Case XXXIII: A “Salted” Gold Mine

The following case for consideration has been sent from South 'Africa:

A certain Solomon fancies that he has discovered a very rich gold mine, and in order to sell it more easily, and of course for a higher price, he " salts " it, as the saying is, i. e. he buries in his mine rich gold ore secured from other gold mines. Some capitalists test the mine, and, being highly satisfied with the result, they buy Solomon's land for an enormous price. A company is formed to work it, but the output does not come up to expectations; in fact, the mine does not even pay the cost of working it. Solomon declares that the mine was not worked properly, and that all sorts of unnecessary expenses were incurred; and this is undoubtedly true. It seems probable that under different circumstances the mine might have repaid the capital, with possibly five per cent interest. Is Solomon obliged to make restitution in full or in part? The question is one regarding the just price (pretium justum) of a thing. This can be regulated in various ways—by law (legale), by the general estimate of its value (vulgare s. naturale), by an agreement between buyer and seller in cases where the value cannot be otherwise ascertained (conventionale), and by bidding at a public auction (concursu effectum). The common price (pretium vulgare) seems fair if it corresponds to the thing's value, as usually estimated. As, however, people may judge very differently of the value of anything, we distinguish the highest, the average, and the lowest just prices (pretium justum summum, medium, infimum). Apart from special circumstances, which we need not discuss here, anything may be sold fairly for the highest, average, or lowest just price. But a sin of injustice is committed if by deception or unfair trickery the highest just price is obtained from the buyer, or if any higher price is obtained than the buyer without that trickery, would have paid.

We are now in a position to answer the question. Solomon asserts that with prudent management, and with care to avoid unnecessary expense, the capital might have been refunded and five per cent interest paid. This is merely a matter of probability, not of certainty. A res existens in spe probabili can be the subject of an agreement, and the probable profits can be assessed at a definite sum of money; but equity requires that the probable profits in an agreement shall be estimated lower than the certain profits. Even if the mine had really been as profitable as Solomon represented it to be, he deceived the purchasers by " salting " it, and so induced them to pay an enormous price for it. He is therefore bound to repay the amount by which his trickery augmented the price of the mine. He is not responsible for the loss incurred by the company by their unwise methods of exploitation and by their unnecessary expenditure, for, as matters stand, his dishonesty was not the efficient cause of this loss.—Dr. A. Goepfert