Albert Steinfeld v. Louis Zeckendorf

• Decision Date: 01 November 1915
• Docket Number: No. 239,239
• Parties: ALBERT STEINFELD, R. K. Shelton, J. N. Curtis, Silver Bell Copper Company, and Mammoth Copper Company, Appts., and Plffs. in Err., v. LOUIS ZECKENDORF and Hiram W. Fenner, Receiver
• Court: U.S. Supreme Court

239 U.S. 26

36 S.Ct. 14

60 L.Ed. 125

ALBERT STEINFELD, R. K. Shelton, J. N. Curtis, Silver Bell Copper Company, and Mammoth Copper Company, Appts., and Plffs. in Err.,

v LOUIS ZECKENDORF and Hiram W. Fenner, Receiver.

No. 239.

Argued October 19, and 20, 1915.

Decided November 1, 1915.

Messrs. James M. Beck, Francis J. Heney, and Eugene S. Ives for appellants and plaintiffs in error.

[Argument of Counsel from pages 26-28 intentionally omitted] Messrs. Frank H. Hereford, Edwin A. Meserve, Selim M. Franklin, and Edwin F. Jones for appellees and defendants in error.

Mr. Justice Holmes delivered the opinion of the court:

This case first came here by appeal from the supreme court of Arizona while Arizona was still a territory. Before the decision by this court, Arizona became a state, and the judgment, so far as now in controversy, having been reversed, the case was remanded 'for such further proceedings as may not be inconsistent with the opinion of this court,'—the formula usual in cases coming from a state. 225 U. S. 445, 459, 56 L. ed. 1156, 1164, 32 Sup. Ct. Rep. 728. The ground for the present attempt to reopen the merits is that the state court has misinterpreted the mandate that it received. Martin v. Hunter, 1 Wheat. 304, 354, 4 L. ed. 97, 109. See Julian v. Central Trust Co. 193 U. S. 93, 48 L. ed. 629, 24 Sup. Ct. Rep. 399.

The case is stated at length in the former decision. All that is necessary to explain the present question may be put in shorter form. The suit was brought by Zeckendorf as a stockholder in the Silver Bell Mining Company to recover money alleged to belong to the company and appropriated by Steinfeld. There was a further cause of action alleged, but that has been disposed of. The money represents the proceeds of the Silver Bell mine and a group of mines adjoining the Silver Bell and purchased by Steinfeld, it was assumed by the parties, as trustee for the company. Steinfeld sold all the mines for $515,000, $115,000 cash, $400,000 in notes for $100,000 each, and his action was confirmed. At the time of the conveyance to the purchaser it was agreed by a contract in writing that the purchase price should belong to the Silver Bell Copper Company, and in the same instrument it was provided that the four notes should be held by Steinfeld as trustee and as security against his personal obligations in the matter. Steinfeld received the cash and the proceeds of the first two notes, paid certain liabilities of the company, and deposited the residue, except $50,000 attached in his hands, in the Bank of California in his own name.

In December, 1903, Zeckendorf brought a suit to restrain the turning over of the deposited funds by the bank to Steinfeld, and on December 26, 1903, a stockholders' meeting was held at which all parties were represented and a vote of rescission was passed upon which the present question arises. For Steinfeld it is argued that the whole agreement was rescinded. The other side contends that the rescission went only to the clause giving Steinfeld a right to the personal custody of the money. The directors, consisting of Steinfeld and his creatures, although not understanding the rescission to go beyond the indemnity clause, passed a vote behind Zeckendorf's back under which the proceeds...