Opinion ID: 1141817
Heading Depth: 1
Heading Rank: 1

Heading: Wecht v. Anderson.

Text: a) The grubstake agreement: On April 11, 1955, Anderson and Robinson entered into a grubstake agreement with nine Pennsylvania contributors, one of whom was Wecht who also acted as attorney for the group and drew up the agreement. This agreement provided that $1000 would be raised to enable Anderson to purchase a Geiger Counter and/or Scintillator and such other equipment or instruments as he may require for prospecting for precious metals in the field, including but not limited to uranium, and of any such deposits found, they were to be registered in the names of Anderson and Robinson as co-owners and trustees for the syndicate. The agreement also specified that the syndicate is organized for a period of one year from the date hereof. Shortly after this document was executed Anderson received several checks totalling $800 of the $1000 agreed upon. This was all of the money ever advanced by the syndicate. He immediately purchased a Geiger counter ($500), tires for his truck ($95), and other necessary prospecting equipment and set off in quest of uranium. Within 30 days the remaining grubstake money had been exhausted, but he continued to explore the Battle Mountain area and all through Death Valley. Uranium eluded him and the old prospector turned his attention to the subject property of this case. In 1919 Anderson had discovered a mineralized deposit in the area of the present Andies claims. He staked a claim at the site but did nothing further to perfect it. On October 20, 1954 he again located that claim and on December 9, 1954 recorded his location certificate. He realized that the area around this first claim might also be valuable and, upon abandonment of the uranium search, returned to Lincoln County to go down and work and get something done with it. In June and July of 1955, 20 more Andies claims were recorded in the names of Anderson and Robinson. At the time of these locations he was neither being supported by the grubstake money nor utilizing the Geiger counter, since that instrument is useless in the detection of cinnabar. The recited facts are not disputed. The Wecht group contends that the trial court committed legal error in ruling that the Andies claims are not within the terms of the grubstake. The contention rests mainly on the premise that the filing of the location certificates to 20 claims in the names of Anderson and Robinson during the one year period following the execution of the agreement automatically brings those claims within the terms of the agreement. The district court rejected this contention. There are sound reasons for the trial court's ruling. First, Andies No. 1 was located and the certificate of location therefor recorded approximately four months before the grubstake agreement was made. The agreement did not mention Andies No. 1, and by its terms referred to claims to be later discovered during the one year effective period of the grubstake. In these circumstances, the contributors to the grubstake could have no interest in Andies No. 1. Hollingsworth v. Tufts, 62 Colo. 256, 162 P. 155, 159 (1917). The right in property under a grubstake contract must be acquired by means of the grubstake furnished and pursuant to the grubstake contract. Prince v. Lamb, 128 Cal. 120, 60 P. 689, 691 (1900). Second, the 20 other Andies claims which were located and recorded in the names of Anderson and Robinson in June and July of 1955 after the grubstake contract was made, were discovered without the use of either funds or equipment supplied by the syndicate. The funds had long before been exhausted, and the equipment was not adaptive to the location of mercury. Thus, those claims were not acquired by means of the grubstake furnished. Prince v. Lamb, supra; Cisna v. Mallory, 84 F. 851 (9 Cir.1898); Johnstone v. Robinson, 16 F. 903 (C.C.Colo. 1881). It is interesting to note that the grubstake agreement of April 1955 was amended in August of that year to add two more contributors whose contributions were never received by Anderson. The August amendment did not mention the Andies claims although 20 of them had been located and certificates of location recorded during the two prior months. Third, it is undisputed that the Wecht group did not fully perform its obligations since Anderson never received the total consideration of $1000 called for by the grubstake contract. It has been held that full performance by the outfitter is a condition precedent to the prospector's obligation to perform, or continue performance, and the furnishing of some but not all of the supplies contracted for does not satisfy this condition. Murley v. Ennis, 2 Colo. 300 (1874). On the other hand, the prospector did perform. He promptly purchased a Geiger as required by the contract and made a diligent search over a large uranium-potential area. The stake was exhausted through reasonable use before he turned his attention to the Andies claims. This satisfied his obligations under the contract. Jennings v. Rickard, 10 Colo. 395, 15 P. 677 (1887). Finally, in the circumstances here presented, the one year specified in the grubstake agreement as its period of duration is not effective to continue the relationship of the parties beyond the exhaustion of the stake, which occurred within a short time after the agreement was made. As a general rule the relationship ends when the stake is exhausted. Here, we do not hesitate to prefer the general rule over the express contractual termination date since the stake was apparently not adequate for the time period reserved, and was exhausted through diligent exploration and reasonable use. [2] b) The 1960 deed: On May 20, 1960 a meeting was held in Philadelphia to discuss a possible lease and option agreement that Wecht was negotiating with two individuals named Swerdfager and Gahagen. Anderson and Robinson were present. The lease was to cover the Andies claims. A tentative lease was prepared, subject to the cancellation of a current lease on the property. As Anderson and Robinson were signing this tentative lease, Wecht presented two additional documents for their signature stating that they are to guarantee to implement the completion of the Swerdfager transaction. One of the documents was a grant deed to Wecht of the Andies claims. Anderson and Robinson signed automatically without reading them. The Swerdfager-Gahagen transaction was never consummated because a release of the existing lease could not be obtained, and in August of 1960 Wecht returned the $5000 advance payment which Swerdfager had deposited. But on September 1, 1960 Wecht caused the deed to be placed of record in Lincoln County. The deed was a nullity when the Swerdfager transaction failed of accomplishment. The grantors never intended a conveyance unless the lease and option to Swerdfager and Gahagen was effectuated. Lanigir v. Arden, 82 Nev. 28, 33, 409 P.2d 891 (1966). The trial court properly voided that conveyance.