Hall v. Nash

• Citation: 81 P. 249,33 Colo. 500
• Parties: HALL v. NASH et al.
• Decision Date: 05 June 1905
• Court: Colorado Supreme Court

81 P. 249

33 Colo. 500

HALL v. NASH et al.

Supreme Court of Colorado

June 5, 1905

Error to District Court, Pueblo County; N. Walter Dixon, Judge.

Action by Jacob G. Hall against Guy T. Nash and others. From a judgment dismissing the bill, plaintiff brings error. Affirmed.

D. V. Burns, J. Ed. Rizer, and Platt Rogers (W. S O'Brien, of counsel), for plaintiff in error.

Chas E. Gast, for defendants in error.

MAXWELL J.

Plaintiff in error instituted this suit December 7, 1899, in behalf of himself and other stockholders of the Matoa Leasing & Mining Company who would come in and contribute to the expenses of the suit. Trial to the court resulted in judgment of dismissal, with costs, against plaintiff, to review which is this writ of error.

The facts, as they appeared by the pleadings and the evidence were as follows: The Matoa Leasing & Mining Company was organized about June 1, 1896, for the purpose of acquiring a mining lease held by one Jackson on block 1 of the Half Moon mining claim, Cripple Creek district, Colo. The capital stock of the company was $32,000, in shares of $1 each, full paid and nonassessable, all of which stock was issued to Jackson as consideration for the assignment of his lease. At or about the time the company was organized, the persons who became stockholders in the company agreed with each other that they would pay into the treasury of the company, monthly, their proportionate shares of the operating expenses, based on the number of shares of stock held by each. Under this agreement, plaintiff became a stockholder to the amount of 3,000 shares, upon which he paid monthly assessments up to and including October 15, 1896. November 6, 1896, defendant Guy T. Nash, who was the president and business manager of the company, drew a sight draft on plaintiff, who was a resident of West Virginia, for the amount of his assessment for the period October 15th to 31st. This draft was returned unpaid. November 24th, Nash telegraphed plaintiff: 'Draft returned. Both pay rolls must be paid or we will close down and let Jackson force collection. Answer.' No answer was made to this telegram. The same date, notice of a special stockholders' meeting to be held December 26th at the secretary's office in Pueblo, Colo., was mailed to the stockholders of the company, the principal object of which meeting, as stated in the notice, was to consider ways and means of providing funds to pay the indebtedness of the company, and with which to continue operations. December 11th, plaintiff wrote Nash that he did not wish to put any more money into the mine. December 15th, Nash wrote plaintiff that the amount due from him December 1st was $247.92; that unless the same was paid within 10 days no work would be done on the property during the month, as required by the lease, and the lease would be lost. No reply was made to this. The special stockholders' meeting was held pursuant to notice, at which the holders of 22,800 shares of stock were present or represented, plaintiff not being present or represented. It was reported to the meeting that the unpaid indebtedness of the company December 1st was $1,215.15; that certain stockholders were delinquent to the amount of $1,062.42, among whom was plaintiff, to the amount of $247.92; that work at the mine had ceased December 15th, and that, unless the shaft was sunk an additional 10 or 12 feet during the month, the lease would be forfeited; that all delinquent stockholders had been notified by registered mail to pay up, and that, unless they did so, work would not be resumed at the mine. The president and secretary were authorized by the vote of the meeting to raise money to pay the indebtedness of the company, and, if possible, to provide funds for further operations. The action of the president in discontinuing work was ratified, and the stockholders present unanimously voted to not resume work on the shaft until all delinquents had paid up. Within a few days of the meeting some of the stockholders of the company advanced the money required to pay the indebtedness of the company, for which the company's notes and a chattel mortgage on the personal property of the company, to secure the same, were given to the president, as trustee, which chattel mortgage was foreclosed January 26, 1897. January 11, 1897, Nash, president of the company, surrendered the lease to the owner of the property. Some time during the month of January of February a new lease on block 1 of the Half Moon claim was granted to one Crow, trustee, who held the same for Nash to the extent of twothirds interest, the other one-third interest being held for himself and Jackson, who had been superintendent of the Matoa Company at the mine. The Crow lease was operated by sublessees, without profitable results, until it finally fell into the hands of one Johnson, who expended large sums of money thereunder, and finally, in the summer or fall of 1897, developed it into a paying proposition. About this time the Crow lease was surrendered, and a new lease, and a lease on an adjacent block of ground, were granted to Johnson, in which leases Nash and his associates had a 7/32 interest, from which profits were realized to the amount of $37,893.91. Prior to the time when the lease became profitable, Nash had gratuitously divided his two-thirds interest in the Crow lease with the other stockholders in the company who had paid up their assessments, in proportion to the amount which they had paid into the company. The plaintiff, up to the time of the stockholders' meeting--December 26, 1896--was fully advised of the operations of the company, and repeatedly urged and importuned to pay his proportion of the expenses, and notified that the lease would be lost to the company if he and others failed to pay their assessments. No attempt was made to conceal anything from him.

It is said that the surrender of the lease was pursuant to a combination entered into between the officers and a majority of the stockholders of the company, and the owner of the property, made prior to the surrender, whereby a new lease was acquired, in fraud of the rights of plaintiff and other stockholders not in the combination, and that such surrender was unwarranted and unauthorized. There is no evidence to connect any officer or stockholder of the company with the surrender of the...