Iron Cliffs Company v. Negaunee Iron Company

This case was begun in the circuit court of the state of Michigan by the defendants in error, the Negaunee Iron Company, Edward N. Breitung, and Mary Kaufman, against the Iron Cliffs Company, the Cleveland Cliffs Iron Company, William G. Mather, and Murray M. Duncan. The defendants in error, plaintiffs in the court below, claimed to be the owners of certain premises upon which there was an outstanding lease purporting to run for a term of ninety-nine years from its date, September 17, 1857, made by Charles Harvey to the Pioneer Iron Company. As the controversy in this court centers about this lease, the allegations of the bill in respect thereto may be noticed. It is alleged that the interest conveyed by Harvey on the 17th day of September, 1857, to the Pioneer Iron Company was for the sole purpose of mining and quarrying at its own expense such ores and marble as might be found on the premises, subject to the qualification that the said company should not quarry, mine, or remove any ore from said lands, except such as it could actually convert into merchantable iron in its own furnaces and forges, being the furnaces and forges then being constructed or about to be constructed by the said company at Negaunee. Complainants allege that at the time of the filing of the bill they were, and for more than fifteen years theretofore had been, in the actual and exclusive possession of all the lands described in the bill, and the ore and marble thereon, claiming to be the exclusive owners thereof. That said Pioneer Iron Company, in the month of September, 1859, erected two certain ore furnaces at Negaunee, instead of one furnace, as contemplated at the time of the execution of the grant or lease by Harvey to the Pioneer Iron Company.

That said Pioneer Iron Company carried on the business of manufacturing iron at its said furnaces from the time they were constructed until about the 1st day of January, 1866. That said Pioneer Iron Company, in carrying on its said business, procured no iron from the premises, or any portion of the premises described in said lease executed by the said Charles T. Harvey to the said Pioneer Iron Company, but procured all of their ore for the manufacturing of iron from other lands.

Complainant alleges that on the 1st day of January, 1866, the Pioneer Iron Company ceased to do business, and has not since that time manufactured or operated under the lease, but, on the contrary, at and from the date aforesaid abandoned the same. On the 10th day of March, 1866, the Pioneer Iron Company entered into an agreement with and leased to the Iron Cliffs Company for the period of ten years its entire real and personal property situated in the county of Marquette, Michigan, consisting of all its iron works, buildings, lands, and property rights. That after making said lease and agreement with the Iron Cliffs Company the said Pioneer Iron Company made and filed no reports as required by the laws of the state of Michigan.

'That at some time prior to the 1st day of January, 1873, the said Iron Cliffs Company became the owner of all the capital stock of said Pioneer Iron Company, and said stock has since that time been held in the names of different individuals for the uses and purposes of said Iron Cliffs Company, and the certificates of stock representing said capital stock of said Pioneer Iron Company have been and now are held in the names of different individuals who are officers, directors, stockholders, agents, or servants of the said Iron Cliffs Company and of the Cleveland Cliffs Iron Company, a corporation organized under the laws of the state of West Virginia and doing business at Negaunee, in said county of Marquette, Michigan, which two corporations have been operating together in the conduct of their business, and whose officers and agents are in the main the same persons; that said stock is held as aforesaid for the use and benefit of said Iron Cliffs Company and the said Cleveland Cliffs Iron Company.

'That on the 2d day of April, A. D. 1887, the corporate existence of said Pioneer Iron Company, by the terms of its articles of association, expired by limitation, and said corporation became and was thereby dissolved; and that whatever rights, if any, the said Pioneer Iron Company had and held under and by virtue of said lease, were thereby terminated and extinguished, and such rights and interest thereby reverted to and became vested in said Charles T. Harvey and his grantees.

'That all the lands hereinbefore specially described are mineral lands, and have therein large deposits of valuable iron ore, and that the chief value of said lands consists in the iron ore situated therein, and the mining and removing therefrom of said iron ore by the defendants would take from said lands their principal value, and would work and would be to your orators an irreparable injury.

'That the officers and agents of said Iron Cliffs Company and said Cleveland Cliffs Iron Company, who are engaged in and carrying out the said scheme and plan to defraud your orators, and to mine and remove the iron ore from said lands under the cover and by the use of the name of the Pioneer Iron Company, are, so far as they are known to your orators, William G. Mather, who is the president of said Iron Cliffs Company and also president of said Cleveland Cliffs Iron Company, and Murray M. Duncan, who, your orators are informed and believe, and upon information and belief charge the truth to be, is the managing agent of the said Iron Cliffs Company and of the said Cleveland Cliffs Iron Company. That said Duncan and said Mather and their confederates, as aforesaid, well know that the corporate existence of the said Pioneer Iron Company has long since been terminated and said corporation dissolved, and that the rights and privileges granted in said lease of date September 17, 1857, have reverted to the said Charles T. Harvey and his grantees; notwithstanding which said Duncan, under the pretense that he is acting as agent of said Pioneer Iron Company, is engaged in superintending and directing said work which is being done on said lands by various persons who are laborers acting under his orders.'

The prayer of the bill is—

'(1) That by the decree of this honorable court, all the rights and privileges in the mineral and stone granted in said lease, executed by the said Charles T. Harvey as aforesaid, to the said Pioneer Iron Company, be declared to be terminated and of no binding force or effect as against your orators or their said lands.

'(2) That in so far as it affects your orators' said lands, said lease be canceled and the cloud upon your orators' title as aforesaid be removed, and your orators' title to all the iron ore and marble in and upon their said lands be quieted and confirmed in your orators.

'(3) That the said William G. Mather, Murray M. Duncan, the said Iron Cliffs Company, and the said Cleveland Cliffs Iron Company, and their officers, directors, agents, attorneys, and employees, be perpetually enjoined and restrained from setting up in the name of said Pioneer Iron Company or in any other manner any right or title, under said lease from said Charles T. Harvey to said Pioneer Iron Company, in or to your orators' said lands, and entering upon or removing from said lands any iron ore or marble, and for such other and such further relief as to the court shall seem meet and proper.'

One of the defendants, Murray M. Duncan, answering separately, took issue upon the allegations of the bill, and denied specially that the Pioneer Company is dissolved, or any of its rights or property under the lease or conveyance terminated, and avers that the said Pioneer Iron Company is still the owner of the property rights and interests granted and conveyed; admits that he, as an agent of the said company, has actively engaged in conducting operations on some of the lands covered by the conveyance, for the purpose of discovering iron ore to be used in the furnaces of the Pioneer Iron Company, and that if ore sufficient in quantity and quality is discovered on the premises the said Pioneer Iron Company intends immediately to purchase the right to the surface, as required in the agreement, and intends to continue explorations until it finds ore on said lands for the use of its furnaces, or discovers the nonexistence of such ore; and further says that he has no personal interest in the lands set forth in the bill, but in all his actions is merely the agent of the Pioneer Iron Company, and not the agent of any other corporation or person whatsoever.

The Iron Cliffs Company and Cleveland Cliffs Iron Company and William G. Mather answer together, taking issue upon the allegations of the bill, admitting the existence of the lease of the Pioneer Iron Company, and aver that the entering and explorations on the lands were made and have been carried on by the Pioneer Iron Company, and deny that the charter of said company has expired; admit that said company through its agents has continued to carry on the operations begun by the Pioneer Iron Company under the direction of William G. Mather, as one of the officers of said company, and deny any interest in the matter set forth in the bill except as some or all of them may be stockholders or officers in the Pioneer Iron Company.

After issue joined and proofs taken, the bill of complaint was amended so as to charge that the defendants claim and pretend that under the provisions of number 142 of the Public Acts of 1889, and under number 60 of the Public Acts of 1899 of the state of Michigan, said Pioneer Iron Company has been reorganized, and that by reason of said act such reorganized company had the right to mine ore under the said lease. The defendants answered the amendment, and admitted that in April, 1901, the Pioneer Iron Company had caused to be filed in the office of the secretary of state and in the office of the clerk of Marquette county certain perfected articles of incorporation of the said company in renewal of the original organization of said company, and under said reorganization, as well as previous filings, claimed to be a valid corporation. The record discloses that certain articles of association undertaking to reorganize the Pioneer Iron Company were adopted October 18, 1889, and filed in the office of the secretary of state, April 8, 1900, and amended articles were filed on April 8, 1901.

And, raising a Federal question, William G. Mather made the following answer:

'And this defendant, William G. Mather, answering for himself, says he owns in his own right and as trustee 3,940 shares of stock of said company; and that if any decree be rendered in this case by the court in any way declaring a forfeiture or termination or expiration of said ninety-nine-year lease, or in any way affecting the rights of the Pioneer Iron Company thereunder, that said Pioneer Iron Company not being made a party to this proceeding, he as such stockholder, and said Pioneer Iron Company would thereby be deprived of its and his property without due process of law, in violation of the provisions of the 14th Amendment of the Constitution of the United States, which forbids any state to deprive any person of life or liberty or property without due process of law; and this defendant avers that any decision or findings of the court in any way limiting, terminating, changing, modifying, annulling, or diminishing the value of any of the rights of the Pioneer Iron Company under said ninety-nine-year lease, and as expressed therein, would be void and of no effect under said provision of said Amendment of the Constitution of the United States.'

Upon hearing, the circuit court, after setting forth certain findings, entered the following decree:

'Now, therefore, in consideration of the foregoing findings and determinations of the court concerning the particular matters set forth in the complainants' bill of complaint, it is ordered, adjudged, and decreed that the defendants, their counselors, attorneys, solicitors, and agents, and each and every of them, whether acting in their individual or representative capacity, immediately vacate and remove from the lands described in the bill of complaint, and that they and each of them be and they hereby are perpetually enjoined from further entering upon the said lands of the complainants for the purpose of exploring for or taking therefrom any minerals or iron ore, or for any purpose whatever, without the consent and authority of the complainants.'

This decree, upon appeal, was affirmed by the supreme court of Michigan. 96 N. W. 468.

From this judgment a writ of error was sued out to this court.

Messrs. James H. Hoyt, Elihu Root, and Hoyt, Dustin, & Kelley for plaintiffs in error.

Messrs. Scott W. Shaull, Benton Hanchett, Arch B. Eldredge, H. F. Pennington, and Charles R. Brown for defendants in error.

Mr. Justice Day delivered the opinion of the court: