Dodge v. Chambers

• Decision Date: 01 June 1908
• Citation: 96 P. 178,43 Colo. 366
• Parties: DODGE et al. v. CHAMBERS et al.
• Court: Colorado Supreme Court

96 P. 178

43 Colo. 366

DODGE et al. v. CHAMBERS et al.

Supreme Court of Colorado

June 1, 1908

Appeal from District Court, Pitkin County; John T. Shumate, Judge.

Action by George Chambers and others against George B. Dodge and another. From a judgment for plaintiffs, defendants appeal. Reversed and remanded, with directions to dismiss.

The Lenado Leasing Company was incorporated March 9, 1900, with a capital stock of 10,000 shares, of the par value of $1 per share. Five shares were subscribed and paid for in cash. On March 10, 1900, it purchased from H. B. Gillespie a certain lease on the Leadville lode mining claim, situated in Woody Creek mining district, Pitkin county, Colo., belonging to the Woody Creek Consolidated Mining Company or the Woody Creek Mining Company, and issued in payment therefor the residue of its capital stock. Mr. Gillespie placed in the treasury of the company 2,900 shares of the capital stock, as a fund to be used in developing and operating the leased property, and shortly thereafter sold the balance of his stock, being something over 5,000 shares, to M. C. McNichols, who was elected president of the company. P. W. Swan, who was a stockholder, was placed in charge of the property as superintendent and assistant manager. Mining operations were commenced and carried on under the supervision of Swan. Soon after work began, a rich body of ore was found, and for some time the expenses of operating the lease were paid out of the proceeds of the sales of ore. The ore body was soon exhausted, and the company was compelled to resort to a sale of the treasury stock to pay the expenses of operation. Some time during the summer of 1900 McNichols sold to George B Dodge and Walter Boyle each a considerable block of his stock. Dodge and Boyle also purchased at par most, if not all, of the treasury stock. By October 1, 1900, the treasury stock was exhausted, and at that time the stock of the company was held as follows: A. J. Rising, 1,000 shares; H L. McNair, 1,000 shares; P. W. Swan, 1,000 shares; M. C McNichols, 2,000 shares; G. B. Dodge, 2,500 shares; and Walter Boyle, 2,500 shares. The mine continued unproductive and, the treasury stock having been sold, it became necessary to suspend operations, or make an assessment on the stockholders. Without any formal action of the company, but by tacit agreement among themselves, McNichols, Swan, Dodge and Boyle, put up from time to time their pro rata share of the monthly expenses incurred in the operation of the property. Rising and McNair, having received their stock for legal services with the understanding that there should be no assessments upon it, did not contribute to these expenses. The contributing stockholders advanced the money for these expenses to the company, with the understanding between themselves and with the company that the sum so advanced should be repaid out of the first proceeds from the mine, and before Rising and McNair should receive any dividends therefrom. The October and November expenses were paid in this manner, when McNichols and Swan became discouraged, and declined to make any further contributions. Mining operations were, however, continued, and Dodge and Boyle made their pro rata contributions for the December bills. Early in January, 1901, the company suspended work, and in February, 1901, subleased the property to Charles Dustin. At the time the company suspended operations it was indebted to some of the miners for work upon the property, and also to the appellees for supplies furnished to carry on the mining operations. The miners assigned their claims against the company to the appellees, and the latter instituted three separate suits, naming as defendants therein the Lenado Leasing Company, the Woody Creek Consolidated Mining Company, and the Woody Creek Mining Company, praying judgment against the former for the various sums of money owing them directly or by assignment, and a decree against the Woody Creek Mining Company fixing a mechanic's lien upon the property.

In their several complaints they alleged that 'during the months of December, 1900, and January, 1901, the defendant the Lenado Leasing Company was a corporation, and was at the special instance and request of the Woody Creek Mining Company engaged in the working, preservation, prospecting, and development of said lode mining claim in search of metals and minerals,' etc. By an order entered January 13, 1902, the three suits were consolidated. On June 10, 1902, the plaintiffs in the consolidated cases applied for and obtained the following order: 'George Chambers et al. v. The Woody Creek Consolidated Mining Company et al. 1987. At this day come again the parties hereto by their attorneys respectively. Thereupon come the plaintiffs, and on their motion this cause is dismissed as to defendants the Woody Creek Mining Company and the Woody Creek Consolidated Mining Company. It is further ordered by consent of the parties hereto that the plaintiffs have time until 20 days from the date hereof within which to prepare and file their third amended complaint, and make certain parties alleged as forming the Lenado Leasing Company, to wit, George B. Dodge, Walter Boyle, H. L. McNair, and A. J. Rising, defendants herein.'

In the third amended complaint, which was filed on the date last mentioned, the plaintiffs, inter alia, allege: '(1) That during the months of December, A. D. 1900, and January, A. D 1901, the defendant, the Lenado Leasing Company was engaged in the working, preservation, prospecting, and development of the Leadville Lode Mining Claim * * * in search of metals and minerals, as lessees thereof. (2) That the defendants the Lenado Leasing Company was at said time a common name, that George B. Dodge, Walter Boyle, Herbert L. McNair, and Amos J. Rising were at said time associated in the business of mining under the name of the Lenado Leasing Company.' Here follow statements and notice of lien claimed upon said mining claim. It avers the performance of labor in the month of December, 1900, upon the property, at the instance and request of the defendant. Then follows a statement of the amounts claimed by the plaintiff and his assignors. Among the latter appears the name of P. W. Swan as entitled to $60. Then follow allegations necessary to support the claim for mechanic's lien, prayer for judgment against the Lenado Leasing Company, Dodge, Boyle, McNair, and Rising, for $724.27 and costs, and for decree awarding the plaintiff a lien upon the Leadville lode mining claim, its improvements, and machinery for that amount. An alias summons was issued August 7, 1902, against the new defendants, and returned August 11, 1902, showing service upon Dodge and Boyle. After appearing specially and filing a motion to quash said alias summons as to themselves, Dodge and Boyle filed an answer to the third amended complaint, which contained a...