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Keyworth v. Nevada Packard Co.

December 31, 1919


Appeal from Sixth Judicial District Court, Humboldt County; James A. Callahan, Judge.

Hoyt, Norcross, Thatcher, Woodburn & Henley, for Appellant.

Cheney, Downer, Price & Hawkins, for Respondent.

By the Court, Coleman, C. J.:

This action was brought to recover an undivided one-fourth interest in the Packard No. 1, Packard No. 2, and Packard Fraction mining claims, situated in Rochester mining district, Humboldt County, Nevada. The plaintiff, on March 29, 1913 (being then past 18 years of age), together with H. R. Lund, Dick Keyworth, and Donald C. Wheeler, gave R. L. Ray an option on the said mining claims for the sum of $5,000, with the understanding that, in case said option were taken up, a corporation should be formed to take title to said property, and that 2 per cent of the capital stock of such company should be issued and delivered to the plaintiff and his co-owners. Five hundred dollars of said cash consideration was to be paid on or before April 10, 1913, and the balance within one year thereafter. It was further agreed that upon the making of the payment of $500 Ray or his assigns should have possession of the property, with the privilege of working the same, and should pay to said owners a royalty of 10 per cent on the net proceeds; the royalty payments to be credited upon the deferred payment of $4,500.

Simultaneously with the execution of said option, another and separate agreement was made, whereby it was understood that in case Ray should make a sale he should receive a commission of 20 per cent. At the same time said owners executed a deed to Ray for said property, which was to be put in escrow upon the making of the initial payment of $500; said deed to be delivered

[43 Nev. 428, Page 433]

to him when the terms of the option agreement were complied with by Ray or his assigns. The execution of said deed and option was procured by Ray with the view of interesting one Gottstein in the property; but, the latter failing to take over the property, Ray sought a written extension of time in which to dispose of it. This the owners refused to grant, but Ray was informed that, if he found a purchaser for the property before the owners did, the terms of such option would be complied with.

Ray succeeded in interesting one Frank Margrave in the property, who on April 19, 1913, paid the owners the sum of $500, in accordance with the agreement of March 29, 1913, and the said deed was at that time placed in escrow with the Mercantile Banking Company of Lovelock, Nevada, to be delivered when the terms of the escrow agreement were complied with.

Ray received from plaintiff and his co-owners $100 of the $500 so paid them. Immediately after the said payment had been made and said deed placed in escrow, Ray, Margrave, and Mark Walser, who was associated with Margrave in the transaction, entered into possession of the property and proceeded to prospect the same and to extract and ship ore therefrom. In July, 1913, Ray, Margrave, and Walser organized the defendant corporation and became directors and officers thereof.

By deed of July 11, 1913, Ray transferred the said mining claims to Walser and Margrave, who by deed of the same date conveyed the property to the defendant company, both of which deeds were recorded on said date of execution. On April 19, 1914, the deed of March 29, 1913, held in escrow as above mentioned, was delivered, in accordance with the escrow agreement, upon the payment of the balance due, less $810 which the defendant claimed the right to withhold, being the balance claimed by Ray as commission, the defendant contending that as between it and Ray it was entitled to the same, and plaintiff and his co-owners waiving all claim thereto.

[43 Nev. 428, Page 434]

It is alleged by plaintiff that Ray, between April 10 and 19, 1913, made a discovery of ore upon said mining claims which “would have the effect of greatly increasing their sale value,” and intentionally declined to communicate to said owners the knowledge thereof, for the purpose of inducing them to carry out the terms of the agreement of March 29, 1913, and that on April 18 Ray took said Margrave upon the said mining claims and disclosed to him his (Ray's) knowledge of such discovery, and, for the purpose of preventing said owners from learning of such discovery, exacted of Margrave a promise to keep it secret in case he did not become interested in the property. Walser is also charged with knowledge of such facts at the time of the making of said first payment, as is defendant company as of the time of its organization.

Knowledge on the part of Ray, Margrave, and Walser of plaintiff's minority is alleged as of April 19, 1913, when said $500 payment was made, and that the defendant was aware thereof at the time of its organization.

It is also alleged that at the time of the making of said first payment said claims were of great value, and that plaintiff did not acquire knowledge of said discoveries of said Ray until on or about April 18, 1917.

A judgment having been entered in favor of the defendant, and a motion for a new trial having been denied, the plaintiff has appealed.

Sections 1 and 2 of “An act concerning conveyances of mining locations and claims by minors,” approved February 29, 1869 ...

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