Elling v. Fine

¶1delivered the opinion of the court. In this case it is admitted by the pleadings, established by uncontradicted evidence, or found by the court: That the defendant, B. J. Pine (the appellant here), and one J. H. Pankey were, on January 28, 1895, indebted to Henry Elling in the sum of $93,494.62, all incurred in the purchase, maintenance and operation of certain mining properties situate in Madison county, among them ten unpatented claims and mill sites, referred to as the “Easton group,” which are the subject of the present controversy. On that day Pine and Pankey executed, and a few days later delivered to Elling, an instrument, in form a deed absolute, conveying the properties so owned by them to him. At the same time and as part of the same transaction Elling (his wife joining) entered into a written agreement with Pine and Pankey, which agreement recited the execution of said deed and the desire of Pine and Pankey to have “the privilege of repurchasing” the Easton group, and provided that Elling would “resell and reconvey” the same to Pine and Pankey if they should on or before February 1, 1899, pay or cause to be paid to Elling “the sum of $93,494.62, together with interest thereon * # * at the rate of 10 per cent per annum, and the necessary, proper and legitimate expenses of operating, preserving and maintaining the title and right to the possession of said property, … with interest on such amounts at the same rate.” Other stipulations of this agreement are these: That *485Elling, if he worked the property, must do so “in miner-like fashion and in a manner conducive to the best interests of all the parties to the contract”; that any profits derived from such operations “shall be credited” on the sum fixed as the repurchase price (viz., $93,494.62); that the costs of improvement and operation “shall be a charge against the property and shall bear, interest at the rate of 10 per cent per annum” that Elling “shall keep a just, true and accurate account” of his receipts from and expenditures on behalf of the property; that “either party to this contract may negotiate a sale” of the property, “but no sale can be made by either … without the consent of the other party in writing”; that if Elling “shall negotiate a sale … he shall receive one-third … of the proceeds over and above the sum of $93,494.62, with interest, … costs, and expenditures,” but if Fine and Pankey should negotiate a sale, Elling “is to receive nothing” over and above said sum, with interest, costs and expenses; that Elling must maintain and defend the title and possession of said property against all persons and protect it from waste or destruction; and that Fine and Pankey, or either of them, shall have the right “at any time and at all reasonable times to enter upon the premises for the purposes of examination and inspection.” Elling went into possession immediately, and from that time remained in the sole and exclusive possession of the property, working and developing it until his death in November, 1900. Thereafter the executors of his will continued to possess, operate and develop the property, until by decree of the district court of Madison county it was formally distributed to the plaintiffs as heirs at law and devisees of Henry Elling, since which time the plaintiffs have possessed, operated and developed the same. During the period elapsing since January 28, 1895, said Henry Elling, his executors, and these plaintiffs have paid all taxes levied against said property, have made large expenditures in mining, developing and improving the same, such expenditures over and above all receipts derived therefrom amounting in 189.9 *486to $52,627.93, which, with the purchase price, made a total of $146,122.55, and all this without accounting to anyone. Meanwhile, and on February 21, 1896, there was issued to Henry Elling, and on March 23, 1896, by him recorded, a patent from the United States granting the Easton group in fee simple to him. The value of this property was always speculative and fluctuating in character, never demonstrably greater than $93,494.62. With full knowledge of all that had been .or was being done, Fine and Pankey stood by demanding no accounting, questioning no act, offering no repayment, nor, save some verbal declarations to-strangers made by Fine shortly before the plaintiffs brought this suit in February, 1913,' had he or Pankey asserted any claim to the property, and Pankey does not now assert any such claim. Fine’s contention, as set forth in his counterclaim, is that the transaction whereby Elling became possessed of the property in question was intended as security for the repayment of the indebtedness then due from Fine and Pankey as above mentioned, and that said transaction therefore amounts to a mortgage, from which he ought now to be permitted to redeem by paying such sum as may, after accounting by the plaintiffs, be found to be still due. The trial court, though requested by both sides to find upon this contention, failed to do so specifically, but held that Fine is barred by laches from making this claim or asserting any right to or interest in the property, and also that his ‘ ‘ cause of action set up in his counterclaim herein is barred by the provisions of the statute of limitations of this state.” As the result plaintiffs were adjudged to be the absolute owners of the property and their title to the same was quieted as against Fine. ■ Hence these appeals.

¶2[1] We may premise at the outset that, if upon the face of the instruments the transaction, made up of the deed and contract, clearly amounts to a mortgage, the judgment is wrong; for, “once a mortgage always a mortgage,” plaintiffs had no title, and could get none by the failure of Fine to assert what was obvious on an inspection of the record. But such is not, *487upon its.face, the effect of the transaction.

¶3[2] The deed is absolute and conveys twenty-seven separate lodes and mill sites. The contract bears date two days later than the deed, and Elling’s wife joined in its execution. Of the twenty-seven lodes and mill sites it covers and agrees to reconvey only the ten comprised in the so-called Easton group. It contains no reference to a loan, no mention of any indebtedness, no engagement by Fine and Pankey to pay or do anything; although some of its provisions, such as those mentioned above, are remarkable, they are not necessarily inconsistent with its expressed purpose to confer upon Fine and Pankey an option to repurchase property theretofore conveyed by them absolutely to Elling. Prima facie the transaction was a sale to Elling with an option to Fine and Pankey to repurchase. (Gassert v. Bogk, 7 Mont. 585, 1 L. R. A. 240, 19 Pae. 281.)

¶4[3] To reach the conclusion that it was intended as a mortgage, resort to extrinsic evidence was necessary. This means that the burden was upon Fine (Gassert v. Bogk, supra; Riley v. Blacker, 51 Mont. 364, 152 Pac. 758), and that he could be barred by laches from making the contention (Riley v. Blacker, supra; Harrington v. Butte & Superior Copper Co., 52 Mont. 263, 279, 157 Pac. 181; 27 Cyc. 231).

¶5[4] The trial court held that he was so barred, and we can see no reason for denying this conclusion. The time within which it became the duty of Fine to challenge the apparent effect of the transaction commenced to run on February 1, 1899, when the option contract expired, and he became charged with the knowledge that Elling might • thereafter treat the property as unaffected by any claim. From that time until the heirs of Elling commenced this suit more than thirteen years elapsed, during which Fine stood idly by while Elling treated the property as his own, spent money upon it, paid the taxes, and died; while the executors of Elling’s will operated the property, spent money for its improvement and paid the taxes upon it; while the property passed through probate proceedings and was by decree formally distributed to Elling’s heirs, and while they, as *488such heirs, have operated the property and paid the taxes on it ever since. Riley v. Blacker, su-pra, presented a similar situation, concerning which we said: “Laches, considered as a bar independent of the statute of limitations, is a concept of equity; it means negligence in the assertion of a right; it is the practical application of the maxim, ‘Equity aids only the vigilant’; and it exists when there has been unexplained delay of such duration or character as to render the enforcement of the asserted right inequitable. Therefore has it often been held by this court that: While a mere delay short of the period of the statute of limitations does not of itself raise the presumption of laches (Wright v. Brooks, 47 Mont. 99, 130 Pac. 968; Parchen v. Chessman, 49 Mont. 326, Ann. Cas. 1916A, 681, 142 Pac. 631, 146 Pac. 469; Brundy v. Canby, 50 Mont. 454, 148 Pac. 315), yet ‘good faith and reasonable diligence only can call into activity the powers of a court of equity, and, independently of the period fixed by the statute of limitations, stale demands will not be entertained or relief granted to one who has slept upon his rights. Considerations of public policy and the difficulty of doing justice between the parties are sufficient to warrant a court of equity iii refusing to institute an investigation where the lapse of time in the assertion of the claim is such as to show inexcusable neglect on the part of the plaintiff, no matter how apparently just his claim may be; and this is particularly so where the relations of the parties have been materially altered in the meantime.’ (Kavanaugh v. Flavin, 35 Mont. 133, 88 Pac. 764; Streicher v. Murray, 36 Mont. 45, 92 Pac. 36; Brundy v. Canby, supra.)What constitutes a material change of condition has been the subject of much judicial discussion and some judicial dissension; but, whatever doubt there may be as to other circumstances, it never has been questioned, to our knowledge, that the death of one of the parties to the transaction is such a change.” To the same effect, see 16 Cyc. 163, 164, and cases cited.

¶6*489[5] The only explanation Fine offers for his delay is lack of funds; he didn’t want to start anything” until satisfied of his ability “to go through with it.” However appropriate this stand may be, considered as business strategy, it has no virtue in the field of equity where Fabian tactics are always dangerous. Especially futile must it be to avoid the effect of inaction so prolonged as here, when there were things he could have done — such as to proclaim his position, to demand an accounting, to protest against expenditures he now seems to question — which required no outlay whatever. Under the circumstances here shown, lack of funds is no excuse (16 Cyc. 159, and cases cited; Leggett v. Standard Oil Co., 149 U. S. 287, 37 L. Ed. 737, 13 Sup. Ct. Rep. 902; Hayward v. National Bank, 96 U. S. 611, 24 L. Ed. 855; Carter v. Mayor of Chattanooga (Tenn. Ch. App.), 48 S. W. 117; Bower v. Stein, 177 Fed. 673, 101 C. C. A. 299.), and the court was clearly right in applying the doctrine of laches (Riley v. Blacker, supra; Maher v. Farwell, 97 Ill. 56; Schradski v. Albright, 93 Mo. 42, 5 S. W. 807; Turner v. Littlefield, 46 Ill. App. 169; Broaddus’ Heirs v. Potts, 140 Ky. 583, 131 S. W. 510; Elliott v. Bunce, 10 Cal. App. 741, 103 Pac. 897; Goree v. Clements, 94 Ala. 337, 10 South. 906; Chapman v. Bank of California, 97 Cal. 155, 31 Pac. 896; Mellish v. Robertson, 25 Vt. 603; Harter v. Twohig, 158 U. S. 448, 39 L. Ed. 1049, 15 Sup. Ct. Rep. 883; Baird v. Baird, 48 Colo. 506, 111 Pac. 79; Fitch v. Miller, 200 Ill. 170, 65 N. E. 650; Landrum v. Union Bank, 63 Mo. 48).

¶7If, then, Fine was barred by his laches from raising the question of mortgage or no mortgage, the court below was justified in failing to specifically find upon the subject; indeed, such a finding would have been a pure gratuity. We may remark, however, that if, as respondents insist with some reason, a fair inference from the language of the findings made is that the transaction was in fact what it appears to be, viz., a deed absolute with an option to repurchase, we should not be inclined to disturb that conclusion, because we cannot say from a careful *490reading of this record that the evidence clearly preponderates against it.

¶8Appellant assails with much force the finding that Fine’s cause of action as set forth in his counterclaim “is barred by the provisions of the statute of limitations of this state.” This finding is rather vague, since it does not indicate what provisions of the statute of limitations are held to be a bar, and it may be that appellant’s criticisms are sound; but if the appellant is barred by laches, and that conclusion is sufficient, as it clearly is, to sustain the judgment, the question of limitations becomes of no importance.

¶9The other matters, assigned as error could not command a reversal, and therefore will not be further considered.

¶10The judgment and order appealed from are affirmed.

¶11Affirmed.