Here is a case that is interesting because of its connection with the coal mining industry that once flourished on the slopes of Mt. Diablo and because it shows how an agent tried to double-cross his principals and how the law made him disgorge his ill-gotten profits. In the early 1860's coal was discovered on Mt. Diablo and two railroads were built from the coal mines to the San Joaquin River shores, one at Antioch and one at what is now known as Pittsburg. At that time the town was called Cornwall.
One of the coal mines was owned by a company called the Black Diamond Coal Mining Company. This company used the railroad that ran into Cornwall to carry its coal to the river where it was loaded on barges and shipped to San Francisco for use in the factories, stores and homes. Practically all of the coal used in San Francisco in the 1860's came from Mt. Diablo. Among the stockholders in the Black Diamond Coal Mining Company were four residents of the town of Martinez, three of them owned one-sixteenth each of the capital stock, and the fourth man named Sturgis owned a larger interest. In 1865 there was considerable interest in the coal mining activities on Mt. Diablo and the three friends of Sturgis decided that they would take advantage of the market for stock in their company and would sell out their interests.
Sturgis told his friends that he knew a concern in San Francisco that he was sure would be interested in buying their stock and he would be glad to go to San Francisco for them and to get the highest possible price for their stock. The three friends were delighted with Sturgis' kindly offer to sell their stock for them and told him to go ahead. Sturgis then went to a San Francisco concern, called Marizon Company, and asked them what they would give for the stock of his three friends. Marizon Company said the stock was worth at least $18,000 and they would be willing to pay that much for it.
Sturgis then told Marizon Company that by reason of his relationship with the three friends he was sure that he could get the stock for Marizon at a figure much cheaper than $18,000 and would do so provided Marizon would pay him one-half the difference between $18,000 and what price Sturgis could get the three friends to sell the stock for. Marizon agreed to this and then Sturgis went back to his friends and told them that the most the stock would bring was $13,500 an that he had persuaded Marizon to pay that for it. The three friends believing what Sturgis told them, then sold their stock in the coal mine to Marizon Co. for $13,500, being $4500 less than what Marizon had originally been willing to pay.
As soon as the deal was consummated Sturgis rushed to Marizon and received $2500 being one-half of what Marizon had saved on the deal. But tricking one's friends does not pay. Before very long in some way the three friends leaned how Sturgis had done them wrong. They there upon brought suit against Sturgis for the $2500 he had illegally gained in the transaction. The Court made Sturgis pay it, too, holding that he had betrayed his friends for a mercenary purpose and must pay back all he had gained as a result of his fraud.
An interesting aftermath of the affair is that in the early 1870's coal began to come in to San Francisco from other states, and being a higher type and class of coal soon drove the Mt. Diablo coal out of the market, and as a result stock in the Black Diamond Coal Mining Company which in 1863 was worth at the rate of $5000 for a one-sixteenth interest became absolutely worthless. The mines shut down and from the early 1870's on were completely abandoned, until just this year. Now there is a revival of interest in the coal on Mt. Diablo. Two of the mines have been reopened and now coal is being once more mined on the slopes of Diablo and is being transported by truck to the markets of Oakland and San Francisco.
Note: The reopening of the mines eventually proved to be uneconomic.
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