Arizona weekly journal-miner., 1898-07-20
HILLSIDE MINING CASE.
An Echo From Or. Warmers Manipu- lation of Mining Case, Which Presents New Phases in
 the Business.


 The decision of the court in the Hillside 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, mining brokers and mine purchasers ali over the United States. The most common method of selling mining property is through the deposit of papers in eskrow. Very few are purchased and paid for outright. This decision, should it be sustained by the higher courts will make this proceeding a very hazardous one to the seller. While not attempting to criticise the court in its findings, the following. which is believed to be a fair and impartial statement of the facts. will be of interest to all:
 In May. 1892, John Lawlef and E. W. Wells, being the owners of the legal title of record to the Hill side mines, in this county, arranged to sell them to H. H. Warner, of Rochester, N. r., for $450O00, on which Warner paid down $5l, 900. An escrow agreement was made be- tween the owners and Charles Cow land, for Warner, fixing the payment of the purchase price in installments running one year. In this agree ment was Q license to Cowlanc to operate the property and apply the gross proceeds of operations to the payment of the purchase price. This escrow agreement was de posited in a bank, with deed at tached. Possession under the license was delivered to the H. H. Warner Investment Company, which trans ferred the possession under the li- cense to the Industrial Mining & Guaranty Company, witE full notice Of the escrow agreement, in July. 1892 This company delivered the possession under that license to the Seven Stars Company, under a reso- lution of the Guaranty Company, offering to sell on deposit in the treasury of $200,000 as working cap ital, and the payment Of $2SO0, 900 in cash or stock of the Seven Stars Company. This agreement was never expressly accepted by the Seven Stars Company. Data, con- sisting of maps of underground and surface workings and shelter re- turns were delivered to Warner, and in September, 1892, Lswler went to New York and there, it was claimed by plaintiffs, though denied by Law Ter, that Warner had a conversation with him and he helped to prepare a prospectus of the Seven Stars Company, and knew of its distribu- tion. This prospectus contained the following:
 Objects-This company is formed to acquire, without further expense or liability [ Q stockholders. on Octo- Der 1, 1892, as a going concern" aud to provide working capital of $20O,0O0 to further equip and de velop the Hillside group of mines Also, Title--The titles are unques- tionable, the Hillside and other mines being held under United States patent. This prospectus was September 24, 1892. On October 2S, 1892, Warner arranged with defend ants for an extension Of time of pay ment of the purchase price, and in May, 1898, Warner failed, but his assignee for the Seven Stars, ob- tained an extension of the install ment payments, and as 6 bonus, gave Law Ter & Wells 10000 shares of guaranteed stock, and appointed Lawler manager OI the property. The subscribers to stock, aggrega- ting $255,0O0 paid in, did not know defendants nor rely upon anything thhat 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 defendants were not promoters of any of these corporations, but knew of their organization and partici- pated in the preparation of the prospectus and knew of its circula- tion, were estopped from asserting their legal title or recovering unpaid purchase money, brought this action to have all the monies paid in on subscriptions to stock, adjudged a 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 de- fendants had done, and did not find any fiduciary relations existed be- tween Lavler & Wells and the stock purchasers, but the acts of Lawler & Wells constituted constructive fraud.
 On exceptions to a draft of the proposed decree in favor of plain tiffs, the courts refused to adjudge the stock moneys a lien. but follow ling the interlocutory decree ad- judged that the monies paid to Law Ter & Wells by the guaranty com pany, amounting to $ll2,0O0.O0, and gross proceeds of the ores received by them amounting to $67, ,000l0O should be adjudged lien upon the property.
 A motion for a new trial has been filed, assigning 170 grounds of error, which has been set down for hear ing on September 15 next.