Union Trust Co. v. Branch Mint Op. Co.

• Decision Date: 31 January 1912
• Citation: 134 N.W. 65,28 S.D. 549
• Court: South Dakota Supreme Court
• Parties: UNION TRUST COMPANY OF PHILADELPHIA, Plaintiff and respondent, v. BRANCH MINT OPERATING COMPANY, Branch Mint Mining & Milling Company, and James D. Hardin, Defendants and appellants.

28 S.D. 549, 134 N.W. 65 (1912)

UNION TRUST COMPANY OF PHILADELPHIA, Plaintiff and respondent v BRANCH MINT OPERATING COMPANY,

Branch Mint Mining & Milling Company, and James D. Hardin

Defendants and appellants

South Dakota Supreme Court

Appeal from Circuit Court, Lawrence County, SD

Hon. W. G. Rice, Judge

Reversed

Martin & Mason

Attorneys for appellant.

McLaughlin & Ogden

Attorneys for respondent.

Opinion filed January 31, 1912

(See 27 S.D. 350, 131 N.W. 308)

WHITING, J.

This action was brought by Kirk G. Phillips and others against the Branch Mint Operating Company, the Branch Mint Mining & Milling Company, the Union Trust Company of Philadelphia, and James D. Hardin. After appeal to this court, the original plaintiffs conveyed to the Union Trust Company of Philadelphia all their rights under and by virtue of the liens claimed herein, and this court, upon application duly made, has substituted said trust company as plaintiff and respondent. Such substitution having been made after the decision herein was prepared, the wording of the following decision conforms to the title of said cause before the order of substitution.

Plaintiffs sought to foreclose miners' liens which they claimed against the property of the defendant Branch Mint Operating Company, which company plaintiffs alleged was the owner of an interest in the property in question and the agent of the Branch Mint Mining & Milling Company. Plaintiffs alleged that defendants Union Trust Company and Hardin each claimed some interest or lien in and upon the property in question, but that such interest or lien was junior and inferior to the liens of plaintiffs. Plaintiffs asked a decree foreclosing their liens as against all the above defendants. Defendant Hardin denied that plaintiffs had any liens against the property in question, alleging that the operating company was never the agent of the other company. Defendant Hardin also claimed a miner's lien on the property in question prior and superior to the alleged liens of plaintiffs. The cause was tried to the court without a jury, findings of facts and conclusions of law were entered, a decree was rendered in favor of plaintiffs as against all defendants in accordance with the prayer of plaintiff's complaint, and defendant Hardin appealed from such decree.

Under the view which we take of this case, it becomes unnecessary for us to consider appellant's contention that his lien is prior and superior to the alleged liens of respondents, and we will discuss the contention that, under the record herein, the court erred in holding that respondents had any lien upon the property of the mining and milling company. We will therefore omit the findings of facts not bearing upon the latter point, merely noting that the court found facts showing that appellant had a valid miner's lien against the property in question.

The court based its conclusions and decree upon the following finding of fact:

"(1) That during the times mentioned in the complaint the Branch Mint Operating Company was the owner of an interest in the property described in said complaint and was the agent of said Branch Mint Mining & Milling Company, and as such agent was operating the premises hereinbefore described, employing men and performing work and labor thereon, and purchasing supplies and materials which were used in the ordinary course of business in the operation of said premises, together with the cyanide mill situated thereupon, and that all of said work and labor and all of said supplies and materials tended to and did develop and improve the property described in the complaint. [The finding then sets out the performance of work by plaintiff as alleged in the complaint and the filing of liens therefor as therein alleged.]" At the time of making the above finding No. 1, the court, at appellant's request, made the following additional findings:

"(A) Findings of fact No. 1, made at the request of the plaintiffs, is based entirely upon the terms and conditions of a lease executed by the Branch Mint Mining & Milling Company to the Branch Mint Operating Company, and filed for record on November 16, 1908, which lease is as follows, to-wit: [Then follows a copy of the lease dated September 7, 1908, under which the operating company were given the right for the period of five years to enter upon the premises in question, use all of the improvements thereon, and conduct mining and quarrying operations, it to pay as rental the sum of $250 per month, and also set aside the one-third of "net" earnings as a fund from which the bonded indebtedness of the lessor should be entirely paid off. The lessor had the right to inspect the books of the lessee at any time, and lessee was to furnish lessor a semiannual statement of gross earnings, net earnings, payments made, etc. Net earnings were to be determined by deducting from gross earnings (a) necessary "operating expenses"; (b) expenses of maintaining lessee's New York office; (c) taxes of lessee; (d) payment of necessary assessment work; (e) payment of insurance on property; (f) payment of interest on bonds of lessor; (g) payment of expenses to protect legal existence of lessor. Lessee covenanted to work and develop the mines on the leased property, and at end of lease to "deliver in good order, reasonable wear and tear and damages by the elements excepted, buildings, appurtenances, fixtures, and machinery herein leased." Lessee was given right to in any manner develop the property for purpose of removing metal and mineral substances, and "to erect, maintain, equip any building, power house, railways, tramways, bridges, cuts, and rights of way which may be necessary for carrying out the purposes of this lease," and "for preparing for market all ores or metals extracted from said property demised."]

It was also provided therein:

"The party of the second part (lessee) further covenants and agrees that during its tenancy and occupation of the leasehold premises that it will keep the property free and clear of all indebtedness of any kind whatsoever, and keep posted upon the property proper notices as required by the laws of the state of South Dakota that all indebtedness incurred by the party of the second part shall in no way become a lien upon the property.") (B) Findings that during all the time the work was performed and material furnished by plaintiffs a notice that the mining properties in question were being operated by the defendant Branch Mint Operating Company under lease, and the lessor was not responsible for any debts incurred by lessee, was posted in several places upon the mill and hoist upon the property, and also published in a daily paper published in Deadwood, in the county where property was situated. (C) That all of said labor was performed and materials furnished under contracts made with the Branch Mint Operating Company, and by its officers in its name and behalf, and not ostensibly for or claiming to act as the agent of the Branch Mint Mining & Milling Company."

Appellant assigns the following errors:

"The court erred in holding that the Branch Mint Operating Company was the owner of an interest in the property described in the complaint, and that it was the agent of the defendant Branch Mint Mining & Milling Company, and that as such agent it was operating the premises described. (2) The court erred in holding that the work and supplies performed and furnished by plaintiffs were so performed and furnished at the special instance of the defendant Branch Mint Mining & Milling Company. (4) The court erred in giving and entering judgment awarding plaintiffs a lien against the property of the Branch Mint Mining & Milling Company, and ordering a sale thereof in satisfaction of the same."

From finding A it appears that finding I is but a mere conclusion drawn from the provisions of the contract contained in finding A and, if such conclusion is not supported by the terms of such contract, finding I must fall and with it the judgment in respondents' favor.

Under chapter 182, Laws 1903, amending section 2573, Rev. Pol. Code, in order for one to acquire a miner's lien, the work performed or material furnished must be performed or furnished "at the request of the owner or owners or his or their agents." In view of finding C, it cannot be claimed that the material and labor were furnished at the direct instance and request of the owner of the property, as it is therein specifically found that the contracts for the work and labor were "made with the Branch Mint Operating Company." The judgment rendered cannot be supported upon the finding that the operating company had an interest in the property, because, if based upon that finding, the court would have to determine what that interest was and the lien would be against such interest only, while the judgment, as rendered, established a lien against the whole property, including the interest therein of the lessor company. To sustain the judgment, the trial court must have found that, while the contracts for labor and material were made with the Operating company and in its name and behalf without any understanding or claim that it was acting for the owners of the mining property, yet that there was an undisclosed agency existing, and the operating company was, unknown to plaintiffs, in truth and fact acting for such owner.

We think the law is well established that, where one knows a party with whom he contracts to be in fact the agent of a third party, yet, knowing that fact, he enters into a contract with such party as principal and not as agent of the real principal, the contract becomes one merely with the agent, and the other party to The contract by his acts elects to look to the agent only for any recovery under such contract. In Rockell on Mechanics' Liens, § 31, it is said:

"In all cases the materialman or laborer must at his peril find out the authority of the...