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WATERMAN V. BANKS, 144 U. S. 394 (1892)
U.S. Supreme Court
Waterman v. Banks, 144 U.S. 394 (1892)
Waterman v. Banks
Argued March 7-8, 1892
Decided March 28, 1892
144 U.S. 394
J.S.W. having advanced to his brother R.W.W. moneys to aid him in developing mines the title to which was in dispute, and being about to
advance further sums for the same purpose, the latter executed and delivered to him an agreement as follows:
"San Bernardino, Cal., May 14th, 1881. -- For and in consideration of one dollar to me in hand paid, the receipt whereof is hereby acknowledged, I hereby agree that at any time within twelve months from this date, upon demand of J. S. Waterman or his heirs, administrators or assigns, I will execute to him a good and sufficient deed of conveyance to an undivided twenty-four one-hundredths (24/100) of the following mines, known as the Alpha, Omega, Silver Glance and Front, each being 600 feet wide by 1500 ft. long, and the same interest in all lands that may be located or has been located for the development of the above mines, with such machinery and improvements as is to be placed upon same, all subject to the same proportion of expenses, which is to be paid out of the development of the above property, all situated near the Grape Vine, in the County of San Bernardino, California."
(1) That, taken in connection with the evidence, this conveyed to J.S.W. no present interest in the property, but only the right to acquire such an interest within a period of "twelve months from this date."
(2) That time was of the essence in such a contract for acquisition.
The principle that time may become of the essence of a contract for the sale of property from the very nature of the property itself is peculiarly applicable to mineral properties, which undergo sudden, frequent, and great fluctuations in value and require the parties interested in them to be vigilant and active in asserting their rights.
The Court stated the case as follows:
This appeal brings up for review a decree requiring R. W. Waterman, the original defendant, to convey, free from encumbrance, to Abbie L. Waterman, the original plaintiff, and the widow and assignee of J. S. Waterman, an undivided twenty-four one-hundredths of certain mining property in San Bernardino County, California, and also to pay to her the sum of $42,987.22, which was adjudged to be the amount of profits derived from that property, with the interest that accrued thereon prior to January 10, 1888. 27 F. 827.
J. S. Waterman and R. W. Waterman were brothers, the former of large wealth and a citizen of Illinois, and the latter of limited means and a citizen of California, engaged with one Porter in "prospecting" and developing mining property. R. W. Waterman and Porter having acquired certain mining claims or interests in San Bernardino County, California, the
former wrote a letter to his brother under date of April 5, 1881, which seems to be the beginning of the transactions out of which the present litigation arose. The writer said:
"Porter finished assay yesterday, and will start in tomorrow. The mine improves all the time. It goes beyond our most sanguine expectations. The chimney will extend somewhere about 800 or 1,000 feet, and is worth, itself, millions. The assay for the dump, after picking out the best ore and assay -- the average of the poorest -- is over $50.00, and, so far as we can see, the entire mass is vary rich. . . . Now we can fight all of them, pay all expenses, and make a million a year, but I don't anticipate much, if any, trouble. . . . You let Mr. Porter have some money to pay his expenses, without his asking for it. He is one of the most modest men I ever saw. I want you to have a talk with Jane about your joining me, and having an interest in the mine. It will include the four claims, the Alpha, Omega, Front, and Silver Glance. They are -- what there is of it, and either one is enough to form a company. I propose to let you have 24-100 of my interest of 75-100 -- you give up my indebtedness, and give me to pay off any debts that I have incurred in mining, say $2,000. That 24/100 is worth $250,000, and may be 1/2 a million to sell outside of this. All the money you get to buy machinery or advance in any way shall be paid from the first earnings of the mill. You might be at the head of the affair financially, and otherwise; each one of us to have his part, but you be at the head. . . . You speak to Porter about our partnership. I know he is all O.K., and will not pretend to own but 1/4; yet try him. I presume he would give you a share of his if you raise the money for us."
It does not appear that any formal reply was made to this letter, but it does appear that J. S. Waterman was in California the succeeding month, and took from his brother an obligation, of which the following is a copy:
"San Bernardino, Cal., May 14, 1881"
"For and in consideration of one dollar to me in hand paid, the receipt whereof is hereby acknowledged, I hereby agree that at any time within twelve months from this date, upon demand
of J. S. Waterman, or his heirs, administrators, or assigns, I will execute to him a good and sufficient deed of conveyance to an undivided twenty-four one-hundredths (24-100) of the following mines, known as the Alpha, Omega, Silver Glance, and Front, each being 600 feet wide by 1,500 ft. long, and the same interest in all lands that may be located or has been located for the development of the above mines, with such machinery and improvements as is to be placed upon same, all subject to the same proportion of expenses, which is to be paid out of the development of the above property, all situated near the Grape Vine, in the County of San Bernardino, State of California."
"R. W. WATERMAN"
This was the obligation, the specific performance of which was required by the decree below.
An obligation of like character as to date and terms was taken by J. S. Waterman from Porter with respect to an undivided three one-hundredths of the same property.
Prior to but perhaps in expectation of the execution of these writings, J. S. Waterman advanced to his brother and Porter the sum of $1,817, and subsequently other sums, the aggregate amount of advancements, on the 22d day of November, 1881, being $26,317, exclusive of interest. For each sum so advanced, J. S. Waterman took the notes of R. W. Waterman and Porter. It also appeared that when the writings of May 14, 1881, were given, R. W. Waterman was indebted to J. S. Waterman in the sum of $11,750.53 for moneys loaned; but R. W. Waterman contended that, if all matters of business between them had been settled, he would not have been then indebted to his brother in any sum whatever.
J. S. Waterman died July 19, 1883, having made a will, which was dated November 28, 1870. That will provided, among other things, that any and all notices, bills, accounts, agreements, or other evidence of indebtedness against any of his brothers, held by the testator at his decease, be cancelled by his executors, and delivered up to the maker or makers without payment of the same, or any part thereof, except two
notes against John C. Waterman, secured by a deed of trust on lands, which were to be collected and equally divided between his brothers and sisters, and the children of such as had died. By a codicil to the will, of date December 7, 1872, his brother R. W. Waterman was substituted as executor, in place of George S. Robinson.
Upon the paper of May 14, 1881, given by R. W. Waterman, appears the following endorsement: "I hereby assign the within to Mrs. Abbie L. Waterman. J. S. WATERMAN. M'ch, 1883. I hereby agree to execute the within agreement on demand." In March, 1883, the paper with this endorsement upon it was presented to R. W. Waterman, and he refused to sign it. At that time, there was a balance of about $11,000 due J. S. Waterman on the notes given by R. W. Waterman and Porter. Porter signed a similar endorsement on the writing of May 14, 1881, executed by him, but the evidence satisfactorily shows that he did this only to indicate his willingness that that paper should stand as security simply for the moneys advanced by J. S. Waterman.
All the moneys advanced to R. W. Waterman and Porter were repaid out of the proceeds of the mining property before the institution of this suit, the principal part before and the balance after the death of J. S. Waterman.
No demand was made upon R. W. Waterman or Porter at any time within twelve months after May 14, 1881, for a conveyance, nor until after the death of J. S. Waterman. This suit and the decree below proceeded upon the general ground that the writing of May 14, 1881, was intended to pass, and was accepted as passing, a present interest of 24/100 in the property covered by its provisions, and required R. W. Waterman to convey such interest at any time before or after the expiration of twelve months from that date, on the demand by J. S. Waterman, his heirs, administrators, or assigns, of a conveyance. The defendant disputed this interpretation of that instrument, and insisted that it was given and accepted only as security for such moneys as J. S. Waterman might advance for the development or management of this property.
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