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Harman v. Byrd

Supreme Court of Arizona

May 1, 1956

H. A. HARMAN and C. O. Byrd, Appellants,
v.
A. R. BYRD, Jr., and Helene K. Byrd, his wife; J. H. Byrd and Dian Byrd, his wife; Byrd Investment Company, a corporation; and A. R. Byrd, Jr., and J. H. Byrd, general partners of Byrd Mining Company, a limited partnership, Appellees.

[80 Ariz. 268] Boyle, Bilby, Thompson & Shoenhair, and Richard B. Evans, Tucson, for appellants.

Udall & Udall, Tucson, for appellees.

ELMER, Superior Court Judge.

Appellants, plaintiffs in the court below, filed an action against the appellees, defendants below, for an accounting, sought

Page 718

as the result of a joint venture which existed between them involving the operation of a group of mining claims in the Patagonia Mining District of Santa Cruz County, Arizona, known and referred to as the Duquesne Mine. Defendants filed their answer to the complaint, denying that plaintiffs were entitled to an accounting and set up the affirmative defense of compromise and settlement, and also filed their counterclaim, demanding an accounting. The issue of compromise and settlement was tried to the court without a jury. No findings and conclusions were demanded and the court, determining that defendants had satisfactorily established the defense of compromise and settlement, rendered judgment dismissing the complaint, with prejudice; dismissing the counterclaim, with prejudice; and awarding defendants their costs. Motion for new trial was made and denied. The appeal is from the judgment.

The plaintiffs have assailed the judgment as not being justified by the evidence, contrary to the evidence and contrary to law. In order, therefore, to have an understanding of the dispute between the parties, it is necessary to review the evidence, which, because of its many ramifications, we set forth rather extensively in narrative form substantially as follows:

Plaintiff C. O. Byrd and defendants A. R. Byrd, Jr. and J. H. Byrd are brothers, all of advanced years. Prior to October, 1944, defendant A. R. Byrd, Jr., owned a 70% interest in the Duquesne Mine, a group of some 76 claims. He assigned certain percentages of his interest to others of his family. The remaining 30% of the Duquesne was acquired by the plaintiffs in October, 1944; thereafter the properties were operated as a joint mining venture between the plaintiffs and defendant A. R. Byrd, Jr., acting on his own behalf and on behalf of the various members of the family, other than plaintiff C. O. Byrd. This continued until September 30, 1945, when a limited partnership called the Byrd Mining Company[80 Ariz. 269] was organized and took over the 70% interest previously held by said A. R. Byrd, Jr., and the joint venture continued between the plaintiffs and the defendant Byrd Mining Company, until May 6, 1946, at which time the Byrd Investment Company, a corporation, was formed and the limited partnership transferred its 70% interest to the corporation. The joint venture continued from that date between plaintiffs and the defendant corporation until May 21, 1951, at which time the Duquesne Mine and the Pride of the West Mine, which will be hereinafter mentioned, were transferred by lease and option contract to one James P. Nash.

In November, 1945, plaintiff C. O. Byrd acquired title to the Pride of the West group of mining claims, which group was entirely surrounded by the Duquesne properties. In January, 1946, plaintiff C. O. Byrd offered in writing to sell to defendant A. R. Byrd, Jr., a 70% interest in the Pride of the West claims for $1,500. This offer was accepted and he was paid $250 cash and the balance was evidenced by the promissory note of the Byrd Investment Company in the principal amount of $1,250, due on July 2, 1947, with interest thereon from date until paid at the rate of 6% per annum. On September 23, 1947, defendants paid $250 in cash on this note, and an additional $300 in cash on December 20, 1947. The contract provided that plaintiff C. O. Byrd would retain all royalties from ores produced and shipped from the property to and including August 1, 1946; after that date defendant A. R. Byrd, Jr., was to receive 70% thereof and plaintiff C. O. Byrd the remaining 30% It further provided that the seller would make and deliver a deed to the buyer, conveying the 70% interest, at any time on request. None was ever given or requested, but from August 1, 1946, until sometime in early 1948, when the mine ceased operating, the royalties from the operations were divided, as agreed. Operations were resumed by plaintiff C. O. Byrd, through a lessee, about July, 1948, and the shipments from the Pride of the West were made in said plaintiff's name; no royalties therefrom were paid to defendants. Defendant A. R. Byrd, Jr., complained of this to his brother C. O. Byrd about September, 1948, at which time C. O. Byrd advised A. R. Byrd, Jr., that he had defaulted on his agreement and had no further interest in the Pride of the West group. Thereafter C. O. Byrd continued to

Page 719

make shipments from this property in his own name and never made any accounting to anyone for any of the ores so shipped. It should be noted in passing no provision was made in the contract for a default or foreclosure, nor was such achieved by any legal proceeding. It also seems appropriate to observe here that at no time did the plaintiff Harman have any interest in the Pride of the West group.

The evidence shows that plaintiff C. O. Byrd has a home on the mine, in which he resided. His brothers, defendants herein, [80 Ariz. 270] resided in Tucson, where the office of their Company was maintained. Throughout the operations of the Duquesne Mine defendant A. R. Byrd, Jr., had charge thereof on behalf of the litigants; the books and records were kept at the Company offices in Tucson, proceeds from operations were received and banked there under his immediate supervision, although it does appear there were times when plaintiff C. O. Byrd either had the power to countersign their bank checks or to independently draw them. In any event, a dispute arose between the parties as early as 1946 concerning the handling of the Duquesne Mine funds, complaint being made by plaintiffs that the bookkeeping was improperly done; that Duquesne Mine funds were being improperly diverted to other enterprises in which the defendant brothers were interested and in which plaintiffs had no interest; and that funds were not being properly disbursed. An audit was made of the books by a Texas auditor selected by plaintiffs which showed defendants to be indebted to plaintiffs in the approximate sum of $13,000, which audit was promptly challenged by defendants as being inaccurate because, as they say, C. O. Byrd had changed the check stubs and that the auditor had, in accordance with his instructions, treated all money paid to him as receivables and not as money paid to him and his co-plaintiff. Defendants claimed a true audit would show plaintiffs indebted to them in the amount of approximately $20,000. A second audit was made by the same auditor as late as 1950 which showed about $30,000 owing plaintiffs, which audit was again disputed for like reasons. Defendants admitted this dispute continued right up to a short time before the deal with Nash, and plaintiffs, of course, contend it still continues.

The negotiations with Nash for the sale of the Duquesne Mine extended over a period of several months, commencing in January, 1951. The agreed price for the Duquesne Mine was $200,000, with down payment of $60,000 in cash, but when Nash learned that the Pride of the West group was not included in the offer, his interest waned. C. O. Byrd had originally refused to permit the Pride of the West to go in on the deal, but finally did agree to include it. The contention of defendants and their evidence is that this was brought about in the following manner:

Defendant A. R. Byrd testified that a short time prior to the sale to Nash, he called his brother, plaintiff C. O. Byrd outside of the office of the Byrd Investment Company in Tucson and informed him that he had been authorized by the stockholders of that corporation to make him (C. O. Byrd) a proposal in complete settlement of all claims he asserted against them, or any of them. He offered to forego any claim they had to royalties collected by C. O. Byrd from the Pride of the West operation, the evidence of defendants showing that the 70% interest in the royalties claimed by [80 Ariz. 271] them amounted to about $4,500. He further offered that if plaintiff C. O. Byrd would sell the Pride of the West group to Nash for $10,000, they would also forego any claim which they might have or assert to their alleged 70% interest as owners therein. A. R. Byrd testified that in return C. O. Byrd was 'to settle all controversy and all claims of every kind against any of us or against the company', and further testified in effect that C. O. Byrd accepted this proposal.

Defendants contend that by reason of the above conversation a compromise and settlement agreement was thereby made. Corroborative evidence came from the lips of J. H. Byrd and Fred W. Fickett, an attorney. J. H. Byrd testified that he was not present at the meeting outside the office but he was ...


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