leased said property to William I. Phillips for a term of ten years; that on June 17, 1932, Phillips assigned said lease to appellant; and that thereafter, until April 25, 1933, appellant was in possession of said property under and by virtue of said lease.

The complaint further alleges that on April 25, 1933, appellant, "by its agent, W. I. Phillips," and appellees, "acting through Jess Hawley," made and entered into an oral contract to the effect that said lease of November 21, 1931, should be terminated and canceled and possession of said mining property surrendered to appellees, free of encumbrance, in good working condition, and without the removal of any machinery or appliances, in consideration of which appellees agreed to organize a corporation under the laws of Idaho, to convey all of said property to said corporation, and to issue and deliver to Phillips, for the use and benefit of appellant, 40 per cent. of the capital stock of said corporation, which, if said contract had been performed according to its terms, would have been worth $217,534.

The complaint further alleges that, pursuant to said contract, and on appellees' demand, said lease was terminated and canceled, and possession of said property was surrendered to appellees on April 25, 1933, and that appellant has performed all the terms and conditions of said contract on its part to be performed, but that appellees have failed and refused to organize any corporation, or to convey said property thereto, or to issue any stock to Phillips for appellant's use or benefit, or to perform any of the terms or conditions of said contract, all to appellant's damage in the sum of $217,534.

Appellees, by their amended answer, denied having made or entered into the alleged contract.

On these pleadings, the case went to trial, and appellant introduced evidence, oral and documentary, at the conclusion of which the trial court granted appellee's motion for a directed verdict. This action of the trial court is assigned as error. The question thus presented is whether there was any evidence on which a verdict for appellant might properly be found. In deciding this question, we assume, as established, all the facts which the evidence supporting appellant's claim reasonably tends to prove, and draw in appellant's favor all the inferences fairly deducible from such facts. Lumbra v. United States, 290 U.S. 551, 553, 54 S.Ct. 272, 78 L.Ed. 492; Gunning v. Cooley, 281 U.S. 90, 94, 50 S. Ct. 231, 74 L.Ed. 720. These facts and inferences, briefly summarized, are as follows:

The trust company became the owner of the Lincoln mine on May 10, 1923, but title thereto was taken and held in the name of appellee Lewis, an employee of the trust company. On March 25, 1926, Lewis, acting in his own name and ostensibly for himself, but actually for and on behalf of the trust company, leased the Lincoln mine to H. W. Dorman. Dorman assigned this lease to Lincoln Mines Operating Company, which operated the mine until some time in 1929, when the lease was terminated and the mine surrendered to the trust company. While operating under this lease, Lincoln Mines Operating Company purchased and placed on the leased premises certain machinery and equipment, which it still owns, and on which Helen S. Pearson has a chattel mortgage, securing a note held by her in the sum of $45,000.

On November 21, 1931, appellee Lewis, again acting in his own name and ostensibly for himself, but actually for and on behalf of the trust company, leased the Lincoln mine to Phillips for a term of ten years. Phillips assigned this lease to appellant on June 17, 1932. Thereafter appellant operated the mine for several months and remained in possession thereof until April 25, 1933. This lease called for certain royalty payments, which appellant was unable to make and did not make. Because of this default, the lease was, by its terms, subject to forfeiture and termination at the option of the lessor. This situation existed in the fall of 1932 and continuously thereafter until termination of the lease.

In December, 1932, and January, 1933, Louis S. Posner, an attorney at law representing Phillips, conferred with J. Lawrence Gilson, a vice president of the trust company, and sought from him, but did not obtain, a modification of the lease of November 21, 1931. Their last meeting was on January 23, 1933. On January 27, 1933, Leonard G. Bisco, an attorney at law representing the trust company, wrote Posner the following letter: "After considerable thought and discussion relative to the suggestions made by you at the last meeting, it was finally decided to formulate, in writing, a statement of the position of Huron¹ in this matter. The enclosed memorandum represents, in substance, if not in exact detail, the ultimate extent to which our people would consider going, providing it is agreeable to Phillips. From the standpoint of time, Phillips should indicate his approval or disapproval of this proposal within the next ten days or two weeks."

The memorandum referred to in this letter was dated January 24, 1933. It reads as follows:

"At the meeting of January 23, 1933, the following plan was developed, without prejudice, for submission to the directors of Huron, if agreeable to Phillips.

"1. Notice of default and demand for possession, in accordance with the lease and option agreement² and with the Idaho law, will be duly served upon Ojus Mining Company and will be followed by or accompanied with (depending upon the local requirements) a suit for the recovery of possession of the mine.

"2. If the suit is undefended and results in a final decree or judgment terminating the lease and awarding possession to the owner,³ or, if a proper instrument of surrender and cancellation...