Florence-Goldfield Mining Co. v. District Court of the First Judicial District of the State of Nevada

By the Court, Norcross, J.: This is an original proceeding in certiorari to review an order, made in the respondent court by the respondent judge, requiring the petitioner herein to pay into court the sum of $117,935.96, in the case of Florence-Goldfield Mining Company, a Corporation, Plaintiff, v. Little Florence Mining Company, a Corporation, Defendant. At the time of the bringing of the action in the lower court the defendant corporation, Little Florence Mining Company, was the owner of a mining lease upon the property of the plaintiff corporation in the Goldfield Mining District. Plaintiff brought its suit against the defendant for the sum of $50,000 damages, because of the alleged violation of the terms of the lease. To this complaint the defendant filed an answer, denying all of plaintiff’s allegations of damages, and set up a cross-complaint, alleging: "That on the 11th day of April, 1908, and prior to the filing of the complaint in this action, the plaintiff had in its possession and under its control about the sum of $100,000 belonging to this defendant, as its proportion of the proceeds derived from the sale of ores extracted by the defendant from the premises included in the Little Florence lease, prior to said date, and which by [397] the terms of said lease the plaintiff should have paid over to the defendant.” Thereupon the defendant corporation noticed, a motion to require the plaintiff to pay into court the sum of $100,000, "the subject of this action.” The motion was based upon the following grounds: " That it appears upon the face of the pleadings in said action that said defendant and cross-complainant was operating a lease upon the property of plaintiff; and that, under and by virtue of said lease, and in compliance with the covenants thereof, had extracted large quantities of ore, which were delivered to plaintiff, and that plain tiff is holding as trustee defendant’s and cross-complainant’s proportion of said proceeds, amounting to the sum of one hundred thousand dollars ($100,000) Before hearing upon this motion the plaintiff, by leave of court, filed an amended complaint, in which it was alleged that in violation of the terms of the lease the defendant had removed the ground underneath and within five feet of certain levels, and within ten feet of the main working shaft. The complaint further alleged: "* * * That the ground underneath said levels and around said working shaft so wrongfully removed by said defendant contains or did contain deposits of gold-bearing ore of great value, and the proceeds derived from the sale thereof was and is now the sole property of the plaintiff under the terms and conditions of said lease, and said defendant has no right, title, or interest therein or thereto; and plaintiff alleges that a considerable portion of the proceeds of the ore broken and raised from said premises by said defendant, which has come into the hands of the plaintiff and is now held by it, was derived from ore so wrongfully taken by said defendant from said ground. Plaintiff further alleges that under the terms and provisions of said lease said defendant was required to work said property in a thorough and workmanlike manner, looking to.the preservation and further development of. same as a workable mine; but plaintiff avers that said defendant has not so worked said property, but, on the contrary, has disregarded said provisions, and violated the terms of said lease or contract, and has worked and managed said mine and the various tunnels, drifts, shafts, or- excavations in such a reek398 less and careless manner as to injure and damage the same and to seriously diminish the value of plaintiff’s property as a workable mine. That the plaintiff has been damaged by the wrongful acts complained of in the sum of one hundred and twenty-five thousand dollars ($125,000);’ By stipulation of the parties the answer and cross-complaint of the defendant was considered as the answer to the amended complaint. By the terms of the lease, a copy of which was made a part of the complaint, it was provided that the lessee was " to not ship any ore, but to deliver all ore broken and raised from said mining property or premises to the lessor, the shipping ore to be sacked by and at the expense of the lessee, and all ore, whether shipping or milling ore, to be shipped or milled by and under the control and direction of the lessor, who, after deducting the expense thereof, shall render and pay to the lessees 80 per cent on $50 and under, and oh ore over $50 value, 75 per cent of the proceeds of the net smelter or mill returns thereof, less the reduction hereinafter provided for; the lessee retaining the balance of such proceeds. The net smelter or mill returns shall be the assay value of the ore returned by the mill or smelter, with deductions, less the cost of transporting the ore from the mine to the mill or smelter and the charge of milling or smelting the same. Said ore to be shipped or milled within a reasonable time after having been brought to the surface and prepared therefor, and all ore broken and raised and remaining undisposed of upon the determination of this lease, that cannot then be profitably smelted or milled, shall be and become the property of the lessor, unless the lessees within ten days from the date of said determination request the lessor, in writing, to have said ore smelted or milled.” Upon the hearing of the motion it was admitted by the plaintiff, petitioner herein, that it had in its possession the sum of $117,935.96, representing the amount of receipts from ore from defendant’s lease shipped by the plaintiff in accordance with the provisions of the lease, and which amount would have been the defendant’s portion of the proceeds, had all provisions of the lease been complied with. [399] The order in question in this proceeding is based upon the provisions of section 145 of the civil practice act (Comp. Laws, 3240), which reads as follows: "When it is admitted, by the pleading or examination of a party, that he has in his possession, or under his control, any money or other thing capable of delivery, which, being the subject of litigation, is held by him as trustee for another party, or which belongs or is due to another party, the court may order the same, upon motion, to be deposited in court, or delivered to such party, upon such conditions as may be just, subject to the further direction of the court.” It is contended by counsel for petitioner that the court had no jurisdiction to make the order in question, for the reason that it is .not only not admitted that it has the sum of money in question in its possession, which it holds as trustee for the defendant corporation, but, on the contrary, it alleges that the defendant i's indebted to it in an amount larger than the sum directed to be paid into court. The moneys which the plaintiff corporation from time to time received as the proceeds from ore extracted from defendant’s lease, after deducting its royalty therefrom, must be regarded as being held by it as trustee. The ore extracted from the leased premises was the property of the lessee, subject to the royalty upon the same. By the terms of the lease this ore was required to be delivered to the plaintiff corporation, which shipped it in its name to the ore reduction works, received the proceeds'thereof, deducted the expense of treatment, other proper charges, its royalty, and the balance was to be paid to the lessee to whom in equity it belonged. » Of the $117,935.96, which the plaintiff in the lower court admitted would be due the defendant from the proceeds of ore from the lease, providing the lessee had complied with the terms and conditions of the lease, a portion of it is claimed to be held to recoup the plaintiff for damages alleged to be due plaintiff for violating the terms of the lease as to the manner in which the leased premises should have been mined. Another portion of it is claimed to be the absolute property of the plaintiff, for the reason that it is alleged to be from ore which the defendant extracted from ground [400] reserved from the lease and belonging exclusively to the plaintiff. Plaintiff has no right to retain in its possession trust funds belonging to the defendant, in order that he may offset against such funds an amount of damages alleged to be due it for a violation of the terms of a contract; for the reason that a debt accruing to one in his individual capacity cannot be set off against a debt due from him as trustee. (First Nat. Bank v. Barnum, 58 Mich. 124, 315, 24 N. W. 543, 25 N. W. 202, 55 Am. Rep. 660; Abbott v. Foote, 146 Mass. 333, 15 N. E. 773, 4 Am. St. Rep. 314; Poe v. Snowden, 70 Md. 383, 17 Atl. 377; Owens v. Barroll, 88 Md. 204, 40 Atl. 880; Dillon v. Insurance Co., 44 Md. 386; Tagg v. Bowman, 99 Pa. 376; Peters v. Bank, 86 Tenn. 224, 6 S. W. 133; 25 Am. & Eng. Ency. Law, 533; 28 Am. & Eng. Ency. Law, 1016; Lewin on Trusts, p. 285; Perry on Trusts, sec. 863.) So far as plaintiff’s claim is concerned, we do not think it would affect the power of the court to direct the payment into court of an amount of money admitted to be held in trust. If it were contended that all of this money was from the proceeds of ore, which ore yms itself the property of the plaintiff, because extracted from ground expressly reserved from the lease, the ease would be different; for then there would be no admission that any of this money was held by plaintiff as trustee for defendant. The allegation in plaintiff’s complaint in this regard is as follows: "Plaintiff alleges that a considerable portion of proceeds of the ore broken and raised from said premises by said defendant, which has come into the hands of the plaintiff and is now held by it, was derived from ore so wrongfully taken by said defendant from said ground;’ The allegation is very indefinite as to what amount is claimed to rightfully belong to plaintiff as the proceeds from ore taken from its ground; but as not all of it, nor any specific amount, is so claimed, there is, in effect, an admission that all of it, less some indefinite portion so held by plaintiff, belongs to defendant. This virtual admission was, we think, under the provisions of the statute quoted, sufficient to give the court jurisdiction to make the order sought by this proceeding to be annulled. (Daniell’s Chancery Pl. & Pr. p. 1779.) If there was any error in the [401] order made, such order could not be considered in this proceeding; for the only question that can be determined upon certiorari is that of jurisdiction. The court having jurisdiction to make an order in the premises, the writ is dismissed. Respondents are entitled to their costs.