Copper Belle Min. Co. v. Costello

• Decision Date: 20 March 1909
• Docket Number: Civil 1094
• Citation: 12 Ariz. 318,100 P. 807
• Parties: THE COPPER BELLE MINING COMPANY, a Corporation of the State of West Virginia, and THE COPPER BELLE MINING COMPANY OF ARIZONA, a Corporation of the Territory of Arizona, Defendants and Appellants, v. MARTIN COSTELLO, Plaintiff and Appellee
• Court: Arizona Supreme Court

100 P. 807

12 Ariz. 318

THE COPPER BELLE MINING COMPANY, a Corporation of the State of West Virginia, and THE COPPER BELLE MINING COMPANY OF ARIZONA, a Corporation of the Territory of Arizona, Defendants and Appellants, v. MARTIN COSTELLO, Plaintiff and Appellee

Civil No. 1094

Supreme Court of Arizona

March 20, 1909

APPEAL from a judgment of the District Court of the Second Judicial District, in and for Cochise County. Fletcher M. Doan, Judge. Affirmed.

The facts are stated in the opinion.

See also, 11 Ariz. 334, 95 P. 94.

Francis M. Hartman, for Appellants.

The second mortgage did not provide for any default for nonpayment of interest. The mortgagee for default in the interest could not foreclose before the maturity of the note. Van Loo v. Van Aken, 104 Cal. 269, 37 P. 925; Williams v. Townsend, 31 N.Y. 415. And nonpayment of an installment does not authorize judgment for the whole debt. Wiltsie on Mortgage Foreclosure, sec. 37; Black v Reno, 59 F. 921; Bank v. Johnson, 53 Cal. 99.

The confirmation of a composition discharges the bankrupt from his debts. In re Jersey Island Pkg. Co., 152 F. 839; Pierce v. Wilcox, 40 Ind. 70. After a discharge in bankruptcy no decree can be made against the person of the bankrupt on account of a mortgage debt due and provable before bankruptcy. Wolfe v. Bate, 48 Ky. (9 B. Mon.) 208; Blackwell v. F. & M. Bank (Tex. Civ. App.), 76 S.W. 454; Delta County Bank v. McGranahan, 37 Wash 307, 79 P. 796; Holland v. Cunliff, 96 Mo.App. 67 69 S.W. 737. Where a claim against a bankrupt is duly scheduled, it is included in his discharge, whether the creditor proves it or not. In re Kuffler, 153 F. 667.

A purchase by a corporation of its own shares of stock paid for out of its assets, or secured by a mortgage on its property, is void as to creditors. Cook on Corporations, sec. 311, p. 675; Lowe v. Pioneer Threshing Co. (C.C.A.), 70 F. 646.

The special meeting of the stockholders and the board of directors to authorize the notes and mortgage were held outside the state of the creation of the corporation and outside the Territory of Arizona. The place of the meetings of stockholders must be within the state creating the corporation. Cook on Corporations, 5th ed., sec. 589; 2 Purdy's Beach on Private Corporations, sec. 671.

James Reilly, and Ben Goodrich, for Appellee.

In Hooper v. Stump, 2 Ariz. 262, 14 P. 799, this court, in construing precisely the same language that appears in the mortgage under consideration, says: "The language [of the mortgage] is plain, and can mean nothing else than on failure to pay the principal or the interest power is given to sell the premises and retain such principal and interest. If it were only to recover interest in default of payment of interest, why say to retain principal? Such is the contract and by it the parties must stand. We see no need in referring to authorities." In Brickell v. Batcheldor, 62 Cal. 630, the court holds that the authorization to sell in the manner prescribed by law means by suit under foreclosure. Phelps v. Mayers, 126 Cal. 550, 58 P. 1048, and cases cited; Clemmens v. Luce, 101 Cal. 435, 35 P. 1032. The judgment of the lower court should be sustained. Pars. 3280, 1433, Ariz. Rev. Stats. 1901; Tinsley v. Boykin, 46 Tex. 597; Kesner v. Trigg, 98 U.S. 54, 25 L.Ed. 84; Olcott v. Bynum, 17 Wall. 63, 21 L.Ed. 575; Chicago & Vincennes R.R. Co. v. Fosdick, 106 U.S. 68, 1 S.Ct. 10, 27 L.Ed. 47; Central R.R. Co. v. Central Trust Co., 133 U.S. 89, 10 S.Ct. 235, 33 L.Ed. 561; Simmons v. Burlington C. & R.N. Co., 159 U.S. 288, 16 S.Ct. 1, 40 L.Ed. 150; Farmers' Loan & Trust Co. v. Oregon etc. R.R., 24 F. 411; Hawkins v. Hill, 15 Cal. 499, 76 Am. Dec. 499.

OPINION

KENT, C.J.

-- This is an action brought by Martin Costello against the Copper Belle Mining Company, a corporation of the state of West Virginia, and the Copper Belle Mining Company of Arizona, a corporation of the territory of Arizona (which we will hereafter refer to as the "West Virginia company" and the "Arizona company," respectively), to recover on certain promissory notes given by the West Virginia company to one Gleeson and subsequently assigned by him to Costello, and to foreclose the liens covered by two mortgages upon certain mining property of the West Virginia company given to secure the notes. The complaint contained two causes of action; the first cause of action being on a certain promissory note for the sum of $15,100, secured by a first mortgage on the property and for a certain amount expended by Costello for assessment work upon the mines covered by the terms of the mortgage, and the second cause of action set up the execution of four certain promissory notes aggregating $53,000, secured by a second mortgage on the same property, and alleged that a certain amount of interest was due upon said last-mentioned notes, although the principal thereof was not due and payable at the time of the filing of the complaint. Judgment was prayed for the full amount of the principal and interest of the note set up in the first cause of action, for the amount expended for assessment work, for the interest due on the notes set up in the second cause of action, for a determination of the present value of the four promissory notes set up in the second cause of action, and for a decree foreclosing the mortgage liens upon the property of the West Virginia company. Upon the first trial of the action, the district court found for the plaintiff for the full amount of the claims set up in the first cause of action, and for a certain amount of interest due on the notes set up in the second cause of action. An appeal was taken from the judgment so entered, and upon such appeal the judgment was affirmed by this court as to the amount found due upon the first cause of action, but modified by striking out therefrom the amount found by the trial court to be due for interest on the notes set up in the second cause of action, for the reasons given in our opinion, reported in 95 P. 94, without prejudice to the plaintiff to thereafter enforce such rights as he might have under his second cause of action. The case thereafter came on for trial in the district court upon the plaintiff's second cause of action as set up in his original complaint and upon the amended answers of the two defendant corporations subsequently filed, and upon a pleading filed at the time of the trial by the plaintiff with the leave of the court, in the nature of a supplemental complaint which set up that, since the judgment was rendered in favor of the plaintiff on his first cause of action, the mining property covered by the mortgages had been sold by the sheriff on execution to satisfy the judgment obtained upon the first cause of action, for the sum of $89,346.25, and that the balance thereof, after the payment of the amount of such judgment, to wit, the sum of $63,964.92, had been paid into court to be applied by the court so far as it might be necessary for the payment of the notes set up in the second cause of action, with interest; and further set up the expenditure by the plaintiff of a certain amount of money for assessment work upon the property since the filing of the original complaint. To this supplemental complaint answers were duly filed by the defendant corporations. Judgment was rendered for the plaintiff for the sum of $65,616.45, to be satisfied only out of the proceeds in the hands of the court from the sale above referred to, and against the Arizona company for costs, no personal judgment being rendered against the West Virginia company. From this judgment and the denial of a motion for a new trial, the defendant corporations have appealed.

Except for the facts set forth in the supplemental complaint, the pleadings and the evidence upon the second trial were substantially the same as upon the first. A full statement of the case is to be found in our former opinion (11 Ariz. 335 95 P. 94), and need not be repeated here. It is proper to state, however, that, in addition to the facts established upon the first trial, the evidence showed and the court found upon the second trial the following facts: That on February 4, 1902, the West Virginia company executed and delivered to Gleeson, for value, its four promissory notes aggregating $53,000, secured by its second mortgage on the property. That according to the terms of the mortgage plaintiff was authorized to have the assessment work required by law to be done performed on said mining claims, and the amount so expended by the plaintiff was found. That before maturity the notes were assigned by Gleeson to the plaintiff for value. That in April, 1904, the Arizona company acquired by conveyance from the West Virginia...