McConnell v. Combination Min. & Mill. Co.
| Decision Date | 02 April 1904 |
| Citation | 76 P. 194,30 Mont. 239 |
| Parties | McCONNELL et al. v. COMBINATION MIN. & MILL. Co. et al. |
| Court | Montana Supreme Court |
Commissioners' Opinion. Appeal from District Court, Silver Bow County; Wm Clancy, Judge.
Action by O. J. McConnell, administrator of the estate of William Thompson, deceased, and others, against the Combination Mining & Milling Company and others. From a judgment for defendants, and an order denying a motion for a new trial plaintiffs appeal. Reversed.
E. N Harwood, for appellants.
Forbis & Evans, for respondents.
Pleadings.
The original complaint in this cause was filed September 8, 1898. Subsequently several supplemental complaints and amendments were filed to meet new conditions arising, or to put in issue facts alleged to have been discovered after the commencement of the action. It is alleged that the individuals named as defendants, pretending to act as trustees (directors) of the defendant corporation, wrongfully abandoned the principal office of the company, at Butte, Mont., and moved the books, records, stock register, and papers to St. Louis, Mo.; that they were proceeding to sell the stock of plaintiffs to satisfy assessments wrongfully made; and that they had misappropriated funds and other property of the company, and had been guilty of fraud in connection therewith. The court was asked to enjoin the defendants from selling the stock, to require the return of the records to Butte, and that defendants be required to render an accounting. An injunction was issued, restraining the selling of the stock, and forbidding the defendants to detain longer away from Butte the records of the company. The material allegations of the complaint were put in issue by the defendants.
Appointment of Referee.
A referee was appointed by the court to hear the evidence, to make findings of fact and conclusions of law, and report the same to the court. The referee having made his report adverse to the contentions of the plaintiff, judgment of dismissal was entered; and from this judgment, and the order overruling plaintiff's motion for a new trial, this appeal is taken.
Statement of the Case.
The defendant company was incorporated under the laws of Montana Territory, December 27, 1887, for the purpose of carrying on a general mining and milling business; to locate, acquire, sell, develop, and work mines and mining claims; and to buy, sell, and treat ores; these operations to be carried on at Black Pine mining district, Deer Lodge county, and also at Butte City, Silver Bow county; the business of the company to be transacted at both these places, but the principal office to be at Butte City. The capital stock of the company consisted of $600,000, represented by 300,000 shares of stock, of the par value of $2 each. Seven directors were to manage the affairs of the company. The mines of the company were operated until July or August, 1893, when they were closed down, and remained closed until June, 1895, when operations were resumed and continued until February, 1897, when the mines were again closed, and have not been operated since that time.
At the annual stockholders' meeting held in Butte City, Mont., June 27, 1892, the defendant directors, together with plaintiffs Williams and Joseph H. Harper, were elected directors for the ensuing year. On July 6, 1892, this new board of directors met, but, no quorum being present, adjourned to meet in St. Louis. Plaintiffs Williams and J. H. Harper were present and supported this action. In the published notice of this stockholders' meeting was contained a statement that at such meeting the question of removing the office to St. Louis would be submitted, and the following resolution was introduced: "Resolved, that the home office and directory of the Combination Mining & Milling Company be removed from the city of Butte, in the state of Montana, to the city of St. Louis, in the state of Missouri, and that the incoming president and board of trustees [directors] be and the seven are hereby authorized and empowered to perform any needful and lawful acts whatsoever necessary or required for the purpose of such removal." 261,429 shares of stock were voted in favor of this resolution, and 1,600 shares against it. Plaintiffs Williams, J. H. Harper, and Helen C. Harper supported this resolution. The records of the company from this time until the return of the office to Butte, in October, 1898, appear to be in a somewhat chaotic condition. The treasurer, it appears, kept no record at all. The secretary's record is in part regular in form, and in part consists of fragmentary scraps and separate sheets of paper written in pencil, containing blanks and marginal notations pinned to the leaves of some book, or laid loosely between the leaves. Certain writings purporting to be by-laws of the company were also presented. Some of these records consist of references to resolutions or proceedings by number, without containing the resolutions or proceedings to which they refer. These matters were all offered in evidence, and were, except the loose sheets, admitted, for one purpose or another, over the objections of plaintiffs.
Passing these objections for the time being, and considering these so-called records in connection with the oral testimony in the cause, it appears that Charles D. McClure was president, Paul A. Fusz vice president, M. Rumsey treasurer, and Jesse B. Mellor secretary of the board of directors; that at the meeting of this board held at St. Louis December 29, 1892, at which were present defendants Ewing, Fusz, M. Rumsey, L. M. Rumsey, and President McClure, this proceeding was had: "That this board does hereby approve the following salaries and office rent, as set by the president: Secretary's salary $1,250 per annum, messenger's salary $300 per annum, office rent $200 per annum." That on February 25, 1893, this board held an adjourned meeting at St. Louis, at which were present Vice President Fusz, L. M. Rumsey, Treasurer M. Rumsey, and President McClure, and the following proceeding was had: It further appears that these defendants, acting as such board of directors, continued to hold meetings at St. Louis, Mo., until, in obedience to the order of the court, they returned the records to Montana; and at Butte, Mont., October 27, 1898, a directors' meeting was held, at which were present Ewing, Fusz, Rumsey, Williams, and one Merrill, who was then a director; absent, McClure and M. Rumsey. At this meeting the minutes of the meeting of November 21, 1891, and July 16, 1892, were also read and approved by all the trustees present, except Williams, who did not vote. The minutes of the various directors' meetings which had theretofore been held in the city of St. Louis were then read and approved by all of the directors present, except Williams, who did not vote. It appears further that during the time the office was maintained at St. Louis the stock-holders' meetings were held at Combination, Mont.; these defendants, except Mellor, being uniformly re-elected as directors. The defendant Mellor was at no time a director, but was during this period, in addition to being the secretary of the board of directors, also the private secretary of defendant McClure.
The expenditures and charges to which specific objections are made are:
and W. J. Schofield, for expenses of this suit ..................... 1,056 65
Demand note dated Dec. 23, 1896, to the National Bank of Commerce in
St. Louis, with interest at 6 per cent. per annum from date ....... 10,000 00
This note is signed "Combination Mining & Milling Co. Chas. D.
McClure, Pres." There was also a deposit of 25,418 ounces of
silver bullion, having a value of $16,000, made to secure the
payment of this note.
Demand note dated March 4, 1897, to the National Bank of Commerce in
St. Louis, interest at 6 per cent. per annum from date ............ 10,000 00
This note is signed, "Combination Mining & Milling Co., by M.
Rumsey, Acting President." A deposit of 32,172 ounces of silver
bullion, then having a value of some over $20,000, was made as
security for the payment of this note.
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