Hardenbergh v. Bacon

33 Cal. 356

• Court: California Supreme Court
• Decided: October 15, 1867
• Status: Published

Opinion

By the Court, Rhodes, J. :

The objections of the defendants to the plaintiff’s evidence do not require particular consideration. The evidence relating to the intended gift of the mining ground by Charles W. Hastings to his mother, the plaintiff; and that in respect to the delivery of the possession of the mining ground .by J. W. Hastings, the father of Charles, to Dunn, for the plaintiff, though it may not have shown title in the plaintiff, was sufficient and competent to show the nature of the plaintiff’s claim to the property—the matter to which the alleged agency related. "

We will first notice the former recovery, which the defendants rely upon as a bar to this action. In that action the present plaintiff, uniting with her husband, set up the same gift and transfer of the possession of the mining ground as are alleged in this, charged that the legal title was in J. W. Hastings, that Bacon & Woodruff fraudulently acquired the title from him, and it was sought to hold them as her trustees. The defendants demurred on the ground that the Court had no jurisdiction of the subject of the action, and that the complaint did not state facts sufficient to constitute ■ a cause of action. The demurrer was sustained, and the plaintiffs refusing to amend, final judgment was given for defendants. It is unnecessary to enter into an analysis of the facts in that case, or to inquire into the effect of a judgment on demurrer to the complaint, when there is no issue of fact; and it need only be observed that the agency of Bacon was not alleged; and as it was not alleged it could not have been proven by the plaintiff or found by the Court. Had that fact been stated it would have essentially changed the action. In this action the agency is the leading fact, and if that fact had not been averred, or, if averred, had not been found by the Court below, the plaintiff must of necessity have failed. Although many of the facts in the former action are identical with those in this, the causes of action are not the same, and, therefore, the former recovery is no bar to this action.

The point upon which counsel have bestowed the most labor, is that of the alleged agency of Bacon. The Court found that he took upon himself the agency of the mining ground for the plaintiff, and promised to take care of her interests, pay assessments, if any became due, and see that she was not swindled out of her interests in the mining ground. There was much evidence produced by each party upon this .point, and the conflict is very apparent. If the Court believed the oral testimony on the part of the plaintiff, the finding, of the fact of the agency was inevitable; but if on the contrary the greater credit was given to the testimony of Bacon, the finding must have been against the alleged agency. All questions relating to contradictions among the witnesses, the degree of credit to be given to each, and the probability of the plaintiff’s story, when tested by the acts, delays and conduct of the plaintiff as well as of Bacon, are all for the Court below. An agency of the character alleged, may be created by parol, and may be proven in the same manner. The evidence should be clear and satisfactory, but when the agency is fully and explicitly testified to, we cannot say that it is not clearly and satisfactorily proven because there are contradictions or disagreements among the witnesses.

The subject matter of the agency was the plaintiff’s claim to the mining ground. Where property, or the claim to property, is the subject to which the agency relates, we do not understand it to be requisite that the principal must hold a perfect title, or an equitable title that will enable him to acquire the legal title; and we know of no rule that will prevent the parties from creating an agency which has for its subject matter a mere naked claim to property. If a perfect title will suffice, and a mere claim will not, where is the line to be drawn between the several grades and characters of title, on the one side of which they will, and on the other side they will not, amount to enough to support the agency ? The agency may be created for the very purpose of procuring title, either legal or equitable, and so it may be for the protection of an asserted title, whether well founded or not. Otherwise, the rule forbidding the agent from acquiring an outstanding title for his own use never could have any application when the principal held a legal title; for if the outstanding title was not the true one, its acquisition by the agent could be of no possible injury to the principal; and if it was the true title, the principal could not complain, for his title, not being the true title, amounted to no more than a mere claim.

The principle is elementary that an agent who is informed of a defect in his principal’s title to land, is not permitted to acquire a title for himself, but will be held as a trustee for his principal. This is not denied by the defendants, but several objections are raised to its application in this case, some of which will be noticed. It is said that the purchase was not in the line of the agency—that as Bacon was not her agent to purchase the outstanding title, he cannot be held as her trustee in respect to such title when purchased in his own name. The prohibition is not limited in that manner. The agent is not merely forbidden to perform in his own name, and for his benefit such acts as he is authorized to perform in the name of his principal, but he cannot act on the subject of the trust for his own benefit. Here the authority committed to the agent and his undertaking was, among other things, as found by the Court, to take care of his principal’s interest in the mining ground; and as any act he might do in acquiring title would have a direct bearing on her interest, she could at her election treat him as her trustee in effecting the purchase and talcing the title. (See Ringo v. Binns; 10 Pet. 269; Story on Agency, Sec. 211 and notes.)

The doctrine that when the alleged agency is created by parol and is denied by the agent, and no part of the purchase money is paid by the plaintiff, the Court will not treat the agent as a trustee, holding the title for the plaintiff, is applicable to a case where it is claimed that the agent’s authority was to effect the purchase in his own name, but in trust for his principal. The action to compel a conveyance in such case cannot be maintained, “ because that would be decidedly in the teeth of the Statute of Frauds.” (2 Sto. Eq. Juris., Sec. 1,201 a.) It has no bearing upon a case like the one at bar, where the agency is to take care of the interests of the principal in the given property. Such agency, as we have remarked, may be both created and proved by parol, and when the agent—it being satisfactorily shown that he is such agent—in violation of the confidence reposed in him, and of his duty, purchases for his own use an outstanding or adverse title to the property, the principal does not proceed against him as his agent to purchase the property, but on the ground that he occupied such a position of trust and confidence in reference to his principal, that his purchase was fraudulent as- against the principal, and therefore may be avoided, or he may at his election treat the agent as his trustee and claim the benefit of the purchase. There is no question in this case in reference to rights growing out of a trust reposed in the agent, to purchase the property in his name for the benefit of the principal, for that trust was not created even by parol; nor any question about the payment of the purchase money by the principal, for that would be inconsistent with the theory that the purchase was in violation of the agent’s duty.

The Court found that the defendants induced J. "W. Hastings to convey to them the mining ground in question. The defendants contend that the evidence shows conclusively that the purchase was made by Woodruff alone, and although we think the evidence tends more strongly to that conclusion, it will make no difference in the final result, according to the view we take of the case. After the title was taken by them, they held as tenants in common, and there being nothing to indicate a disproportion .in their shares, each will be deemed to hold the undivided half. ■ They were partners in their dealings in mining land and stocks, but the title to the mining land did not vest in the partnership, but in the individuals composing the-firm. The title could be controlled, and the property itself sold or otherwise administered in a Court of equity for the benefit of the partnership, but until such a disposition is made the legal title remains where their conveyances placed it. The result will be the same, so far as the title to the undivided half that passed to Bacon is concerned, whether the negotiation was in fact made by both partners or by Woodruff alone, for if made by him, he was merely the agent of Bacon in respect to the half conveyed to Bacon, and Bacon will be considered for every purpose as the purchaser of that half of the property. That portion of the title, upon the execution of the conveyance by J. W. Hastings to the defendants, became subject to the trust in favor of the plaintiff, she being entitled under the principles of equity in reference to the agency, already announced, tó treat him as her trustee, holding the title for her use.

Woodruff occupies a position quite different from that of Bacon. He was neither actually nor constructively the agent, of the plaintiff. If the interest acquired by him can be reached and controlled for the benefit of the plaintiff, it must be worked out by means of the notice to him of her rights in the property. Counsel have discussed at some length the question of notice of the agency of Bacon, but the question has no bearing on the case. He stood in reference to the whole matter of the agency—both the trust and the property to which it related—as would any other third person. The partnership had no connection with the agency, and could not impose any disability upon him in respect to the property; and as any other person, although having full knowledge of the agency, might purchase the outstanding title to the property or any interest therein, Woodruff was entitled to do the same. The only notice that would affect and bind him would be the notice of the right or title of the plaintiff to the property. The Court found that Woodruff “ had knowledge of the said agency, assumed by his partner Bacon for plaintiff, and also had knowledge of plaintiff’s title to said Belcher ground.” It is not found what title she had, but in the findings the evidence is stated showing what was said and done in reference to the property, and upon those matters of evidence the plaintiff’s title, at the time of the creation of the agency, depends. It hence becomes necessary to ascertain the nature and extent of the plaintiff’s title at that time.

Both parties concede that the claim to mining ground in Hevada, acquired by location, purchase, etc., is treated as real estate, and is subject to the laws governing property of that character. The wish or desire expressed by Charles W. Hastings, shortly before his death, that this property should go to his mother, the plaintiff, was ineffectual to pass the title, and his subsequent death, without having revoked that desire, did not serve to add anything to the words expressed, as a means of passing the title. The title could pass only by deed or last will and testament. The assent of J. W. Hastings to the desire expressed by his son, did not lend it any strength in law, for he then had nothing in the property; and if he had then held any interest in the property, his verbal assent to the wish expressed by the son that the title should be transferred to his mother would have been a mere nullity. And any statement of his, subsequent to the death of his son, to the effect that the property was the plaintiff’s, or that he intended that she should have it, or that he would comply with the wish of his son in that respect, was without effect upon the title, either legal or equitable. Hpon the death of Charles the title passed by descent to his father, and this was held by him at the time of the appointment of Bacon as the agent of the plaintiff, unless the matters that transpired between Mm and Dunn, as the plaintiff’s agent, passed some title or interest to the plaintiff.

The Court found “ that the said J. A. Dunn, in company with the said J. W. Hastings, went upon the Belcher Mining Claim, in the month of April, 1862, and from thence to the house of Mrs. Barstow, near said claim, and that said J. W. Hastings then and there delivered the deed from himself to Charles of this ground to the said Dunn, saying: I give you possession of forty feet of, this ground for Maria, (meaning plaintiff;) Charley left it for her, and she shall have it.’ Considering the mining ground as real estate within the proper meaning of that term, it is beyond all question that that ceremony and those words were incompetent and insufficient to pass the legal title. In this State it has frequently been held that the title to a mining claim would pass by a verbal sale accompanied by an actual transfer of the possession. (Table Mountain Company v. Stranahan, 20 Cal. 198; Gatewood v. McLaughlin, 23 Cal. 178; Patterson v. Keystone Mining Company, 23 Cal. 576.) It is impossible to reconcile those cases with the Statute of Frauds, except upon the ground taken in the leading case, that “ rights resting upon possession only, and not amounting to an interest in the land, are not within the Statute of Frauds, and no conveyance other than a transfer of possession is necessary to pass them.” The doctrine of those cases, however, has no bearing, when the interest held in the mining ground is considered as real estate.

The plaintiff’s counsel claim that she held some title in the premises, but they do not undertake to define it, and they speak of the defect in her title, but do not state in what the defect consisted; nor did the Court find what title was in her, nor in what respect it was defective. All the title she held, came to her through the acts and declarations of J. W. Hastings at the time he delivered to Dunn the deed he had executed to his son. We do not understand the plaintiff as claiming that thereby the legal title was transmitted to her; for if such was the case there would be no reason in saying that there was a defect in her title. And besides this, by claiming that the legal title then passed, and that the defendants had notice thereof at the time they took their deed from J. W. Hastings, she would show that she was entitled to no relief in this action, so far as the title was concerned; for if the defendants purchased with notice, they took nothing by their purchase, and their deed would be simply void. Did those proceedings on the part of J. W. Hastings pass to her the equitable title ? We cannot see how this can be claimed. It certainly was not a contract to be enforced against him, for there is an absence of a consideration, and of any promise, express or implied. There was nothing in the transaction affecting his conscience that a Court of equity could lay hold of, to enforce from him either the legal title, or the proceeds and profits of the mining ground, and it being purely voluntary on his part, the Court would not confer upon her any other or greater rights than he had bestowed. The utmost that can.be claimed for her is a license, which, until revoked, would justify her entry and receipt of the profits. She would possess no greater right or remedy against a third person, bearing no fiduciary relation to her, who took the title from J. W. Hastings, than against Hastings, had he not conveyed the title. She could not demand of him a conveyance of the legal title, nor could she claim the possession or enjoyment of the property, for any time, against his will. There was no title in the plaintiff of which Woodruff can be said to have had notice, and on the case before us, it is impossible to see how he can be charged as her trustee. The title to the undivided half of the mining ground stands unaffected by the agency assumed by Bacon, or the rights and duties growing out of that relation.

The defendents contend that there can be no recovery, in this case, at least that if there is to be any recovery, it must be for only a small portion of the stock sued for, because ' they say that the Hastings title in a great measure failed, that the stock issued by the Belcher Company on this ground was mostly absorbed in a compromise and settlement of the Murphy title. The evidence upon this point is quite voluminous, but either the parties have not been fortunate in eliciting the testimony with precision and clearness, or the company did not make its arrangements as to the reservation and the subsequent delivery of the stock with the certainty that should characterize such a transaction. We gather from the record, that the company reserved thirty-six feet to meet the claim of the holders of the Murphy title, and the reservation was made against the defendants, as the holders of the last purchase from J. W. Hastings. It also reserved forty feet to answer the claim of the present plaintiff, and this was of course the forty feet in controversy. The President of the company states that the company held the last purchase responsible for both claims, because they did not wish to make a double reservation. The last purchase from Hastings, though calling for eighty-five feet, was held good for only fifty feet, and that was insufficient to respond to both claims, should they be held good. After the termination of the suit above referred to, of Hardenbergh and wife against the present defendants and Hastings, the defendants gave a bond of indemnity against the claim of the plaintiff, and the stock reserved on account of that claiih, was issued to the defendants. An action was commenced by the claimants of the Murphy title against the Belcher Company, and they obtained judgment in the District Court of ¡Nevada, and while the cause was pending an appeal to the Supreme Court of that State, a compromise was effected with the claimants of the Murphy title, by which it was agreed, that Bacon and "Wood-ruff should give them, in satisfaction of their claim, thirty feet of Belcher stock. That stock was immediately issued to Bacon and Woodruff, and was by them delivered to the claimants of the Murphy title. The question arising at this point is, were those thirty shares of stock a parcel of the forty shares issued upon the mining ground in controversy ? It does not become material to inquire either as to the validity of the Murphy claim or upon what portion of the mining ground originally held by J. W. Hastings it became a charge —whether it should have been satisfied out of the fifty feet passing under the deed of Hastings to the defendants, or that which they held through the deed of Hastings to Kelly, or out of both—for the responsibility of the defendants, or either of them, growing out of their connection with the mining ground in controversy, is measured by what they received in consideration of their conveyance of the ground rather than what they were entitled to receive. From the testimony of the President and Secretary of the company, it appears that the bond of indemnity was filed and the largest part of the stock issued to the defendants on the 1st of September, 1864, and the balance of the forty feet was issued ¡November 26th, 1864. The compromise with the claimants of the Murphy title was effected and the thirty feet of stock issued to the defendants, and by them delivered to tire claimants of the Murphy title, in October, 1864. The thirty feet of stock could not therefore have been parcel of the forty feet representing the ground that Hastings took by inheritance.from his son. The Court below did not err, we think, in finding that the Hastings title did not fail, and that the Belcher Mining Company did not recognize any adverse claim as superior to the title of the defendants, and did not reject the title of the defendants.

We see no merit in the plaintiff’s appeal. The plaintiff ' seeks a recovery of the stock, and if that cannot be had, that she may recover the value thereof. Since the issue of the stock the defendants have always had forty shares of stock; and as one share is of the same value and will serve the same purposes in every respect as another, it is of no conceivable interest to the plaintiff to have the particular stock. She is not injured by the transfer of this stock if the requisite amount of stock is transferred to her.

It follows, from the views above expressed, that the decree should have been, that the plaintiff is entitled to a transfer of twenty instead of forty shares of the capital stock of the Belcher Mining Company, together with the dividends paid thereon; and it is ordered that the cause be remanded, with directions to modify the decree accordingly, and to make such orders in reference to the dividends accruing since the entry of the decree as may be meet and proper.

Mr. Justice Sawyer did not express an opinion.