Christian v. First Nat. Bank of Deadwood, S.D.

• Decision Date: 10 June 1907
• Docket Number: 2,394.
• Citation: 155 F. 705
• Parties: CHRISTIAN v. FIRST NAT. BANK OF DEADWOOD, S.D., et al.
• Court: U.S. Court of Appeals — Eighth Circuit

155 F. 705

CHRISTIAN v. FIRST NAT. BANK OF DEADWOOD, S.D., et al.

No. 2,394.

United States Court of Appeals, Eighth Circuit.

June 10, 1907

Carle Whitehead (Robert C. Hayes and William B. Shattuc, on the brief), for plaintiff in error.

Norman T. Mason (Eben W. Martin, on the brief), for defendants in error.

Before SANBORN and VAN DEVANTER, Circuit Judges, and PHILIPS District judge.

VAN DEVANTER, Circuit Judge.

This was an action of trover against the First National Bank of Deadwood, S.D., and the Oro Hondo Gold Mining Company for the alleged conversion of a large number of shares of the capital stock of the mining company claimed by the plaintiff, Thomas Christian. At the trial which was to a jury, the evidence, without any conflict established these facts: The plaintiff and 11 other co-owners of less than the entire number of shares, represented by three stock certificates issued by the mining company deposited the certificates with the defendant bank for the purposes and upon the terms named in the following agreement:

(1) This envelope contains two million, one hundred and twenty thousand (2,120,000) shares of the capital stock of the Oro Hondo Mining Company, evidenced by certificates as follows, to wit: Certificate No. 19, for five hundred and five thousand (505,000) shares, certificate No. 20 for seven hundred and fifty-seven thousand five hundred (757,500) shares, certificate No. 21, for seven hundred and fifty-seven thousand five hundred (757,500) shares, of the par value of one dollar per share; which said certificates of stock are issued to George M. Nix, and by him assigned in blank.

(2) One million, nine hundred ninety-eight thousand eight hundred and eighty (1,998,880) shares of said stock belong to the parties named below, signing this escrow, and are placed by the undersigned in escrow with the First National Bank of Deadwood, South Dakota, upon the following terms and conditions:

(3) All of said stock may be purchased by said George M. Nix for the sum of ninety-nine thousand nine hundred and forty-four ($99,944.00) dollars, less a commission of ten (10%) per cent. to be paid to said George M. Nix as payments are made upon this escrow.

(4) On or before the 1st day of April, 1903, the said George M. Nix or his assigns must pay all of the parties signing this escrow, except himself, or deposit to their order in the First National Bank of Deadwood, South Dakota, the sum of twenty-two thousand, four hundred eighty-seven and forty one-hundredths ($22,487.40) dollars, and shall then have the privilege of withdrawing twenty-five (25%) per cent. of said stock so deposited belonging to the signers of this escrow, four hundred ninety-nine thousand seven hundred (499,700) shares, or certificate No. 19, for five hundred and five thousand (505,000) shares.

(5) Within six months from said 1st day of April, 1903, the said George M. Nix or his assigns must pay thirty-seven and a half (37 1/2%) per cent. of eighty-nine thousand, nine hundred forty-nine and sixty one-hundredths ($89,949.60) dollars, or thirty-three thousand and seven hundred thirty-one and ten one-hundredths ($33,731.10) dollars, and may then withdraw seven hundred forty-nine thousand and five hundred and fifty (749,550) shares of said stock, or certificate No. 20 for seven hundred fifty-seven thousand five hundred (757,500) shares deposited in escrow.

(6) Within one year from the said 1st day of April, 1903, said George M. Nix or his assigns, must pay thirty-seven and a half (37 1/2%) per cent. of said eighty-nine thousand, nine hundred forty-nine and sixty one-hundredths ($89,949.60) dollars, or thirty-three thousand seven hundred thirty-one and ten one-hundredths ($33,731.10) dollars, and may then withdraw the balance, to wit: Seven hundred forty-nine thousand, five hundred and fifty (749,550) shares of said stock so deposited in escrow, or the third certificate, No. 21, for seven hundred fifty-seven thousand, five hundred (757,500) shares of stock.

(7) It is understood that the extra one hundred twenty-one thousand one hundred and twenty (121,120) shares of stock deposited in escrow are the property of George M. Nix, the certificates having erroneously been made out for a larger amount of stock than the agreement with the signers of this escrow calls for, by reason of a mistake in the acreage of the ground.

(8) In case said George M. Nix or his assigns does not carry out the conditions of this escrow in reference to work to be done on said ground, as specified in the contract with said signers of the escrow, made on the 18th day of March, 1902, or payments provided for herein shall not be made, then all rights under this escrow shall cease and determine, and said parties depositing said stock may withdraw the same from said First National Bank of Deadwood, and shall be the owners thereof as shown by the schedule marked 'Exhibit A' hereto free of any option upon the same by the said George M. Nix, or his assigns.

(9) In case any payments shall be made by said George M. Nix or his assigns to the undersigned parties and the future payments provided for herein shall not be made, then all rights of said George M. Nix or his assigns to any future delivery of stock shall cease and the undersigned parties may withdraw said stock from said bank as above provided.

(10) Time is of the essence of this contract.

(11) All moneys deposited with said bank as above provided shall be paid over by the said bank to the several parties entitled thereto as shown by the schedule marked 'Exhibit A' hereto attached and made a part of this agreement.

(12) In case any of said payments shall not be made, the stock shall be delivered to the parties named in said Exhibit A and be the property of said parties; twenty shares of stock to be delivered for each dollar to be paid the said parties.

Dated Deadwood, South Dakota, this 16th day of January, 1903.

Exhibit A.

Each payment as it shall be made shall be by said bank apportioned and paid over to the following named parties or deposited to the credit of said parties in the following amount to wit:

Name of Persons to Whom 1st Payment 2d Payment 3d Payment

Payments are to Less 10%. Less 10%. Less 10%.

be Made. $22,487 40 $33,731 10 $33,731 10 Total.

Susie B. Moore ............. $ 770 60 $ 1,155 87 $ 1,155 87 $ 3,082 34

Pat J. O'Brien ................ 770 60 1,155 87 1,155 87 3,082 34

Thomas Burke .................. 770 60 1,155 87 1,155 87 3,082 34

James Cusick ................ 7,419 95 11,129 94 11,129 95 29,679 84

Thomas Christian ............ 6,804 12 10,206 19 10,206 19 27,216 50

B. F. Atkins .................. 910 25 1,365 39 1,365 19 3,640 85

Charles Hegberg ............... 455 10 682 76 682 77 1,820 63

Ed A. Dryer ................. 2,518 00 3,777 01 3,777 01 10,072 01

Frank Abt ..................... 498 60 747 90 747 90 1,994 40

R. H. Purcell ................. 498 60 747 90 747 90 1,994 40

A. D. Wilson .................. 615 83 923 75 923 76 2,463 34

Charles J. Swanstrom .......... 455 15 682 75 682 75 1,820 65

George M. Nix ............... 2,498 60 3,747 81 3,747 77 9,994 18

The agreement was signed by the plaintiff and the other co-owners of the shares intended to be sold, but was not signed by Nix, the bank, or the mining company.

In this connection it may be observed that there are several mistakes in the agreement, which, though confusing at first, are obviated when the entire instrument is considered. The number of shares represented by the three certificates is inaccurately stated as 2,120,000, but is shown to have been actually 2,020,000. The number of shares owned by the plaintiff and his co-depositors is stated as 1,998,880 and also as 1,998,800; the former being correct. Nix is spoken of as owning 121,120 shares, but the true number appears to have been 21,120. In Exhibit A, Nix is named as if he were one of those among whom the specific payments of $22,487.40, $33,731.10, and $33,731.10 provided for in paragraphs 4, 5, and 6 were to be divided; but a computation of the amounts there apportioned to the plaintiff and his co-depositors shows that the whole of these payments would be exhausted before reaching Nix's name. As these specific payments were unquestionably the net purchase price of the shares of the plaintiff and his co-depositors, after deducting the commission allowed to Nix by paragraph 3, and as the last line of Exhibit A must be regarded as a mere statement of Nix's commission, the rule stated in paragraphs 8, 9, and 12 for measuring the interests of the plaintiff and his co-depositors in such of the stock as might not be sold is not well expressed, unless it was intended that Nix should have a commission or interest in such shares as he might fail to purchase, which is both improbable and contrary to the provisions of paragraphs 3, 8, and 9. It was doubtless meant that the plaintiff and his co-depositors should own 20 shares of the stock not sold for each dollar of the gross purchase price not paid or earned as a commission.

Pursuant to paragraph 4, Nix paid the first installment of $22,487.40 being 25 per cent. of the gross purchase price, less a corresponding proportion of his commission, and withdrew from the bank certificate No. 19 for 505,000 shares. The time for paying the second installment was then extended to January 1, 1904, when Nix made default and so lost all rights to...