The San Francisco call., 1896-03-30
Property From Which $I3,ooo,ooo
in Yellow Metal Has
Been Taken.
JUDGE PREWETT IN CONTROL.
Interesting History of Bitter Legal
Fight Dating Back to Twelve
Years Ago.

OROVILLE, CAL, March 29.-The we'll
known Spring Valley hydraulic mine at
Cherokee Flat, whose big mortgage of
$3.50 900 was ordered foreclosed by Judge
Prewett on Friday, after eight years of
bitter fighting on the part of the Bank of
California and Rideout & Smith, is the
only mine in California that has ever
been run by a court of equity. Through
application made by the bondholders last
November Judge Prewett appointed re-
ceiver for the mine, thus taking it out OF
the control of the banks, where it had been
so long.
The Judge appointed for the responsible
position of representing him at the mine
close personal friend, w. J. Whitcomb of
Colfax. Whitcomb, under orders of the
court, has absolute charge of the mine.
While not working it himself the receiver
has made contracts with third parties for
the leasing and working of various parts
of the "worked over" portions of the mine
upon an agreed royalty. He also super
vises the maintenance, patrol and opera
ton of the 100 miles of bitches, fumes and
pipes owned by the company, and gener-
ally has the care of the large interests at
stake covered by the big mortgage.
The appointment of the receiver was not
secured by the bondholders without
hard fight, the two banks which have been
fighting the validity of the bonds making
the claim that for a court of equity, in
which capacity Judge Prewett sat in the
case. to assume judicial charge would vir-
tually amount to usurpation. Attorney
Brakeman, however, as counsel for the
a Il re UT "a
court alleging gross negligence on the
part of the agents of the Bank of Califor-
MIA, which had been for six years in pos
session of the mine. In support of his affi-
davit Attorney Brakeman declared to
Judge Prewe.t that the fumes of the mine
had all been ripped out, that many of the
''chiefs" had been sold and that Attorney
c. w. Cross, one of the lawyers in the case,
had Jumped one of the most valuable
portions of the property at the mine.
The receiver was appointed upon the
presentation of these atfidavits, and the
mine has since been run by the receiver,
under the direction of the court. 1t is not
expected that there will be any contest of
the claim by Mr.. Cross, as the lawyers
hold that the latter has no legal standing
in the case.
The history of the protracted litigation
dates back over twelve years. In 1880 the
New Y York Mining Development Company,
headed by Senator A. B. Dorsey, pur-
chased the property. The price paid was
$500, 900 in cash. One hundred and fifty
thousand dollars in bonds was sold. Later
the company became indebted to the Bank
of California and Rideout & Smith for
$4,000.
The attempt to defeat the bonds fol-
lowed. The banks claimed that there were
technical informalities in the issue of the
bonds. and, after raising that question
concerning their validity, sold the entire
property, including the vast system of
bitches and canals, bidding everything in
for the amount of their judgment. Owing
TO the uncertainty regarding the bonds,
no one else cared to bid at the sale. Since
then the fight has been between the
banks and the bondholders.
At one time an attempt was made to
compromise the suit. The bondholders,
while claiming that the banks had full
knowledge of the mortgage at the time
they made advances, and that if poor
judgment was shown, they, and not the
innocent holders of the bonds should
stand the loss, agreed to q reorganization
plan. 1t was proposed that a new issue of
bonds to the amount of 100000 be made
by the mining company, the banks to get
$50, 900 in bonds as the amount of their
debt, and the bondholders to take the bal
ance of $l50,0OO for the $155, 900 owed
them. The late L. L. Robinson, who was
president of the company, made several
trips to New York for conference with the
Eastern bondholders, but when the deal
was about to be consummated, the banks
suddenly broke off all negotiations and
began their attempt to defeat the mort
gage So confident were the banks in
being able to win, that it is said that they
had all the arrangements made at one
time to sell the mine to big company of
mining men.
The mine has q brilliant record as q
gold producer. Upward of S13,OOO,O 600 in
gold has been taken out, with the lead
apparently inexhaustible. No other single
hydraulic mine in California has such a
magnificent showing. The gravel deposit
is over 1000 feet wide and the extent of the
workings is over mile in length.
The price paid for the mine by the New
York company, $500, 900. represented one
of the largest deals of it's kind on the coast.
At present prospecting tunnels show over
81, ,OOO,O 900 to be lying loose In the lead.
The last manager of the mine before the
litigation tied up the property was Louis
Glass, the we'll known head of the tele-
phone interests on this coast.
1t is due to Glass engineering skill that
the present course of the lead is known.
Against the advice of many other engi-
neers. who asserted that the lead had de-
fected into side ravine, where 1T totally
disappeared, he ran long tunnel under
meath Table Mountain, again discovering
the lead, which was found to be richer and
larger than ever. Under the mountain
the lead was probed by numerous tunnels
and was found to be from 800 to 1000 feet
wide and from twenty-five to fifty feet
thick.
1t is in the tunnels that the estimates
show over 81 900 900 in loose gold lying in
the gravel lead ready for extraction.
Glass had all the preparations made for
drifting. but the filing of the suit in fore
closure brought everything to standstill
The long litigation that has followed has
had one beneficial effect. The long delay
has, in the opinion of experts, given the
Glass tunneltime to drain the part of the
lead already tapped, so that to-day drifting
for the million in sight can be commenced
at once.
Mr.. Glass is one Of the holders OF the