Kuchler v. Greene

• Decision Date: 09 June 1908
• Citation: 163 F. 91
• Parties: KUCHLER v. GREENE et al.
• Court: U.S. District Court — Southern District of New York

163 F. 91

KUCHLER v. GREENE et al.

United States Circuit Court, S.D. New York.

June 9, 1908

Samuel S. Watson, Walter B. Raymond, and Chester A. Jayne, for plaintiff.

F. W M. Cutcheon, M. E. Harby, and Augustus L. Hunes, for defendants.

MARTIN District Judge.

The complainant alleges: That she is a stockholder of the Cobre Grande Copper Company and is a citizen of the state of California; that the defendant Cobre Grande Copper Company is a corporation organized under the laws of the territory of Arizona, and has its place of business in Phoenix, in said territory; that the defendant Cananea Copper Company is a corporation organized under the laws of the republic of Mexico; that the Greene Consolidated Copper Company is a corporation organized under the laws of the state of West Virginia; that the defendant Greene is a citizen of the state of New York; that the Cobre Grande Copper Company possessed the right to purchase and became the equitable owner of certain mines in said Mexico; that the said Greene was the legal holder of the mines and the president of said company that he subsequently transferred said mines to the Cananea Company; that the said Greene Consolidated Copper Company acquired all the stock of the Cananea Company; that the complainant, some nine or ten years ago, paid to one George Mitchell of Arizona a sum of money for investment in the mining property in question in Mexico, and the sum was so invested, and a receipt taken therefor to the effect that she owned a certain fractional interest therein; that it was arranged between the owners of said mining properties that they would form a corporation and convey the property to the corporation and exchange such receipts for stock; that pursuant to said arrangement the Cobre Grande Copper Company was incorporated April 25 1899, and thereupon the complainant surrendered said receipt and became entitled to her fractional interest in the capital stock of said company; that about the 2d of August of the same year the complainant received a stock certificate for 67 shares of the capital stock of said corporation in exchange for said receipt, and then became, and ever since has been, a stockholder of record of said corporation; that on the 26th of November of the year previous the defendant Greene contracted to convey to said Mitchell the said mining properties for $12,500 in cash, $37,500 to be paid in one year, $100,000 in two years, and $100,000 in three years that the said Greene thereupon executed and delivered deeds therefor and deposited them in escrow in the Phoenix National Bank in Phoenix, Ariz.; that on April 15, 1899, said Greene executed another agreement with said Mitchell that, upon the payment by the said Mitchell of the several sums of money above set forth, said Greene would continue to hold the title of the said properties in trust for the said Mitchell and until the said Mitchell or his assigns might demand of the said Greene the said deed, or that the said Greene should execute to said Mitchell, his assigns, or to such person as the said Mitchell might designate; that 10 days later, April 25, 1899, the said Cobre Grande Company was incorporated as above set forth; that on the 26th day of May following the said Mitchell delivered to said corporation an assignment of all his title in and to said properties; that on the 26th of April of the same year the said Greene delivered to the said corporation an agreement ratifying and confirming said agreement of the said Mitchell and transferred to said company other mines in Mexico; that on the 24th of July of the same year the said Greene sold to said corporation the 'Elisa Mine,' so called, in Mexico, and accepted in payment therefor four promissory notes of said corporation for the sum of $100,000; that on the same day of said conveyance one Costello became director, president, and general manager of said corporation, and one Wood became director, secretary, and treasurer thereof, and one O'Keefe became manager of the mines; that soon thereafter the said Greene, Mitchell, and one Treadwell, then a director of said corporation, claimed that said Costello was not carrying out the arrangements made respecting the advance of funds, the working and developing of the mining properties, and thereupon said directors met in New York for the purpose of making arrangements to provide funds, and entered into negotiations with one Addicks and one Lawson for the purpose of securing funds; that pursuant to an understanding with Lawson, Addicks, Greene, Mitchell, and Treadwell, the election of said Costello and Wood was, by the directors declared to be void because of a defect in the notice of the meeting at which they claimed to have been elected, and thereupon, on the 6th of October, 1899, the said Greene and Treadwell took possession of said properties on behalf of said corporation; that during the same fall of 1899 the said Greene procured to be incorporated under the laws of Mexico the defendant Cananea Consolidated Copper Company, and thereupon the said Greene transferred to said Cananea Company, subject to the rights of said Mitchell and the Cobre Grande Copper Company, all of said mining properties, and this without any authority from the Cobre Grande Company and without any compensation being paid to said company therefor; that the said Cananea Consolidated Company had full knowledge of the rights of the Cobre Grande Company at the time of receiving said transfer; that the Cananea Consolidated Copper Company entered into possession of said properties and has continued said possession from thence hitherto, has worked and operated the same, has received large incomes, and refused to account to the Cobre Grande Company; that at the time of the formation of the Cananea Company the said defendant Greene gave as a reason therefor that the Cobre Grande Company; could not hold title to the property in question under the laws of the republic of Mexico, and it was necessary, in the interest of the Cobre Grande Company, that a corporation be formed under the laws of the republic of Mexico to take and hold the title to said mining properties, and work and operate the same for the benefit of the Cobre Grande Company; that the said Greene then declared that the said transfer was simply for the use and benefit of the said Cobre Grande Company; that on the 15th of September, 1899, the said Greene, Mitchell, and Treadwell organized the Greene Consolidated Copper Company under the laws of West Virginia; that all the capital stock of the Cananea Company, except what might be necessary for qualification of the directors, was turned over to the Greene Company with full knowledge of the rights of the Cobre Grande Company; that the mines were worked thereafter by the Greene Company and the Cananea Company; that the proceeds amounted to over $4,000,000, distributed in dividends by the Greene Company; that the profits of said mines have been diverted and invested in other properties; that on January 12, 1901, the defendant Green Consolidated Company agreed that all the stockholders of the Cobre Grande Company should have the right to exchange their stock for stock in the Greene Company; that this agreement was ratified by the Greene Company and accepted by certain stockholders of the Cobre Grande Company; that when the defendant Greene and the Greene Consolidated Copper Company had obtained a majority of the shares of stock in the Cobre Grande Company, all offers to exchange were withdrawn, and the complainant and other minority stockholders of the Cobre Grande Company were denied the privilege of exchanging stocks and were also denied any portion of the earnings of said mining properties, or any share or part of the dividends paid from the earnings thereof; that on the 16th of October, 1899, the defendant Greene entered into an agreement with said Costello to purchase of him all of his stock in the Cobre Grand Company; that it was then agreed by the said Greene and Lawson that there should be organized under the laws of the state of Delaware the Greene Consolidated Copper Company, with a capital stock of $6,000,000, to which should be transferred all the capital stock of the Cananea Company, and on the 24th of November, 1899, it was further agreed by said Lawson and said Addicks, on the one side, and the defendant Greene, the said Mitchell, Treadwell and one Logan, representing the Greene Consolidated Copper Company and the Cobre Grande Copper Company, that the Greene Consolidated Copper Company of West Virginia should be substituted for the proposed Delaware corporation; that suits grew out of the ousting of Costello, Wood and O'Keefe, and out of said agreement to transfer the Cananea Company, and out of the action of the Cananea Company in entering into possession of the properties and concerning the disposition of products of the mines, all of which had been brought prior to December 12, 1900, and were undetermined at that time; that the defendant Greene and the Greene Consolidated Copper Company, after having secured a majority of said stock, caused said suit to be dismissed; that the contract under date of November 26, 1898, was fully performed on the part of said Mitchell to the satisfaction of the parties; that the said Greene Consolidated Copper Company is now the owner of about 117,000 shares of the stock of the Cobre Grande Company, which is a majority thereof;...