G.V.B. Min. Co. v. First Nat. Bank

• Decision Date: 02 May 1899
• Docket Number: 507.
• Parties: G.V.B. MIN. CO. v. FIRST NAT. BANK OF HAILEY.
• Court: U.S. Court of Appeals — Ninth Circuit

95 F. 23

G.V.B. MIN. CO. v. FIRST NAT. BANK OF HAILEY.

No. 507.

United States Court of Appeals, Ninth Circuit.

May 2, 1899

The complaint, among other things, alleges: 'That in said mortgage, as written, there is a clerical error in one of the 'calls,' in the description of the part of the 'O.K.' lode described, in failing to give the minute call of the last course in said description, which in the description herein given is corrected to conform to the fact that said mortgage should be reframed to conform to the intention of the parties thereto, as above alleged, and the said Senator and Sumol lode claims be, by order and decree of this court included in the property described in, and mortgaged by, the said mortgage, and included and embraced in the decree of foreclosure and sale in this action.'

The answer of the G.V.B. Mining Company denied the existence of any indebtedness whatever. It denied the execution of the notes and mortgage sued upon, or either of them; and further denied that it made any mistake in describing any property mortgaged to plaintiff, or omitted to include any property it intended to mortgage, or erred in any description or call in any mortgage, to plaintiff, or at all.

The general facts, as developed at the trial, were substantially to the effect that, prior to 1891, G. V. Bryan and G. W Venable were, or claimed to be, the owners of the Red Elephant group of mines, although the interest of Venable therein was held in the name of George B. Howard. They kept an account with appellee in the name of 'G. V. Bryan, Superintendent.' on February 9, 1891, the G.V.B. Mining Company was incorporated, under the laws of the state of New York, with a capital stock of $500,000, divided into 5,000 shares. Bryan and Howard conveyed the Red Elephant group of mines to the corporation, and received in exchange all of its capital stock. Bryan received three-fourths, and Howard, representing Venable, one-fourth. Howard afterwards transferred the one-fourth to Venable, and Venable transferred 350 shares to one Heyman, and pledged 1,850 shares to Henry Aplington and R. J. Dean, as trustees for Mrs. H. K. Thurber. Bryan gave one share of his stock to one Donnelly, and another to Howard, so as to qualify them to act as directors of the corporation. On February 18, 1891, the stockholders met, and elected Bryan president, Howard secretary, and H. K. Thurber treasurer, and adopted by-laws, sections 7 and 8 of which read as follows:

'Sec. 7. The president shall preside at all meetings of the board of trustees, when present. In the absence of the president, the trustees may appoint a president pro tem. from their number. The president shall sign all certificates of stock and bonds, and may sign other obligations of the company. In the absence of the president, or in case of his inability to act, the trustees may appoint from their number a person to perform the duties of the president. The president shall perform all duties required by law, or that are usually performed by the president of a corporation.

'Sec. 8. It shall be the privilege of the president or treasurer to have the care and custody of the funds of the company, and to deposit the same in such bank or banks as the trustees may elect. The treasurer may sign all notes, checks, drafts, and orders for the payment of money made by the company. He or the president shall render a statement of his cash account at each meeting of the trustees, if required, and shall, at all reasonable times, exhibit his books and accounts to any trustee of the company upon application at his office. He shall countersign and affix the seal of the company to all certificates of stock signed by the president.'

The articles of incorporation provided, among other things, that the objects for which said corporation was formed were to carry on the business of mining for gold, silver, etc., a part of its business to be carried on in Alturas (now Blaine) county, Idaho, and elsewhere in said state. On the 21st day of May, 1891, the directors held another meeting, and amended the by-laws so as to relieve Mr. Thurber from his duties as treasurer, and no other meeting was ever held by them, or anybody else, for the corporation, until September 16, 1895. After this incorporation, the business between the bank and the corporation was conducted in the same manner as before. Checks were drawn, and payments made thereon credited, nearly every day, until after June 12, 1895. There was never any controversy or suggestion as to the legality of these acts. None of the transactions was ever questioned by any party. Bryan borrowed money from time to time; overdrew his account; gave his notes, either as superintendent or president,-- sometimes both. In other words, Bryan and Venable transacted the business of the corporation as if they were the sole owners thereof.

There is a sharp controversy arising out of a conflict or dispute in the testimony as to the number of shares of stock owned by Bryan and Venable, on June 12, 1895, at the time the mortgage was executed. Bryan, in answering an interrogatory upon this point in his deposition, said: 'The only stock, to my knowledge, standing upon the books of the company, in any other name than that of myself and Mr. Venable, was 350 shares owned by the Heymans, and 2 shares which I gave to two gentlemen in New York to make them directors of the company. * * * I don't think there was any transfer on the books. If there was any transfer on the books, I didn't know of it. I don't think there could have been, without ny knowledge. ' When H. K. Thurber was on the witness stand, he was requested by appellant to refer to the stock book of the G.V.B. Mining Company, and from the book ascertain how the stock stood on June 12, 1895. Objection was made that the book was not competent. The court said that the book would show what stock was issued at certain dates, and that this might be shown, but that the evidence was not conclusive that the ownership of that stock continued for any length of time, and further said that no one could tell from that book where the stock was and who owned the shares at any given date. Appellant's counsel then asked the witness if he knew, of his own knowledge, 'how the stock was owned on June 12, 1895. ' He answered, 'I do, or very nearly.' In reply to the question, 'State, as near as you can,' he said that Olive M. Bryan owned 1,000 shares; R. J. Dean and Henry Aplington, 1,850 shares; George V. Bryan, 498 shares; George W. Venable, 300 shares; Heyman, 350 shares; Dean 1,000 shares; and the two odd shares make up the 5,000. This testimony was, of course, subject to the ruling of the court as to its effect. George W. Venable testified that, at the date the mortgage was executed, 'Col. G. V. Bryan owned one-half; I owned a quarter; and my partner, Moses J. Heyman, owned a quarter. ' He further said that 1,850 shares of his stock were in the names of Henry Aplington and R. J. Dean, as trustees. 'They held it as collateral security.'

The weight of the direct testimony, notwithstanding some apparent discrepancies in the testimony of Mr. Venable, and all the surrounding circumstances of the transaction, establish the fact that Bryan and Venable, at the time the mortgage was executed, were unquestionably the owners of more than two-thirds of the capital stock. The agreement executed July 11, 1895, between Bryan and Venable, of the first part, and H. K. Thurber, of the second part, recites: 'And whereas, the said parties of the first part are the principal stockholders in the G.V.B. Mining Company. ' There is no pretense that any change in the ownership of the stock took place after the mortgage was executed and the time of the signing of this agreement. The testimony shows that Bryan was a director of the bank from January, 1893, to January, 1896. He was present at the meeting when the question came up of taking a mortgage to secure the notes from the G.V.B. Mining Company. 'He made his application for the loan, and then withdrew, and went away, and left the other members there to discuss the matter, and he took no part in the proceedings with reference to it at all. ' There is no testimony in the record tending to show any conspiracy or collusion between the bank and Bryan in any of the transactions between the bank and the mining company.

There is a mass of testimony in the record as to whether or not Bryan and Venable, in 1894, used any money upon mining claims not owned by the corporation. Without entering into any of the details of this testimony, it may be said that the testimony shows that some of the money obtained upon some of the notes given by Bryan as president was used by Bryan and Venable upon mines which they owned individually at Silver City, Idaho, and that appellee had some knowledge of that fact. The testimony fails to show that there was any fraud conspiracy, or design on the part of the bank to defraud the corporation. On the other hand, the testimony shows that there was no bad faith on the part of the bank, and that the amount for which the mortgage was given was actually due from the corporation. R. F. Bullard, president of the appellee, upon this point testified as follows: 'We had information from Col. Bryan, and it was a common rumor around and commonly reported, that Bryan and Venable were engaged in mining down at Silver City; that there was a claim that they were operating on,-- the Tiptop and another claim. I never asked who owned the property. We never had any information-- never made any inquiry--about that. We did not consider that it was any of our business. We thought they had a right to mine wherever they pleased; but we understood that they were spending quite a good deal of money down there at Silver City, although...