Ballagh v. Williams

DRAPEAU, J. pro tem.

— Four men became interested in a placer mine on the Mother Lode. In a placer mine gold

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is mixed in with sand and gravel, generally a deposit in the stream bed of a living or an ancient river. If there is gold enough in the gravel to pay the cost of extracting it, and something more for the miner, it is said to be a paying proposition. If there is enormous profit for the miner, it is said to be a bonanza. But, if there is no profit, or not enough profit to pay the cost of operation, then it is said to be borrasca. In this case, and with reference to this particular mine,—and not for the first time in the history of mining,— the recovery of gold did not pay the cost of getting it out of the gravel. It was borrasca.

And so, two of the four men who became interested in the mine have resorted to the courts to determine their rights. In the beginning, the parties met in Sacramento and went to Wheatland to see the mine. Title to the property was vested in a Nevada corporation. Being impressed with the possibilities, there was an agreement that the defendant was to purchase all of the stock in the corporation, whereupon the mine would be operated by the corporation for their benefit. The purchase price of the stock was to be $10,000 down, together with the note of the corporation for $15,000, which the defendant was to endorse, and an additional payment of $5,000 out of the recovery of gold.

The defendant received from the plaintiff $3,333.33. One of the other parties put in a like amount. The defendant put up the balance of the down payment, went to Nevada and closed the deal. The terms of purchase were changed in that the defendant gave to the vendor of the stock, the note of the corporation, endorsed by him, for $20,000, instead of $15,000. Just prior to this, all of the stock in the corporation was, by appropriate corporate action, delivered to the defendant.

Thereafter, the defendant operated the mine as an individual, and not through the corporation, until he quit because it would not pay. He caused the gravel to be worked to extract the gold; he paid all of the expenses involved; and he disposed of the gold for his own account.

The plaintiff knew nothing about the increase of the principal sum of the promissory note. The defendant did not convey to the plaintiff any of the corporate stock which he received, although the plaintiff had put up his money on the understanding and with the expectation that he would receive 12% per cent of the total stock of the corporation.