Baglin v. Earl-Eagle Mining Co.

• Decision Date: 30 June 1919
• Docket Number: 3348
• Citation: 54 Utah 572,184 P. 190
• Court: Utah Supreme Court
• Parties: BAGLIN v. EARL-EAGLE MINING CO. et al

184 P. 190

54 Utah 572

BAGLIN v. EARL-EAGLE MINING CO. et al

No. 3348

Supreme Court of Utah

June 30, 1919

On Application for Rehearing October 11, 1919.

Appeal from District Court, Salt Lake County, Third District; P. C Evans, Judge.

Action by George Baglin against the Earl-Eagle Mining Company and others. From a judgment for plaintiff, the named defendant appeals.

REVERSED.

Marioneaux & Beck and George G. Armstrong, both of Salt Lake City, and A. J. Evans of Lehi, for appellant.

Dana T Smith of Los Angeles, Cal., and Fred C. Loofbourow and George J. Constantine, both of Salt Lake City, for respondent.

THURMAN J. CORFMAN, C. J., and FRICK, WEBER, and GIDEON, JJ., concur.

OPINION

THURMAN, J.

This is an action to recover the value of 10,000 shares of the capital stock of the defendant mining company which plaintiff alleges defendants wrongfully converted to their own use.

The complaint, in substance, alleges that plaintiff is the owner of said shares of stock by purchase from one R. E. Campbell on the 1st day of May, 1917, and that plaintiff at all times thereafter was entitled to have said shares issued to him by the defendant company; that plaintiff on the said first day of May, 1917, and thereafter on the twelfth day of the same month, demanded of said defendant company that it issue to him said shares of stock, which said company refused and ever since has refused to do; that on the fifteenth day of May, 1917, the individual defendants, who constituted the board of directors of the defendant company, by resolution directed the president and secretary of said company not to issue said shares of stock to plaintiff; that the defendants were then in possession of said stock, and by the resolution aforesaid converted the same to their own use, to plaintiff's damage in the sum of $ 3,000, the value of the said stock.

Defendants, for want of information sufficient to form a belief, deny that plaintiff is the owner of the stock, or that he purchased the same from Campbell, or that plaintiff is entitled to its possession, or that defendants converted the same, or that the stock is of the value of $ 3,000, or that plaintiff sustained damages in said sum or at all.

Further answering, defendants, in substance, allege that in 1915 all of the stockholders of defendant company entered into an agreement with one George E. Hemphill, whereby they gave him the right to purchase 400,000 shares of the capital stock of said company, to be delivered to him from time to time at a certain specified price, and said contract was to continue in effect until the vendors should terminate the same upon fifteen days' previous notice in writing, which contract, it is alleged, is still in full force and effect; that at the time of said agreement one Fred Alkire was a stockholder in said company and was one of the parties to said contract; that at the time of making said contract said Alkire, said Hemphill, and others entered into an agreement that none of said stock should be sold, bargained, or otherwise disposed of before May 1, 1917, or as long as said contract with Hemphill should remain in force, and until ninety days thereafter; that at the time of said agreement said Alkire was the owner of 10,000 shares of the stock of said company, and that said stock is the same stock that is now claimed by the plaintiff. It is then alleged, in substance, that after the making of said agreement Alkire transferred his stock to said R. E. Campbell; but defendants, upon information and belief, allege that the same was transferred by Alkire for the use and benefit of himself. It is then alleged that their reason for refusing to issue said stock to plaintiff was solely upon the ground that said Alkire was the owner thereof and had entered into the aforesaid agreement.

The trial court found for the plaintiff against the defendant company and entered judgment for damages. The action as to the other defendants was dismissed. Defendant company appeals, and assigns as error the order of the court, overruling its motion for a nonsuit, the admission of evidence over plaintiff's objection, and insufficiency of the evidence to sustain the findings.

The evidence tends to show the following facts: That Fred Alkire was the original owner of the stock in question; that as evidence of ownership he held a certificate of the company therefor, certifying that he owned 10,000 shares of stock subject to a pool agreement that the said stock was not to be issued until May 1, 1917; that in May, 1916, Alkire transferred the stock to R. E. Campbell by indorsement and delivery of the above certificate; that on May twenty-seventh of the same year Campbell sent the certificate to the secretary of the company for transfer, and in due time received one made to himself, in substantially the same form as the one received from Alkire. The exact form of the certificate is as follows:

"Lehi, Utah, May 27, 1916.

"This is to certify that R. E. Campbell is the owner of ten thousand shares of the capital stock of the Earl-Eagle Mining Company, and that said stock, by pool agreement, is directed not to be issued, sold, transferred, bartered, or otherwise disposed of until May 1st, 1917.

Earl-Eagle Mining Company,

"By W. E. Evans, Secretary."

"[Signed]

Campbell kept the certificate in his possession until about May 1, 1917, and then "turned it over" to the plaintiff, with the following indorsement thereon:

"Earl-Eagle Mining Company,

"Lehi, Utah, May 1, 1917.

"Please issue my 10,000 shares of Earl-Eagle to the order of George Baglin.

R. E. Campbell."

"[Signed]

It also appears from the evidence that plaintiff is a mining stockbroker of Salt Lake City; that Campbell was absent from the state, and some time in the latter part of April, 1917, wrote the plaintiff informing him that he had a pool certificate for 10,000 shares of Earl-Eagle stock; that the pool expired May 1, 1917; that he desired to sell the stock, and inquired if plaintiff could sell it for him after May first. Plaintiff answered saying that he could. It further appears, from the testimony of both plaintiff and Campbell, that Campbell transferred the stock to plaintiff without consideration and without intending it as a gift. The only consideration moving Campbell to indorse the certificate and send it to plaintiff, as shown by the evidence, seems to be that Campbell desired to sell the stock and plaintiff assured him that he could sell it. It also appears from the evidence that plaintiff made formal demand upon the company that the stock be issued to him, and that the company refused to issue it until certain alleged conflicting claims were adjusted. Whether or not the refusal to issue the stock, in view of the excuse offered, amounted in law to a conversion we need not now determine.

Certain evidence admitted in proof of the market value of the stock was vigorously contested by the defendants, and its admission as evidence assigned as error. These questions, as far as may be necessary, will receive consideration before concluding these remarks.

At the close of the evidence for the plaintiff, defendants moved for a nonsuit on the following grounds:

"That there is no proof that the complaining party, the plaintiff, was the actual owner or owner at all of the stock that he attempts to sue for; or that he was entitled to any rights or privileges of an incorporator; or that there is no proof that the corporation was in any way, or the individuals in any wise, liable for refusal to issue the stock at the time that the alleged conversion is complained of;

"That there is no evidence of a conversion in the record whatever made by the plaintiff, for the reason that there is no evidence whatever showing that the corporation or any of the defendants in any wise attempted to exercise any ownership or control as owners over the stock which the plaintiff alleges he made demand for; and there is no evidence that the corporation or these directors in any wise attempted to pass upon the ownership or the title to the stock; or that they ever denied that any particular person was the owner of the stock. There is no evidence of damages whatever in this case, under the rules of law, on which the court could find any damage accruing to the plaintiff in this action."

The trial court overruled the motion. Appellant took exception, and relies upon the exception as grounds of reversal.

The points raised by the exception are (1) that the evidence fails to establish plaintiff's ownership of the stock; (2) that there is no evidence of conversion, and (3) that there is no evidence of damage. If any one of these propositions is true, the court erred in denying the motion.

Appellant, under the first proposition, contends that plaintiff, in view of the evidence, was not the owner of the stock, and was therefore not the real party in interest.

Comp. Laws Utah 1917, section 6495, with certain exceptions which are immaterial here, provides that "every action must be prosecuted in the name of the real party in interest." Relying upon this provision of the Code, appellant insists that plaintiff was not entitled to prosecute the action. We have heretofore alluded to the fact that the evidence showed the stock was transferred from Campbell to plaintiff without consideration; that he neither sold it to plaintiff nor gave it to him; that he delivered the certificate to plaintiff with the indorsement thereon authorizing defendant to issue the stock to the order of plaintiff; that Campbell's purpose in so doing was to authorize plaintiff to sell the stock for Campbell's benefit. No other conclusion can be drawn from the evidence, which is unimpeached and uncontradicted.

Plaintiff himself testified on...