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abstract covers 164 typewritten pages, and defendant's 58 pages), the court had to refer to the testimony in order to determine the issues of facts.

A most important fact is whether there was an oral agreement between the parties, after the execution of the written agreement, materially modifying it as alleged in the bill. Whether oral testimony is admissible to establish this modification and new agreement, and, if so, whether the evidence necessary to establish it must be clear, unequivocal, and convincing, or whether a mere preponderance is sufficient, are questions which the court deems it unnecessary to determine in this case. But the following authorities may be consulted on those questions: Section 2496, Wigmore on Evidence; Sherman v. Sandell, 106 Cal. 373, 39 Pac. 797; Bohm v. Bohm, 9 Colo. 111, 10 Pac. 790, as to what evidence is necessary to establish it; and Whitney v. Hay, 181 U. S. 77, 89, 21 Sup. Ct. 537, 45 L. Ed. 758, and the leading English case, Reach v. Kennegate, 1 Ves. 125, decided by Lord Hardwick-as to whether oral evidence is admissible for the purpose of establishing a constructive trust.

A careful examination of the evidence fails to satisfy me that there is a preponderance of the evidence in favor of the plaintiff. The evidence clearly shows that Chew is a practical business man of large experience, and very careful in all his business transactions. The agreement prepared by him and accepted by the plaintiff shows that he did not intend to go into this transaction blindly, but that he wished to make a careful examination of the property before investing any money. In order to enable him to do so, the time of the life of the option being short, he made it a condition precedent, before he was to make any examination and expend any money for that purpose, that the option should be extended for 60 days from October 20, 1905, for the first payment. The most favorable view that can be taken is that the evidence is so evenly balanced that it is impossible to say that there is a preponderance. in favor of either party.

In determining the other questions at issue in this cause, it is important to note that the mining concession, the subject of the negotiations between the parties, was not a contract of purchase and sale, but merely an option by which the owners of the concession obligated themselves to sell it to Clayton or his assigns upon certain terms, without any corresponding assumption on the part of Clayton to make the purchase. Besides, the option specifically provides that:

"If the buyer omits to make any one of the payments which are referred to at the end of the second clause of the contract, at the expiration of each time of payment, this contract will become nullified and without any value, the grantee losing the payments already made."

It is well settled that time is the essence of any option, and more especially does it apply where the property is of a speculative value, such as an undeveloped mine. Taylor v. Longworth, 14 Pet. 172, 10 L. Ed. 405; Richardson v. Hardwick, 106 U. S. 252, 1 Sup. Ct. 213, 27 L. Ed. 145; Waterman v. Banks, 144 U. S. 394, 12 Sup. Ct. 646, 36 L. Ed. 479; Kelsey v. Crowther, 162 U. S. 404, 16 Sup. Ct. 808, 40 L. Ed. 1017; Woods v. McGraw, 127 Fed. 914, 63 C. C. А. 556; Kentucky Distilleries & Warehouse Co. v. Warwick Co., 109 Fed. 280, 48 C. C. A. 363; Mason v. Payne, 47 Mo. 517.

Counsel for plaintiff cite a number of decisions arising under section 2324, Rev. St. (U. S. Comp. St. 1901, p. 1426), and also cases in which the parties were partners engaged in the development of mines, but they clearly do not apply to this case, as the parties never were co-owners of any mine or mining property, nor was this a mineral entry under the laws of the United States. It was simply an option to purchase something in a foreign country which happened to be a mine. Nor do the cases cited by learned counsel for plaintiff to sustain the contention that forfeitures are not favored and will not be enforced in equity apply, for this was not, strictly speaking, a contract, but a naked option which contained a stipulation of forfeiture as hereinbefore set out.

Was Chew, by reason of the written agreement existing between him and plaintiff, occupying such a fiduciary relation towards plaintiff, that the purchase by him, after the refusal of plaintiff to furnish his proportionate share of the purchase money when due, would make the later purchase a fraud upon plaintiff's rights, and for this reason he should be charged as a trustee of a constructive trust for plaintiff's benefit? Unless plaintiff complied with the terms of that written agreement and furnished his proportionate share of the money for the first payment under the option, there could be no express trust. If any trust can be established, it must be a constructive trust, but such a trust can arise only when a person clothed in some fiduciary character, by fraud or otherwise, gains some advantage to himself. As stated by Judge Sanborn in Trice v. Comstock, 121 Fed. 620, 57 С. С. А. 646, 61 L. R. A. 176:

"The only indispensable elements of a good cause of action to enforce such a trust are the fiduciary relation and use by one of the parties to it of the knowledge or the interest he acquires through it (the fiduciary relation) to prevent the other from accomplishing the purpose of the relation."

Constructive trusts differ from other trusts in that they are not within the intention and contemplation of the parties at the time the contract is made from which they are construed by the court, but they are thrust upon the party contrary to his intention and against his consent. Perry on Trusts, § 166.

As the court finds that the verbal agreement charged in the bill has not been proved, was there anything in the written agreement to establish such a fiduciary relationship as prohibited the defendant from making the purchase after the forfeiture of the option caused by the refusal of plaintiff to contribute his share of the purchase money as required by the agreement? In connection with this matter, it is important to call attention to some of the testimony.

When the contract between plaintiff and defendant, Chew, was entered into, Chew insisted, as a condition precedent, upon an extension of the option in order to give him an opportunity to have an investigation made of the property. The plaintiff wired to Clayton asking for such an extension, and received in reply a telegram from Clayton, "Extension granted upon conditions," referring to a letter he had written explaining the conditions. This letter, it seems, had been sent to Austin, Tex., the home of the plaintiff, who was then in St. Louis negotiating with Chew. He thereupon telegraphed to Hancock, who also had an interest in this option, to open that letter and wire him at St. Louis what it contained. Hancock wired back that the conditions referred to were that an extension for the first payment would be granted, provided work was commenced at once, but, in truth and in fact, one of the conditions stated in the letter was that a payment of $5,000 was to be made at once, and the other $15,000 in January.

It is but proper to say that while in St. Louis plaintiff apparently acted in good faith, and showed all telegrams which he sent to and received from his associates to the defendant Chew, but after his return to Austin, when he saw the letter of Clayton, which stated the conditions upon which the extension was granted, namely, "upon the payment of $5,000.00, Mexican, on October 20, 1905, an extension of ninety days will be granted, and said $5,000.00 to be deducted from first payment of twenty thousand dollars to be paid January 20, 1906," he concealed that fact from the defendant. On September 9th, after his return to Austin, and after seeing the letter and having Hancock approve the agreement, he wired and wrote to Chew in relation to the agreement, but failed to mention the conditions of the extension. On September 12th he wrote again to Mr. Chew, saying:

"Mr. Hancock says that Mr. Clayton thinks the owners of the mine might want you to put up a small amount of money after examination of the mine if it should prove satisfactory; but he also says he is satisfied Mr. Rains could avoid this if he goes down prepared to begin development work in the event the mine is satisfactory on inspection,"

-never mentioning the conditions contained in Clayton's letter. It is thus shown that after he returned to Austin, and before he was called upon to pay his proportion of the $5,000 due October 20th, he had seen the letter from Clayton and knew that one of the conditions mentioned in Clayton's telegram to him while in St. Louis was that payment of $5,000 was to be made on the day the first installment was due, and that the option was only extended as to the payment of the other $15,000 under the agreement. On September 23d Chew wrote to Gaines complaining of these facts, and saying:

"I am free to say, and so stated to you repeatedly, that if it was necessary to pay money on this mine before I could exploit it, I would not touch it. and would, therefore, not have been out the money expended by Mr. Rains so far."

Not only was there no obligation on the part of Chew to advance the money for him, but the contract specifically provided that the financing of the property would have to be made jointly by all the parties interested. There was no obligation on the part of Chew to advance the money for him, and plaintiff knew that the failure to pay the money according to the terms of the option as modified would forfeit it. After having been called on by Chew on October 13th, his refusal to pay, he having at that time full knowledge of the terms, as shown by the letter of Mr. Clayton to him, worked a forfeiture of the optior. The vendors thereupon had a right to sell to any other persons, and there is no principle of equity jurisprudence which would prevent Chew, after that forfeiture, from entering into a new agreement with the vendors. This last agreement was, in fact, outside of the terms of the agreement between plaintiff and Chew, and comes within the rule laid down in Latta v. Kilbourn, 150 U. S. 524, 14 Sup. Ct. 201, 37 L. Ed. 1169. The result might have been different if Chew had failed to call upon plaintiff for his proportion of the money, or in any way misled him to his detriment, or prevented him from carrying out his part of the agreement. But there is no such proof in ⚫ this case. Chew called on plaintiff for his share of the money in ample time to enable him to furnish it. He refused to do so with full knowledge of the fact that unless the $5,000 was paid on October 20th all rights under the option would be forfeited. He permitted the forfeiture to take place, and thereafter had no further interest in the purchase of the mine, nor was there anything which made Chew occupy a fiduciary relation towards him. Had the purchase been made by a stranger, although he had knowledge of all the agreements between Gaines and Chew, he could have made no claim for an interest. He had been advised that Chew would not advance his share of the money, and upon his failure to furnish it the agreement was treated as at an end. Nothing was done by Chew to prevent him from carrying out the agreement, and, when he refused to do so, Chew had the same rights as a stranger would have had.

From a careful consideration of all the testimony in this case, it is impossible to escape the conclusion that plaintiff had no intention of ever paying his share of the money necessary to purchase the mine and to exploit it; that he intended to make Chew advance all the money, and, if the mine should prove successful, claim his share in it, and, should it prove unsuccessful, let Chew bear the entire loss. Mr. Von Phul, his partner in the transaction, in a letter to him dated October 13, 1905, after Chew had called on them for their proportion of the $5,000, said:

"I had worked myself up to believing, thinking, that I had a big fortune to fall back on in my old age. All gone up in smoke."

Mining claims are not only subject to great and sudden fluctuations in value, but it is impossible to tell, even after careful examination by experts, whether they will prove valuable or not. What may appear to be a vein of great value may turn out to be a pocket, and it is for this reason that courts of equity will refuse to grant relief in such cases, if the suit is not brought within a comparatively short period after the deprival of his rights became known to him. In view of the concealment of the terms upon which the option was to be extended, Chew was justified in losing confidence in the integrity of the plaintiff, and he had a right to stand upon the strict letter of his agreement with plaintiff.

In the opinion of the court, there is no equity in plaintiff's claim, and the bill will be dismissed accordingly.

FARRELL et al. v. UNITED STATES.

(District Court, E. D. Arkansas, W. D. February 20, 1909.)

1. INTERNAL REVENUE (§ 8*) -LEGACY TAXES-CONSTRUCTION OF STATUTE-"IмPOSED."

A legacy tax under War Revenue Act June 13, 1898, с. 448, § 29, 30 Stat. 464 (U. S. Comp. St. 1901, p. 2307), was not "imposed" within the meaning of the saving clause of the repealing act of April 12, 1902, с. 500, $7,32 Stat. 97 (U. S. Comp. St. Supp. 1907, p. 649), until its assessment, and there remained no power to make a valid assessment after July 1, 1902, when the repealing act took effect.

[Ed. Note.-For other cases, see Internal Revenue, Cent. Dig. §§ 11, 12; Dec. Dig. § 8.*

For other definitions, see Words and Phrases, vol. 4, p. 3440.]

2. INTERNAL REVENUE (§ 8*) -LEGACY TAXES-INTERESTS SUBJECT TO TAX.

The interest of an heir in personal property left by an intestate is wholly contingent until the estate becomes distributable under the laws of the state by the expiration of the time for the proving and payment of claims, and where such time did not expire until after July 1, 1902, the share of an heir was not subject to legacy tax provided for by War Revenue Act June 13, 1898, с. 448, § 29, 30 Stat. 464 (U. S. Comp. St. 1901, p. 2307), it being provided by Act June 27, 1902, с. 1160, § 3, 32 Stat. 406 (U. S. Comp. St. Supp. 1907, p. 652), that no such tax should thereafter be assessed or imposed on any contingent beneficial interest which should not become absolutely vested in possession or enjoyment prior to said July 1, 1902.

[Ed. Note.-For other cases, see Internal Revenue, Cent. Dig. § 11; Dec. Dig. § 8.*]

At Law.

The plaintiffs, heirs of Elizabeth Farrell, deceased, seek to recover from the United States the sum of $901.86, money alleged to have been unlawfully collected by the collector of internal revenue as a legacy tax from the administrator of their mother's estate. The allegations of the complaint are that the plaintiffs are residents of this district, and that their mother died in the city of Little Rock, where she resided at the time, on June 3, 1901, intestate, leaving an estate consisting of personal property, and the plaintiffs as her sole heirs at law; that on February 11, 1903, the said estate was assessed, under Act Cong. June 13, 1898 (chapter 448, § 1, 30 Stat. 448 [U. S. Comp. St. 1901, p. 2286]), a tax of the amount claimed as the distributive shares going to plaintiffs as her heirs; that on the 24th of February, 1903, the tax was paid to the collector upon his demand, by the administrator of the estate, out of the funds of said estate, which payment reduced by an amount equal to one-third of said tax each of the said three equal distributive shares accruing and thereafter descending under the laws of the state of Arkansas to plaintiffs; that the distribution of said estate did not take place until September 29, 1903, and that until that time no distributive shares of the value of $10,000 or more took effect in the possession or enjoyment of them; that the distributive shares were, at the time the tax was assessed, contingent Leneficial interests which did not pass to, or vest in the possession or enjoyment of, said distributees until said September 29, 1903, on which day it was determined that there would be any shares of $10,000 or more accruing to plaintiffs; that under the provisions of the act of Congress approved June 27. 1902 (Act June 27. 1902, с. 1160, § 1, 32 Stat. 406 [U. S. Comp. St. Supp. 1907, p. 652]), plaintiffs are entitled to recover the amount of said tax; that on December 27, 1907, plaintiffs filed in due form, in accordance with the rules and regulations prescribed by the Secretary of the Treasury under the act of June 27, 1902, their claim of refunding of said tax, which claim was rejected

For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

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