Beshoar v. Chappell

• Decision Date: 11 February 1895
• Citation: 40 P. 244,6 Colo.App. 323
• Parties: BESHOAR v. CHAPPELL et al. [1]
• Court: Colorado Court of Appeals

40 P. 244

6 Colo.App. 323

BESHOAR v. CHAPPELL et al. ^[1]

Court of Appeals of Colorado

February 11, 1895

Error to district court, Pueblo county.

Two actions by M. Beshoar against Delos A. Chappell and others to hold defendants responsible for the disposition of stock of the Grey Creek Coal & Coking Company, and an action by the latter company against Beshoar and another to compel the surrender of certificates of stock, were consolidated, and tried as one case. From a judgment dismissing the complaint Beshoar brings error. Affirmed.

D.C Beaman and Gerry & Rittenhouse, for plaintiff in error.

Caldwell Yeaman, for defendants in error.

BISSELL P.J.

In the statement of what is requisite to an apprehension of the suit, and to an application of the law which we conclude must control its decision, we shall very closely adhere to the facts recited in the findings of the court. They may be occasionally supplemented by our own conclusions respecting some matters, but in no instance will there be any departure from what the trial court has stated. The force and effect of these findings are thoroughly settled. As a general proposition, parties are not entitled to attack a judgment on the claim that it is unsupported by the evidence. Wherever the controversy, in its important and essential features, rests on conflicting testimony, the appellant must be able to demonstrate error of law, to maintain his appeal. Nevertheless, we have read this very voluminous record, and while we are compelled to affirm the judgment, notwithstanding our conclusion that there is enough in the case to show that under some circumstances, and with proper parties, what was done by the appellee Chappell would subject him to legal responsibility, we are satisfied the trial court did not err in its conclusions respecting some facts which we deem decisive of the action.

In 1887 the Cincinnati-Colorado Coal, Coke & Iron Company, which is designated in the evidence, and will be hereafter referred to, as the "Four C. Company," was the owner of some lands in Las Animas county. They were coal lands, and apparently had been somewhat developed by that corporation. The company had not reached a paying basis, and was without sufficient capital to proceed with the satisfactory development of the mines. At this time the appellant Beshoar, with some other persons, was the owner of the capital stock of the Four C. Company. On behalf of his company, he entered into negotiations with Chappell which looked to the organization of a new corporation on a basis which would permit funds to be raised to open up the property. The parties concluded the thing was feasible, and Chappell organized a new company, called the Grey Creek Coal & Coking Company. The capital stock of this latter corporation was 2,000 shares, of $100 each. This new company was organized by the election of officers and a board of directors, and then received from Beshoar, on behalf of himself and the stockholders of the Four C. Company, a written proposition, which, substantially, was that the Four C. Company would sell to the Grey Creek Coal & Coking Company their real estate, which was described in the proposition, for 1,000 shares of the capital stock of the company. In the proposition, nothing whatever was said in regard to the remaining 1,000 shares. The evidence, however, discloses that it was in the contemplation of the parties that the 1,000 shares of stock should be sold at 60 cents on the dollar, to produce a development fund of $60,000, which should be devoted to opening up the property. Evidently, the stockholders of the Four C. Company were willing to surrender one-half of their holdings for this purpose, and in place of canceling, transferring, or surrendering any of the Four C. Company's stock, pursued this plan. There were some limitations of time which were to control Chappell in his scheme to float the new company, but this is not important to the dispute. This proposition was submitted at a directors' meeting held on the 22d of September, 1887. It was accepted, and what was done by the Grey Creek Company will be assumed to be enough to secure them in their legal rights. The project was carried out by the Four C. Company, which conveyed the lands to the other corporation. The capital stock of the Grey Creek Company was issued. Nine hundred shares of it went to Beshoar, according to the arrangement; 100, which he had agreed to give Chappell for his services in the premises, were turned over to him; and the remaining 1,000 shares were left for sale, to raise the development fund. The trial court finds that these 1,000 shares of stock were sold by Chappell for $60,000, in cash, which went into the treasury of the company, and was applied by its officers and directory to the development of the lands which had been transferred. In stating this fact, we do not express our opinion concerning its justness. We expressly decline to yield our assent to the result respecting this matter, for we desire that the affirmance shall not extend so far as to conclude any parties in any subsequent litigation which may be instituted regarding it. The stock was deposited in the First National Bank of Trinidad, subject to sale, and payment of the subscription price; and when the whole sum of $60,000 was paid in, and properly applied, the stock was turned over to the purchasers. The court finds the money was actually put into the development of the property. To illustrate the animus and modus, we must now state what is really the occasion of the suit:

On the 26th of September a written agreement was entered into between the Colorado Coal & Iron Company and Chappell, which need only be stated to disclose the hidden motives. It was recited therein that Chappell had procured from Beshoar and others an option on a controlling interest in the stock of the Grey Creek Company, and he undertook to obtain from that company a lease of the estate for a term of 20 years, on sundry conditions. The only one of importance is that which looked to the expenditure of money for the development of the property. The Colorado Coal & Iron Company undertook to spend $60,000 for this purpose. It will be observed there was a very strange coincidence between the amount which the Colorado Coal & Iron Company agreed to spend and the sum for which Chappell undertook to sell the Grey Creek Company's stock. The evidence likewise disclosed that as fast as money was disbursed by him, as an officer of the Grey Creek Company, in payment of the bills which were incurred in the development, these vouchers were turned over to the manager of the Colorado Coal & Iron Company, who honored them by checks of that corporation for their face value. It thus resulted that what Chappell paid out with his right hand for the Grey Creek Company he instantly got back in his left from the Colorado Coal & Iron Company. On the 27th of September, which was the day following the execution of the agreement between Chappell and the Colorado Coal & Iron Company, the Grey Creek Company and the Colorado Coal & Iron Company made an agreement of lease which contained the provisions and various conditions specified in the agreement between Chappell and that corporation. It was executed by the lessors through Chappell, the vice president, and by the proper officers on behalf of the Colorado Coal & Iron Company. Under the provisions of this lease, the Colorado Coal & Iron Company spent $60,000, opened up the property, paid royalties from time to time, but in the end suspended operations. The transaction concerning this stock is not creditable to the appellee Chappell, and we cannot close our mental vision to what is so evident from the record: that the scheme was one cunningly devised for the appropriation, without cost to him, of one-half of the capital stock of the Grey Creek Company. This in no wise militates against what we said at the outset concerning the force of the court's conclusion on matters of fact, because our opinion in no wise affects the legal result which we have reached. We have simply given expression to our doubts respecting this matter, for, if the thing be possible, we desire to so far leave the matter open that the Grey Creek Company may ultimately be able to establish and enforce its rights. We have stated enough to show the alleged basis for the suits which Beshoar afterwards brought. Beshoar claims that for a long time he was ignorant of the situation, and without knowledge of what Chappell had done with reference to the disposition of the Grey Creek Company's stock, and was uninformed concerning this contract between the Colorado Coal & Iron Company and Chappell. There was a change in the management of the Colorado Coal & Iron Company, and in the investigations which followed it this agreement between Chappell and the company came to the surface, and Beshoar learned of it. How little or how much he knew before of the transactions is not easily ascertained from the testimony. The record shows the lease to the Colorado Coal & Iron Company was made in February, 1888, and shortly thereafter that company went into possession of the property, and engaged in its development. Beshoar knew of the lease, and had frequent conferences with Chappell concerning its terms. Whether he had any other information which should have advised him concerning the exact nature of...