Hatch v. Lucky Bill Min. Co., No. 1403. (71 Pac. 865.) (UT 3/25/1903)

• Decision Date: 25 March 1903
• Docket Number: No. 1403. (71 Pac. 865.).,1403. (71 Pac. 865.).
• Parties: JOSEPH HATCH, Respondent, v. THE LUCKY BILL MINING COMPANY, a Corporation, Appellant.
• Court: Utah Supreme Court

Page 405

JOSEPH HATCH, Respondent, v. THE LUCKY BILL MINING COMPANY, a Corporation, Appellant.

No. 1403. (71 Pac. 865.).

Supreme Court of Utah.

Decided March 25, 1903.

1. Mining Corporations: Sale of Stock: Assessments: Irregularities: Acquiescence.

Where a corporation acts within the scope of its general powers, and such acts are irregular, and performed in a manner not authorized by its charter, but are neither criminal, opposed to good morals, nor against public policy, they are voidable only, and a stockholder aggrieved thereby may acquiesce in and ratify what has been done, or may disaffirm and repudiate the voidable proceeding within a reasonable time.

2. Same.

A stockholder of a mining corporation, whose duty it was, as president, director, and business manager, to see that assessments on stock were regularly made and collected, and who knew that it was the uniform practice of the company to levy assessments though a majority of the stock was not represented at the meetings, and though small amounts of previous assessments remained uncollected, could not, after his own stock had been sold under such assessments, complain of their irregularity.

3. Same: Holdover Directors: Powers.

Holdover directors of a corporation are still in office, and qualified to act, until their successors are elected and qualified.¹

Page 406

4. Same: Failure to File Oath: Effect.

Where directors of a mining corporation had taken and subscribed to, but not filed, their oaths, as required by Revised Statutes 1898, section 317, an assessment on stock made by them will not be set aside, no one appearing to have been misled or injured by the irregularity.

5. Same: Directors' Meeting: Notice.

An assessment on the stock of a mining corporation at a meeting at which but four of the seven directors were present, no notice thereof having been given to the absentees, was void, and stockholders whose stock was sold under such assessments were entitled to recover, unless estopped by acquiescence or laches.²

6. Same: Facts Held to Establish Estoppel.

Stockholders of a mining corporation whose stock had been sold under void assessments, but who, with full knowledge of the irregularity, made no objection for more than ten months after the last sale, and who repeatedly stated that they had abandoned the enterprise and acquiesced in the forfeiture, the stock meanwhile having been bought by innocent parties, were estopped from claiming that such sales were void.³

7. Same: Assignee Estopped.

One who procured the assignment of mining stock with full knowledge of facts estopping the owners from asserting that a sale thereof to pay assessments was void, was also estopped from making such claim. BASKIN, C. J., dissenting.

Appeal from the Third District Court, Summit County.— Hon. S. W. Stewart, Judge.

Action to have reissued and restored certain shares of the capital stock of the defendant corporation sold for delinquent assessments and bought in by the defendant. From a decree in favor of the plaintiff, the defendant appealed.

REVERSED.

Page 407

Andrew Howat, Esq., for appellant.

Independently of any statute of limitations, courts of equity uniformly decline to assist a person who has slept upon his rights and shows no excuse for his laches in asserting them. Nothing can call forth a court of equity into activity but conscience, good faith and reasonable diligence; where these are wanting the court is passive and does nothing. Laches and neglect are always discountenanced. Harwood v. Railroad Company, 17 Wall. 78, 81. Speidel v. Henrici, 120 U. S. 377, 387; Rabe v. Dunlap, 51 N. J. Eq. 40, 46; G. W. Mining Co. v. W. of A. M. Co., 14 Col. 90, 95.

A party who makes an appeal to the conscience of the chancellor should set forth in his bill specifically what were the impediments to an earlier prosecution of his claim. Landsdale v. Smith, 106 U. S. 391; Olden v. Hubbard, 34 N. J. Eq. 85.

Where the suit is one that would be barred by laches, but for reasons excusing the delay, the complainant is required to state in his bill the facts and circumstances on which he relies to repel the presumption of laches. Story Eq. Plead., secs. 484, 503, and note; Lansdale v. Smith, 106 U. S. 391; Olden v. Hubbard, 34 N. J. Eq. 85; Walker v. Ray, 111 Ills. 315; Haskell v. Bailey, 22 Conn. 569.

A great deal of confusion has arisen because of the failure of the courts and text-writers to observe the distinction between acts and contracts that are void and those that are voidable only. No contract or transaction is absolutely void so that no rights can be acquired thereunder unless it is in violation of the criminal law, is against good morals or against public policy. When the only rights affected are the rights of individuals and not of the public generally acts and contracts, though in violation of the rights of individuals, are not void, but voidable only, and statutes that in terms declare certain acts to be void are usually construed so that the act is voidable

Page 408

only, unless the public interests are affected thereby. 28 Am. and Eng. Enc. of Law. 473, 475; Endlich Interp. St., 268, 271; Ewell v. Daggs, 108 U. S. 148; Pearsoll v. Chapin, 44 P. A. St. 7; Schwab v. Mining Co. (Utah), 60 Pac. 940; Anderson v. Roberts, 18 John. 527-8; Bennett v. Mattingly, 11 N. E. 792; Kearney v. Vaughan, 50 Mo. 287; Allis v. Billings, 6 Metc. 417; Beecher v. Marq. & Pac. R. M. Co., 45 Mich. 107; Van Schaack v. Robbins, 36 Iowa 201.

If the property is of a speculative or precarious nature it is the duty of one complaining of fraud or other wrong, depriving him of an interest therein, to assert his claim at the earliest possible time, and if he fails to do so he will be guilty of laches and will be estopped from thereafter asserting his claim. Attwood v. Small, 6 Clark & F. 356; Pollard v. Clayton, Kay & J. 480; Raht v. Mining Co., 18 Utah 290, 301; Twin Lick Oil Co. v. Marbury, 91 U. S. 587, 592; Johnson v. Standard Mining Co., 148 U. S. 360; Penn., etc., Ins. Co. v. Austin, 168 U. S. 685; Curtis v. Lakin, 94 Fed. 251, 255; Sayre v. Citizens G. & L. Co., 69 Cal. 207, 214; Germantown, etc., Ry. Co. v. Fitler, 60 Pa. St. 124, 133, S. C. 100 Am. Dec. 546-51; Kent v. Quicksilver Mining Co., 78 N. Y. 159, 187, 188; G. W. Mining Co. v. Mining Co., 14 Col. 90, 94, 98, and cases cited.

Frederick A. Sweet, Esq., and Albert R. Barnes, Esq., for respondent.

The section of the statute of limitations that has application to this suit is subdivisions 3 and 4, section 2877, Revised Statutes of Utah. It provides a period of three years in which such an action may be brought. The contention of counsel for respondent is, that there is no such thing in law or in equity as laches where an action is brought any time before the period provided by the statute has had time to run; that nothing short of an equitable estoppel will bar the plaintiff

Page 409

of relief. Under the code we have but one action for the redress of private wrong and the statute of limitations has general application to all without regard to whether they are equitable or legal in their character, and in those states where the statute has not been made expressly applicable to equitable actions—as has been done here—courts of equity will, by analogy regard the statute of limitations that will bar the legal action as absolutely binding upon them. Love v. Watkins, 40 Cal. 547, 567-8-9-70. Ormsby v. Vermont Copper Co., 56 N. Y. 623; White v. Sheldon, 4 Nev. 739; Kane v. Blood-good, 7 Johns. Chan. 90; 11 Am. D. 417; Lang Syne M. Co. v. Ross, 18 Pac. 358-63; 19 Am. St. Rep. 337-344; Boyd v. Blankman, 29 Cal. 20-44; Gilmer v. Morris, 80 Ala. 78; 60 Am. Rep. 90-1; Lux v. Haggin, 69 Cal. 266-7; Met. Bank v. Despatch Line, 149 U.S. 448; Donn v. Stotesbury, 26 Pac. 333.

STATEMENT OF FACTS.

Plaintiff brought this action to have reissued and restored to him 36,313 2-3 shares of the capital stock of the defendant corporation, which are claimed by him and his assignors, which stock was sold for delinquent assessments, and bought in by the defendant company. The complaint contains three causes of action. The first is to recover 15,761 2-3 shares, sold for the twenty-eighth assessment; the second is to recover 10,650 shares, sold for the twenty-ninth assessment; and the third is to recover 9,902 shares, sold for the thirty-first assessment.

Defendant company was incorporated March 26, 1888, with a capital stock of 120,000 shares. The only assets of the company at the time of its incorporation were some undeveloped mining claims near Park City, Utah. The company never sold any ore, and the only means it had of raising money for the development of its mining claims was the sale of treasury stock and the levying of assessments on the

Page 410

stock outstanding. The articles of incorporation provide that an assessment shall not be levied except by a majority of the board of trustees, and not by them unless they personally or by proxy, at the time of such levy, represent a majority of the stock of said corporation, and that no assessment shall be levied while any portion of any previous assessment remains unpaid. Plaintiff, who was a director from June 12, 1892, to June 11, 1900, participated in all meetings at which assessments were levied from and including the eighth (held September 22, 1892) down to and including the twenty-seventh (held September 3, 1897). During the greater portion of this time he was president, and for three years business manager, of the corporation. Printed notices of the assessments were mailed to the address of each stockholder by the secretary of the company, and duly published in two newspapers of general circulation. The notices of sale were also published, and were in all respects regular. In addition to the notices thus given, the plaintiff and certain of his assignors, who owned and represented in the aggregate nearly all of the stock sued for, had actual notice of these assessments...