Carter v. Gray

Riddick, J., (after stating the facts.) This is an appeal from a judgment of the chancery court of Marion County ordering a specific performance of a contract to convey land. The facts, briefly stated, are that in 1902 the plaintiff, John G. Gray, and Ñ. E. Bennett, were the owners of a mining claim in Marion County, Arkansas, known as' the Blue John lode claim, which covered twenty acres. This claim was located in 1887. In-1891 Gray and seven others located a mining claim known as the Blue' John placer claim. This Blue John placer claim covered 160 acres of land, and included the 20 acres of the Blue John lode claim, owned by Gray and Bennett. Afterwards the appellant, W. Frank Carter, of St. Louis, became the legal owner of the Blue John placer claim, with the exception of the one-eighth interest held" by Gray. Although the legal title to this interest m the Blue John placer claim was held by Carter, he held it as trustee and agent for other parties. As Carter lived in St. Louis, he and the parties for whom he acted had another agent, Powell, in Marion County, Arkansas, to look after and perfect the title to this and other mining claims. In order to carry out this purpose, Carter, as the legal owner of a part of this claim, executed and delivered to Powell a power of attorney, which is set out in the statement of facts, and which authorized Powell to make application for patents, sign papers and make affidavits in the name of appellant Frank Carter, and do all things necessary to secure patents. He was also authorized, in case of an adverse claim, to employ counsel and do whatever might be necessary to protect the interests of Carter. This agent, Powell, concluded that it would be to the interest of Carter and the others whom he represented to get a conveyance to Carter from Gray of Gray’s interest in the Blue John placer claim. Powell- thereupon, acting as the agent of Carter and those he represented, made a contract with Gray and Bennett that Gray should convey his interest in the placer claim to Carter, and that Carter should procure a patent for the 160 acres as a placer mine, and that when the patent was procured he should reconvey to Gray and Bennett the portion of the 160 acres covered by their lode claim. This arrangement was carried into effect. Gray under this agreement with Powell conveyed his one-eighth interest in the placer claim to Carter, and Powell, acting for Carter and in his name, executed bonds for title to Gray and Bennett, by which he obligated himself, upon the receipt of a patent to the 160 acres of the Blue John placer claim, to convey to Gray and Bennett that part of the tract which was covered by the Blue John lode claim.This 20-acre tract lay in the northwest portion of the 160 acres, the position of which can be better understood by reference to the plat accompanying the statement of facts. The statute of the United States under which mining claims of that kind were patented required that at least $500 worth of improvement in the way of developing the mine should be made on each claim before a patent therefor would be issued. Gray and Bennett, the owners of the lode claim referred to above, had done work on their claim, and by procuring the co-operation of these parties Carter was enabled to use this improvement as a part of the improvement required to be made on his claim. By acting for them in this way he obviated any contest between himself and these owners of the lode claim, and became, in effect, a trustee for them for their interest in this land. In this way Powell, acting for Carter, obtained the patent to the 160 acres in Carter’s name. But, although the patent was obtained in that way for Carter, it seems that Carter and the parties in St. Louis whom he represented had no actual notice of the agreement made by Powell in the name of Carter with Gray and Bennett. These parties in St. Louis, who were represented by Carter and Powell, organized in 1894 a corporation known as the Southwestern Zinc Company, for the purpose of having this property transferred to it when the title was obtained by Carter. Powell was agent of this company also. The patent to the 160 acres of land was obtained by Carter in 1895, and in 1896 Carter conveyed the land to the Southwestern Zinc Company by quitclaim deed for the nominal consideration of one dollar, and the company issued stock to the parties interested in the mining claim for whom Carter had procured the patent to the extent of their interest in the land. The zinc company afterwards refused to convey to Gray and Bennett any interest in the land, and they brought this action against Carter and the zinc company to compel the company to carry out the contract made by Powell, the agent, with Bennett and Gray. The company denied that Powell had authority to make such a contract, and alleged that it was a purchaser for value without notice of the claims of plaintiffs. The defendant also filed a motion to dismiss on the ground that the causes of action set up by Gray and Bennett were separate and distinct, and could not be joined. Pirst, we are of the opinion that there was no misjoinder of actions. By reference to the bond for title executed by Powell in the name of Carter to Gray, it will be seen that Powell agreed that Carter, so soon as he obtained the title to the placer claim, should, upon payment by Gray of his part of the expenses, convey to Gray all that portion of the placer claim covered by the Blue John lode claim. In other words, he agreed to convey to Gray the full 20 acres covered by the lode claim, notwithstanding Bennett was interested in the lode claim. It will be noticed that, as Gray was the owner of a one-eighth interest in the 160-acre placer claim, amounting to 20 acres, he conveyed to Carter the same amount of land that Powell for Carter agreed to reconvey to him. But Powell, acting for Carter, also agreed to convey to Bennett a one-fourth interest in that part of tlie placer land covered by the lode claim. In other words, he agreed to convey to Bennett one-fourth of the same land he agreed to convey Gray. As the contracts made by Powell in the name of Carter with Gray and Bennett, though separate, covered the same land in part, it was proper for both of these parties to join in the action in equity, so that the seeming' conflict between these two contracts could be determined, and the title cleared in one action. The omission of the name of Gray at one place in the deed from him to Carter is a matter of no moment, as it is plain that it was a mere clerical omission that does not affect the validity of the deed in law, much less in equity. Coming down to the merits of the case, as Powell was the agent of Carter, and also of the zinc company, these defendants must be held to have had notice of the means by which he obtained for them the interest of Gray in this placer claim. Gray was the owner of a one-eighth interest in the 160-acre placer claim. At the request of Powell, the agent of Carter, he conveyed this land to Carter under a written contract that Carter would reconvey to him. Carter accepted the deed, and now claims the right to hold the land on the ground that he had no notice of the contract made by Powell. But he had no reason to suppose that Gray was making a gift of this land to him, and, before he accepted the deed, he should have ascertained the consideration 'to be paid for it. If Carter authorized Powell to acquire title to the mining claims and accept deeds for the same in the name of Carter, then notice to Powell was notice to Carter. So we think that it is plain that he must be treated as having notice of this contract made by Powell with the plaintiffs. If he had notice, then the parties whom he represented must be held to have had notice; and if they had notice, the zinc company formed by them for the express purpose of having Carter convey these lands to it had notice. Parties affected with notice of that kind can not escape the consequences thereof by forming a corporation and having their agent convey the land to the corporation and then set up that the corporation is an innocent purchaser for value. These parties were the officers and agents of the corporation, and notice to them was notice to the corporation. If the case turned solely on the authority of Powell to bind his principal by a contract of the kind which plaintiffs seek to have performed in this case, we might hesitate to hold that he had such authority under the power of attorney executed by Carter to him. But the contract, so far as plaintiffs are concerned, has been executed, and defendants have accepted the benefits of it. Whether their agent had the authority to make the contract or not, equity will not permit these defendants to accept the benefits of this contract, and at the same time escape its burdens. But for this agreement made with plaintiff, Carter could never have procured the legal title to this claim, formerly owned by plaintiffs. It was to the mutual benefit of these parties that the legal title of this land should be conveyed to Carter. But he held it in trust as well for Gray and Powell as for the other owners, and we see no reason why he and the zinc company should not be made to carry out the contracts made by Powell with Gray and Bennett. The only question as to which we have felt some doubt is whether this contract which is asked to be enforced was not one in fraud of the rights of the Government. The price required by law to be paid the United States for a patent to a lode claim is five dollars per acre, while the price for a patent to a placer claim is only half that amount. For this reason counsel for appellant say that, if plaintiffs’ statements are true, then this land was conveyed by Gray to Carter for the purpose of having him procure a patent to it as a placer claim, and thus cheat the United States out of $2.50 per acre. But this contention can not be sustained, for the patent to Carter expressly excepts any lode or vein.of valuable metal known to exist within the limits of the grant previous to November 2, 1902. As the Blue John lode claim was located in 1887, it does not seem that the rights of the United States to any lode or vein then known to exist within the bounds of the tract conveyed by this patent would be affected thereby. Again, Gray had an interest, not only in the lode claim, but in the placer claim also. If we disregard entirely the rights of Gray and Bennett that are founded on the lode claim, still, as Gray was a joint owner with Carter of this placer claim, there is certainly no reason why the defendants should not be compelled to perform their contract with Gray. But the contract with Gray calls for the full 20 acres claimed by plaintiff. If Gray is willing to turn over one-fourth of the 20 acres to Bennett, defendants are not thereby injured, nor are the rights of the Government in any way affected. In fact,' the government is not complaining, and, so far as the evidence shows, the motives of the parties in making this contract were legitimate and proper. On the whole case, we are of the opinion that the decree was in accordance with equity and right. It is therefore affirmed.