23 F. 625 (D.Colo. 1885), Gillett v. Bowen

Citation:23 F. 625
Party Name:GILLETT v. BOWEN.
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 625

23 F. 625 (D.Colo. 1885)

GILLETT

v.

BOWEN.

United States Circuit Court, D. Colorado.

1885

L. S. Dixon and Thos. Macon, for complainant.

Decker & Yonley, for defendants.

BREWER, J.

Out of the tangled and voluminous testimony in this case I have deduced these facts:

(1) In August, 1875, the San Juan Consolidated Mining Company was organized as a corporation, under the laws of the territory of Colorado, with a capital stock of 20,000 shares of $100 each; the corporators being the complainant, the defendants Bowen and Tankersley, and George M. Binckley. To this corporation these several corporators conveyed certain mining claims and properties owned by them, receiving in payment therefor, each 3,875 shares of the stock. Subsequently, and during the fall of that year, the remaining 4,550 shares were, with the exception of five shares, issued to defendant Bowen and others for the purchase of other mining properties. The four corporators above named constituted the first board of directors. Defendant Tankersley was president; Binckley, vice-president; complainant, superintendent; and defendant Bowen, secretary and treasurer. These officers remained unchanged during the transactions which form the basis of this litigation. While the stock of this corporation was large, yet, until 1880, its value was wholly speculative, a mere guess at the undiscovered bowels of the hills, so much so that in 1879 defendant Tankersley sold to defendant Bowen 3,800 shares, and a note of $6,000, given by the corporation, for $1,000.

(2) Whatever trifling legal business-- and it was but trifling-- the firm of Tankersley & Bowen, or either of them, may have transacted for complainant and Binckley prior to the organization of the company, after that time, neither as a firm nor individually were they the attorneys of, nor did they occupy confidential relations to, complainant or Binckley. In their subsequent dealings with each other in respect to stock matters, these four corporators dealt at arm's length. I consider this an important fact, for if defendant Bowen, with whom this controversy really is, either individually or as a member of the firm of Tankersley & Bowen, was the attorney of or occupied other confidential relations to complainant or Binckley, then it

Page 626

devolves upon him to show the good faith and sufficient consideration of the subsequent transactions, while if not, it devolves upon complainant to show the bad faith and lack of consideration. A good deal of testimony was introduced for the purpose of showing such confidential relations, but it seems to me of the weakest and most frivolous character. It is not pretended that there was any formal retainer, or that any fees were paid. Binckley claims that he had paid Bowen in advance, in that, 20 years prior thereto, he had, as editor of a country paper in Iowa, supported Bowen in a canvass for the legislature. He seems to think that such support gave him a permanent lien on Bowen's professional services, and established life-long confidential relations. Doubtless the parties were, at the time, friendly, and as friends confided in each other. They worked together in a common effort to develop the mining properties of the corporation in which they were stockholders. As officers of the corporation, they occupied trust relations to it, and in the faithful performance of such trusts they would indirectly subserve the interests of the other stockholders. But trust relations to the corporation do not, as to the stockholders, create trust relations inter sese. Whatever duties they owed to the corporation, as between themselves they dealt at arm's length, and neither had special charge of the other's interests. I fail to see any satisfactory testimony showing that Bowen was ever employed by Binckley or complainant, or ever acted as an attorney in respect to their stock or individual properties, or occupied any other confidential relations to them in respect thereto.

(3) On or about the twenty-eighth of October, 1875, a contract in writing was entered into between complainant, Binckley, and Bowen, on the one side, and Tankersley on the other, by which, in consideration of $500,000 of the stock of said company, to be delivered to Tankersley by the other parties, he agreed to purchase and put up, during the spring of 1876, on the property of said company, a 10-stamp mill and convey the same to the company. Of this $500,000 of stock, Bowen was to give $125,000, and Binckley and complainant the rest, in equal proportions. At the time, or within two or three days thereafter, Binckley and complainant gave $375,000 in stock to Tankersley, and this stock is the subject of the present controversy. Now, what was the effect of this contract as to the title to this stock? Obviously to vest it absolutely in Tankersley. He did not hold it as trustee. It was not placed in his hands to be used by him as their agent in procuring the mill. It was given to him in consideration of his procuring the mill. It was payment in advance. They relied on his promise, and if he failed to perform that promise their recourse, or that of the company, the beneficiary in the contract, was not upon the stock, but against him. This is the fair interpretation of the contract as, in the bill of complaint, it is charged to have been made. It is true, complainant and Binckley say that they understood that Tankersley was to return the stock if he failed to procure the mill, and Tankersley

Page 627

says that when he got from them the stock, two or three days after the contract, he promised to return it if he did not get the mill. But this arrangement, if made, was an after agreement, not a part of the original contract, and unknown to Bowen. So far as that contract is concerned, the stock was to be immediately delivered, and according to Bowen's testimony was, in fact, delivered as payment in advance, and the parties trusted to Tankersley's promise and responsibility for the fulfillment by him of his agreement.

(4) Soon after this contract and the receipt of the stock, Tankersley went to Chicago to make arrangements for the mill. In so going, and while there, he was at some little personal expense, the amount of which is not disclosed; neither is any repayment of these expenses by the contracting parties or the company shown, save as by the arrangement hereinafter mentioned. He did not in fact procure any mill in Chicago, but about the first of January, 1876, was notified by Bowen by telegraph not to purchase any, because he (Bowen) had obtained in Denver a 30-stamp mill. He immediately came to Denver, and there an arrangement was, on the third day of January, made between himself and Bowen on the one side, and J. B. Chaffee on the other, for the erection of a 30-stamp mill. The contract between the parties is as follows:

'EXHIBIT A.

'Memorandum of agreement made and entered into this third day of January, A.D. 1876, by and between Jerome B. Chaffee, of the city of Denver and territory of Colorado, party of the first part, and Thomas M. Bowen and Charles W. Tankersley, of the county of Rio Grande and territory aforesaid, parties of the second part.

'Witnesseth, that the said party of the first part, for and in consideration of certain stipulations and agreements hereinafter mentioned and agreed to by the parties hereto, has agreed, and does by these presents agree and bind himself, to furnish and erect, at a point to be selected by himself, and approved by the parties of the second part, in the Summit mining district, in Rio Grande county, in the territory of Colorado, a good thirty-stamp quartz-mill, complete and suitable for working gold ores, with proper machinery and steam-power for operating said mill and machinery for saving gold, together with a suitable building to cover said mill and machinery, the whole to be erected and completed at the cost and expense of the said party of the first part as early in the spring and summer of the year A.D. 1876 as is practicable, or the weather will permit.

'It is further agreed by and between the parties hereto that when said mill is completed and ready to operate, as hereinbefore mentioned, and in good running order, the said party of the first part shall have, and hereby has, the option to accept such propositions as the said parties of the second part may make, in full payment for said mill and machinery; or, in case of refusal to accept such proposition or propositions on the part of the said party of the first part, then the said party of the first part hereby binds himself to sell and deed to the said parties of the second part all of said mill and premises for their own free use and benefit, upon the following terms, to-wit: the first cost of said mill to be twelve thousand dollars, ($12,000,) and such other cost as may arise in transporting said mill from Gilpin county to the above-named location in Rio Grande county, and also all cost and expense in erecting the same, and putting the same in running order, and completing the same, and

Page 628

also the building inclosing the same. The terms of payment to be as follows, to-wit: The first twelve thousand dollars to be paid in quarterly payments at the end of each quarter from the day the said party of the first part shall decline the proposition or propositions made by the said parties of the second part; the remainder to be paid in quarterly payments in like manner, but during the following year,-- the said amounts to be put into notes in amounts corresponding with the payments as above mentioned, and signed by the said parties of the second part, and drawing interest at the rate of eighteen per cent. per annum from date until paid, and secured by trust deed upon said mill and premises also by one-quarter of the paid-up stock of the San Juan Consolidated Mining Company, a company organized under the laws of the territory of Colorado and...

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2 practice notes
  • 150 N.Y. 410, Farmers' Loan and Trust Co. v. New York and Northern Railway Co.
    • United States
    • New York New York Court of Appeals
    • October 20, 1896
    ...C. Bank, 11 Paige, 118; Pratt v. Bacon, 10 Pick. 123; Russell v. McLellan, 14 Pick. 63; Abbott v. Merriam, 8 Cush. 591; Gillett v. Bowen, 23 F. 625; Gamble v. Q. C. W. Co., 123 N.Y. 91; Harpending v. Munson, 91 N.Y. 652; Leavenworth Co. Comrs. v. C., R. I. & P. R. Co., 134 U.S. 688; C. ......
  • 88 S.W. 6 (Mo. 1905), Newman v. Mercantile Trust Company
    • United States
    • Missouri Supreme Court of Missouri
    • June 15, 1905
    ...509; Carpenter v. Danforth, 52 Barb. 581; Deaderick v. Wilson, 8 Bax. (Tenn.) 108; Smith v. Hurd, 12 Metc. (Mass.) 371; Gillett v. Bowen, 23 F. 625; 1 Cook on Corp. (4 Ed.), sec. 320; Taylor on Corp. (3 Ed.), sec. BRACE, P. J. Marshall, J., not sitting. OPINION Page 7 [189 Mo. 430] BRACE, P......
2 cases
  • 150 N.Y. 410, Farmers' Loan and Trust Co. v. New York and Northern Railway Co.
    • United States
    • New York New York Court of Appeals
    • October 20, 1896
    ...C. Bank, 11 Paige, 118; Pratt v. Bacon, 10 Pick. 123; Russell v. McLellan, 14 Pick. 63; Abbott v. Merriam, 8 Cush. 591; Gillett v. Bowen, 23 F. 625; Gamble v. Q. C. W. Co., 123 N.Y. 91; Harpending v. Munson, 91 N.Y. 652; Leavenworth Co. Comrs. v. C., R. I. & P. R. Co., 134 U.S. 688; C. ......
  • 88 S.W. 6 (Mo. 1905), Newman v. Mercantile Trust Company
    • United States
    • Missouri Supreme Court of Missouri
    • June 15, 1905
    ...509; Carpenter v. Danforth, 52 Barb. 581; Deaderick v. Wilson, 8 Bax. (Tenn.) 108; Smith v. Hurd, 12 Metc. (Mass.) 371; Gillett v. Bowen, 23 F. 625; 1 Cook on Corp. (4 Ed.), sec. 320; Taylor on Corp. (3 Ed.), sec. BRACE, P. J. Marshall, J., not sitting. OPINION Page 7 [189 Mo. 430] BRACE, P......