Patrick v. Bowman/Dissent Brewer

The CHIEF JUSTICE and Mr. Justice BREWER dissented. See 13 Sup. Ct. Rep. 866.

I am unable to concur in the foregoing opinion. Accepting the rule laid down in Brooks v. Martin, 2 Wall. 70, as controlling, it is undisputed that no conveyance was made by Bowman to Patrick until October 19, 1892. It is undisputed that, long before that, Patrick knew of a large body of valuable mineral in the shaft, and that he did not communicate the fact of this discovery to Bowman. It is also not open to question that the property then conveyed was worth very much more than Bowman received. But it said that prior thereto there was a completed understanding that Patrick was to purchase Bowman's interest. What is meant by the term 'completed understanding' is doubtful. If by it is meant that a binding contract had been entered into before October 19th, I deny the fact. If only that Patrick knew the terms upon which Bowman was willing to sell, I deny that the law is that knowledge of such fact relieved Patrick from the obligation to make full disclosure up to the time of the actual purchase. It may be conceded that Bowman was willing to sell in consideration of the surrender of his note, and Patrick knew of this willingness; but can it be that knowledge by a resident partner that the nonresident partner is willing to sell at a fixed price releases him from the obligation of full disclosure, enables him to continue his explorations to discover the value of the property, and, when ore of large value is finally discovered, complete the purchase without disclosing that fact? I do not so understand the law. Until a definite contract has been entered into between the parties, binding alike on vendor and purchaser, and understood to be binding alike on both, the rule laid down in Brooks v. Martin compels the resident partner to make full disclosure. The question is not whether Bowman acted badly, but whether Patrick fully discharged the duties resting upon him as resident partner. If he says that, before the purchase was actually made, there was a completed contract which relieved him from his obligations of disclosure, must he not make it clear that such completed contract was in fact made? It is true, Bowman was willing to sell during June and July, providing he could get his note back; but this willingness to sell was based upon the facts as they then existed, or at least as known to him. The shaft had been sunk many feet; no mineral had been discovered; no indications of mineral disclosed. He might well have said, 'I am ready to abandon this if you will only give me back my note;' but can it be that this willingness to sell, communicated as it was to Patrick, will sustain a purchase in the succeeding October, after mineral had been discovered, the value of the property largely advanced, and without any disclosure of those facts to Bowman?

As the transactions between Patrick and Bowman, intermediate June 19th and October 19th, were all by letter or telegram, there can be no dispute as to what took place. It appears that Patrick wrote three letters after the interview of June 19th,-one June 22d, another June 27th, and a third June 28th. The first says this: 'In regard to your interest in the Col. Sellers, I think I know a man who will pay the note you gave me, ($288.69,) and take your interest off your hands. * *  * If you are willing to let it go on these terms, *  *  * please telegraph me immediately, and I will try and make the arrangement.' This letter did not reach Bowman until the 13th of July, when he telegraphed: 'Yours of June 22d received yesterday; proposition accepted; send note,'-to which Patrick replied, on July 15th: 'Acceptance too late; proposition was dependent upon an immediate acceptance in St. Louis. See my letter of 5th.'

How, out of this, a contract can be deduced, I do not understand. Patrick does not offer to purchase, does not say that he knows any one who will purchase, but simply asks Bowman if he is willing to sell at such a price, and promises, if so, to try and find a purchaser. It was this letter only which Bowman had received at the time of his telegram, and only the proposition or suggestion contained in it which he by that telegram accepted. It seems to me that it would puzzle a pleader to so frame a declaration as to show that that letter and acceptance created any contract between the parties.

Something is suggested as to an undisclosed principal, and it is said that the agent is bound when the principal is not. I do not appreciate the pertinency of that suggestion, for there is in this letter no assertion of an undisclosed principal for whom the agent makes the proposition. All that Patrick says is that, if Bowman will consent to sell upon the terms named, he thinks he knows of some one who will buy, and will try to make the arrangement. It is true that, on June 27th, Patrick does say that there is a party who will take the property on those terms, and it may be said that here is an allegation of an undisclosed principal. But that letter had not then been received by Bowman, and nothing in it was covered by his acceptance of July 13th. The acceptance specifically referred to the letter of June 22d, which contained the only proposition or suggestion which Bowman then knew. Out of that I can torture no binding contract, no 'completed understanding.' On the 15th, two days after this telegram from Bowman, Patrick telegraphed: 'Acceptance too late; proposition was dependent upon an immediate acceptance in St. Louis.' In the face of this, can it be said that there was a binding contract or a completed understanding? Did Patrick, when he sent this telegram, understand that he had bought Bowman's interest, or was bound by any contract of purchase? I do not understand the force of the English language if it can fairly be said, in the face of such a telegram from the subsequent purchaser, that there was a completed understanding between the parties in respect to the sale. Patrick's declaration that the acceptance was too late was justifiable if he had been theretofore acting in good faith. His three letters in June were all directed to Bowman at St. Louis, although he knew that Bowman was going to spend the summer in Wisconsin, and had given his address, 'Bayfield, Wisconsin.' Directing to St. Louis, and calling for a telegram immediately, was a notification that that was not a continuing proposition, but one which must be received and acted on immediately. If it was not a proposition requiring haste, he would naturally have addressed these letters to Bayfield, Wis., the address given by Bowman, and in the vicinity of his summer outing in the woods. Sending to St. Louis was because he thought he might possibly reach him before he left for the summer, and thus have the question settled promptly, and so, when he telegraphed on the 15th of July, he could properly say: 'Acceptance too late; proposition was dependent upon an immediate acceptance in St. Louis.' It is unnecessary to refer to the letter which Patrick claims to have written on July 5th, as it is conceded that that letter was never received by Bowman. It is significant, only, as indicating Patrick's state of mind, by these closing words: 'I withdraw my offer to return your note of $288.70, dated June 19th, 1882, in case you assign your interest in the contract to me.'

Reliance is placed on Bowman's letter, in which he used the words 'your proposition,' but this it seems to me is trivial. The proposition or suggestion was one which did come in a letter from Patrick; and though Bowman does not write out in detail the full description of that proposition, but refers to it in the brief way he does, that cannot enlarge the scope, or change the character, of the proposition as it was sent in the letter by Patrick. That meant only that which it said, and, when Bowman telegraphed an acceptance of that specific proposition, neither party was bound beyond the terms expressed. That made no binding contract of sale, and when Patrick, two days after Bowman's telegram, replied that the acceptance was too late, there was nothing concluded between the parties. That Patrick understood that there was nothing binding is further evidenced by the fact that before Bowman's telegram of July 13th, and on July 5th, he had received advice from his counsel that Bowman's interest could be obtained in another way, and without paying anything; and so, in attempting to carry out the plan suggested by counsel, he sent a letter to Bowman at the Merchants' Hotel in St. Paul, and drew a draft upon him at St. Paul for his supposed share of the expenses to date. To say that, while he was trying to obtain possession of Bowman's interest by proceedings of this character, there was a completed understanding between the parties for the purchase of that interest, is something I cannot understand. Evidently Patrick did not have the utmost reliance upon this plan suggested by his counsel, and although that draft was returned unpaid, yet, as the indications of approaching mineral became clearer, his desire to purchase from Bowman became stronger, and he concluded that the better way was to come back to the original proposition of purchase, and so, on August 2d, he sent a proposed contract. Still, as, at the date at which that contract was sent, it was not absolutely sure that mineral in paying quantities would be found in the mine, the contract which he sent to Bowman for his signature was simply a contract binding Bowman to sell, and not binding himself to buy. Obviously he was not then sure that he would purchase. He wanted to get an option from Bowman, something that would bind him to sell, and then sink the shaft a little further, and make some more developments, before he bound himself to purchase; and yet it is said that before this there was a completed understanding-a binding contract-between these parties for the purchase of Bowman's interest. Bowman, knowing nothing of the disclosures made by the sinking of the shaft, and not knowing that the indications of approaching mineral were stronger and clearer, was still willing to sell on the terms named, but was not willing to give an option to buy; and so on August 28th he prepared a contract binding both parties, and inclosed it in a letter to Patrick at Leadville, but, before it had reached there, Patrick had gone east. Nothing further took place until the day of the conveyance, October 19th.

It is suggested that Bowman evidently regarded the matter as settled, leaving only the details to be arranged. It seems to me the important question is not how Bowman, but how Patrick, regarded it. Did he understand that the thing was settled between them? Certainly not, when he telegraphed that the acceptance was too late; certainly not, when he sent a contract not for a purchase, but giving him an option to purchase, binding Bowman and not himself.

And, in this respect, Patrick's testimony as to his understanding of the matter is significant. On his direct examination he testified that the party he had in mind when he wrote the letter of June 22d was his own attorney in Leadville, Col. J. B. Bissell. His testimony was in these words:

'It was Col. J. B. Bissell, and when I came up to Leadville I spoke to him in regard to it, and he declined to take it, and declined to take the interest and pay that note, and, as I told Bowman, I was carrying all I could; so between the 22d of June and that time I changed my mind,-that is, between the 22d of June and July 5th,-in regard to it.'

In reference to the advice given him by Col. Bissell, he testified:

'He said it was no use of paying that note, or having anybody else buy it; when another assessment was due to draw on Bowman, and, if he does not pay your draft promptly, just apply to the owners of the Col. Sellers, that is, to Stebbins, Robinson, and others, for a new contract in your own name, leaving Bowman out; and when I wrote the letter of July 5th it was my intention to do that, and when I received Bowman's telegram of the 15th of July I so notified him in that telegram.'

Further on in his deposition appears the following, also on direct examination:

'Question. When was your partnership with the plaintiff in the working of the Col. Sellers and Accident mining claims under the contract (defendant's Exhibit A) terminated?

'Answer. It was terminated, as I regarded it, on the receipt of the plaintiff's letter of July 16th, and by my acceptance of the proposition contained therein, and the forwarding of the contract which was prepared by C. C. Parsons.'

'Q. You recognized it to be your duty as a partner, when you wrote a letter accepting what you call Bowman's proposition of July 16, 1882, to tell him what occurred before you wrote that letter, didn't you?

'A. I did not regard him as my partner after I received that letter of July 16th; he had not paid.

'Q. Didn't you regard him as your partner up to the time that you mailed an answer to that letter?

'A. Yes, but I accepted his proposition, and I thought that ended the partnership.

'Q. In your view, when did your partnership with Bowman end, when you received his letter of July 16, 1882, or when you mailed your answer to it?

'A. Take the two together.

'Q. It can't be both. When did you conclude that Bowman was not your partner, and was not entitled to the information?

'A. When I accepted his proposition of July 16th.'

According, therefore, to his own testimony, Patrick understood that the partnership relation, with the obligations of disclosure, continued until he had accepted the proposition in Bowman's letter of the 16th of July. When he mentally accepted that proposition, he alone knows or can tell. What he did after that was, on the 2d day of August, to send to Bowman, for signature, an agreement giving him an option to purchase, which never was signed. The contract which Bowman did prepare-a contract binding both parties, and which Bowman signed and forwarded on August 28th-was not signed and forwarded until after mineral had been in fact discovered, and was so signed and forwarded by Bowman in ignorance of that fact.

Were not the discoveries in the mine such as should have been disclosed? Let us see what there is in this record that does not depend upon the recollections of witnesses. On July 5th, Patrick writes to his brother, saying: 'The shaft in the Col. Sellers is looking very promising: For several feet the porphyry has been heavy iron-stained, and I have good reasons for thinking that we are near the contact. Acting on Col. Bissell's advice, I to-day write to Bowman telling him that, if he did not pay up, I would apply to the owners of the ground for a new contract in my own name, and leave him out. I don't suppose he will pay, but I will let you in on the new one on the same terms you are in the old.' On July 30th this appeared in the Leadville Herald: 'The Col. Sellers shaft, on Iron Hill, is now down about 215 feet. Some small streaks of ore have already been cut, one of them assaying nineteen ounces in silver. The sinking of the shaft is progressing rapidly, with the prospects that expected ore bodies will soon be cut.' And Patrick was in Leadville at that time. On August 10th, in the same paper, appeared this statement: 'Late Tuesday night [which would be August 8, 1882] ore was encountered in the shaft of the Col. Sellers on Iron Hill, appearing first in one corner of the shaft. The ore is pyrites in character, and is pronounced to be identical with that which was first cut in the A. Y. mine, which it adjoins. It is probable that it will be necessary to pass through several feet of it before the same class of ore which has enabled the A. Y. to make such shipments will be reached. The property is owned by W. F. Patrick, Charles Stebbins, George Simmons, John Livezey, and others.'

But we need not stop with this. On August 16th a contract was signed by Patrick and the original owners of the mine, in which it was recited that 'a lode or vein is now by all believed to have been struck,' and which provided for the delivery of the deed called for by the original contract, which deed was, in fact, delivered on August 31st. We need not resort to the parol testimony of which there is an abundance, but may rest upon this written contract to prove that, within 32 days after Patrick had telegraphed that Bowman's acceptance was too late, a vein of mineral had been discovered in this shaft, and that this discovery, known to Patrick, was made two months and three days at least before the deed was acquired from Bowman. Parol testimony tends to show that the discovery was made at a much earlier date. Did Patrick at this time understand that a purchase had been made? We have seen that this correspondence with Bowman does not show a binding contract, and we have noted his own version of the matter, but there is still other testimony very significant. A letter from his wife to his brother-the brother whose interest in the mine Bowman was carrying for a year-was produced, which is as follows:

'Knoxville, August 21, 1882.

'Dear Jemmie: I have just received a letter from Will, in     which he tells me I was mistaken about his securing B.'s      interest in the Col. Sellers. He only had the written promise     of it. The deed has not been delivered to him. In my letter     to-day he tells me to caution all of our home folk not to      mention the success of the prospect, and adds: 'If you have      said anything to home folk about the Col. S., caution them      not to mention it, whatever they do, for if it should get to      St. L., and to B.'s ears, it might cause me considerable trouble and      expense to get him out of the contract. Please caution the     family not to mention it until I get a deed from B.'

'I am sorry I have said anything about it, but, as I have,     for pity's sake do not tell it, or if, like myself, you have      said anything to Fannie or Mr. McM., do write immediately and      ask them to keep it secret, so much depends upon a rigid      silence. As Will said, if Mr. Bowman hears it, he can cause     him a great deal of trouble, to say nothing of the expense. I     feel dreadfully, and I shall never again put myself in this      position. I am going to the 'Quarry' early to-morrow to     caution mother and father. Do help me to keep this business     as quiet as possible. You see at a glance how much depends     upon it. My sister is not so well to-day, although she is     better than when I first came. With love and an earnest     request that you will burn this as soon as received, I am,      hastily and truly,

'Annie.'

And a letter of date August 28th, from this same brother, James M. Patrick, to his wife, in which he says: 'Willie has written to Annie (and she to me) telling her that there was an interest in the Col. Sellers which he wished to buy before the news of the strike got out, and wanted her and I to keep the matter quiet for a few weeks, until he could get the deed.' These letters show that it was known in the family that mineral had been discovered, and discovered long enough before August 21st for two or three letters to have passed between Knoxville and Leadville. Patrick had not, as shown by these letters, secured Bowman's interest. He had, it is true, received a letter from Bowman of July 16th, in which the latter expressed his willingness to sell, said that he would not stand in his (Patrick's) way, and that, if he (Patrick) wished any papers signed, to send them to him. In other words, he knew that Bowman was willing to sell, and had so expressed himself; he had not bought, and wanted the matter kept secret until the purchase was consummated.

Taking these letters in connection with the correspondence which passed between these parties and Patrick's own testimony, it seems to me strange to say that there was a 'completed understanding.' It will not do to hold that, because Patrick had received Bowman's declaration of his willingness to sell,-a declaration made in ignorance of any discovery of mineral,-he (Patrick) could mentally accept Bowman's offer, and, without disclosing the fact that mineral had been discovered, proceed to secure a conveyance.

For these reasons I dissent from the opinion of the court, and I am authorized to say that the CHIEF JUSTICE concurs in this dissent.