Benavides v. Hunt (79 Tex. 383, 1891)

STAYTON, Chief Justice.

This suit was brought by A. 0. Hunt for himself and other plaintiffs, beneficiaries under a contract to be hereafter set out, to recover possession of the mines named in that contract and to enforce such rights as they may have thereunder.

The contract of lease was set out in full by the plaintiffs and is substantially as follows:

“Articles of agreement entered into this 25th day of May, A. D. 1881, between C. M. Macdonell and Teresa Pisana Benavides, of the city of Laredo, county of Webb, and State of Texas, of the first part, and A. C. Hunt, trustee, of the second part, witnesseth:

“The parties of the first part hereby let, lease, and donate unto the parties of the second part the right to mine coal or other minerals on all that tract of land in the county of Webb, State of Texas, known as the Santo Tomas Bauch, fronting on the Bio Grande, between El Arroyo Santo Tomas and El Arroyo de la Llave, with a depth of six leagues, reserving to themselves the use of the land for grazing or farming; to have and to hold the above described mining rights unto the parties of the second 23art for the full term and period of fifty years, upon the following terms and conditions, to-wit:

“1. The said second parties 2>romise and agree to furnish all the material, tools, implements, machinery, capital, and labor requisite and necessary for the working and development of any coal mine or mines -that may be found on said land.

“2. The second parties to have the exclusive privilege to mine coal or other minerals on said land during the continuance of said terms, to have the privilege of taking sufficient wood, timber, rock, or any other material on said land for the purpose of said mining enterprise, and to have the right to erect and put up all necessary buildings or structures for carrying on the business of said mining enterprise; and in case said mining enterprise should not be successful the second parties shall have the right to remove all engines, tools, machinery, buildings, and other fixtures.

“3. The first parties shall be owners of a one-third part of said mining enterprise, and shall receive one-third of the net profits realized therefrom in the following proportions, that is to say, the said C. M. Macdonell is to have and receive three-fifths of said one-third and Teresa Pisana Benavides two-fifths of said one-third.

“4. One-fourth of the profits so accruing to the parties of the first part shall be applied to the payment of one-third of the capital invested in said mining enterprise by the parties of the second part and the remaining three-fourths shall be paid over to the first parties as dividends or gains.

“5. The second parties shall have the exclusive control, management, and direction of said mining enterprise.

“ 6. The first parties shall be allowed at all reasonable hours to inspect the books and accounts of said mining enterprise.

“7. An account shall be taken and dividends or losses declared every six months after the commencement of operation.

“ 8. Interest shall not be charged against the first parties on their ,one7 third unpaid capital, nor shall they be liable for any losses.

. “9. The second parties shall begin in good faith the execution and performance of their agreement on or before the 15th day of May, A. D. 1881.

“10. This agreement shall be in force from and after the 15th day of May, A. D. 1881. Upon a dissolution of said mining enterprise the first parties shall be entitled to receive a pro rata share of the capital paid in by them. Said second parties obligate themselves to use all economy in the conduct and management of said mining enterprise.

“O. M. Macdonell,

“ Teresa Pisana de Benavides,

“Alex. C. Hunt.”

The evidence shows that Hunt in good faith began developing the mine within the time prescribed by the contract, and that this he continued actively until some time in April, 1884, during which time he had expended for this purpose as much as $50,000, no part of which was furnished by the defendants.

The mine was situated some distance from any railway, Laredo being perhaps the nearest point at which a railway could be reached. Coal was found and worked, but for want of other or cheaper transportation it was conveyed to Laredo for some time in wagons, but the cost was such that coal was sold at a loss.

Prior to April, 1884, a railway had been constructed from Laredo to the coal mines, and this seems to have been done through the exertion and influence of Hunt, who was connected with it; but there seems to have been between the mining and railway enterprises no other relation than such as exists between a common carrier and those who furnish freight.

In April, 1884, from some cause active work in the mine ceased, but the evidence tends to show that from that time until defendants took possession of the mine some work was done and the mine in possession of and cared for by persons in the employment of Hunt.

It does appear, however, that at some time prior to September 22,1884, the railway running from Laredo to the mines was placed in the hands of a receiver, who for some reason unexplained assumed the light to control the mine.

Hunt seems to have had knowledge of this, but whether the receiver was acting under authority from him or for him, or assuming such charge on the belief that the receivership extended to the mine as well as the railway, is not shown.

It does appear, however, that there was a person in charge of the mine and keeping it in order who was employed by Hunt for that purpose, but that without the consent of Hunt or the person left by him in charge of the mine, on September 22,1884, a person acting for and under authority of 0. M. Macdonell and Mrs. Benavides took possession of the mine and has since held and operated it, and refused to surrender possession to Hunt or any person for him, though demand has been frequently made from the time appellants took possession.

The evidence shows with reasonable certainty that books were kept by Hunt or under his authority, and does not show that opportunity to inspect them was ever refused either to Macdonell or Mrs. Benavides,, though it does appear that one Mo wry, as agent of Mrs. Benavides, desired to see the books and did not succeed. His evidence, as set out in brief for appellants, is as follows:

“Am one of the defendants. Mrs. Benavides, defendant, is my wife’s mother. I have acted as agent for her since latter part of 1881. . I never saw a statement from Governor Hunt declaring losses or dividends from the working of these coal mines. Never received such statement either for her or myself. I never saw the books kept relating to the transactions of these coal mines. I tried to see them. We called on Governor Hunt several different times, and also on Hungerford, for the privilege of examining the books, and were referred to the Mexican National Railway Company. We called there several times, but did not get to see any books or papers. During the three yeárs in which Hunt had possession of the mines, from 1881 to April, 1884, no statement relating to the business transactions showing losses or gains was ever prepared or presented to us in any way, shape, or form. I demanded the right to examine the books, but did not see them, and do not know of my own knowledge that any books were kept.'

“The last time I went to see Mr. Thacher (Mexican National Railway Company) Mr. Macdonell was with me. Mr. Thacher told us the books were in a desk in the office there. It was about the 1st of the month. They were busy and he asked us to come again. We were again told that the books were kept at,the Mexican National Railway Company office. I don’t know why they were kept there. So far as I know, Governor Hunt never kept any books. He never told me he kept them. When I went to him for the books he referred me to the Mexican National Railway Company. I never got any moneyfrom Governor Hunt; neither did those I represented. Macdonell and I and the other parties took possession of this mine when the receiver abandoned it in September, 1884. We are getting something now from these mines. I think it was in the first part of 1882 when I first went to Governor Hunt to look at the books and he referred me to Thacher. The three efforts to see the books were made within a period of two months. I think it was in May or June, 1882.”

A. W. Wilcox, for plaintiffs, testified: ■ “Hunt went to work developing the mines in May. I came here in September following. The books of the concern were kept in Laredo. Simply a tally book for the miners was kept at the mines. The main books of the-transactions of the concern were kept at Laredo, first at the Wilson House, and also at the railway office. We had our books there at first, but Mr. Clifford took charge of the books after that, separate from the railway office. My understanding was that the books were open to the inspectioú of any one that wanted to see them. To the best of my belief the accounts of the business were footed up every month to show whether it was earning or losing and a statement made every six months. Of course I have not got the books. I would like to know myself where they are. 1 expect the Rio Grande & Eagle Pass Railway could produce them.”

Hunt’s evidence in this respect was as follows: “ The accounts of the mining enterprise were kept in Laredo. Mr. Johns had charge of them; Mr. Spinelli also, and then Mr. Clifford, whose business was at the mines. Macdonell and Benavides had free access to the books. The books were kept here in Laredo and were always open. I instructed Mr. Johns to allow them to inspect the books whenever they came. ' They were balanced all the time. The books were well kept. I instructed that accounts .should be cast up and losses and gains declared every six months after work began. Of course expenses were so heavy it was always running behind. During the whole of the three years while I operated the mines I' nowhere near realized enough money to pay the current expenses of the business.”

It appears that General Palmer, who was connected with the Mexican National Railway Company, was one of the beneficiaries under the contract hereinbefore set out, and that on this account the books were kept for a time at the office of that company.

This suit to recover possession of the mines was brought by appellees on August G, 1889, and appellants defended on the ground that the action was barred by four years adverse possession; and on the further ground that there had been a failure on the part of Hunt to .perform the terms and conditions expressed in the contract between the parties, which entitled the owners to re-enter and hol