Curtz v. Park City Chief Mining Co.

142 P.2d 163, 105 Utah 300, 1943 Utah LEXIS 20

• Court: Utah Supreme Court
• Decided: October 15, 1943
• Docket: No. 6548.
• Status: Published

Opinions

McDONOUGH, Justice.

Appeal from a decree declaring that appellant held certain mining claims in trust for Curtz and requiring appellant to quitclaim said mining claims to Curtz.

The facts are numerous and somewhat complicated. We recite only those which we deem necessary to an understanding of this decision.

Rachel B. Urban died testate on or about March 23, 1933. By the terms of her will the plaintiff was made the residuary legatee and devisee. Included in the residuary estate were some fractional interests in some patented and unpatented lode mining claims in the Blue Ledge Mining District in Wasatch County, known generally as the Levary group. Her interest was alleged to be 5/16th in the patented claims and about one-half interest in the un-patented claims. There were a number of creditors’ claims, which had to be satisfied out of the residuary estate. 101-3-3. U. C. A., 1943.

On April 2, 1937, before settlement of all creditors’ claims bad been made, the plaintiff, Edgar Curtz, individually and as “administrator” of the estate of Rachel B. Urban, deceased, together with other persons, as sellers, executed a contract to sell to defendant P. C. Reynolds, all of said mining claims for the total purchase price of $25,000. The sum of $22,500' was allocated to the patented claims and $2,500 to the unpatented claims. If Curtz could acquire by distribution from the estate the entire fractional interests which the decedent was said to have owned, his ratable share in the purchase price would have been approximately $8,280. By the terms of said contract the administrators of the estates involved were to obtain confirmation of sale in the estate proceedings. The first payments amounting to $2,200 were to be made by specified times to enable the sellers to clear the title in accordance with a title opinion rendered, and to settle the debts of the estates to prevent the properties from being sold in estate proceedings. The court appraisers valued the interest of said decedent in the mining claims at $5,500.

The initial payments on the contract amounting to $2,200 were made, but apparently nothing was done to clear the record title nor to buy in any of the adverse interests which were made to appear after some investigation. Only about $945 went to apply on the claims of creditors. In 1938 when both Edgar Curtz and E. D. Sorenson were “administrators,” the latter attempted to get Curtz to raise sufficient money to pay the balance of the debts of the Urban estate then amounting to nearly $1,800. On the organization of the Park City Chief Mining Company in 1938, the contract of sale was assigned by Reynolds to said corporation. While Curtz denied he had any knowledge of this assignment, by a letter in 1939 he requested said corporation to make certain payments on his automobile and take credit on the contract. In 1940 the New Park Mining Company which claimed a contract of sale from plaintiff as to four of these same mining claims executed in 1935 or two years prior to the contract of sale of all the claims to Reynolds, instituted action againt plaintiff Curtz for specific performance. E. D. Sorenson, coadministrator, made a number of threats to have a probate sale of the residuary assets to satisfy the claims of creditors unless Curtz raised some money immediately to pay said claims. No sale of such assets could be made without an appraisal within a year if sold at private sale, nor without confirmation of sale by the court.

On July 25, 1940, after some negotiations with defendant Reynolds, the plaintiff executed three instruments and placed them in the possession of defendant Reynolds: (1) A quitclaim deed executed by plaintiff Edgar Curtz, an unmarried man, covering all of said mining claims, but with the space for the name of the grantee left blank. (2) An assignment of all of his rights to distribution of said claims in the estate of Rachel B. Urban, deceased, with the right of the assignee to receive distribution in said estate matter, with the space for the name of the assignee left blank. (3) An agreement signed by plaintiff Curtz and defendant Reynolds whereby it was recited that Edgar Curtz and other joint owners of the Levary group of claims executed an agreement to sell said claims to said P. C. Reynolds, dated April 2, 1937; that Reynolds had done the assessment work on said claims and had paid to Curtz to apply on the purchase price the sum of $2,358; that Curtz was then a defendant in a suit for specific performance brought by New Park Mining Company to compel conveyance of four of said mining claims alleged to have been sold on September 23, 1935; that all performance under said contract of April 2, 1937, was thereby suspended until final determination of said action, and in case New Park Mining Company should prevail, out of the proceeds of sale to the New Park Mining Company Curtz would pay Reynolds all money paid or advanced and that portion of the money expended on said property in proportion to his ownership; provided, that if Curtz should be successful in defending the suit, the parties should continue to be bound by said contract of April 2, 1937. The Park City Chief Mining Company, which was the assignee of said contract of April 2nd, 1937, was not made a party to said agreement. Eeynolds was not an officer of said corporation, and there is no evidence that said corporation was advised as to said agreement nor that it authorized Reynolds to make such an agreement.

There is an irreconcilable conflict in certain particulars in the testimony as to the conversations which led up to the signing of these instruments, and which followed their execution and placement in the possession of Reynolds. The testimony of Curtz is that while he knew about some of the debts of the Urban Estate remaining unpaid, and the fact that he was still a coadministrator, he did not recall that Sorenson had threatened to have a probate sale of the interest owned by decedent in these mining claims to pay the debt. He claimed that these instruments were made so that if he won the suit they could be returned to him unused, but if he lost the suit, then Reynolds was to negotiate with the New Park Mining Company for as good a bargain as possible as to all of these claims. He testified that Reynolds was not to fill in the name of the grantee or assignee without the express consent of Curtz himseslf. As far as the record shows, Reynolds was acting as agent for Curtz.

Reynolds testified that the instruments were given to him to enable him to raise the money to pay off the debt of the estate. The decree settling the final account in the estate shows that the residuary estate which otherwise would have been distributed to Curtz included property in addition to an interest in the mining claims. Reynolds also claimed he was told by Curtz he could deal with anyone, and could fill in his own name if he raised the money to pay off the debts. He further testified that nothing was done to clear the title to the mining claims; and that he had learned that instead of acquiring the adverse or conflicting interests essential to enable the sellers under the contract of April 2, 1937, to give an acceptable warranty deed and to eliminate the defects complained of and which he claimed Curtz and his attorney had agreed to clear up immediately, some of those outstanding fractional interests had been sold. From the statement made by counsel for Curtz, it appears that New Park Mining Company purchased some of the outstanding interests, and from other evidence introduced it appears that New Park Mining Company attempted to obtain for $150 an administrator’s deed to the four claims on which it brought suit against Curtz. Reynolds attempted to show that Curtz had been paid everything he was entitled to receive in view of his failure to clear the record title.

After Reynolds received the instruments above mentioned on July 25, 1940, he negotiated with the officers of Park City Chief Mining- Company. Whether any of the officers actually saw that the instruments were executed with the grantee clause left blank does not appear. That corporation as assignee of Reynolds’ interest in the contract of sale dated April 2, 1937, claimed to be a purchaser of the property. It apparently knew of the litigation instituted by New Park Mining Company, and it discovered some of the alleged infirmities in title. It also knew that there was danger that there would be a probate sale of the interests Rachel B. Urban owned in the claims if the debts were not paid. The officers of the corporation accepted Reynolds’ offer to deliver the assignment if sufficient funds were raised to pay the balance of the debts. The officers discussed the matter of the amount of the debts with E. D. Sorenson, the administrator. Before the negotiations were completed, Curtz resigned as an administrator and left for California. The balance of the debts and court costs and counsel fees aggregating $2,028.76 was paid on or before December 4, 1940, by the officers of Park City Chief Mining and some of the stockholders.

The final account of the estate had been prepared in June, 1940, which recited that Curtz had paid the balance of the debts of the estate, and Sorenson, who became the sole administrator, credited all of the money received from the Park City Chief Mining Company by way of Reynolds, as coming from Curtz. Someone filled in the name of Park City Chief Mining Company as the assignee, with a rubber stamp. The insertion was made sometime between July 28 and December 4, 1940’. On the latter date Sorenson as administrator acknowledged receipt of the assignment and it was recorded on the same date. The final account and petition for final distribution was set for hearing and came on for hearing on December 16, 1940.

By the terms of the probate decree the interest which Edgar Curtz would have received in all of said mining claims as part of the residue of the estate as residuary devisee and legatee was distributed to Park City Chief Mining Company by virtue of the said assignment dated July 25, 1940. The balance of the property constituting the residuary estate was distributed to Curtz, including a residence in Park City.

No motion was ever made to vacate, modify or set aside the decree of distribution in the probate matter. By this suit Curtz seeks not to overthrow the decree, but he seeks to have the court treat Park City Chief Mining Company as constructive trustee for him and to have a conveyance of the mining claims made to him. The lower court granted judgment and directed the mining company to convey the mining claims to Curtz, quieting title in Curtz, subject to the provision that it would not pass on the question as to the rights under the contract of April 2, 1937. The court took the position that the mining company as assignee of the purchaser was put on notice of the fact that the space for the name of the assignee was left blank when the instrument was executed for the reason it was subsequently filled in with a rubber stamp, and that it had a duty to inquire as to the authority of Reynolds to enter into such a transaction which would reduce the purchase price payable to Curtz. The decree does not allow the appellant min ing company any charge, lien or claim for the money it advanced to make settlement of the estate possible nor which made distribution of other assets to Curtz possible.

The appellant corporation on this appeal attacks the proceedings, judgment and decree on four grounds: (1) That plaintiff attempts to make a collateral attack by this action on the probate decree distributing the property, without a legal or equitable right to do so. (2) The findings are contrary to the evidence and the judgment is contrary to the evidence and law. (3) The assignment as delivered through the agent of Curtz was a valid instrument and a valuable consideration was paid therefor. (4) Even if plaintiff could maintain such an action, he is not entitled to set aside the assignment without making restitution of the funds paid to settle the debts of the estate which constituted a lien upon the residuary assets to which he was entitled to distribution only after such charges were paid.

The question of collateral attack on the probate decree need not be considered for such decree is recognized and its validity to pass title not questioned. The fact that the distributee may have received it for certain purposes, one of which was to reconvey, on the happening of certain conditions, does not affect the validity of the decree. The court will construct a trust in the distributee to accomplish the understanding of the parties. A part of the understanding, knowledge of which the Mining Company must be deemed to have been charged with, is that the property was to be conveyed back to Curtz upon his prevailing in the Park City suit.

We think there was substantial evidence to support the findings. The decree should, however, be modified so as to give the appellant a lien for such moneys as it advanced to pay the debts of the Urban estate, the trial court to determine the amount of the same.

The rights of the appellant under the contract of April 2nd, 1937, and the status of that contract were not affected by the decree of the lower court. The decree expressly refrained from any determination “as to whether it was binding or in force and effect and what rights the parties to this action have under said- contract.” This was correct. The status of the said contract or the rights of the parties under or in reference to it were not in issue in this action and are not before us for review. That part of the decree which reads “and that the defendants herein, and all persons claiming through or under them be, and they are forever barred, restrained and enjoined from asserting any right, title or interest in the interest or ownership of plaintiff in and to the above described property after the said five day period hereinabove specified” should be omitted. The action was not one to quiet title and if the contract gives the appellant or Reynolds any rights in the property they must not be barred from asserting them.

In addition to impressing a lien upon the mining claims, the decree should provide that if it should in a proper action be determined that the contract of sale dated April 2, 1937, was in force at the time the advances were made by appellant to discharge the debts of the Urban estate, appellant may, if it so elect, have the amount of the lien applied toward payment of the amount of the purchase price found to be due to Curtz. Under such circumstances Curtz may not tender the money for which the lien is given and refuse to allow appellant to have it applied on the contract so as to have an excuse for forfeiture which otherwise might not exist. The granting of such lien is not to operate to impair any right of action appellant as assignee of the purchaser might have for breach, if any, of said contract of sale or for the enforcement thereof.

The question of whether if appellee proceeds to exercise any claimed right of forfeiture because of failure to pay installments in the time provided by the contract, the appellant may show justification or excuse for failure to make the payments in time because of its supposition that it had full title to the mining claims, is of course also open to determination under the general statement above made that rights under the contract are not in this action decided.

The case is remanded to the lower court for further proceedings as hereinabove directed. No costs allowed.

WOLFE, C. J., and LARSON and WADE, JJ., concur.