Geddes v. Anaconda Copper Mining Co.

• Decision Date: 29 June 1912
• Docket Number: 1,086.
• Parties: GEDDES et al. v. ANACONDA COPPER MINING CO. et al.
• Court: U.S. District Court — District of Montana

197 F. 860

GEDDES et al. v. ANACONDA COPPER MINING CO. et al.

No. 1,086.

United States District Court, D. Montana.

June 29, 1912

Walsh &amp Nolan, for complainants.

C. F Kelley, L. O. Evans, W. B. Rodgers, and D'Gay Stivers for defendants.

HUNT Circuit Judge.

Peter Geddes et al., who are minority shareholders in the Alice Gold & Silver Mining Company, incorporated under the laws of Utah, and doing business at Butte, pray the court to annul a deed of all the property of the Alice Gold & Silver Mining Company to the Anaconda Copper Mining Company, a corporation also doing business at Butte. The consideration for the transfer of the property of the Alice Company to the Anaconda Company is 30,000 shares of the capital stock of the Anaconda Company, worth about $1,300,000. The application for immediate consideration is that an injunction issue restraining the Anaconda Copper Mining Company from transferring the stock in question pending the litigation, to the end that, if the facts upon final hearing should warrant the court in granting the relief prayed for, the stock received by the Alice Company as a consideration for its property may be restored to the Anaconda Copper Mining Company. Defendants resisted the application, and hearing was had.

Among the grounds relied upon by the complainants for a restraining order is this: That the sale is void because there is a substantial identity between the parties who negotiated and carried out the sale and the parties who negotiated and carried out the purchase. The contention, stated in the briefest way, is that the defendant the Anaconda Copper Mining Company, and the Alice Gold & Silver Mining Company in which latter corporation complainants are shareholders, are both in practical effect directed or controlled by Mr. John D. Ryan, who it is proven was, at the time of the transaction involved herein, a director in both of said corporations and held the position of president of the Alice Gold & Silver Mining Company. The Alice Company was incorporated in 1881 with 400,000 shares of par value of $25 for each share.

At the time that the Alice Mining Company sold its property to the Anaconda Company, the majority of the stock of the Alice Company was owned by the Butte Coalition Company, a stockholding corporation holding stock in mining corporations in Butte. In this corporation also Mr. Ryan was a director at the time of the sale of the property of the Alice Company to the Anaconda Company. Furthermore, it appears that the Amalgamated Copper Company, also a stockholding corporation, owns a majority of the Anaconda Copper Mining Company's stock, and about one-twentieth of the capital stock of the Butte Coalition Company, and that in the Amalgamated Copper Company Mr. Ryan was and is a director and vice president.

The Butte Coalition Company referred to was organized about 1906 to hold the majority of the stock of the Alice Mining Company, heretofore referred to, and all of the stock of the Red Metals Mining Company. The Red Metals Mining Company was also organized about 1906, and became the owner of certain valuable copper mining properties in and about Butte which had for a long time theretofore been the subject of bitterly contested litigation between mining interests commonly regarded as belonging to or controlled by the Amalgamated Copper Company and those commonly known as belonging to or controlled by Mr. F. A. Heinze. Settlement of all the differences between the litigants in these contests was had about 1906, and transfer of title was made to the Red Metals Mining Company, and thereafter the Butte Coalition Company became the owner of the stock of the said Red Metals Company. It appears that certain of the stockholders of the Alice Mining Company, who sent proxies to vote at the meeting held at Salt Lake in May, 1910, to consider the transfer of the property of the Alice Company to the Anaconda Company, designated as one of their attorneys one of the counsel who had been and was then one of the counsel of the Anaconda Copper Mining Company. Again, the same counsel who acted for the Anaconda Copper Mining Company acted for the Red Metals Mining Company in harmonizing the relationships of the properties of the Red Metals Mining Company toward the properties of the Anaconda Copper Mining Company when the Amalgamated-Heinze litigation ended in 1906. It also appears that Mr. John Gillie, general superintendent of mines of the Anaconda Copper Mining Company, has for some years been connected with the Alice Company; such connection having its origin in some agreement had by Mr. Gillie with Mr. Ryan, though no compensation was ever paid to Mr. Gillie by the Alice Mining Company. Mr. Gillie appears, too, to have acted in an advisory capacity to the Red Metals Mining Company.

The Alice properties, consisting of many quartz claims which are on the hill north of Butte, appear to be lowgrade, below the 1,000-foot level. The Alice claims are situated just west from and contiguous to certain of the properties of the Anaconda Company. The main shaft is nearly 1,500 feet deep. About 1893, the mines were flooded up to the 1,000-foot level. The water was kept at that level until 1899, when a mill then upon one of the claims was closed down, and the water rose to the 200-foot level. Within the Alice properties there are veins-- some large, others smaller, with zinc and some lead, with apparently a large body of ore, much of which is refractory zinc. For years prior to the sale of the Alice property to the Anaconda Company, the Alice Company's interests were in charge of Mr. Buzzo. When advice was necessary with respect to mining matters, he consulted with Mr. Gillie, of the Anaconda Company, and, when legal matters arose, he consulted with a gentleman who was also one of the counsel of the Anaconda Copper Mining Company. There were some leases made upon the Alice property upon which certain royalty payments were made, which payments were deposited to the credit of the Alice Company, up to the time when the Anaconda Company took over the property. The receipts of the Alice Company were not sufficient, however, to take care of the expenditures. When the transfer was made to the Anaconda Company, the Alice Company was indebted to the Butte Coalition Company in about...