Jones v. Bonanza Min. & Mill. Co.

• Decision Date: 16 July 1907
• Docket Number: 1848
• Citation: 32 Utah 440,91 P. 273
• Parties: JONES v. BONANZA MIN. & MILL. CO. et al
• Court: Utah Supreme Court

91 P. 273

32 Utah 440

JONES v. BONANZA MIN. & MILL. CO. et al

No. 1848

Supreme Court of Utah

July 16, 1907

APPEAL from District Court, Fifth District; Joshua Greenwood, Judge.

Action by George Jones against the Bonanza Mining & Milling Company and others. From a judgment for plaintiff, defendants appeal.

REVERSED, WITH DIRECTIONS TO DISMISS THE ACTION.

W. A Lee for appellants.

Henderson Pierce, Critchlow & Barrette and B. N.C. Stott for respondent.

FRICK J. McCARTY, C. J., and STRAUP, J., concur.

OPINION

FRICK, J.

This action was commenced by plaintiff, hereinafter designated respondent, against the defendants, who are appellants in this court, to enjoin them from acting as the officers and board of directors of the Bonanza Mining & Milling Company, a Utah mining corporation, and to enjoin them from holding a certain stockholders' meeting, and from entering into negotiations for and from making a sale of the property of said company, and for general relief. A restraining order was duly issued pending the hearing on the merits, and upon final hearing the individual defendant E. G. Jones, and four others who were not made parties to the action, were removed as officers and directors of said company, and others reinstated into such offices, and the appellant E. G. Jones and the four other members of the board of directors were enjoined from holding any stockholders' or directors' meeting. They were enjoined from offering for sale or selling the property of said corporation, and from transacting any of its business; and all acts of the board of directors of said corporation from and after March 9, 1903, including the acts on said date, were held illegal and void. The court further decreed that the plaintiff and his associates still were the owners of and entitled to the stock which was sold on the assessment hereinafter referred to. From the findings and the decree as made by the court, appellants prosecute this appeal.

Appellants' attorney has assigned over eighty errors, but has massed them into eight groups, and nearly all of them in some way relate to errors of the court in granting the injunction and other relief mentioned above. We shall not attempt to discuss the assignments separately, nor even do so in groups. The case may be determined upon the question as to whether under the whole evidence the respondent is entitled to the relief prayed for, or to any relief in this action. The complaint, findings of fact, conclusions of law, and decree cover eighty-three pages of the printed abstract, and the bill of exceptions containing the transcript of the evidence is composed of 663 pages of typewritten matter. In view of this it is utterly impossible within the limits of this opinion to attempt even a summarized statement of the pleadings and findings; nor of the evidence adduced at the trial. We will refer to such parts in the opinion as may be deemed necessary to a clear understanding with regard to the conclusions reached.

The principal matters relied on in the complaint consist of three separate agreements, all dated at Robinson, Utah. February 16, 1903, namely: (1) An agreement signed by one Ed. Mingle whereby he agreed to enter into a bond and lease with the Bonanza Mining & Milling Company "upon certain mining property in Juab county, Utah, upon terms and conditions this day agreed upon and to be agreed upon on or before April 1, 1903, or in the event of my failure so to do to forfeit and return that certain power of attorney and option to purchase this day given me by D. A. Depue, George Jones, Raymond Jones, A. J. Underwood, and the Tintic Lumber Company;" (2) an agreement by the parties last above named as stockholders of the Bonanza Mining & Milling Company to said Ed. Mingle giving him an option on 176,604 shares of the capital stock of said company at the rate of five cents per share to remain in force unconditionally until April 1, 1904; and (3) a power of attorney or proxy by the five parties above named to said Ed. Mingle whereby he was given the right to vote said shares of stock in the same manner and to the same extent as the parties could do if present at any meeting, and "reserving only from this power the right to sell or incumber said shares of stock, it being understood that the powers and authority hereby delegated shall for a period of one year from April 1, 1903, next be irrevocable and shall run jointly with that certain option or options to purchase the shares of stock now owned by us this day given to said Mingle." The two last agreements were signed by the five parties named, and the first one was signed by Ed. Mingle alone. It is also alleged in an amended complaint that the bond and lease mentioned in the first of the three agreements above mentioned were entered into, and the court so finds in findings 13 and 14; but there is no evidence to sustain these allegations or findings and respondent's attorney at the trial, as the bill of exceptions discloses, disclaimed such to have been the fact. He, therefore, rests his claim for relief upon the fact that Mingle should have entered into such a bond and lease, but that he fraudulently failed to do so.

After the three agreements had been entered into a stock-holders' meeting of the Bonanza Mining & Milling Company was duly called to be held at its office at Robinson Juab county, at which, according to the notice therefor, a new board of directors was to be elected for said company; authority to bond and lease the property to be obtained from the stockholders and to "ratify the action of the board of directors taken at said meeting." This meeting was duly held at the time and place designated in the notice and one Wardlaw, holding the proxy given to Mingle with the consent and direction of respondent, who was secretary of the Bonanza Company, and D. A. Depue, its president, elected a new board of directors. We remark here that at the annual stockholders' meeting of said company, held in the month of January, 1903, as appears from the recorded proceedings of that meeting, the old officers were continued in office until the stockholders should elect others. At the stockholders' meeting held on March 9, 1903, Mingle was not present, nor was the appellant C. W. Jones. When this meeting adjourned, the newly elected directors, as is claimed by respondent, were to meet on the same day at Salt Lake City to organize while the appellants claim such meeting was to be held on May 9th following. In this connection the record of that meeting shows that "March" was changed by substituting "May" therefor. How or when such change was made, or who made it, the evidence fails to make clear. The fact, however, is that the new board did not meet until May, 1903, at which time two of the newly elected members, who were not consulted when elected, could not serve, and the board was filled by the others who qualified by taking the usual director's oath of office as provided by law and thereafter filed the same with the county clerk of Juab county. Afterwards, on June 6, 1903, another director was appointed in place of one who resigned on that day, and the one appointed duly qualified on June 9th by taking the oath of office and duly filed the same on June 22d. This board from and after May 11, 1903, conducted all the corporate business of the Bonanza Company during the year 1903, and in January, 1904, at the annual stockholders' meeting duly called and held at the office of the company at Robinson, Juab county, Utah, a new board of directors was elected, who duly qualified, and the same proceeding was had in January, 1905. On July 10, 1903, the board of directors, composed of the members elected and appointed as above stated, levied an assessment of one-fourth of one cent per share upon the whole of the outstanding capital stock of the Bonanza Company. The notice of this assessment was regularly published in a newspaper, and copies of the notice were mailed to the stock-holders. The respondent and his associates received this notice, and protested against the assessment upon the ground that they had no stock except that on which they had given an option to Mingle and that he should either do the assessment work under his bond and lease or else take care of the assessment upon their stock. The officers of the company, however, disclaimed any knowledge of such an option or of any agreement to that effect, and insisted on the assessment being paid with the view of obtaining money to keep the mining claims of the company in good standing. Respondent and his associates, as they admit, consulted a lawyer at the time with respect to the regularity of the assessment; and the officers, as respondent admits, offered back at that time to him and his associates all the books, records, and matters pertaining to the affairs of the company if they would take charge of the corporate affairs and pay the debts necessarily incurred, which appeared of small consequence. But respondent refused to do this. The sale of the delinquent stock was postponed pending the controversy, but, no understanding having been arrived at, the sale took place October 3, 1903. At this sale 229,484 out of about 295,000 shares then issued were offered for sale as delinquent. Out of this number the officers of the company bid in for its benefit for want of bidders, 168,956 shares. J. G. Campbell, the then president, bought 33,720 shares, and N. B. Campbell, the then secretary bought 23,808 shares, and J. A. Lloyd, a director, bought 3,000 shares. From this it appears that the assessment of one-fourth of one cent per share was paid on about 66,000 shares out of the whole capital stock of 300,000 shares, for which the corporation was incorporated. The whole amount thus realized from this assessment,...