Smaller v. Leach, 18041

• Decision Date: 14 October 1957
• Docket Number: No. 18041,18041
• Citation: 316 P.2d 1030,136 Colo. 297
• Parties: , 70 A.L.R.2d 891 Elmer J. SMALLER, Robert L. Taylor and John T. Fontecchio, Plaintiffs in Error, v. James LEACH, Paul W. Grimes, W. Russell Olson, Thomas E. Fontecchio and George Bodley, Defendants in Error.
• Court: Colorado Supreme Court

Page 1030

316 P.2d 1030

136 Colo. 297, 70 A.L.R.2d 891

Elmer J. SMALLER, Robert L. Taylor and John T. Fontecchio Plaintiffs in Error, v. James LEACH, Paul W. Grimes, W. Russell Olson, Thomas E Fontecchio and George Bodley, Defendants in Error.

No. 18041.

Supreme Court of Colorado, En Banc.

Oct. 14, 1957.

Rehearing Denied Nov. 12, 1957.

Stinemeyer & Stinemeyer, Roger M. Breyfogle, Max C. Wilson, Canon City, for plaintiffs in error.

John Stump Witcher, Canon City, for defendants in error.

SUTTON, Justice.

Plaintiffs in error were defendants and defendants in error were plaintiffs in the trial court. We will refer to them as they there appeared or by name.

The long record in this case details controverted material facts showing in substance that one of plaintiffs, Thomas E. Fontecchio, hereinafter sometimes referred to as Tom, with the use of a radio detection instrument known as a scintillator, while prospecting on December 26, 1954, discovered a radioactive mineralized area containing uranium on Soapy Hill, near Hunky Dory Mountain, in Fremont County, Colorado. It is further disclosed that plaintiffs were the owners of the scintillator and had agreed to a division among themselves of anything found by its use and that Tom told defendants and one Perkins, all of whom accompanied him in his car on December 26, 1954, about his arrangements with his co-owners. Perkins is not involved in this controversy, having sold his interest to defendants. The area in question was prospected to some extent on that day. On December 30, 1954, Tom, Leach and Olson went to Canon City and remained over till the 31st. Though it had snowed they proceeded to Taylor's ranch and during those two days part of the area was again tested with the scintillator and similar 'hot' results were obtained. It was determined that the area was open for locating claims and Tom wanted to do so on December 30th, but the others, though then prepared to stake, thought it better to examine the entire area more thoroughly. The parties discussed this rather fully during those two days.

Plaintiffs are employees of the Bureau of Internal Revenue in Denver, Colorado. Defendants are all married to sisters and reside in the Canon City area, Taylor also owning a ranch about one mile from the discovery site. John F. and Thomas E. Fontecchio are brothers. The record depicts a close, friendly and trusted friendship between the defendants and Tom prior to this controversy.

On the afternoon of December 26th, after digging at least two shallow test holes on Soapy Hill that reacted favorably to the scintillator, the parties started back to Canon City in Tom's car. He sat in the rear seat working the scintillator and while so doing brought up the question as to how the discovery should be owned. His testimony on this point, as well as that relating to staking, was accepted by the trial court. We deem it unnecessary to repeat in detail this testimony. Suffice it to say that there was sufficient competent evidence to support the finding of the trial court that an oral grubstake contract was entered into on that day whereby the owners of the scintillator were to have 50% and those making the discovery 50% of any claims located as a result of the use of the scintillator.

When Tom returned to Denver he told his partners about the discovery and about his agreement with his brother and the others in Canon City. The Denver men then ratified the agreement. A bulldozer to trench part of the area had not been brought in on December 30th as agreed on December 26th. The scintillator was not left in Canon City of the December 30th-31st trip for it had been committed elsewhere but the Denver men offered to return it later for use at Soapy Hill.

On December 31st John T. Fontecchio did not go prospecting with his brother and Smaller, Leach and Olson when they searched another area. He came to Smaller's home later that day when the parties were again discussing what should be done with the Soapy Hill area. The trial court again accepted the testimony of Thomas E. Fontecchio when he testified concerning the staking of the claims. This pertinent part is:

'Q. Now, was anything said after that about this Soapy Hill area, about what would be done with anything in that area?

'* * * So, we were in there * * * when my brother John came in. We all sort of briefed Johnny as to what we found in the north of Canon area there.

'And Johnny asked me if it would be all right if he went up to Soapy and staked, started staking that stuff. Well, I told him that, sure, it would be fine, but when he started staking be sure he stakes, puts enough claims up there, because just as soon as the word gets out everybody--I believe Johnny said everybody and his brother would be up there.

'Q. Now, did he or did he not indicate that would be for all of you or for just himself?

'* * *

'The Witness: He did not--Johnny did not tell me that he was staking it for himself. In the course of all this conversation we were all talking as if we were all in on the deal, we were all working together. And that is the impression I had, that when he staked it was going to be for all of us.'

It also appears that the first working day after December 26, 1954, Smaller (whose friend Rossi testified that Smaller was interested earlier in buying a counter) inquired from a local store about buying a Geiger Counter--an instrument that normally is less expensive and less powerful than a scintillator but which generally performs in the same manner. On the first business day after December 31, 1954, Smaller bought a counter. On January 8, 1955, Smaller and John T. Fontecchio checked a nearby working mine known as the Crescent with their new counter to compare it with Soapy Hill and promptly on the same day began to locate (stake) claims in the Soapy Hill area in defendants' names only. On January 12th or 13th, 1955, Thomas E. Fontecchio returned to Canon City and was disturbed because Smaller had bought a counter when the scintillator was to be made available. John T. Fontecchio then told Tom he had staked some claims at Soapy Hill (this was on January 8, 1955) because they had seen some airplanes and they were afraid someone else would discover the area and move in and stake it. The record shows that none of the plaintiffs were ever on more than a few of the 22 claims but that all of the claims are contiguous to each other. Tom testified that John told him sotto voce on the evening of December 31, 1954, when they were discussing the claims: 'Don't worry, Tom, I'm looking after your interest.' In February, 1955, Tom went to Soapy Hill to check a dozer cut with the scintillator. The Denver men could not take formal leave from their jobs with the United States Internal Revenue Bureau from January 1st to April 15th. However on March 30th Thomas E. Fontecchio, Grimes and Leach came to Canon City to check on rumors they had heard, on about March 26th, that the defendants had staked 22 claims solely in defendants' names in the Soapy Hill area and were denying all rights of the plaintiffs. Controversy ensued over this on March 30th and plaintiffs filed suit soon thereafter (the original complaint is not in the record but their second amended complaint is and shows that it was lodged January 21, 1956) asking that they be declared the owners of a one-half interest in said claims, that Thomas E. Fontecchio be found to be the owner of another one-tenth because he was also one of the discoverers and for an accounting.

The record further shows that defendants since January 8, 1955, had not only staked claims solely in their own names and denied the rights of plaintiffs, but they also had opened a mine on one of the claims, shipped some ore and treated the property solely as their own. Their testimony generally agrees with that of plaintiffs as to dates, meetings and trips, but is contradictory to that of plaintiffs and was not accepted by the trial court on any material issues relating to ownership. Defendants as a separate defense to this action claimed abandonment, if there was any such agreement. We note that John T. Fontecchio's testimony even went so far as to deny on cross examination that he knew that on December 26, 1954, that the parties going out that day were going prospecting. Smaller's testimony on important questions on cross examination was evasive and filled with expressions such as 'I can't really recollect' or 'not to my knowledge'. John T. Fontecchio on cross examination in reply to a question asking if the plaintiffs had found something at Soapy Hill on December 30th, 1954, would he (John) feel they (the plaintiffs) had an interest in it replied: 'Well, sure, they would have, if they had staked it.' Then, 'Q. But if they had found something and it was later staked by some of their associates you would still feel that they had an interest in it, wouldn't you?' 'A. Well, that would depend on what type of arrangements were made--if there were any arrangements made.'

Trial was to the court and after trial and based on ample evidence it expressly found, among other things, that:

1. '* * * I think from the evidence and the pleadings it can be said that there was an agreement of contract between parties as of December 26th, 1954.'

2. Under all the evidence there was no abandonment and that plaintiffs' sole duty under the contract as it developed was to point out the area and that if the situation were reversed that defendants '* * * would have been here making the same claims that the plaintiffs now make.'

3. '* * * it was optional with the defendants to accept the terms stated by the finder of the ore, the plaintiffs with their scintillator, and if they chose to go along, they had the obligation to do the staking, the posting and a reasonable search for ore. If ore was not found, then there was no profit to anybody. If it was found, they should share equally.'

4. As the accounting phase of the suit the...