Fleming v. Black Warrior Copper Co. Amalgamated

• Decision Date: 26 September 1913
• Docket Number: Civil 1283
• Parties: JAMES A. FLEMING, Plaintiff, and L. E. HEWINS, as Executor of the Last Will and Testament of E. B. KNOX, Deceased, Intervener, Appellants, v. THE BLACK WARRIOR COPPER COMPANY AMALGAMATED, a Corporation, HENRY A. FRY, EARNEST L. TUSTIN, JAMES DOBSON, S. DAVIS WALTON, WM. H. FRANCIS, EDWARD W. PATTON, JOSEPH M. GAZZAM, WALTER LA RUE, JOSEPH RUTTER and CHAS. A. CHASE, Constituting the Board of Directors of said Corporation; W. W. KEEN, JOSEPH WRIGHT, HARRY S. HOPPER, SPENCER D. WRIGHT, and ALBERT LA RUE, as a Reorganization Committee of THE BLACK WARRIOR COPPER COMPANY AMALGAMATED; SPENCER D. WRIGHT, as Trustee for said HARRY S. HOPPER; SPENCER D. WRIGHT and ALBERT LA RUE, as a Reorganization Committee of THE BLACK WARRIOR COPPER COMPANY AMALGAMATED; the WARRIOR COPPER COMPANY, a Corporation; HARRY S. HOPPER, SPENCER D. WRIGHT, CHAS. A. CHASE, CORNELIUS ALEXANDER, Jr., and GEO. P. HARRISON, as Incorporators of the WARRIOR COPPER COMPANY; and MEREDITH HANNA and the FIDELITY TRUST COMPANY, a Corporation, Appellees
• Court: Arizona Supreme Court

136 P. 273

15 Ariz. 1

JAMES A. FLEMING, Plaintiff, and L. E. HEWINS, as Executor of the Last Will and Testament of E. B. KNOX, Deceased, Intervener, Appellants, v. THE BLACK WARRIOR COPPER COMPANY AMALGAMATED, a Corporation, HENRY A. FRY, EARNEST L. TUSTIN, JAMES DOBSON, S. DAVIS WALTON, WM. H. FRANCIS, EDWARD W. PATTON, JOSEPH M. GAZZAM, WALTER LA RUE, JOSEPH RUTTER and CHAS. A. CHASE, Constituting the Board of Directors of said Corporation; W. W. KEEN, JOSEPH WRIGHT, HARRY S. HOPPER, SPENCER D. WRIGHT, and ALBERT LA RUE, as a Reorganization Committee of THE BLACK WARRIOR COPPER COMPANY AMALGAMATED; SPENCER D. WRIGHT, as Trustee for said HARRY S. HOPPER; SPENCER D. WRIGHT and ALBERT LA RUE, as a Reorganization Committee of THE BLACK WARRIOR COPPER COMPANY AMALGAMATED; the WARRIOR COPPER COMPANY, a Corporation; HARRY S. HOPPER, SPENCER D. WRIGHT, CHAS. A. CHASE, CORNELIUS ALEXANDER, Jr., and GEO. P. HARRISON, as Incorporators of the WARRIOR COPPER COMPANY; and MEREDITH HANNA and the FIDELITY TRUST COMPANY, a Corporation, Appellees

Civil No. 1283

Supreme Court of Arizona

September 26, 1913

APPEAL from a judgment of the Superior Court of the County of Gila. A. G. McAlister, Judge. Reversed and remanded.

The facts are stated in the opinion.

Mr Eugene S. Ives, for Appellants.

Messrs Alderman & Elliott, for Appellees.

OPINION

CUNNINGHAM, J.

This action was commenced March 25, 1909, by the appellants as minority stockholders in the Black Warrior Copper Company Amalgamated, a domestic corporation, against the said Black Warrior Copper Company Amalgamated, certain named members of its board of directors, certain of its stockholders, certain named persons comprising a reorganization board, the Warrior Copper Company, a foreign corporation, organized by said reorganization board, the incorporators, of the foreign corporation, Meredith Hanna, and the Fidelity Trust Company a corporation, as trustee for certain purposes.

The purpose of the action is to have declared void transfers of all the property of the defendant Black Warrior Copper Company Amalgamated to the Warrior Copper Company, because such transfers are in fraud of the rights of the plaintiffs as stockholders of the Black Warrior Copper Company Amalgamated, a corporation, and in fraud of the rights of the holders of bonds issued by said corporation.

The defendant Warrior Copper Company defends alone. The other defendants make no appearance in the action. The said defendant demurred to the complaint upon the grounds that the facts stated do not constitute a cause of action, and because the court has no jurisdiction over a foreign corporation in this kind of action, because the matters and things alleged are shown to pertain to the internal affairs of this corporation, because the alleged cause of action is barred by laches and the statute of limitations, and because the intervener's complaint does not show capacity to sue, in the absence of a showing that the Black Warrior Copper Company amalgamated and its managing board were requested to sue the cause of action. The court by a general order sustained the demurrers without a more specific designation of any particular grounds, and, the plaintiff and intervener electing to stand upon their complaints, judgment was rendered for the defendants, and, from which judgment, this appeal is prosecuted.

Appellant James A. Fleming, the original plaintiff, and L. E. Hewins, as executor intervener, only appeal, and assign error separately upon the orders of the court sustaining the demurrers general and special, viz.: Whether the complaint is sufficient to state a cause of action; whether the plaintiff and intervener appellants are barred by laches and by the statute of limitations; and whether the complaints show equity.

In the most general manner we will observe that the plaintiffs show their rights as stockholders, and Fleming's additional interest as a bondholder, in the Amalgamated corporation. The complaint then shows that the defendants in furtherance of a conspiracy, and by the use of the courts and officers of the law, did, upon the face of the transaction, divest, on the twenty-ninth day of June, 1906, the Amalgamated corporation of all its property, and thereby caused the stock and bonds of the plaintiff and others similarly situated to become wholly worthless. The complaint shows that at the time of the transaction complained of the Amalgamated company was possessed of personal property consisting of its capital stock, then in the treasury undisposed of, and callable, of the reasonable value of $60,000; also fuel oil worth $2,500; also a stock of merchandise of great value; also timber and copper ready for market; also $19,849.75 cash on hand -- and this property, with other real property owned by the company, in the aggregate was of a reasonable value of $2,000,000, and the company was indebted in the sum of about $15,000. In furtherance of the said conspiracy, the money and personal property were dissipated, and the real property was allowed to be sold under execution to satisfy the small indebtedness, and about the time of the sale of the real property under execution the Amalgamated company was disincorporated in order to prevent a redemption of the property from the sale, and the defendants organized the Warrior Copper Company, and appointed trustees to, and they did purchase the property at the sale, and conveyed the property to the said Warrior Copper Company.

The complaints show that the parties defendant had at all times complete control of the affairs of the Amalgamated company, that they were hostile to the plaintiff and to the intervener, and were acting upon a preconcerted plan to accomplish the very results complained of, and for plaintiff and the intervener to demand that the Black Warrior Copper Company Amalgamated commence and prosecute this action would be a futile thing which the law does not require. Nothing but a refusal could be reasonably expected to result from such demand.

The defendant Warrior Copper Company has submitted itself to the jurisdiction of the court for all purposes of this action, and it cannot complain if the court exercise that jurisdiction.

The property incidentally involved is within the jurisdiction of the court, and a decree of the court might affect the title to the property involved; therefore the...