Arizona republican., 1898-07-21
HILLSIDE MINING CASE.

HlLLSIDE MlNlNN SaOII.
 This case is attracting such wide spread attention that a detalleo ac- count of the transactions leading up to the suit will be interesting to miners and mine owners everywhere. The Prescott Journal-Miner of last Friday has the following:
 The decision of the court ir the Hill sile mining case, the title of which is c. B. Weiser versus Lawler & Wells, is of interest, not only to people of this section, but to mine owners, min ing brokers and mine purchasers all over the United States. The most common method of selling a mining property is through the deposit of pa pers in eskrow. Very few are pur- chased and paid for outright. This decision, should it be sustained by the higher courts, will make this proceed ing very hazardous one to the seller. While not attempting to criticize the court in it's findings, the following, which is believed to be a fair and i'm partial statement of the facts, will be of interest to all:
 In May, 1892, John Lawler and D. w. Wells, being the owners of the legal title of record to the Hillside mines, in tEis county, arranged to sell them to H. H. Warner of Rochester, N. Y, for S450,0OO, on which Warner paid down s51,G00. An escrow agreement was made between the owners and Charles Cowland, for Warner, fixing the payment of the purchase price in instaliments running one year. In this agreement was a license Io Cowland to operate the property and apply to the payment of the purchase price. This escrow agreement was deposited in bank, with deed attached. Posses sion under the license was delivered to the H. H. Warner Investment com pany, which transferred the possession under the license to the Industrial Min ing and Guaranty company, with full notice of the escrow agreement, in July, 1892. This company delivered the possession under that license to the Seven Stars company, under reso- 1ution Of the Guaranty company, offer ing to sell on deposit in the treasury of S200,000 as working capital, and the payment of $2,S00,000 in cash or stock of the Seven Stars company. This agreement was never expressly ac- cepted by the Seven Stars company Data, consisting of maps of under ground and surface workings and smell ter returns were delivered to Warner, and in September, 1892, Lawler went to New York and there, it was claimed by plaintiffs, though denied by Lawler, that Warner had a conversation with him and he helped to prepare a pros pectus of the Seven Stars company, and knew of it's distribution This prospectus contained the following:
 Objects-This company is formed to acquire, without further expense or lia- bi1ity to stockholders, on October 1, 1892, as going concern and to pro- vide working capital of $200,O00 to further equip and develop the Hillside gronp of mines.
 Also, Title-The titles are unuues- tiOnable, the Hillside and other mines being held under United States patent. This prospectus was September 24, 1892. On October 28, 1892, Warner ar ranged with defendants for extension of time of payment of the purchase price, and in May, 1893, Warner failed, but his assignee for the Seven Stars, obtained an extension of the install ment payments, and as a bonus, gave Lawler & Wells 10000 shares of guar anteed stock. and appoined Lawler manager of the property. The sub soribers to stock, aggregating $255,- oO0 paid in, did not know defendants nor rely upon anything that they said or done, and that they had said or done, and claiming that they had a right to believe from this prospectus that the title was vested in the Seven Stars company, and that although de- 1ehdants were 10: promoters of any of these corporations, but knew of their organization and participated in the preparation Of the prospectus and Knew Of its circulation, were estopped from asserting their legal title or re- covering unpaid purchase money. brought this action to have all the monies paid in on subscriptions to stock, adjudged lien upon the mines. The trial judge found that there was no actual fraud on the part of Lawler & Wells, nor did the stock purchasers have any knowledge of anything that the defendants had done, and did not find any judiciary relations existed be- tween Lawler & Wells and the stock purchasers, but the acts of Lawler & Wells constituted constructive fraud.
 On exceptions to a draft of the pro- posed decree in favor of plaintiffs, the courts refused to adjudge the stock moneys lien, but following the in terluctory decree adjudged that the moneys paid to Lawler & Wells by the guaranty company, amounting to s112- oOO, and gross proceeds of the ores re- ceived by them amounting to s67.OOO should be adjudged a lien upon the property
 BIG BUG DISTRICT.