
    George W. McIntyre, Resp’t, v. Luther H. Buel et al., App’lts.
    
    
      (Court of Appeals, Second Division,
    
    
      Filed March 15, 1892.)
    
    1. Deed—Mixes—Conveyance of surface ground—Counterclaim — Fraud.
    Plaintiff, having only a locator’s mining claim to the “John” lode, which the defendants well knew, agreed to put said lode into, a syndicate with a mine to he paid for hy defendants. In this action to recover the balance of the price agreed to he paid him, defendants alleged as a counterclaim that plaintiff fraudulently represented that he was seized of the .whole mine, whereas he had theretofore conveyed to a third party the surface ground of the lode. His deed was produced on the trial and the court charged the jury that it conveyed the right to the surface only and did not impair plaintiff’s right to the minerals.beneath the surface. Held, that even if the construction was not the correct one, the error was not one which permits a reversal of the judgment, as it had no effect upon the case made by defendants’ testimony.
    2. Same.
    The counterclaim was a cause of action for fraud and deceit and it was incumbent upon the defendants to prove not only a false statement or representations, but that such representations were made with intent to deceive, and that such was the result of defendants’ reliance upon them.
    Appeal from a judgment of the general term of the fifth judicial department, affirming a judgment entered upon the verdict of a jury.
    On July 21, 1881, the parties to this action entered into the following agreement:
    '* For tho purpose of forming a syndicate to purchase the ‘ John’ and ‘Forrest’ lodes located in Sari Juan county, state of Colorado, and ultimately to form a company to develope the name, We, George W. McIntyre and Luther H. Buel and Charles D. Safford, do hereby jointly and severally covenant and agree. ■
    “ George W. McIntyre agrees to put in the ‘John’ lode for $8,000, to be paid for in cash $4,000 and syndicate shares or stock $4,000 on a basis of fifty shares at $500 each, making $25,000 for the proposed purchases of the ‘John ’ and ‘ Forrest ’ lodes, (being 8-J- shares.)
    “ Messrs. Buel and Safford also agree to pay for the ‘ Forrest ’ lode themselves; also all commissions, and are to have the remaining shares of the above named fifty as their portion of the transaction. George W. McIntyre is to leave a deed of the ‘ John’ lode with Messrs. Buel and Safford to be used only when the above arrangement is consummated and only in case the original Cameron scheme should fail to carry out its contemplated plans ; otherwise said deed is to be duly returned to said McIntyre.”
    Five days prior to the date of this agreement, McIntyre had conveyed the “ John ” lode to Safford as trustee.
    Thereafter the Cameron scheme having failed, Safford conveyed the property to “ the Cameron Gold' & Silver Mining Company” of San Juan, Colorado, and plaintiff thereupon received the stock to which under the foregoing agreement he was entitled and was paid $1,900 in money. This action was brought to recover the balance of the sum of $4,000, stipulated, to be paid to him.
    The defendants alleged as a defense and counterclaim that the plaintiff, with intent to influence defendants to enter into said agreement and to deceive and injure them, falsely and fraudulently represented that the said “John” lode was 1,500 feet long and 300 feet in width, and that he was seized of the whole thereof, and that relying upon such representations defendants entered into said agreement and made the payments aforesaid, but that after so doing they ascertained that on October 9, 1879, plaintiff had conveyed lo Hannah B. McIntyre the south 100 feet of the surface ground of the said lode its entire length, and that by reason thereof they had sustained damage which they sought to eounter•claim against plaintiff’s demand.
    
      John J. Linson, for app’lts; Adelbert Moot, for resp’t
    
      
       Affirming 33 St. Rep., 778.
    
   Brown, J.—The

asserted counterclaim was a cause of action founded upon alleged fraud. In making this claim the defend-ants did not proceed in disaffirmance of their contract with the plaintiff, and that agreement remains effectual, subject only to ..■such damages as they may have sustained from the fraud which they charge upon the plaintiff. For the purposes of this action, therefore, no restoration of anything received under the agreement was essential. Gould v. Cayuga County Bank, 99 N. Y., 333; Thomson v. Sanders, 118 id., 252; 28 St Rep., 924; Vail v. Reynolds, 118 N. Y., 297; 28 St. Rep., 707.

It was a fact well known to the defendants that the plaintiff had no title to the “ John ” lode. What he had, and claimed to 2iave, was a locator’s mining claim, and whether that would receive ■recognition from the government and a title to the land be conveyed by it to the holder, was a matter of which defendants were to take the risk.

The defendants’ contention was that plaintiff represented that ¡he -possessed a claim to the whole lode,-1,500 feet long and 300 feet wide, whereas he had conveyed his right to one-third of it to Ms niece Hannah McIntyre. The plaintiff denied making any false representations to the defendants as to the size or extent of the claim, and testified that he repeatedly told them that he had given to his niece the right to the surface of the south one hundred feet thereof. He testified that he had no recollection of the ■deed, but he did not deny its execution.

We must assume from the verdict of the jury that they adopted ■plaintiff’s version of the transaction.

The deed to Hannah McIntyre was produced upon the trial and the court charged the jury that it conveyed the right to the ■surface of the land only, and did not impair the plaintiff’s right to his claim to the minerals beneath the surface, and the exception to the construction thus given to the deed is the only question, necessary to be considered upon this appeal. The construction and effect of the deed to Hannah McIntyre is not a question of importance to the cause of action constituting defendants’ counterclaim. The representations there alleged to have been the inducement of the contract would have been shown to have been false whether the deed conveyed one-third of the whole claim or .a right only to one-third of the surface. The latter construction was the one claimed by the plaintiff and his testimony was to the effect that he had informed defendants that he had conveyed away such a right.

In considering the exception, therefore, it is evident that it has mo effect upon the case made by the defendants’ testimony. The jury have rejected their version of the transaction and adopted the plaintiff’s and the effect of the appellants’ argument is to ask -us to hold that, adopting the plaintiff’s evidence as to the facts, the jury would have been warranted in finding fraud had they been instructed that the deed conveyed one-third of the mine instead of one-third only of the surface.

Had the defendants sought'in their counterclaim an abatement;, from the purchase price, growing out of the failure of the plaintiff to perform his contract, or if a rescission' was sought on the-ground of mutual mistake, the erroneous ruling of the court would', have a most material bearing on this appeal. But the counterclaim constituted a cause of action for fraud and deceit and it. was incumbent upon the defendant's to prove not only a false-statement or representation as to the property agreed to be conveyed, but that such representations were made with intent to deceive and that such was the result of defendants’ reliance upon them. And we must find the evidence of such fraudulent intent in the record before us. The defendants have had their day in court and were bound to prove their whole case, and if it is claimed that there was an erroneous ruling upon the construction of the-deed, it must appear that upon the evidence before us the jury would have been justified m finding a different verdict than that, rendered had the court instructed them upon the legal effect of the deed in accordance with defendants’ request.

As I have already stated, the construction of the deed had no-bearing upon the truth or falsity of defendants’ evidence, and the-question now presented is, would it have permitted the jury upon plaintiff’s own testimony to have found a fraudulent intent-Very obviously it would not

Treating it as we must in the light of the fact now determined, that the only representation was that plaintiff had conveyed to his niece on'e-third of the surface of the ground only, a ruling by the-court that the deed conveyed one-third of the mine would have-shown that the plaintiff’s statement- was untrue. Beyond that, it, would have had" no effect on.the case. It would not have shown-that it was fraudulent. That fact remained to be proven b;y independent evidence, and I find none in the case that would justify such a conclusion.

The deed is not free from ambiguity. The rulings of the trial court and the general term show that the plaintiff’s construction) has support in the, language of the instrument. Of course, if he so believed and honestly stated his belief, there would be no basis-for a finding that he intended deceit.

There is no evidence in the case as to the claim made by the grantee under the deed. She did not appear to be in possession, nor was it shown that she had ever asserted any rights in the property antagonistic to or inconsistent with the plaintiff’s representations. ít did appear that the corporation to which the property was conveyed by defendants failed to get a title from the government for the one-third described in the deed, and we may assume that that was because of the existence of the deed, but it, nowhere appears that it was because of any claim made by Hannah McIntyre.

For aught that-appears in the evidence, Hannah McIntyre may have claimed no greater right in the property than the plaintiff said he had conveyed to her, and if such was the fact, there was -of course no false representation and no deceit

Innocence, therefore, is entirely consistent with the case made by the evidence, and under such circumstances guilt cannot be found. Fraud must be proven and cannot be presumed, and we think that the evidence before us would not support any other -conclusion than that plaintiff was entirely honest when he asserted that the rights that he had conveyed .to his niece were in the surface of the ground only. We think it unnecessary to determine -the proper construction of the deed, and that, assuming for the •purposes of this appeal that the trial court’s construction was not the correct one, the error was not one which permits a reversal of -. .the judgment.

The judgment should be affirmed.

Judgment affirmed, with costs.

All concur, except Parker, J., not voting.  