Bissell v. Foss

114 U.S. 252, 5 S. Ct. 851, 29 L. Ed. 126, 1885 U.S. LEXIS 1756

• Court: Supreme Court of the United States
• Decided: April 13, 1885
• Docket: 103
• Status: Published

Opinion

. Mu. Justice Woods

delivered the opinion of the court.

This was a suit in equity. The facts as they appeared by the pleadings and evidence were as follows: In January, 1878, two miners, named Davidson and Yanboxall, located a mining claim near Leadville, Colorado, which they called the Winnemuck. In March following they jointly conveyed to the appellant Bissell, and to the appellees Foss and Hunter, each a one-fourth interest in the property in consideration of their agreement to furnish money to-sink a shaft to the ores on the claim. These parties worked the mine as mining partners until July, 1878, when Davidson and Boxall, with the consent of their associates, sold their one-fourth to three persons, Rawlings, Handley and Robertson, called in the record “The Missourians,” who. with Bissell, Foss and Hunter continued the working'■¿of the mine.

Tabor and Reische, who owned and worked a mine adjoining the Winnemuck on an alleged title not necessary to state, .claimed the ore from the Winnemuck mine, and instituted from time to time, attachment proceedings by which they seized the ore as it was taken from the mine. The associates who were working the Winnemuck mine procured the release of the ore, by giving forthcoming bonds, with one Halleck as security, who signed the bonds on condition that the money arising from the sale of the ore should be placed and kept in bank, as an indemnity to him until the ownership of the ore could be settled. On this understanding the proceeds of the sale of the ore were deposited in the Miners’ Exchange Bank of Leadville.

In August or September, 1878, the owners of the Winnemuck, Bissell, .Foss, Hunter, and the Missourians, having received from the sale of ore, money more than sufficient to indemnify Halleck, Avith the surplus bought and paid for an interest in the New Discovery Lode. About October 1,1878, they had on deposit to their credit in the bank $16,000, and Halleck was bound for them to the amount of $12,000.

In the latter,part of September the Missourians offered for sale their one-fourth interest in the mines. ' Bissell and Foss were anxious, lest the interest of tbe Missourians should fall into the hands of Tabor and Reische, who might thereby 'gain some advantage in their suits then pending. They had a conversation in-reference to the purchase of the interest of .the Missourians.' They differ in their account of-this conversation. It is thus detailed by Bissell:

“ Along about the 30th day of September Mr. Foss came to my room and stated that the Missourians, as Ave termed them,.Avere wanting to sell their quarter interest in the property, and had offered it for $30,000, and he said that he thought. Ave had better 'go in and buy it. I said to him that it Avas all well enough to buy it, if they Avanted to sell, but' that I Avas confident that I could get it at better figures. I said, ‘ I am almost certain, Mr. Foss, that I .can buy it for less; let me manage it and I think I can buy it for $15,000,’ and Avent on to say what I would say to.them concerning all the trouble and suits in the case. He said, ‘ Very well, if you can get it for that so- much the better.’ It Avas an agreement and understanding between us, that if Ave could- get it for $15,000 Ave were to take it.”

He further stated in reference to the same interview: .

“ We sat down there and made figures to see if Ave could pay for it out of the money belonging to the company in bank ; and the result of our figuring Avas, that Ave couldn’t do it to the full extent; “that we could pay a portion of it from that money, and the balance outside, each of us raise our share.”.

In.ansAver to the question, who Avere to have the interests in the quarter to be purchased of the Missourians, he said: “ They were to go betAveen us three, Trimble and Hunter, Foss and myself. Mr. Trimble and Hunter’s were interests together; they owned jointly th^tt quarter, interest, so I Avas informed by Mr. Trimble and Mr. Hunter.”

Foss gave the following account of his interviews with Bis-sell in reférence to their project to buy but the Missourians:

“ I met Dr. Bissell over Tribe and Jeffrey’s store, in Lead-ville, and we talked the purchase over. I told- him that the boys Avanted to get out bad, and' I thought they would sell pretty reasonable; • but. that as I was Avorking about there managing-the mine, he could-do better than I could. I said he. bad mentioned to us one night on. the street $30,000 as a price, but that we wouldn’t agree to for a moment. We wondered how we could do about the money for the purchase. If we could use the company money, we thought we must use a little more than our joint interest. Bissell was to see the boys in regard to it.” •

In answer to the question, “ what was said about the price ? ” he replied:

“We talked the amount; $20,000 was spoken of. He thought that was too high and more than we should give. I thought so too, but $30,000 was the price fixed by them. That I wouldn’t think of for a moment. We figured it over, but I don’t remember the exact figures, and we concluded that at $15,000 we could pay for it, in case we could draw out the money in the Exchange Bank. Dr. Bissell thought it could be bought for less than $10,000. There was no proposition made for any definite price, but if we could buy the property we were to buy it together. He was to see what was the best he could do. with it.”

He was then asked to state “ whether there was, up to the time you concluded the trade with Handley, any agreement with Dr. Bissell that you and he should buy that property for $15,000; ” to which he replied, “ No, sir.”

,After these conversations between Bissell and Boss, Boss and Hunter, early in October, 1818, purchased of the-Missourians for $15,000 their interest in the Winnemuck and New Discovery Mines, and in the money of the associates on deposit in the Exchange Bank. The purchase was' made in- the name of Boss, but it was agreed between him and Hunter that líunter was to have two-thirds and Boss one-third of the share. The money to pay for the share was ail advanced by Hunter,. Boss agreeing to reimburse Hunter the one-third. In order to induce the Missourians to sell at $15,000, Hunter declared to them that he was willing to sell' his fourth to Boss for that sum, and actually made a pretended sale i and conveyance to Boss at that price.

Bissell -was not informed of the negotiations for the sale and purchase while they-were going on, and Boss requested Handley, the one' of the Missourians with whom he .treated for the purchase, not to tell' Bissell of the sale.,

After the purchase was completed Foss denied the right ' of Bissell to a one-third share of the interest sold by the Missourians.

Matters thus remained until November 16, 1878, when the . Tabor party on one side, and Foss, Bissell and Hunter on the other, joined in a conveyance of their interests to B. M. Hughes, as trustee, to hold seventy-three out of one hundred equal shares.for the Tabor party, and twenty-seven for Bissell, Foss and Hunter; and, by agreement, the mines were to be worked and the moneys made deposited in the First National Bank of Denver, one of' the appellees, and credited to the two parties in the proportions above stated. On April 2, 1879, there was on deposit in the bank to the credit of Foss, Bissell' and Hunter $92,502.58. It was in reference to the division of this fund that this.litigation arose.

If there had been no purchase of the interest of the Missourians, Bissell; Foss and Hunter would each have owned three-twelfths of - this fund. ■ But Bissell, insisting that he was entitled to one-third of the one-fourth interest purchased of the Missourians, claimed four-twelfths. Foss and Hunter, insisting that Bissell had no interest in the share purchased of the Missourians,- contended that he was only entitled to three-twelfths of the fund, and they jointly to nine-twelfths.

' Thereupon Foss and Hunter, on April 26,1879, brought the present suit in equity against the First National Bank of Denver as the depositary, and against Bissell-as the adverse, claimant,: to recover nine-twelfths of the fund. The bank answered the bill and at the same time' filed a cross-bill, in which it alleged that it was merely a stakeholder, claiming no interest in the fund; and praying that Foss, Hunter and Bissell might be required to interplead. Bissell answered boththe original and . cross-bills, claiming four-twelfths of the sum.

The sum in dispute between the.parties seems to have increased after the filing of the original bill, and before' final decree amounted to $36,454.35. This sum, by agreement .of the parties, was deposited in the registry of the.court, and they stipulated that the decision of the court should settle their rights, not only to the fund claimed in the original bill, but to the whole amount in the registry of the court.

On final hearing, the Circuit Court decreed “ that Foss ■ and Hunter were entitled to the $36,454.35 in controversy in the registry of the court, and that it be paid to them.” From this decree Bissell appealed.

It is clear that the' appellant had no claim to the fund in controversy, unless he had. some title, legal or equitable, to the property which produced it. But he was not • a party to the purchase -of the property by Foss and Hunter. The Missourians, who owned the property, never bargained with Bissell to sell him any interest in their share, ,and never conveyed to him any interest in it. They contracted with Foss and Hunter only. Bissell never paid any part of the purchase' money. It was paid exclusively by Foss and Hunter. His title,' if' he has any, is not. based on any contract of purchase- made with the Missourians, nor on any contract.or understanding between him and Hunter.' He bases his claim on the conversation and agreement between himself and Foss. This agreement, as stated by Bissell, was that Bissell and Foss should buy out the Missourians, for the benefit of. themselves and Hunter, and divide the share equally between the three, and that each should pay one-third of the purchase-money. According to Bissell’s own version, the arrangement was based on the expectation that a large part of the purchase-money could be paid out of the deposit 'of the parties in the bank. But the evidence shows'that the money., which they were at liberty to draw from the ■ bank vrould pay less than one-third of the price at which the purchase was made;'- Foss testifies that all his individual resources consisted of a small grocery store not paying much, and that he “ was just living in thé hope of beating Tabor.”

Looking-at all the testimony-it is impossible to reach the conclusion, unless wé disregard "altogether the evidence of Foss and rely entirely on that of-Bissell, that there was any well-defined agreement between them to buy out the Missourians at. a specified price, or. that the two hail available resources to make the purchase. Nothing but'an arrangement left at loose ends can be deduced from the evidence. But if the agreement had been clear .and definite, it could bind neither Foss nor Bis-sell until Hunter was consulted and agreed to it. If Hunter declined, the matter was at an end, and there was no obligation on either Foss or Bissell to purchase • for themselves or themselves and Hunter.

The record shows, and counsel for Bissell contend, that Foss told Hunter about the arrangement, in reference tó the purchase/between himself and Bissell. There is no proof that Hunter assented to the arrangement made between Foss and Bissell. . It is clear that he did not-assent, for he made a different arrangement with Foss, by which he was to purchase 'and pay for twó-thirds of the share of the Missourians, and Foss the other third, and by which he was to advance all the money to make the purchase, leaving the funds of the associates on deposit in the Miners’ Exchange Bank untouched. It is plain, therefore, that the project of Foss and BisselLfor the purchase, for the joint benefit of. themselves and Hunter, of the share of the Missourians, fell through. It could not be carried out without the assent of Hunter, and he did not assent.

To show the fraudulent conduct of Foss and Hunter, stress is laid by counsel for fhe appellant on the fact that they deceived the Missourians by the pretence that Hunter was willing to sell, and that he did actually sell his one-fourth to Foss for $15;000, and thus induced them to sell at the same price. But as the Missourians were the only persons injured by this stratagem, if any one was injured, and they do not complain, we do not see how it concerns the appellant. The device by which Foss and Hunter made the purchase at .$15,'000 did not add to- or detract from the rights of the appellant. And, as he is seeking to get the benefit of the contract thus fraudulently made, as he alleges, it does not lie in his mouth to complain'of a fraud of which he is seeking to .share the fruits.

Bissell had no ground upon which he could base any .contract right to an interest in the purchase made by Foss for himself and Hunter. He paid no money on the purchase, and he could not have been compelled to pay any, either by the ■ Missourians with, whom he had no contract,'or by Foss, who, after Hunter had declined to acquiesce in the arrangement between Bissell and himself, could not have demanded of Bis-sell that he and Foss should buy for themselves. And if Foss had actually bought for himself and Bissell he. could not have compelled the latter fio pay his half of the purchase money, for Bissell had never agreed to such a purchase. The agreement could not bind.Foss unless it also bound BisselL Bissell therefore did not, by reason of his' agreement with Foss, acquire any interest in the share purchased by Foss and Hunter of the Missouriáns.-

But the appellant insists that there was a mutual agreement .between Bissell. and Foss that if either made the purchase it should be for the benefit of all, and that this agreement, although not amounting to a' contract which could be specifically enforced if it had been made with a stranger, created between, parties who sustained to each other the confidential and trust relations which existed between these parties a constructive trust which would be enforced in equity.

The contention is that these three parties were in such relations to each other that, if one bought a share in' the common property and business, it enured in equity to the benefit of all, subject to the payment by each of the associates of his share of the purchase money. The relations from which this result springs are stated to be those, first, of joint tenants, and, second, of - partners; and that, by reason of these relations, Foss and Hunter became trustees for'themselves .and Bissell in purchasing the share of the Missourians.

It is true that one of two or more tenants in common, holding by a common, title,'cannot purchase an outstanding title or incumbrance upon the joint estate for his own benefit. Such a purchase enures to the bénefit of all, because there is an obligation between them, resulting from their, joint claim and com- ■; munity'of interest, that one of .them shall not affect the claim-to the prejudice.of"the others. Rothwell v. Dewees, 2 Black, 613; Van Horne v. Fonda, 5 Johns. Ch. 388; Lloyd v. Lynch, 28 Penn. St. 419; Downer v. Smithy 38 Vt. 464.

But this ■ rule cannot apply to Hunter and Foss. They' purchased no outstanding title or incumbrance to the prejudice of -the other tenant in common. They did what any tenant in common with entire good faith might do, namely, purchased the interest of some of. their, co-tenants without consulting the others. The title which they purchased of the Missourians was not antagonistic or hostile to the title of Bissell. Their ^purchase did not in any degree tend to injure or damage his interest. His share was jugt as valuable after as before the purchase, and his rights were^the same. In such a purchase no trust, or confidence is violated.

Nor do we think that the relations of the parties as partners prohibited Foss and Hunter from making the purchase in question for their own benefit to the exclusion of Bissell,- The association of Bissell, Foss, Hunter and the Missourians was not an ordinary partnership. It was what is known as a mining partnership, which is a partnership sub modo only, and is thus described by Mr. Justice Field in Kahn v. Smelting Co., 102 U. S. 641: signment- of Ms interest. A different rule from that which governs the relations of members of a trading partnership to each other was, therefore, recognized as applicable to the relations to each other of members of a mining association. The delectus joersonce, which, is essential to constitute an -ordinary partnership, has no place in these mining associations. Duryea v. Burt, 28 Cal. 569; Settembre v. Putnam, 30 Cal. 490; Taylor v. Castle, 42 Cal. 367.”

' “ Mining partnerships, as distinct associations, with different rights and liabilities attaching to their members, from those attaching to members of ordinary trading partnerships, exist in all mining communities,; indeed, without them successful mining would be attended with difficulties and embarrassments much greater than at present.” He then quotes a passage •from the opinion in Skillman v. Lockman, 23 Cal. 199, 203, to the effect that a mining partnership is governed by many of the rules relating to ordinary partnerships, but also by some rules peculiar' to itself, one of which is, that one person may convey his interest in the mine and business without dissolving the partnership, and then proceeds as follows: “ The same-doctrine is asserted in numerous other cases, not only in that court, but in the courts of England. Associations for working mines are génerally composed of- a greater number óf persons than- ordinary- trading partnerships; and it ivas early seen that the continuous working of a mine, which is. essential to its successful development, would be impossible, or, at least, attended with great difficulties, if an association was to be dissolved by the death or bankruptcy of- one of its members, or the as-:

This case settles two propositions: first, that the members of a mining association, have no right to object to the admission of a stranger into the association who buys the share of one of the associatesand, second, that the sale and assignment by one of the associates of his interest does not dissolve the mining partnership. It. follows from these propositions, that one mem-’ •her of a mining partnership has the. right, without consulting his associates, to sell his interest in the partnership to a stranger, and that such a sale injures no right or property of the other associates. Much- less does a purchase by one associate of the share of another inflict any wrong upon the other members of the partnership. There is no relation of trust or confidence between mining partners which is violated by the sale and assignment by one partner to a stranger, or to one of the associates, of his share in the property and business of the association.

-.It- results as a conclusion from these premises, that Bissell has suffered no wrong at the hands of either Hunter or Foss, on the ground that they were his tenants in common or partners, by reason of any contract made between the latter in reference to the purchase of the share of. the Missourians in their joint enterprise. There has been no violation of any trust and confidence arising from the relations' existing between Bissell, Foss and Hunter.

■ The appellant,, it is therefore clear, cannot demand any part of the two-thirds interest purchased by Hunter in the share of the Hissouriañs: If he is entitled to participate in any way in the purchase made by Foss and Hunter, it can only be in the one-third interest purchased by Foss. ' But this demand cannot be based on any contract between Bissell and Foss, for the contract arrangement between them was conditioned upon the consent of Hunter, and Hunter did not consent. It was also an element of the agreement, that the money of the associates on deposit in the bank should be sufficient and should be available to pay a large part of the money required for the purchase of the share of the Missourians. But this condition also failed. He was, therefore, bound by no contract with Bissell to make the purchase.

The only questión which remains is, was Foss bound, when he learned that the arrangement he had made with Bissell for the purchase of the share of the Missourians could not be carried' out, to inform Bissell of the fact, and give him a chance to join in the purchase made by him and Hunter ? It cannot be denied .that, under the circumstances, there was an obligation on Foss to inform Bissell of the failure of their plan before making another with a third person. But it was not a legal obligation capable of enforcement in foro externo, but only a natural obligation to be disposed oí'in foro conscientim. Story Eq. Jur., § 2. It was one of those obligations which w~as binding on the honor and conscience of the party, but one not the subject of a suit and not to be enforced in a court of either law or equity.

We are of opinion that the decree of the Circuit Court was right'. It is therefore

Affirmed.

Me. Justice Beadley and Me. Justice Matthews dissented.