Boston Acme Mines Development Co. v. Clawson

• Citation: 240 P. 165,66 Utah 103
• Decision Date: 12 September 1925
• Docket Number: 4262
• Court: Supreme Court of Utah
• Parties: BOSTON ACME MINES DEVELOPMENT CO. v. CLAWSON

240 P. 165

66 Utah 103

BOSTON ACME MINES DEVELOPMENT CO. v. CLAWSON

No. 4262

Supreme Court of Utah

September 12, 1925

Appeal from District Court, Third District, Salt Lake County; W. S Marks, Judge.

Suit by the Boston Acme Mines Development Company against Moroni Clawson. From a judgment for defendant, plaintiff appeals.

REVERSED AND REMANDED, with instructions.

P. G Ellis, of Salt Lake City, for appellant.

P. C Evans, of Salt Lake City, for respondent.

THURMAN, J. GIDEON, C. J., and FRICK, CHERRY, and STRAUP, JJ., concur.

OPINION

THURMAN, J.

This is an appeal by plaintiff from a judgment against it in favor of defendant, in a case involving a controversy concerning the ownership of certain mining machinery and equipment situated on the premises of defendant in the town of Morgan, Morgan county, Utah. Plaintiff claims title under an alleged purchase from the Boston Acme Mines Company, a Delaware corporation, executed in May, 1919. The defendant claims under an alleged judgment against, said company in favor of one Hattie Tavener, rendered in June, 1921. It is alleged in the answer that the judgment was assigned to defendant for a valuable consideration in December of the same year, after the first execution had been issued upon the judgment, and that defendant purchased the property under an alias execution sale in October, 1924.

This is an equitable proceeding to determine the ownership of the property and to restrain a threatened sale thereof and for other equitable relief.

The case, as tried below, both as to the issues raised by the answer and the conduct of the trial, took a wide range, because of which the record is incumbered with much irrelevant and immaterial matter. The findings of the court are subject to the same criticism; thus casting upon this court the burden of shifting and weeding out the superfluous matter in order to ascertain the precise questions to be determined. We shall not attempt to follow counsel in their peregrinations as far as the irrelevant and immaterial issues are concerned.

Before stating what we understand to be the controlling questions, it is necessary to make a brief statement of matters essential to a determination of the questions involved.

The Boston Acme Mines Company, hereinafter called the Boston company, from which both plaintiff and defendant deraign title, acquired title to the property in question some time prior to the month of May, 1919. It had stock interests in mining property in Morgan county, and the mining machinery and equipment in controversy was used or to be used in the development of said property. In the summer of 1918 the company employed one M. K. Tavener to come to Utah to see that certain moneys it was advancing to mining companies in which it had an interest were being properly expended in the development of the properties. He was a director and stockholder in the company, and it does not appear from the record that there was any friction between him and the company prior to the beginning of 1921. Quite a large amount of money was raised in the East by the company on sales of its stock, and much of it was forwarded to Tavener to be expended for the purposes hereinbefore stated. His wife kept his books of account with the company, showing the money received and how expended. He applied to his own use sufficient to defray hotel expenses for himself, his wife, and her mother, which amounts the company conceded it had agreed to pay.

Early in 1919 the plaintiff company was organized as an Arizona corporation, under the name of the Boston Acme Mines Development Company. The plaintiff appears to have been organized as a subsidiary company of the Boston company; the purpose being to transfer to plaintiff all of the Utah holdings of the Boston company. The directors of plaintiff company were three in number, all of whom were likewise directors of the Boston company. It appears from the minutes kept by plaintiff company that on May 12, 1919, at Baltimore, Md., the company held its first meeting with two directors present, which constituted a quorum. After organizing, by the election of a president, vice president, secretary, and treasurer, the company proceeded to consider an offer, dated May 7, 1919, made by the Boston company to sell all its interest in certain mining property in Morgan county, including mining machinery theretofore used in connection with said mining properties, together with any and all its capital stock in said mining companies, for 10,000 shares of the plaintiff company's capital stock of the par value of $ 1 per share. The 10,000 shares was the entire capitalization of the plaintiff company. By resolution, the offer of the Boston company was accepted, and scrip issued and delivered to the Boston company, which scrip constituted an order for delivery of the stock on presentation. It also appears that the Boston company was informed that its offer of sale had been accepted. A deed evidencing the transfer was also presented, accepted by the plaintiff company, and direction given that it be forthwith recorded in the office of the proper public official. The deed, in substance, purports to convey all of the rights, title, and interest of the Boston company in certain mining claims, mines, and material in Morgan county, and their equipment in said county.

Such, in substance, were the proceedings of the plaintiff and Boston company in respect to the property in question, as appears from the minutes of the plaintiff company of May 12, 1919. This, together with subsequent proceedings relating to the property, constitutes the transfer of the property from the Boston company to the plaintiff upon which plaintiff relies. The validity of the transfer is challenged by defendant, and is the principal question for determination on this appeal.

There is some controversy between the parties as to whether the plaintiff company took over the business of the Boston company thereafter, or whether the latter company continued to carry on the business. The evidence quite clearly shows that checks of the Boston company were periodically forwarded to Tavener for the payment of expenses incident to the development of the properties during the years 1919 and 1920 down to the month of December of that year. It also satisfactorily appears that during 1920 Tavener located for the plaintiff company numerous mining claims in Morgan county. In December, 1920, the Boston company ceased remitting money to Tavener, and in March following it appears his employment was suspended altogether, but he still retained the office of director. No remittances were sent to Tavener after December, 1920. At the time of his suspension, it appears that he was in arrears for hotel expenses for himself and wife to the defendant, Clawson, as hotel keeper for the months of January, February, and March, 1921. Mrs. Tavener's mother had died in the latter part of 1919. The usual remittances had not been received from either the Boston company or the plaintiff. Considerable correspondence was carried on during this period between the Taveners and the witness Klem, a common director in both plaintiff and the Boston company. As we view the case, the correspondence is not material, and we only refer to it as leading up to a material issue.

In June, 1921, Mrs. Tavener instituted an action against the Boston company for the sum of $ 5,569.44, $ 1,600 of which was alleged by her to be money belonging to her which the defendant in that case had wrongfully converted to its own use. The remainder of the amount sued for was alleged by her to be money which was owing to M. K. Tavener for money advanced to said defendant upon its request, and for unpaid salary at $ 50 per week from the 11th day of July, 1918, to and including the 1st day of June, 1921. It was further alleged in the complaint that the claim of Tavener had been assigned to her for a valuable consideration, and that she was the owner thereof.

Summons in due form was issued upon the complaint and delivered to the sheriff of the county for service. The manner of making service, as shown by the sheriff's return, was as follows:

"I served said summons upon M. K. Tavener, agent for Boston Acme Mines Corporation, defendant in Morgan City, Morgan county, state of Utah, on the 1st day of June, 1921, by then and there delivering to and leaving with said M. K. Tavener, defendant personally, a true copy of the within summons. I do further certify and return that at the time of the service of said summons upon said M. K. Tavener, defendant, as aforesaid, I indorsed upon said copy so served the date and place of service, adding thereto my name and official title."

The summons recited that within 10 days the complaint would be filed with the clerk. The defendant failing to appear in answer to the summons, a default judgment was entered June 30, 1921, in which it was recited that due and legal service of the summons had been made upon the defendant. The judgment roll containing the above matter, and also the sheriff's certificate of sale of the property on execution, was offered in evidence by defendant as proof of his title to the property. Plaintiff objected to the offered evidence as being insufficient and void on its face in not showing that the court ever acquired jurisdiction of the cause. It was further objected that the proceedings did not show that the summons was ever lawfully served upon the Boston Acme Mines Corporation. The objection was overruled, exception taken, and the evidence admitted.

In the foregoing statement, as before suggested, we have endeavored to disregard immaterial matter which might have a tendency merely to befog the issues without serving any useful purpose. It may be necessary in the...