Unfortunatley I would have left. If the other guy could not understand the reasoning for being asked to find another spot or leaving it just would not be worth the time to stay there.

One thing would lead to another. Its a shame that the other hunter would not politly remove thier self from the area.

But, may be ther other guy had his eye on the location as well and was just as surprized to see your friend. Still in this case I would have left the area and found another spot.