Ross v. Burrage

• Decision Date: 10 September 1919
• Citation: 233 Mass. 439,124 N.E. 267
• Parties: ROSS v. BURRAGE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

233 Mass. 439

124 N.E. 267

ROSS

v.BURRAGE.

Supreme Judicial Court of Massachusetts, Suffolk.

Sept. 10, 1919.

Case Reserved from Supreme Judicial Court, Suffolk County.

Suit by Louis Ross against Albert C. Burrage. On reservation from the Supreme Judicial Court. Decree for plaintiff for payment of a sum of money.

Whipple, Sears & Ogden, of Boston (Sherman L. Whipple and Alexander Lincoln, both of Boston, of counsel), for plaintiff.

Henry F. Hurlburt and Boyd B. Jones, both of Boston, for defendant.

LORING, J.

This is a bill in equity brought by the plaintiff to compel the defendant to assign to him 250 shares in the capital stock of the Chile Exploration Company, being 5 per cent. of the common shares in the capital stock of that company received by the defendant for certain atacamite lands at Chuquicamata, Chile, in accordance with provisions of the concluding paragraph of the following letter:

‘London, England, Sept. 14, 1910

‘Louis Ross, Esq.-Dear Mr. Ross: It is understood and agreed by and between us that from the day you last left Boston you are to receive a salary of five hundred dollars a month and when away from Boston your actual travelling expenses, this arrangement to terminate any time upon thirty days notice from either party. * * *

‘It is further understood that you are to receive in the common shares of each company which takes over, through me, properties in Chile and Peru, other than Ferrobamba, brought to me by or through you, five per cent. of such common shares as may come to me as profit by virtue of such taking over.

‘Yours very truly, Albert C. Burrage.’

In two different places in his report the master has found that the Chuquicamata property here in question was brought to the defendant's attention by others through the plaintiff. Both findings have been attacked by the defendant. It seems to us that if these findings are open to attack a finding to the same effect would have to be made upon the subsidiary findings of fact made in the report. But in the view which we have taken of the case it is not necessary to come to a final decision upon that point. For we are of opinion that if the two findings made by the master are to stand or if a similar finding is made by us, the plaintiff is not entitled to the shares he is seeking to recover in this suit.

The material circumstances which have given rise to the suit now before us so far as the legal aspects of the case go are as follows: The defendant is by profession a lawyer. After 13 years' practice he retired from the bar in 1897 and devoted himself to mining. Ten years later he conceived the idea that improvements could be made in the leaching process then in use by which copper is extracted from the ore. He hoped by these improvements to reduce the cost of extracting copper from ore to such an extent that low-grade copper properties which up to that time had not been worked at a profit would become of value. For this purpose he engaged the services of a chemist, Bradley by name. Being convinced of the ultimate success of the process being developed by Bradley, he determined, in 1909, to acquire large low-grade copper properties which had been abandoned as unprofitable. In the winter of 1909 and 1910 the plaintiff made the defendant's acquaintance in connection with certain mines and mining properties which he (the plaintiff) had for sale for others. Nothing came of this. But in the spring of 1910 the plaintiff (being under contract to go to England to sell some mining securities) suggested to the defendant that while there he might hear of copper properties that would interest him. The defendant told the plaintiff that if he did hear of such properties while in England, he (the defendant) would be glad to know about them. He then explained to the plaintiff in detail the scheme which he had in mind.

While in England the plaintiff devoted a good deal of his time to searching for mining properties of the kind the defendant wished to obtain. In the course of this search the plaintiff made the acquaintance of one Plews who was the managing director of a company which owned a copper property in Chile, not at Chuquicamata. The plaintiff cultivated Plews' acquaintance and told him that he was trying on obtain for another person lowgrade copper properties where there was a possibility of great tonnage. The defendant came to Europe in the summer of the same year and while he was there the plaintiff brought Plews and the defendant together. From an inquiry made by the defendant of Plews later on the defendant learned of the atacamite properties here in question, owned by Compania de Cobres de Antofagasta and by the Sociedad Explotodora de Chuquicamata. These properties consisted of about 756 acres, 230 of which were owned by the Cobres Company and 526 by the Explotodora Company. The plaintiff and defendant were much together while they were in London. On the day before the defendant was to sail for home, the plaintiff suggested to him that he should employ him (the plaintiff) ‘regularly.’ As a result of this suggestion the defendant wrote out and handed to the plaintiff on the morning of the day on which he left London to take the steamer for the United States, the letter the material part of which is set forth above. It is not necessary to state in detail what was done thereafter by the defendant personally and through others, including the plaintiff. It is enough to say that on March 27, and April 3, 1911, the Cobres Company and the Explotodora Company executed formal options in favor of the plaintiff upon the lands at Chuquicamata owned by them respectively.

By these options the defendant was given the right to examine the properties during periods ending 9 months from the dates of the respective contracts. If on examination the properties were found to be satisfactory to him, the defendant agreed within a year of his giving notice to the company in question of his intention so to do, to erect a plant capable of treating 250 tons of ore a day, and to pay a royalty of 25 per cent. of the net profits of the undertaking, guaranteeing that the royalty should be not less than £>>5,000 a year. The defendant was given the further right to buy each property within 4 years and 9 months from the dates of the respective contracts for £ 50,000 and a 10 per cent. share in the capital of the company which took over the property in question. The 9 months' investigation period was afterwards extended for 12 additional months. During the investigation period the plaintiff in each case was to be lessee of the property.

The defendant was satisfied that the properties owned by these two companies could not be successfully operated unless they were operated together and operated on a large scale; and in addition that a large water power would have to be obtained and brought from a distance to treat the ore by the Bradley process. Further he was of opinion that to make it a well-rounded enterprise other adjoining mining properties of smaller extent would have to be obtained. These matters were matters which (among others) were entrusted by the defendant to the plaintiff during three months that he was in Chile, where he went on the defendant's business in 1911.

With a view to procuring the necessary mining organization and the money necessary to carry the adventure through, the defendant had been in negotiation with Daniel Guggenheim, a member of the firm of Guggenheim Bros. of New York, during the year 1911. By January, 1912, the defendant was satisfied that the rights which he had acquired were actually worth at that time ‘far in excess of $20,000,000’ and on January 9 of that year he made a written offer to Daniel Guggenheim in substance to this effect: Daniel Guggenheim within 10 days was to organize a corporation to be known as the Chile Exploration Company with a capital stock of 10,000 shares of $100 each, all of which was to be issued to the defendant in payment of the defendant's options and rights; 5,000 shares were to be handed to Daniel Guggenheim and 5,000 were to be kept by the defendant. Daniel Guggenheim was to lend to the Exploration Company $40,819.73, being the amount theretofore expended by the defendant in the undertaking, and also money necessary to be expended in the future in making a thorough test of the property. The $40,819.73 was to be repaid by the Exploration Company to the defendant. Daniel Guggenheim was to be under an obligation to continue in the enterprise only so long as he though it advisable to proceed with the investigation. There was a further provision that when Daniel Guggenheim was satisfied that the ores on the property could be treated at a profit, he should organize a corporation to be known as the Chile Copper Company with a capital stock of 4,000,000 shares of $25 each, 1,000,000 of which was to be reserved to retire bonds to be issued to raise money for operating the company and the other 3,000,000 was to retire the stock of the Exploration Company on the basis of 300 shares of the Copper Company for one share of the Exploration Company.

This offer was accepted. The Chile Exploration Company was organized. On January 17, 1912, the defendant assigned and conveyed to it all his right and interest: (1) in the option granted to him by the Cobres Company; (2) in the option granted to him by the Explotodora Company; (3) in two other options (covering smaller acreages) specifically described, and ‘also in and to all other options, denouncements, petitions, grants, concessions for mines, mill sites, limestone and salt areas, water springs, water power locations at or within 50 miles of Chuquicamata obtained by or for me, directly or indirectly.’ Thereupon drills were sent to South America and a thorough investigation made of the extent and character of the ore on these Chuquicamata mining properties. The result of this investigation was that on September 10, 1912, Daniel Guggenheim and the defendant...