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panies, paying therefor the amount named in each contract, and received therefor the shares of stock mentioned. It was also agreed that both of these corporations were "insolvent" before the bankruptcy of said Neff, and that this stock was of no value. The stock certificates were filed as part of the proof in each case and tendered to the trustee. The contracts are plainly agreements to purchase the shares of stock named at the time and price stated. They rest upon a sufficient consideration, and are written agreements to take and pay for the shares named and signed by the parties to be charged and delivered to and accepted by the promisees. There is, therefore, nothing in the objection as to the contracts being invalid under the statute of frauds because not signed by claimants also. Thayer v. Luce, 22 Ohio St. 62; Himrod Furnace Co. v. Cleveland, 22 Ohio St. 451; Lee v. Cherry, 85 Tenn. 707, 4 S. W. 835, 4 Am. St. Rep. 800; Brown's Statute of Frauds, §. 3450. The status of a claim must depend upon its provability at the time the bankrupt petition was filed. At that time it must come within the definition of section 63 of the bankrupt act; it cannot be benefited by its status at a later date. The defense is that these claims were not "fixed liabilities," "absolutely owing" at the time of the filing of the petition against the bankrupt. This is based upon the fact that the liability of the bankrupt is made dependent upon the surrender of the stock certificate at a date which had not then arrived, and that it was optional with the promisees to surrender or keep the stock until that time, and that the liability of the promisor was undetermined and contingent until such surrender at the time named.
That the promisor might refuse performance until the time named is true. But if, before the time of performance, one absolutely repudiate liability and disavow unequivocally any purpose to perform at any time, the other party may treat such repudiation, at his election, as a breach of the agreement and sue for his damages. This is the rule as settled in Hochster v. De La Tour, 2 El. & Bl. 678, and approved by the Supreme Court in Roehm v. Horst, 178 U. S. 1, 20 Sup. Ct. 780, 44 L. Ed. 953, and by this court in Foss Brewing Co. v. Bullock, 16 U. S. App. 311, 59 Fed. 83, 8 C. C. A. 14, and Edward Hines Lumber Co. v. Alley, 43 U. S. App. 169, 73 Fed. 603, 19 C. C. A. 599; McBath v. Jones Cotton Co., 149 Fed. 383, 79 C. C. A. 203; Michigan Yacht Co. v. Busch, 143 Fed. 939, 75 C. C. A. 109. So, if one of the parties absolutely disables himself from performing the contract by putting performance out of his power, the other party may treat that as a repudiation and bring his action to recover damages then or wait the time of performance at his election. This aspect of the question of an anticipatory breach is well put by Fuller, Chief Justice, in Roehm v. Horst, cited above, when
"It is not disputed that if one party to a contract has destroyed the subject-matter, or disabled himself so as to make performance impossible, his conduct is equivalent to a breach of the contract, although the time of performance has not arrived; and also that if a contract provides for a series of acts, and actual default is made in the performance of one of them, accompanied by a refusal to perform the rest, the other party need not perform, but may treat the refusal as a breach of the entire contract, and recover accordingly.”
In Lovell v. St. Louis Life Ins. Co., 111 U. S. 264, 274, 4 Sup. Ct. 390, 395, 28 L. Ed. 423, the company had failed and transferred its business to another company. The court held that this authorized one insured to treat the contract as at an end and to sue to recover back premiums paid although the time of performance had not arrived. Mr. Justice Bradley, for the court, said:
"Our third conclusion is that, as the old company totally abandoned the performance of its contract with the complainant by transferring all its assets and obligations to the new company, and as the contract is executory in nature, the complainant had a right to consider it as terminated by the act of the company, and to demand what was justly due to him in that exigency. Of this we think there can be no doubt. Where one party to an executory contract prevents the performance of it, or puts it out of his own power to perform it, the other party may regard it as terminated and demand whatever damage he has sustained thereby. We had occasion to examine this subject in the recent case of United States v. Behan, 110 U. S. 339, 4 Sup. Ct. 81, 28 L. Ed. 108, to which we refer.”
See, also, Carr v. Hamilton, 129 U. S. 669, 9 Sup. Ct. 295, 32 L. Ed. 669.
Bankruptcy is a complete disablement from performance and the equivalent of an out and out repudiation, subject only to the right of the trustee, at his election, to rehabilitate the contract by performance. In the case styled In re Swift, 112 Fed. 315, 50 C. Č. A. 264, this consequence was considered by the Court of Appeals for the First Circuit in a very satisfactory opinion by Putnam, C. J. There the obligation of a broker to deliver certain shares of stock on demand was held to be breached by bankruptcy, and that no prior demand was essential, a right of action accruing simultaneously with the bankrupt petition, which was the act of disablement to which the adjudication related. In re Pettingill Co. (D. C.) 137 Fed. 143, 147, Judge Lowell, in a very able and discriminating opinion in which the authorities are considered in the light of the requirements for a provable debt under the present bankrupt law, reached the conclusion that:
“If the bankrupt, at the time of bankruptcy, by disenabling himself from performing the contract in question, and by repudiating its obligation, could give the proving creditor the right to maintain at once a suit in which damages could be assessed at law or in equity, then the creditor can prove in bankruptcy on the ground that bankruptcy is the equivalent of disenablement and repudiation. For the assessment of damages proceedings may be directed by the court under section 63b, Act July 1, 1898, c. 541 (30 Stat. 562, U. S. Comp. St. 1901, p. 3447)."
In that case it was held that a contract guaranteeing “the redemption" of corporate shares, three years after date of issue, was a provable claim, although the time for "redemption" had not arrived at date of bankruptcy.
It is sufficient that a claim becomes provable as a consequence of bankruptcy. The right to sue for and recover damages then accrues. As Judge Lowell puts it in Re Pettingill Co., cited above:
"In admission to proof, however, the claim need not arise before bankruptcy, nor need the contract be broken theretofore. It is sufficient for proof if the breach of contract and bankruptcy are coincident.”
The creditor by offering to file his claim manifests his election to treat the contract as broken. This the court held he might do. The decree in each case is affirmed.
(157 Fed. 62.)
CASCADEN V. DUNBAR et al.
DUNBAR et al. V. CASCADEN.
(Circuit Court of Appeals, Ninth Circuit October 28, 1907.)
1. FRAUDS, STATUTE OF--CONTRACTS WITHIN STATUTE-EXECUTORY AGREEMENT
FOR JOINT VENTURE.
A parol agreement by which one party agreed to locate and mark mining claims and prepare the notices of location which were to be recorded by and at the expense of the other parties, the first party to have a half interest in the claims, and the second parties the other half interest, was one for a joint venture, to which both parties were to contribute personal services and money for their joint and equal benefit, and is not within the statute of frauds.
[Ed. Note.—For cases in point, see Cent. Dig. vol. 23, Frauds, Statute of,
$ 138.) 2. TRUSTS-CONSTRUCTIVE TRUSTS-FRAUDULENT BREACH OF ORAL AGREEMENT
FOR ACQUISITION OF MINING CLAIMS.
One of defendants, on behalf of himself and his codefendants, who were his partners in the freighting business in Alaska, entered into an agreement with plaintiff by which the latter was to locate mining claims in the name of some one of defendants, who were to record the locations and pay the cost of recording, plaintiff to have a half interest in such claims, and defendants together the other half interest. From that time forward defendants as partners engaged in dealing in and working mining claims. Plaintiff located certain claims, and delivered the location notices to defendants, who did not, however, record the same, but, after the time for recording them had expired, relocated the claims for their joint benefit. Held, under the evidence, that defendants became partners for mining purposes from the time of the agreement made with plaintiff, and were all bound by such agreement; that their action in failing to perfect plaintiff's locations, and in relocating the claims, was for the fraudulent purpose of cheating plaintiff of his half interest; and that in
equity they held such interest as trustees, for his benefit. Appeal from the District Court of the United States for the Third Division of the Territory of Alaska.
These are cross-appeals, the plaintiff below being the appellant and crossappellee, and the defendants the appellees and cross-appellants. The suit was brought to charge the defendants Dunbar, Scott, and Bennett, as constructive trustees of the plaintiff's alleged interest in certain mining claims situated in the Fairbanks mining district of Alaska, and to compel the conveyance thereof to him; the substance of the complaint being that on or about Yovember 30, 1902, the plaintiff, being about to start on a prospecting trip for himself, entered into an agreement with those defendants, alleged to have been copartners carrying on the business of packers and miners under the name, style, and firm of Charles Scott, John Bennett, and George F. Dunbar, by which the plaintiff was at his own expense to proceed to search for, prospect, and stake certain placer mining claims, and that, in addition to the claims staked for himself, he was to stake for, and in the name of, the said named defendants, or either of them, certain placer mining claims, in consideration of which the said named defendants agreed that they would forthwith, after such staking, record the locations thereof, and fulfill the other requirements of the rules and regulations governing the location of placer mining claims on vacant public lands, and convey to the plaintiff a one-half interest therein; that in pursuance of the agreement, and in accordance with those provisions, the plaintiff did on or about December 2, 1902, stake for the defendants Dunbar, Scott, and Bennett the following placer mining claims : “(A) In the name of the defendant John Bennett, side claim No. 12A below discovery on Cleary creek on the right limit, and the first tier thereof, placer mining creek claim No. 3, from the mouth of Lulu creek, a tributary of Cleary creek, placer mining claim No. 5 above discovery on Solo creek, a tributary of Fish creek, and the fractional creek claim No. 2, above discovery on Burns creek; (B) in the name of the defendant Charles Scott, creek placer mining claim No. 8 above discovery on Solo creek; (C) in the name of the defendant George F. Dunbar, a fraction known and described as fractional creek placer mining claim between discovery creek placer mining claim between discovery and No. 1 above on Solo creek, about 1,100 feet in length, -all of which said claims and creeks are situated in the Fairbanks mining district of Alaska.” And that thereupon the defendant Bennett did on the 20th day of December, 1902, convey to the plaintiff a one-half interest in the claims so staked in Bennett's name, but that thereafter, intending to cheat the plaintiff out of his interest in the claims so located by the plaintiff, he entered into a fraudulent scheme with the defendants Scott and Dunbar, by which the three would abstain from recording the notices of the location of the claims as required by statute, and, in pursuance of such fraudulent scheme, the said three named defendants did so abstain and "so endeavored to cause the said claims to lapse and revert, and become reopen for entry,” by reason of their failure to record, and there and then, and after the time for recording had passed, and that said defendants deemed said claims reopen for location, the said defendants Scott, Bennett, and Dunbar, with the intent to cheat and defraud the plaintiff as aforesaid, re-entered them as follows: "(A) The defendant George F. Dunbar restaked, relocated, and recorded in his name, for the partnership, side claim No. 12A below discovery on Cleary creek, right limit, first tier, and also the other claims previously located by the plaintiff in the name of the defendant Bennett, and also creek claim No. 8 above discovery on Solo creek, located by the plaintiff in the name of the defendant Scott. (B) The defendant Rennett restaked, relocated, and recorded, in his name for the partnership, the fractional creek claim previously located by the plaintiff in the name of the defendant George F. Dunbar, being fractional creek claim, about 1,100 feet long, situated on Solo creek between discovery and No. 1 above. (C) The defendant Charles Scott located his name, for the partnership, claim formerly located by the plaintiff for the defendant Bennett, to wit, No. 5 above discovery on Solo creek.” The complaint further alleged that on the 17th day of May, 1904, the defendants Dunbar, Scott, and Bennett attempted to convey to the defendants Manley and Rice a one-third interest in the claim No. 12A below discovery on Cleary creek, and that those defendants had at the time full knowledge of the plaintiff's rights in the premises; that the claim last mentioned is of a value in excess of $200,000; that the defendants are in possession thereof, operating the same, and extracting gold therefrom, to the plaintiff's damage; that the plaintiff has performed all of the covenants and conditions on his part to be performed under the agreement alleged, and has requested the defendant to convey to him, by a good and sufficient deed, his one-half interest in the claims, and to let him in possession thereof, and to account to him and pay him his share of the proceeds thereof-all of which they refuse to do. The defendant Bennett filed a separate answer, in which he admitted making the deed to plaintiff of December 20, 1902, but denying all of the other allegations of the complaint. The other defendants filed a joint answer, in which they denied all of the allegations of the complaint, with the exception that they admitted their possession and operation of claim No. 12A below discovery on Cleary creek, and admitted that that claim is worth $50,000. Upon the issues thus raised the case was tried before the court, and resulted in a decree directing a conveyance, by the defendants to the plaintiff, of an undivided one-third interest in the relocated claims.
McGinn & Sullivan, J. C. Campbell, and W. H. Metson, for appellant and cross-appellee.
T. C. West, Fernand De Journel, Hugh O'Neill, and John R. Jones, for appellees and cross-appellants.
Before GILBERT and ROSS, Circuit Judges, and DE HAVEN, District Judge.
ROSS, Circuit Judge (after stating the facts as above). The court below found the making of the alleged contract by the plaintiff with Bennett; that it was oral; that at that time Bennett, Scott, and Dunbar were general partners and then engaged in freighting, and immediately thereafter "in locating, acquiring, and working placer mines” in the vicinity of Fairbanks. The evidence shows without conflict that in the early part of December, 1902, the plaintiff made the locations set out in the complaint for the defendants Bennett, Scott, and Dunbar, and prepared the notices of location thereof, and gave them to Bennett for recordation, and that Scott and Dunbar, as well as Bennett, had actual notice of the plaintiff's action in locating the claims; and the court below so expressly found. But the court also found that “neither Scott nor Dunbar made any agreement of any kind with the plaintiff Cascaden, nor gave him any power or authority to locate mines for them, and the evidence does not show that Bennett had any power, as partner or otherwise, to employ him for that purpose." Other findings of the court below are as follows:
“That on May 21, 1903, Dunbar relocated bench claim No. 12A below dis covery on Cleary creek, on the right limit and first tier, in his own name; on May 24, 1903, he relocated No. 5 above on Solo creek in the name of Scott, No. 8 above on Solo in his own name, and the fraction between discovery and No. 1 above on Solo creek in the name of Bennett; in doing so he saw and used the stakes set by Cascaden in his prior locations, and had full notice and knowledge thereof.
"On July 1, 1903, Scott, Bennett, and Dunbar were general partners, and held and owned each and all of the claims so mentioned in paragraphs 5 and 9 herein, as equal partners, and that on that day Bennett was the owner as such partner, and in possession of an undivided one-third interest in and to those placer mining claims mentioned in paragraphs 5 and 9 in these findings, and in those certain placer mining claims described in his deed to Cas. caden so made and delivered on December 20, 1902; that on July 1, 1903, Cascaden presented the deed so made and delivered to him by Bennett on December 20, 1902, to the said Bennett, and requested him to formally acknowledge the same, and the said Bennett did on said July 1, 1903, acknowledge the same to be his deed, before J. Tod Cowles, a notary public in and for Alaska, who thereupon wrote his certificate of acknowledgment thereon; and the said Bennett again delivered the same to Cascaden, who thereupon filed the same for record, and the said deed and certificate of its acknowledgment was on that day recorded in the office of the recorder in the Fairbanks precinct, Alaska.
"That on July 1, 1903, and for a long time prior thereto, the placer mining claims so described in Bennett's said deed to Cascaden had been duly located by the defendants Bennett, Scott, and Dunbar; a discovery of mineral had been made thereon; the boundaries had been so marked that they could be