Waterman v. Banks

• Decision Date: 28 March 1892
• Citation: 12 S.Ct. 646,144 U.S. 394,36 L.Ed. 479
• Parties: WATERMAN v. BANKS
• Court: U.S. Supreme Court

144 U.S. 394

12 S.Ct. 646

36 L.Ed. 479

WATERMAN v. BANKS.

March 28, 1892.

This appeal brings up for review a decree requiring R. W. Waterman, the original defendant, to convey, free from incumbrance, to Abbie L. Waterman, the original plaintiff, and the widow and assignee of J. S. Waterman, an undivided twentyfour one-hundredths of certain mining property in San Bernardino county, Cal., and also to pay to her the sum of $42,987.22, which was adjudged to be the amount of profits derived from that property, with the interest that accrued thereon prior to January 10, 1888. 27 Fed. Rep. 827.

J. S. Waterman and R. W. Waterman were brothers; the former of large wealth, and a citizen of Illinois, and the latter of limited means, and a citizen of California, engaged with one Porter in 'prospecting' and developing mining property. R. W. Waterman and Porter having acquired certain mining claims or interests in San Bernardino county, Cal., the former wrote a letter to his brother, under date of April 5, 1881, which seems to be the beginning of the transactions out of which the present litigation arose. The writer said: 'Porter finished assay yesterday, and will start in to-morrow. The mine improves all the time. It goes beyond our most sanguine expectations. The chimney will extend somewhere about 800 or 1,000 feet, and is worth, itself, millions. The assay for the dump, after picking out the best ore and assay,—the average of the poorest,—is over $50.00, and, so far as we can see, the entire mass is vary rich. * * * Now, we can fight all of them, pay all expenses, and make a million a year; but I don't anticipate much, if any, trouble. * * * You let Mr. Porter have some money to pay his expenses, without his asking for it. He is one of the most modest men I ever saw. I want you to have a talk with Jane about your joining me, and having an interest in the mine. It will include the four claims, the Alpha, Omega, Front, and Silver Glance. They are—what there is of it, and either one is enough to form a company. I propose to let you have 24-100 of my interest of 75-100,—you give up my indebtedness, and give me to pay off any debts that I have incurred in mining, say $2,000. That 24-100 is worth $250,000, and may be 1/2 a million to sell outside of this. All the money you get to buy machinery or advance in any way shall be paid from the first earnings of the mill. You might be at the head of the affair financially, and otherwise; each one of us to have his part, but you be at the head. * * * You speak to Porter about our partnership. I know he is all O. K., and will not pretent to own but 1/4; yet try him. I presume he would give you a share of his if you raise the money for us.'

It does not appear that any formal reply was made to this letter; but it does appear that J. S. Waterman was in California the succeeding month, and took from his brother an obligation, of which the following is a copy:

'San Bernardino, Cal., May 14, 1881. For and in consideration of one dollar to me in hand paid, the receipt whereof is hereby acknowledged, I hereby agree that, at any time within twelve months from this date, upon demand of J. S. Waterman, or his heirs, administrators, or assigns, I will execute to him a good and sufficient deed of conveyance to an undivided twenty-four one-hundredths (24-100) of the following mines, known as the Alpha, Omega, Silver Glance, and Front, each being 600 feet wide by 1,500 ft. long, and the same interest in all lands that may be located or has been located for the development of the above mines, with such machinery and improvements as is to be placed upon same, all subject to the same proportion of expenses, which is to be paid out of the development of the above property, all situated near the Grape Vine, in the county of San Bernardino, state of California.

'R. W. WATERMAN.'

This was the obligation, the specific performance of which was required by the decree below.

An obligation of like character as to date and terms was taken by J. S. Waterman from Porter with respect to an undivided three one-hundredths of the same property.

Prior to, but, perhaps, in expectation of, the execution of these writings, J. S. Waterman advanced to his prother and Porter the sum of $1,817, and, subsequently, other sums, the aggregate amount of advancements, on the 22d day of November, 1881, being $26,317, exclusive of interest. For each sum so advanced, J. S. Waterman took the notes of R. W. Waterman and Porter. It also appeared that when the writings of May 14, 1881, were given, R. W. Waterman was indebted to J. S. Waterman in the sum of $11,750.53 for moneys loaned; but R. W. Waterman contended that, if all matters of business between them had been settled, he would not have been then indebted to his brother in any sum whatever.

J. S. Waterman died July 19, 1883, having made a will, which was dated November 28, 1870. That will provided, among other things, that any and all noties, bills, accounts, agreements, or other evidence of indebtedness against any of his brothers, held by the testator at his decease, be canceled by his executors, and delivered up to the maker or makers without payment of the same, or any part thereof, except two notes against John C. Waterman, secured by a deed of trust on lands, which were to be collected and equally divided between his brothers and sisters, and the children of such as had died. By a codicil to the will, of date December 7, 1872, his brother R. W. Waterman was substituted as executor, in place of George S. Robinson.

Upon the paper of May 14, 1881, given by R. W. Waterman, appears the following indorsement: 'I hereby assign the within to Mrs. Abbie L. Waterman. J. S. WATERMAN. M'ch, 1883. I hereby agree to execute the withing agreement on demand.' In March, 1883, the paper with this indorsement upon it was presented to R. W. Waterman, and he refused to sign it. At that time there was a balance of about $11,000 due J. S. Waterman on the notes given by R. W. Waterman and Porter. Portersigned a similar indorsement on the writing of May 14, 1881, executed by him; but the evidence satisfactorily shows that he did this only to indicate his willingness that that paper should stand as security simply for the moneys advanced by J. S. Waterman.

All the moneys advanced to R. W. Waterman and Porter were repaid out of the proceeds of the mining property before the institution of this suit, the principal part before and the balance after the death of J. S. Waterman.

No demand was made upon R. W. Waterman or Porter at any time within 12 months after May 14, 1881, for a conveyance, nor until after the death of J. S. Waterman. This suit and the decree below proceeded upon the general ground that the writing of May 14, 1881, was intended to pass, and was accepted as passing, a present interest of 24-100 in the property covered by its provisions, and required R. W. Waterman to convey such interest at any time before or after the expiration of 12 months from that date, on the demand by J. S. Waterman, his heirs, administrators, or assigns, of a conveyance. The defendant disputed this interpretation of that instrument, and insisted that it was given and accepted only as security for such moneys as J. S. Waterman might advance for the development or management of this property. Geo. F. Edmunds, for appellants.

C. C. Bonney and E. W. McGraw, for appellees.

Mr. Justice HARLAN delivered the opinion of the court.

We cannot assent to the view taken by the court below. The bill alleges—and the evidence fully sustains the allegation—that when the writing in question was given the title to this property was in dispute, and that its development and improvement involved the expenditure of large sums, great risk of the total loss of everything invested in it, and uncertainty of profit. Under these circumstances, J. S. Waterman, according to the decided preponderance of the evidence, did not wish to be come a part owner of the property, or to incur the responsibility of developing and managing it in conjunction with his brother and Porter. He was entirely willing, indeed, anxious, to assist his brother, but was not willing, at the outset, to take an interest in the property, or to become connected with them in business. His chief concern then was to secure the repayment of sums advanced and to be advanced by him to his brother and Porter for the development of the property, postponing to a future time the decision of the question as to whether he would take an interest in the property, as suggested in the letter of April 5, 1881. If it proved to be valuable he would incur no responsibility by becoming a part owner, and uniting with his brother and Porter in its development and management. If it proved to be worthless, and if his brother and Porter were unable to meet their notes, he would only lose, and, as he possessed large wealth, could afford to lose, the sums advanced by him. These were the objects he had in view when he prepared and obtained from his brother the writing of May 14, 1881. That writing evidently contemplated that, 'out of the development of the above property,' that is, out of its earnings, were to be paid the expenses incurred in providing machinery, in making improvements, etc. These expenses were to be met, in the first instance, by the moneys advanced by J. S. Waterman to his brother and Porter. They could not have been otherwise paid; for the resources of R. W. Waterman and Porter were very limited, and the property had not then been sufficiently developed to become itself the basis of borrowing large sums from banks, or from individual lenders of money. All this is manifest from the facts in the case.

But it is clear from the face of the writing, without calling to our aid the circumstances under which it was executed, that J. S. Waterman did not stipulate for a present interest in the property. It was drawn so as not to give him an interest, as owner, during...