Treat v. Hiles

• Decision Date: 01 March 1887
• Citation: 32 N.W. 517,68 Wis. 344
• Parties: TREAT AND ANOTHER v. HILES.
• Court: Wisconsin Supreme Court

68 Wis. 344

32 N.W. 517

TREAT AND ANOTHER

v.HILES.

Supreme Court of Wisconsin.

March 1, 1887.

Appeal from circuit court, Milwaukee county.

N. S. Murphy, for appellants.

John W. Cary, for respondent.

ORTON, J.

The complaint states substantially the following facts: The plaintiffs, by their superior scientific knowledge, diligence, observation, and skill, had discovered a very valuable stone quarry on certain lands of William and Lyman Saunders, in Waukesha county, Wisconsin, of which said owners were ignorant; and, wishing to engage some person of abundant means with them in the scheme of making said quarry available to themselves, as well as to such person, by large profits on the investment, they communicated their information of said quarry to the defendant, he being such a person of large means, and well suited to such an enterprise; and they entered into a verbal contract with him that they should negotiate the purchase of said land for not exceeding $12,000, to be paid by the defendant, and procure a deed of said land to him, and that thereafter they, together with the defendant, should forthwith proceed to open and work the said stone quarry, by quarrying, removing, and selling the said stone, for profit, the defendant to advance the necessary money to carry on said business, and the plaintiffs to give and bestow their exclusive time, labor, and services for that purpose, and that the net profits of so opening, working, and developing said stone quarry, and so selling the said stone, should be equally divided between them; that is, one-half to go to the plaintiffs, and one-half to the defendant. The plaintiffs, in pursuance of said verbal contract, on the twenty-eighth day of September, 1885, by the employment of much of their time, labor, and money, negotiated said purchase for said sum of $12,000, and procured a deed of said lands to be executed and delivered to the defendant, and on the first day of October thereafter, they, together with the defendant, employed a foreman for said works, and the plaintiffs purchased tools therefor, with the moneys advanced by the defendant for that purpose, and they were shipped to said quarry, and preparations were made to commence said works, and the plaintiffs were ready to perform said contract, and commence and prosecute said business, on the terms aforesaid with the defendant. The defendant, however, very soon thereafter refused to allow the plaintiffs to bestow any labor, services, or attention to the opening, developing, or working said stone quarry, or to divide any profits therefrom, and utterly refused to commence said works with the plaintiffs in pursuance of said contract, although they were ready and willing to do as they had so agreed to do on their part, and the defendant notified said plaintiffs that they could have no further interest in said works or business, or the profits thereof. The defendant thereupon took exclusive possession of said quarry, and commenced opening, working, and developing the same, and selling stone therefrom, to the exclusion of the plaintiffs from said works, and the profits thereof. There are proper allegations of a valuable consideration to said contract, and of a breach thereof by the defendant. The stone quarry was supposed to be very extensive and valuable, and stone of the quality found therein was worth in market four dollars per cord, deducting all costs and expenses, which would have yielded to the plaintiffs a very large sum as their share of the net profits of said works had the defendant allowed them to perform said contract, and performed the same on his part. The prayer is for damages for the breach of said contract by the defendant by his refusal to allow the plaintiffs to enter upon and carry out said joint enterprise with him, commensurate with their share of said profits. A general demurrer to said complaint was sustained by the circuit court, and from the order sustaining the same this appeal is taken.

The above is believed to be a substantially correct statement of the facts alleged in the complaint, although much briefer than the complaint itself.

Before entering upon the consideration of the important questions raised and argued in this court upon the demurrer as to the validity of the contract in view of the statute of frauds, it may be proper to determine the nature of this action, and to classify, if we may, the contract set out in the complaint. On that subject we have the benefit of a recent decision of this court in Hill v. Palmer, 56 Wis. 123, 14 N. W. Rep. 20, in which the facts were very closely alike those in this case, so far as that matter is concerned. In that case a similar contract was made between three persons for cutting, hauling, banking, and running logs, to be taken from land belonging to another person. It was agreed that one of them should procure the right to so cut logs upon said land for the benefit of all three, and that thereupon that they should commence said works, which should be for their joint benefit and equal profits. The right to cut on said land was procured by such one of them, according to the contract, and the other two were ready, with tools, teams, supplies, and camping outfit, to commence upon said works, whereupon they were notified by such other person that he would not go on any further with the contract, or with them in said works, and he entered upon said works alone, and on his own account, to the exclusion of the other two, and availed himself of the benefit of the right to cut logs on said land, procured by him for the benefit of all of them jointly, and went on and made large profits, for which the other two brought suit as damages for breach of the contract, as in this case. The striking similarity of the cases appears also in the fact that the plaintiffs had, by their prospecting and exploration, discovered and estimated the pine timber on said land, and by their own skill, labor, and superior knowledge, and communicated their discovery to the defendant as an inducement for him to enter into the contract with them. This court determined in that case that the contract was one to enter into an agreement for a copartnership, or to enter upon the business of a copartnership already formed, which had not been commenced, and that, therefore, an action at law would lie for the breach of the contract. This decision was sustained by the citation of numerous authorities. (1) Then the contract here set out is either one for a copartnership, or of copartnership not yet practically commenced; and (2) this action at law for damages is properly brought. A bill in equity to close up a partnership, or to dissolve it, or for an accounting, would be fruitless, because it had not entered upon business, and had made no profits or accumulated any property. It is proper to say that no objection to the form of the action was taken in this case by the learned counsel of the respondent, but he declined to notice the argument of opposite counsel relative to the questions of partnership, as he claimed they had no relation to the issue.

The important questions in this case, and which were very ably discussed by the learned and distinguished counsel on both sides, are whether this contract is for any interest in lands, in violation of the statute of frauds in section 2302, Rev. St., or by its terms is not to be performed within one year, in violation of section 2307, Rev. St. These questions will be disposed of in their order.

The first question, as to whether this contract is for any interest in the land so purchased by the defendant upon which the stone quarry is situated, is not very clear, or readily answered, without a very full examination of the authorities, and a critical understanding of the terms, purposes, and relation of the contract to the said lands. I confess that it appeared to me at first blush that the contract does create an interest in said land, or convey some interest therein, to all of the parties, or to the plaintiffs, or to the copartnership; but, upon further and much thought, and a full investigation of the subject in the light of the authorities, it appears perfectly clear that it does not, and that the contract is not within the statute. Neither the contract nor the partnership concerns anything except the mere working of a stone quarry on the land of one of the partners, and the selling of the stone and the profits of the business. It does not convey the stone in the quarry, or any part of it. The quarry remains the property of the defendant, or the owner of the land, all of the time, and the stone severed from the freehold by the joint labor of the parties only becomes the property of the partnership, to be sold for a profit to be equally divided. The contract contains a license to the plaintiffs to go upon the land of the defendant, and work the quarry, either as a mere verbal license which, while it exists, will justify the entry for such purpose, or a right to so work by the authority and in the right of the defendant as one of the copartners. In either case there is no interest in the land itself involved. It may be that such license could be revoked by the defendant at any time, but such revocation would involve a breach of the partnership contract, for which damages could be recovered, as in this case.

The same principles exist in all mining contracts when the mere working of the mine is the subject of the contract, and no interest in the mine itself is at all affected. This interest, as we shall see, is represented by the shares of stock of a company that has the mere right to work a mine. Such shares represent no interest in the mine itself, or the land, but the mere interest in the net profits. The shareholder is entitled to his dividend, which consists of his share of the net profits of the enterprise.

With these preliminary observations, we will notice some of the authorities sustaining these views. In Gillett v....