Source: https://supreme.justia.com/cases/federal/us/149/411/
Timestamp: 2019-04-25 14:43:47+00:00

Document:
in evidence, as recited and referred to in the opinion of the Court, held that the evidence showed that the parties had made a complete settlement of their rights under the contract, and that B. had parted with all his interest in the property, and the bill must be dismissed.
When an offer is made and accepted by the posting of a letter of acceptance before notice of withdrawal is received, the contract is not impaired by the fact that a revocation had been mailed before the letter of acceptance.
should not be sooner found, and to obtain patents from the United States to said property, and further agreed to commence work in sinking the shaft within thirty days from the date of the contract. It seems the mineral in that district lies in nearly horizontal bodies at the contact between porphyry and limestone, the porphyry being the overlying rock, and of varying thickness. The shaft was to be sunk through the surface earth and gravel, known as "wash," and the porphyry. The indications are generally apparent in the shaft, if there be an ore body below, and it be near, the porphyry becoming iron stained, and sometimes small seams or stringers of mineral are found in the porphyry leading to the mineral body below.
Bowman and Patrick were, between themselves, to be equal partners in the venture, each paying half of the expenses. Patrick, living at Leadville, was to superintend the sinking of the shaft and keep Bowman advised of all that should happen in the partnership venture. In March, 1892, and for some time afterwards, Patrick was indebted to Bowman for money advanced by him on account of certain legal business then in his charge. Bowman returned to St. Louis, and did not meet Patrick again until June 19, when they had a settlement at which Bowman exhibited a willingness to sell out his interest to Patrick. A correspondence, both by letter and telegram, began soon after that date, which is fully set forth in the opinion of the Court, and which resulted in a deed by Bowman of his entire interest in the property.
Upon the hearing in the circuit court upon pleadings and proofs, a decree was entered setting aside the sale and adjudging that William F. Patrick refund the sum of $57,099.69, the amount of profits received by him on Bowman's interest to March 19, 1889, the date of the final decree. 36 F. 138. From that decree, Patrick appealed to this Court.
This case turns upon the question whether the correspondence between these parties subsequent to the execution of the contract of February 17, 1882, and the conduct of Bowman in that connection, indicated a completed understanding between them, prior to the discovery of ore in paying quantities, that Patrick was to purchase Bowman's interest.
The theory of the plaintiff in this connection is that Patrick, being present on the spot and having the sole charge and management of the sinking of the shaft, was bound to keep the plaintiff advised of the progress of the work and the prospects of the mine pending the negotiations for the purchase of his interest, and that, having failed to apprise him of the discovery of a large body of ore on the 31st of August, the sale subsequently made was fraudulently procured, and should be annulled. The defendants do not dispute the legal principle laid down by this Court in Brooks v. Martin, 2 Wall. 70, that where one partner is present, in sole charge of the business, while the other is at a distance, in order to sustain a sale of the absent partner's interest, it must be made to appear that the price paid approximates a fair consideration for the thing purchased, and that all the information in the possession of the purchaser necessary to enable the seller to form a sound judgment of the value of what he sells should be communicated by the buyer to him. Defendants, however, claim that the parties had reached an understanding as to terms and conditions of the sale before the discovery of the ore, and that William F. Patrick was under no obligation to apprise plaintiff of this fact; that, even if the plaintiff had a right to rescind the sale, he did not act with sufficient promptness, and that his failure for four years to institute these proceedings should debar him from a recovery.
the day following the execution of the contract with the understanding that Patrick should remain there and superintend the opening of the shaft -- in short, that he should be the resident partner of the enterprise. He and Bowman were each to contribute one-half, and to have an equal interest in the venture. On March 25, Bowman sold to James M. Patrick, brother of the defendant, William F. one-third of his half interest in consideration of Patrick's paying one-third of Bowman's share of the cost of sinking the shaft, Bowman agreeing to make all necessary advances for the first year, and Patrick agreeing to repay him the sums so advanced. Bowman did not return to Denver until early in May, having in the meantime received several letters from William F. Patrick giving a general idea of the progress of the work and of certain litigation connected with the property.
telegraphed you, but can get no answer. I leave in an hour for Chicago."
The parties did not meet again until June 19, when Patrick went to St. Louis to talk over the Col. Sellers matters, and at this interview they had a settlement of their accounts up to May 8, in which a balance of $288.69 was found due from Bowman, for which he gave his note to Patrick, who had it discounted at once for its face. Of this $288.69, the sum of $245.75 was for James Patrick's share of the expenses, which Bowman was to advance for him, and for which amount James soon afterwards gave his note to Bowman.
"He made me a proposition at that time, as I remember, after I secured this note, if I would surrender the note, he would surrender all his right, title, and interest under that contract to me, and I told him at the time that I had about all that I could carry, and I didn't think I could afford to take it, but thought I knew a man out west who I thought would take it, and that on my return I would speak to him in regard to it."
right ahead with the work, which I would very much like to do. If you are willing to let it go on these terms, which is the same proposition you made me in your office, please telegraph me immediately and I will try and make the arrangement."
"I would also like to have an answer with regard to the proposition I made you about the Col. Sellers, to return you your note and forfeit your share in the contract. There is a party here who will take it."
"Please let me know what we are to do in this new complication, and also about the Col. Sellers, as I am anxious to continue work on that property, and see what is there."
"When I came out of the woods, I found your letter of June 22 waiting my answer, and I telegraphed you on the same day, accepting your proposition to surrender to you all my remaining interest in the property adjoining the A. Y. on your surrendering my note; and, on a perusal of your subsequent letters received here at St. Paul today, I learn that is your wish. I do not complain of it. My judgment differs from yours as to the course to pursue, and I should not stand in your way, and will not. If you wish any papers signed, send, and I will sign them. My address is Bayfield, Wis."
"Mr. Frank J. Bowman, Merchants' Hotel, St. Paul, Minn."
"Dear Sir: I send you a statement of all amounts paid on the Col. Sellers contract since our settlement, from which you will see that the am't due from you thereon is $952.32, for which am't I will draw on you tomorrow. I wish to notify you and hereby do so, that if the draft is not paid, that I will apply to Stebbins and Robinson and their partners for a new contract in my own name. I have consulted an attorney here, and am satisfied that we are obliged to continue the work in order to comply with our contract, and that your plan of doing a little work every ten days would not be acting according to its letter or spirit, and would cause a forfeiture of the contract and loss of the am't we have spent in sinking the first 100 feet. The same attorney also tells me that under our contract, if you do not pay your proportion when called upon, you forfeit your rights under said contract. I want to deal fairly with you, and will tell you that in my opinion the shaft, which is now 165 feet deep, is looking very promising, and I think we are not very far from the contact. My reasons for thinking so are that the porphyry is now heavily iron stained. Hope you will pay the draft, and that we may continue the work together, but if you do not, I will have to protect myself, and will do so by taking a new contract, as I have said. I withdraw my offer to return your note of $288.70, dated June 19th, 1882, in case you assign your interest in the contract to me."
on June 19, when he expressed himself as dissatisfied with the way the work was going on. The letter of July 5 seems never to have been received.
"Yours of the 16th ult. received. In accordance with your request therein, I send the within paper for your signature. I sold the note in St. Louis before getting your reply, so will have to wait until it matures, which will be September 19."
Enclosed in this letter was a memorandum of agreement, signed by William F. Patrick, reciting the contract of February 17, 1882; the performance of considerable work in developing the lode; the unwillingness of Bowman to continue such work or to pay the costs; the execution of the note of June 19, 1882, and providing that, if Patrick should pay the note when it became due, Bowman would release to him all his right, title, and interest to the contract with the owners of the property, and would execute and deliver to Patrick a good and sufficient deed of conveyance of the same, Patrick agreeing to release Bowman from any liability under the contract.
"I send you the contract you desire, and trust that this will settle our matters pleasantly and amicably. I have inserted a clause concerning your brother's interest, but he may not care to retain it. My address will be St. Paul until September 10. Then I shall return to St. Louis, and business. P.S. Mails are slow here."
With this letter was a contract signed by Bowman, which was a substantial copy of the one signed by Patrick, but containing a reservation for the use of Patrick's brother. This contract, however, made it obligatory upon Patrick to pay the note, and gave him no option in that particular, as was given in the contract enclosed in his letter to Bowman.
it on September 7. He made no reply, however, and there was no further correspondence between the parties.
On October 19, 1882, Bowman having returned to St. Louis, James Patrick went to Bowman's office, and said he had called, by request of his brother, to get him to execute a deed to his brother for his interest in the Col. Sellers. The Patricks testify that they were both present in Bowman's office, that they talked over the matter of Bowman's relations to James, with regard to an interest in the contract, and that W. F. Patrick then agreed to take a conveyance of Bowman's entire interest, to assume Bowman's liability, and to advance James' share of the expenses. This matter being settled, Bowman acknowledged and delivered a deed of his interest in the property. There is a dispute between Bowman and the Patricks as to whether the former made any inquiry of them as to whether any mineral had been discovered in the Col. Sellers shaft. It is clear they never mentioned the matter to him, and there is no doubt Patrick failed to inform Bowman of the discovery of a large body of ore that had been made in the last days of August. If at that time there was a completed understanding between them that Patrick was to buy out Bowman's interest, and release him from his liability upon the note, there was no obligation to make such disclosure. If, upon the other hand, no such understanding had been reached, it was then incumbent upon Patrick to inform Bowman of the progress of the work before taking from him the deed of October 19.
We think this question must be answered by referring to the correspondence between these parties, between June 19 and August 13, upon which day the first indication of mineral was discovered in the shaft, and the policy of suppressing all information was inaugurated.
"I think I know a man who will pay the note you gave me, $288.69, and take your interest off your hands. . . . If you are willing to let it go on these terms, which is the same proposition you made me in your office, please telegraph me immediately, and I will try and make the arrangement."
"spoke to him in regard to it, and he declined to take it, and declined to take the interest and pay that note, and, as I told Bowman, I was carrying all I could."
"I would also like to have an answer in regard to the proposition I made you about the Col. Sellers, to return you your note, and forfeit your share in the contract. There is a party here who will take it."
binding upon anyone else, is binding upon the agent -- at least if the credit be given to such agent. Welch v. Goodwin, 123 Mass. 71; Worthington v. Cowles, 112 Mass. 30; Cobb v. Knapp, 71 N.Y. 349; Blakely v. Bennecke, 59 Mo, 193; Eichbaum v. Irons, 6 W. & S. 67; Meech v. Smith, 7 Wend. 315; Winsor v. Griggs, 5 Cush. 210; Mechem on Agency secs. 542, 550, 557.
"When I came out of the woods, I found your letter of June 22 waiting my answer, and I telegraphed you on the same day accepting your proposition to surrender to you all my remaining interest in the property adjoining the A. Y. on your surrendering my note."
"I decided to accept the proposition contained in the letter, and instead of applying to the owners for a new contract . . . , I decided to accept the proposition which was contained in Bowman's letter of July 16. I had a contract prepared, such as he indicated he would sign in that letter, . . . and I sent that contract to him by mail after signing it myself."
"I sent you from Leadville an agreement concerning the Col. Sellers, in which I agreed to pay that note, $288.70, and you relinquish all rights under the agreement."
that of Patrick himself. For these reasons, we think the offer should be considered as one made by Patrick to Bowman to take Bowman's interest in the mine and release him from his liability upon the note.
The letter of June 22, which was addressed to Bowman at St. Louis, was forwarded to Bayfield, Wisconsin, and reached him in the woods at a distance from a telegraph office. He proceeded at once to Ashland, Wisconsin, the nearest telegraph station, and on July 13 telegraphed Patrick as follows: "Yours of June 22 received yesterday. Proposition accepted. Send note." To this Patrick replied by telegraph, sent both to St. Louis and Ashland, as follows: "Acceptance too late. Proposition was dependent upon immediate acceptance in St. Louis. See my letter of the 5th." In view of the fact that Patrick was informed when in St. Louis, June 19, that Bowman was about starting for the woods for the summer, and that his letters of June 22, 27, and 28 were sent to St. Louis, when he must have known that Bowman had gone, we do not think the acceptance was too late, although it might have been otherwise had the circumstances been such that a prompt reply must have been expected. After having sent this telegram, and before receiving the reply, Bowman left Ashland, and went to St. Paul, where he received the letters of June 27 and 28, and answered them by his letter of July 16, renewing his acceptance of the proposition he had already made by telegram. The tone of this letter certainly indicates that he had not received Patrick's telegram of July 15 when he wrote it. Indeed, it is improbable that he should have done so, as one copy of that telegram was sent to St. Louis, and another to Ashland after Bowman had left there.
"We are of opinion that an offer, under the circumstances stated, prescribing the terms of insurance, is intended, and is to be deemed a valid undertaking on the part of the company that they will be bound according to the terms tendered if an answer is transmitted in due course of mail accepting them, and that it cannot be withdrawn unless the withdrawal reaches the party to whom it is addressed before his letter of reply announcing the acceptance has been transmitted."
This case was cited and followed in Byrne v. Van Tienhoven, 5 C.P.D. 344, and Stevenson v. McLean, 5 Q.B.D. 346. Other cases to the same effect are Adams v. Lindsell, 1 B. & Ald. 681; Dunlop v. Higgins, 1 H.L.Cas. 381; Harris' Case, L.R. 7 Ch. 587; The Palo Alto, 2 Ware 344; Wheat v. Cross, 31 Md. 99.
binding upon himself, but this could not be done without infringing upon the inexorable rule that one party to a contract cannot be bound unless the other be also, notwithstanding that the principle of mutuality thus applied may enable a party to take advantage of the invalidity of his own act.
19, but it is scarcely presumable that he would have signed the deed at that time without instituting very careful inquiries with regard to the work, unless he had treated the matter as abandoned, since, from the time that had elapsed, he must have known that it was either a success or a failure. In a subsequent conversation with Wilson, he said that his reason for selling out to Patrick was that he was not able to carry the assessments. He made substantially the same statement to James Patrick, and added that even if he had had money enough, the constant fear of litigation and "jumpers" would have caused him to sell out, and wished him to express his congratulations to his brother upon the success of the enterprise.
In short, he gave no further attention to the matter for four years, when, from some letters between members of the defendant's family which fell into his hands, he was apprised of the fact that a large body of ore had been discovered about the 31st of August, the knowledge of which Patrick had concealed from him. Conceding that if the negotiations had then been open, it would have been Patrick's duty to inform his partner of all that had taken place, he was under no obligation to do so if the contract were complete. He might well be reluctant to give him information which would only lead to disputes and litigation.
In the view we have taken of this case, it becomes unnecessary to consider the conduct of Patrick after August 13 in suppressing the information with regard to the discovery of the ore or the question of laches which the defendant urges with so much earnestness.
Reversed, and the case remanded, with instructions to dismiss the bill.
MR. JUSTICE BREWER, with whom concurred MR. CHIEF JUSTICE FULLER, dissenting.
it is undisputed that no conveyance was made by Bowman to Patrick until October 19, 1892. It is undisputed that long before that, Patrick knew of a large body of valuable mineral in the shaft, and that he did not communicate the fact of this discovery to Bowman. It is also not open to question that the property then conveyed was worth very much more than Bowman received. But it said that prior thereto there was a completed understanding that Patrick was to purchase Bowman's interest. What is meant by the term "completed understanding" is doubtful. If by it is meant that a binding contract had been entered into before October 19, I deny the fact. If only that Patrick knew the terms upon which Bowman was willing to sell, I deny that the law is that knowledge of such fact relieved Patrick from the obligation to make full disclosure up to the time of the actual purchase. It may be conceded that Bowman was willing to sell in consideration of the surrender of his note, and Patrick knew of this willingness, but can it be that knowledge by a resident partner that the nonresident partner is willing to sell at a fixed price releases him from the obligation of full disclosure, enables him to continue his explorations to discover the value of the property, and, when ore of large value is finally discovered, complete the purchase without disclosing that fact? I do not so understand the law. Until a definite contract has been entered into between the parties, binding alike on vendor and purchaser and understood to be binding alike on both, the rule laid down in Brooks v. Martin compels the resident partner to make full disclosure. The question is not whether Bowman acted badly, but whether Patrick fully discharged the duties resting upon him as resident partner. If he says that before the purchase was actually made, there was a completed contract which relieved him from his obligations of disclosure, must he not make it clear that such completed contract was in fact made? It is true, Bowman was willing to sell during June and July, providing he could get his note back; but this willingness to sell was based upon the facts as they then existed, or at least as known to him. The shaft had been sunk many feet; no mineral had been discovered; no indications of mineral disclosed.
He might well have said, "I am ready to abandon this if you will only give me back my note," but can it be that this willingness to sell, communicated as it was to Patrick, will sustain a purchase in the succeeding October, after mineral had been discovered, the value of the property largely advanced, and without any disclosure of those facts to Bowman?
"In regard to your interest in the Col. Sellers, I think I know a man who will pay the note you gave me ($288.69), and take your interest off your hands. . . . If you are willing to let it go on these terms, . . . please telegraph me immediately, and I will try and make the arrangement."
This letter did not reach Bowman until the 13th of July, when he telegraphed: "Yours of June 22 received yesterday; proposition accepted; send note," to which Patrick replied, on July 15: "Acceptance too late; proposition was dependent upon an immediate acceptance in St. Louis. See my letter of 5th."
How, out of this, a contract can be deduced I do not understand. Patrick does not offer to purchase, does not say that he knows anyone who will purchase, but simply asks Bowman if he is willing to sell at such a price, and promises, if so, to try and find a purchaser. It was this letter only which Bowman had received at the time of his telegram, and only the proposition or suggestion contained in it which he by that telegram accepted. It seems to me that it would puzzle a pleader to so frame a declaration as to show that that letter and acceptance created any contract between the parties.
refer to the letter which Patrick claims to have written on July 5, as it is conceded that that letter was never received by Bowman. It is significant only as indicating Patrick's state of mind by these closing words: "I withdraw my offer to return your note of $288.70, dated June 19, 1882, in case you assign your interest in the contract to me."
proposed contract. Still, as at the date at which that contract was sent it was not absolutely sure that mineral in paying quantities would be found in the mine, the contract which he sent to Bowman for his signature was simply a contract binding Bowman to sell, and not binding himself to buy. Obviously he was not then sure that he would purchase. He wanted to get an option from Bowman, something that would bind him to sell, and then sink the shaft a little further, and make some more developments, before he bound himself to purchase, and yet it is said that before this there was a completed understanding -- a binding contract -- between these parties for the purchase of Bowman's interest. Bowman, knowing nothing of the disclosures made by the sinking of the shaft and not knowing that the indications of approaching mineral were stronger and clearer, was still willing to sell on the terms named, but was not willing to give an option to buy, and so on August 28 he prepared a contract binding both parties, and enclosed it in a letter to Patrick at Leadville, but, before it had reached there, Patrick had gone east. Nothing further took place until the day of the conveyance, October 19.
It is suggested that Bowman evidently regarded the matter as settled, leaving only the details to be arranged. It seems to me the important question is not how Bowman, but how Patrick, regarded it. Did he understand that the thing was settled between them? Certainly not, when he telegraphed that the acceptance was too late; certainly not, when he sent a contract not for a purchase, but giving him an option to purchase, binding Bowman and not himself.
June and that time I changed my mind -- that is, between the 22d of June and July 5 -- in regard to it."
"He said it was no use of paying that note, or having anybody else buy it; when another assessment was due to draw on Bowman, and, if he does not pay your draft promptly, just apply to the owners of the Col. Sellers, that is, to Stebbins, Robinson, and others, for a new contract in your own name, leaving Bowman out, and when I wrote the letter of July 5, it was my intention to do that, and when I received Bowman's telegram of the 15th of July, I so notified him in that telegram."
"Question. When was your partnership with the plaintiff in the working of the Col. Sellers and Accident mining claims under the contract (defendant's Exhibit A) terminated?"
"Answer. It was terminated, as I regarded it, on the receipt of the plaintiff's letter of July 16, and by my acceptance of the proposition contained therein, and the forwarding of the contract which was prepared by C. C. Parsons."
"Q. You recognized it to be your duty as a partner, when you wrote a letter accepting what you call Bowman's proposition of July 16, 1882, to tell him what occurred before you wrote that letter, didn't you?"
"A. I did not regard him as my partner after I received that letter of July 16; he had not paid."
"Q. Didn't you regard him as your partner up to the time that you mailed an answer to that letter?"
"A. Yes, but I accepted his proposition, and I thought that ended the partnership."
"Q. In your view, when did your partnership with Bowman end -- when you received his letter of July 16, 1882, or when you mailed your answer to it?"
"A. Take the two together."
was not your partner, and was not entitled to the information?"
"A. When I accepted his proposition of July 16."
According, therefore, to his own testimony, Patrick understood that the partnership relation, with the obligations of disclosure, continued until he had accepted the proposition in Bowman's letter of the 16th of July. When he mentally accepted that proposition he alone knows or can tell. What he did after that was, on the second day of August, to send to Bowman, for signature, an agreement giving him an option to purchase, which never was signed. The contract which Bowman did prepare -- a contract binding both parties, and which Bowman signed and forwarded on August 28 -- was not signed and forwarded until after mineral had been in fact discovered, and was so signed and forwarded by Bowman in ignorance of that fact.
"The shaft in the Col. Sellers is looking very promising. For several feet, the porphyry has been heavy iron-stained, and I have good reasons for thinking that we are near the contact. Acting on Col. Bissell's advice, I today write to Bowman telling him that if he did not pay up, I would apply to the owners of the ground for a new contract in my own name, and leave him out. I don't suppose he will pay, but I will let you in on the new one on the same terms you are in the old."
"The Col. Sellers shaft, on Iron Hill, is now down about 215 feet. Some small streaks of ore have already been cut, one of them assaying nineteen ounces in silver. The sinking of the shaft is progressing rapidly, with the prospects that expected ore bodies will soon be cut."
in character, and is pronounced to be identical with that which was first cut in the A. Y. mine, which it adjoins. It is probable that it will be necessary to pass through several feet of it before the same class of ore which has enabled the A. Y. to make such shipments will be reached. The property is owned by W. F. Patrick, Charles Stebbins, George Simmons, John Livezey, and others."
"Dear Jemmie: I have just received a letter from Will, in which he tells me I was mistaken about his securing B.'s interest in the Col. Sellers. He only had the written promise of it. The deed has not been delivered to him. In my letter today, he tells me to caution all of our home folk not to mention the success of the prospect, and adds:"
to B.'s ears, it might cause me considerable trouble and expense to get him out of the contract. Please caution the family not to mention it until I get a deed from B."
"I am sorry I have said anything about it, but, as I have, for pity's sake do not tell it, or if, like myself, you have said anything to Fannie or Mr. McM., do write immediately and ask them to keep it secret, so much depends upon a rigid silence. As Will said, if Mr. Bowman hears it, he can cause him a great deal of trouble, to say nothing of the expense. I feel dreadfully, and I shall never again put myself in this position. I am going to the 'Quarry' early to-morrow to caution mother and father. Do help me to keep this business as quiet as possible. You see at a glance how much depends upon it. My sister is not so well today, although she is better than when I first came With love and an earnest request that you will burn this as soon as received, I am, hastily and truly,"
"Willie has written to Annie (and she to me) telling her that there was an interest in the Col. Sellers which he wished to buy before the news of the strike got out, and wanted her and I to keep the matter quiet for a few weeks, until he could get the deed."
These letters show that it was known in the family that mineral had been discovered, and discovered long enough before August 21 for two or three letters to have passed between Knoxville and Leadville. Patrick had not, as shown by these letters, secured Bowman's interest. He had, it is true, received a letter from Bowman of July 16, in which the latter expressed his willingness to sell, said that he would not stand in his (Patrick's) way, and that, if he (Patrick) wished any papers signed, to send them to him. In other words, he knew that Bowman was willing to sell, and had so expressed himself; he had not bought, and wanted the matter kept secret until the purchase was consummated.
it seems to me strange to say that there was a "completed understanding." It will not do to hold that, because Patrick had received Bowman's declaration of his willingness to sell -- a declaration made in ignorance of any discovery of mineral -- he (Patrick) could mentally accept Bowman's offer, and, without disclosing the fact that mineral had been discovered, proceed to secure a conveyance.
For these reasons, I dissent from the opinion of the Court, and I am authorized to say that THE CHIEF JUSTICE concurs in this dissent.

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