CHAPTER XXV.

MINING PARTNERSHIPS AND TENANCIES IN COMMON.

135. Mining Partnerships.

135a.

Differences between Mining Partnerships and Ordinary Partnerships.

136. Tenancies in Common of Mining Property.

136a.

136b.

136c.

Accounting between Co-tenants.

Fiduciary Relationship of Co-tenants.

Relations Between Surface and Subsurface Owners.

MINING PARTNERSHIPS.

135. A mining partnership is that relationship short of ordinary partnership which the law affirms where two or more persons, who own or for exploitation acquire a mining claim, actually engage together in working the claim.

So closely connected with prospecting or "grub-staking" contracts as to require consideration with them are mining partnerships. A mining partnership, so called, is something different from a regular commercial partnership; but, to avoid any misunderstanding, it must be stated that just as a prospecting contract may also involve a mining partnership, so what at first sight seems to be a mining partnership may be an ordinary partnership. The peculiar kind of partnership known distinctively as a "mining partnership" is all that is discussed here.

State statutes regarding mining partnerships are in general merely declaratory of what is the law in the absence of legislation. A mining partnership exists where two or more persons who own a mining claim, or who acquire one for development purposes, actually engage together in the working of the claim.3 Though no express agreement of partnership is necessary, mere co-tenancy is not enough to con

1 See Costello v. Scott (Nev.) 93 Pac. 1; Bybee v. Hawkett (C. C.) 12 Fed. 649; Haskins v. Curran, 4 Idaho, 573, 43 Pac. 559; Decker v. Howell, 42 Cal. 636; Kimberly v. Arms, 129 U. S. 512, 9 Sup. Ct. 355, 32 L. Ed. 764. Compare Freeman v. Hemenway, 75 Mo. App. 611; Lawrence v. Robinson, 4 Colo. 567. 2 CONGDON v. OLDS, 18 Mont. 487, 489, 46 Pac. 261; FERRIS v. BAKER, 127 Cal. 520, 59 Pac. 937.

3 Stuart v. Adams, 89 Cal. 367, 26 Pac. 970; Dorsey v. Newcomer, 121 Cal. 213, 53 Pac. 557; Marks v. Gates, 2 Alaska, 519; Walker v. Bruce (Colo.) 97 Pac. 250. See note 6, infra.

4 Manville v. Parks, 7 Colo. 128, 134, 2 Pac. 212; Dale & Bennett v. Goldenrod Min. Co., 110 Mo. App. 317, 85 S. W. 929; DURYEA v. BURT, 28 Cal. 500; Snyder v. Burnham, 77 Mo. 52. That an agreement of mining partnership,

stitute a mining partnership." A mining partnership arises only when there is a joint working of the mining claim.

SAME DIFFERENCES BETWEEN MINING PARTNERSHIPS AND ORDINARY PARTNERSHIPS.

135a. The chief difference between mining partnerships and ordinary partnerships lies in the fact that there is no delectus personæ in mining partnerships. From this results the fact that the implied authority of one mining partner to bind the others is extremely limited.

A mining partnership exhibits striking differences from the ordinary commercial partnerships.

In the first place, in a mining partnership there is no delectus personæ. One partner may retire, sell his interest to a stranger, or die, without destroying the partnership. A sale may be made by one where one exists, is not within the statute of frauds, see cases cited, chapter XXIV, note 1. A mining partnership may exist, even though the partners agreed that they should not be liable as partners. Bentley v. Brossard (Utah) 94 Pac. 736.

5 HARTNEY v. GOSLING, 10 Wyo. 346, 68 Pac. 1118; First Nat. Bank v. G. V. B. Min. Co. (C. C.) 89 Fed. 449; G. V. B. Min. Co. v. First Nat. Bank, 95 Fed. 35, 35 C. C. A. 510; Tuck v. Downing, 76 Ill. 71. A mining partnership is a cross between a tenancy in common and a regular partnership. Bates on Partnership, § 14.

6 Hartney v Gosling, 10 Wyo. 346, 68 Pac. 1118, 98 Am. St. Rep. 1005, See note 3, supra. See First Nat. Bank v. G. V. B. Min. Co. (C. C.) 89 Fed. 449; Caley v. Coggwell, 12 Colo. App. 394, 55 Pac. 939; Lyman v. Schwartz, 13 Colo. App. 318, 57 Pac. 735; Ferris v. Baker, 127 Cal. 520, 59 Pac. 937; Madar v. Norman, 13 Idaho, 585, 92 Pac. 572; Higgins v. Armstrong, 9 Colo. 38, 10 Pac. 232; Meagher v. Reed, 14 Colo. 335, 24 Pac. 681, 9 L. R. A. 455; Anaconda Copper Mining Co. v. Butte & Boston Min. Co., 17 Mont. 519, 43 Pac. 924; Marks v. Gates, 2 Alaska, 519. It exists, although the partners are only lessees. Kirchner v. Smith, 61 W. Va. 434, 58 S. E. 614. Where some furnish the money, and the others do the work, and all are to share equally in results, there is a mining partnership. LYMAN v. SCHWARTZ, 13 Colo. App. 318, 57 Pac. 735; CHILDERS v. NEELY, 47 W. Va. 70, 34 S. E. 828, 49 L. R. A. 468, 81 Am. St. Rep. 777. But the partnership extends to the work and its profits, and not necessarily to the title to the claim. McMahon v. Meehan, 2 Alaska, 278. In PRINCE v. LAMB, 128 Cal. 120, 60 Pac. 689, it was held that though a contract for the formation of a mining partnership in the future possibly existed, an actual mining partnership did not. At the most there was a grub-staking contract. In Dodge v. Chambers (Colo.) 96 Pac. 178, the court found that loans were made to a corporation by its shareholders, and hence no partnership existed between the contributing shareholders.

7 KAHN v. CENTRAL SMELTING CO., 102 U. S. 641, 26 L. Ed. 266; BLACKMARR v. WILLIAMSON, 57 W. Va. 249, 50 S. E. 254; Childers v. Neely, 47 W. Va. 70, 34 S. E. 328, 49 L. R. A. 468, 81 Am. St. Rep. 777. A retiring partner

partner against the protest of the others, and yet the purchaser becomes. a partner. The death of one partner neither dissolves the partnership nor gives to the surviving partners as such any right to control the property.

In the second place, and growing out of the fact that there is no delectus personæ, it is the rule that in mining partnerships there is no general implied authority of any of the partners to bind any of the others.10 Even in mining partnerships, however, authority to do so is implied to the limited extent that such authority is necessary and usual in the case of such partnerships.11 Where, on due notice to the world, a co-tenant mining partner withdraws from the partnership, which he may do when he wills, 12 he is restored to his regular condition as tenant in common, subject merely to such liabilities as were incurred by the partnership prior to his withdrawal.18 The remaining partners do not lose the lien they have on the partnership property, which is a right in equity to have partnership assets go for partnership debts.1 A purchaser from a retiring partner takes subject

must give notice, of course, to persons who have dealt with the partnership, if he wishes to escape any further liability to them. Dellapiazza v. Foley, 112 Cal. 380, 44 Pac. 727.

8 KAHN v. CENTRAL SMELTING CO., 102 U. S. 641, 26 L. Ed. 266; Bissell v. Foss, 114 U. S. 252, 5 Sup. Ct. 851, 29 L. Ed. 126; Kimberly v. Arms, 129 U. S. 512, 9 Sup. Ct. 355, 32 L. Ed. 764; Nisbet v. Nash, 52 Cal. 540; CHILDERS v. NEELY, 47 W. Va. 70, 34 S. E. 828, 49 L. R. A. 468, 81 Am. St. Rep. 777; Taylor v. Castle, 42 Cal. 367.

9 JONES v. CLARK, 42 Cal. 180.

10 Skillman v. Lachman, 23 Cal. 198, 83 Am. Dec. 96; DURYEA v. BURT, 28 Cal. 569; Decker v. Howell, 42 Cal. 636; Bentley v. Brossard (Utah) 94 Pac. 736.

11 Bentley v. Brossard (Utah) 94 Pac. 736; HARTNEY v. GOSLING, 10 Wyo. 346, 68 Pac. 1118; Meagher v. Reed, 14 Colo. 335, 24 Pac. 681, 9 L. R. A. 455; Manville v. Parks, 7 Colo. 128, 2 Pac. 212; Abbott v. Smith, 3 Colo. App. 264, 32 Pac. 843; Lyman v. Schwartz, 13 Colo. App. 318, 57 Pac. 735; Nolan v. Lovelock, 1 Mont. 224.

But even this limited authority is subject to the rule that those who own a majority of the shares or interests in the partnership shall control. Dongherty v. Creary, 30 Cal. 291, 89 Am. Dec. 116; CHILDERS v. NEELEY, 47 W. Va. 70, 34 S. E. 828, 49 L. R. A. 468, 81 Amn. St. Rep. 777; Nolan v. Lovelock, 1 Mont. 224; Taylor v. Castle, 42 Cal. 367; BLACKMARR v. WILLIAMSON, 57 W. Va. 249, 50 S. E. 254.

12 Lawrence v. Robinson, 4 Colo. 567.

13 SLATER v. HAAS, 15 Colo. 574, 25 Pac. 1089, 22 Am. St. Rep. 440. See First Nat. Bank v. G. V. B. Min. Co. (C. C.) 89 Fed. 449.

14 DURYEA v. BURT, 28 Cal. 569; CHILDERS v. NEELEY, 47 W. Va. 70, 34 S. E. 828, 49 L. R. A. 468, 81 Am. St. Rep. 777. See Beck . O'Connor, 21 Mont. 109, 53 Pac. 94; G. V. B. Min. Co. v. First Nat. Bank. 95 Fed. 35, 35 C. C. A. 510; Ervin v. Masterman, 16 Ohio Cir. Ct. 62, 8 Ohio Dec. 516.

to the lien, even though he does not become personally liable for the partnership debts contracted prior to his purchase.15

In conclusion, it should be noted that the copartners hold fiduciary relations toward one another, which will prevent one acquiring for himself property which rightfully belongs to the partnership.18 But a location made by one partner after dissolution upon a discovery prior to dissolution will not inure to the benefit of the other partner, unless the failure to locate during the partnership was fraudulent.17

TENANCIES IN COMMON OF MINING PROPERTY.

136. The mere fact that one is a tenant in common and works the claim does not make him a mining partner of his co-tenant; but the latter may call on him to account.

Mere co-tenancy, as we have seen, does not create a mining partnership; 18 but the peculiar nature of an unpatented mining claim and the fact that any co-tenant can enjoy the claim only by more or less rapidly exhausting its ore bodies have contributed to make special problems for co-tenants of mining property and to differentiate co-tenancy of such property somewhat from co-tenancy of other kinds of real property.

Each co-tenant has a perfect right to enter upon the mining claim and work it, and to maintain an action for its recovery without join

19

As to what constitutes mining partnership property, see Dorsey v. Newcomer, 121 Cal. 213, 53 Pac. 557.

15 Jones v. Clark, 42 Cal. 180.

16 KIMBERLY v. ARMS, 129 U. S. 512, 9 Sup. Ct. 355, 32 L. Ed. 764; Continental Divide Min. Inv. Co. v. Bliley, 23 Colo. 160, 46 Pac. 633; Settembre v. Putnam, 30 Cal. 490; Brown v. Bryan, 5 Idaho, 145, 51 Pac. 995; McMahon v. Meehan & Larson, 2 Alaska, 278.

17 JENNINGS v. RICKARD, 10 Colo. 395, 15 Pac. 677. See Pierce v. Pierce, 55 Mich. 629, 22 N. W. 81. One mining partner may sell out, it seems, at a higher price than his partners get. Harris v. Lloyd, 11 Mont. 390, 38 Pac. 736, 28 Am. St. Rep. 475.

18 Where some co-owners engage in working a mine, and others do not, the former are mining partners, and the latter are merely co-tenants. Madar v. Norman, 13 Idaho, 585, 92 Pac. 572. See, also, Garside v. Norval, 1 Alaska, 19. 19 Kahn v. Old Telegraph Min. Co., 2 Utah, 13; McCORD v. OAKLAND QUICKSILVER MIN. CO., 64 Cal. 134, 27 Pac. 863, 49 Am. Rep. 686; Marsh v. Holley, 42 Conn. 453. The doctrine to the contrary in Murray v. Haverty, 70 Ill. 318, 320, cannot be supported. A co-tenant has no more right to exclude the other co-tenants from a tunnel run to work the claim than to exclude them from the claim itself. People v. District Court, 27 Colo. 465, 62 Pac. 206. And he has no right to work the claim itself through a shaft from another mine to which his co-tenants have no right of access. Butte & B. Consol. Min. Co. v. Montana Ore-Purchasing Co., 24 Mont. 125, 60 Pac. 1039. And no right to

ing his co-tenants; 20 but he must account to his co-tenants for their share of the ore that he takes out and sells. The other co-tenants, while entitled to claim their share of the profits, are not responsible for any losses, except that they cannot claim any damages if in fact the working co-owner emerges with a loss.21 It is not waste for the tenant in common to take out ore in minerlike fashion, but may be a violation of a state statute for the protection of co-tenants.2o

By statutes in the different jurisdictions the right of one tenant in common to sue another has been considerably enlarged.23

SAME-ACCOUNTING BETWEEN CO-TENANTS.

136a. The proper basis for accounting between co-tenants of mining property would seem to be the net profits after the deduction of the actually incurred reasonable expenses; but where the co-tenant who works the claim invites the others to join in the work, and they refuse, the justice of this rule is doubted by some.

The common-law rule was that a tenant in common of real property had no right to an account from his co-tenant. This was changed by the statute of Anne,2* which gave an account for rents and profits actually received by the defendant co-tenant from third persons, but it gave none for the use and occupation of the co-tenant.25 Where, however, one co-tenant excluded another from the possession of the joint property, an account would lie.2 If the co-tenant is not ex

26

use a tunnel on the claim to convey ore from an outside claim. Laesch v. Morton, 38 Colo. 171, 87 Pac. 1081.

20 Morenhaut v. Wilson, 52 Cal. 263; Weese v. Barker, 7 Colo. 178, 2 Pac. 919; Binswanger v. Henninger, 1 Alaska, 509. See Melton v. Lambard, 51 Cal. 258.

21 WOLFE v. CHILDS (Colo.) 94 Pac. 292; Stickley v. Mulrooney, 36 Colo. 242, 87 Pac. 547, 118 Am. St. Rep. 107; McCORD v. OAKLAND QUICKSILVER MIN. CO., 64 Cal. 134, 27 Pac. 863, 49 Am. Rep. 686; Edsall v. Merrill, 37 N. J. Eq. 114. See Goller v. Felt, 30 Cal. 481.

22 ANACONDA COPPER MINING CO. v. BUTTE & BOSTON MIN. CO., 17 Mont. 519, 43 Pac. 924.

23 For cases under the Montana statute, see Connole v. Boston & M. Consol. Copper & Silver Min. Co., 20 Mont. 523, 52 Pac. 263; Butte & B. Consol. Mining Co. v. Montana Ore-Purchasing Co., 24 Mont. 125, 60 Pac. 1939; Id., 25 Mont. 41, 63 Pac. 825.

24 St. 4 Anne, c. 16, § 27.

251 Tiffany, Real Property, 392.

26 Id. So it has been held that a lessee of one co-tenant, when excluded by the other co-tenant, may have an accounting, and may even recover damages based on loss of profits. PAUL v. CRAGNAZ, 25 Nev. 293, 59 Pac. 857, 60 Pac. 983, 47 L. R. A. 540.