Monte RICO Min & Mill Co. v. Fleming

• Decision Date: 28 April 1919
• Docket Number: 5037.
• Citation: 258 F. 106
• Parties: MONTE RICO MIN. & MILL. CO. et al. v. FLEMING et al.
• Court: U.S. Court of Appeals — Eighth Circuit

258 F. 106

MONTE RICO MIN. & MILL. CO. et al. v. FLEMING et al.

No. 5037.

United States Court of Appeals, Eighth Circuit.

April 28, 1919

Lawrence R. Boyd, of Lynchburg, Va. (A. W. Morningstar and E. H Mitchell, both of Lordsburg, N.M., on the brief), for appellants.

W. C Reid, of Albuquerque, N.M. (J. M. Hervey and E. C. Iden, both of Rosewell, N.M., on the brief), for appellees.

Before HOOK and CARLAND, Circuit Judges, and AMIDON, District Judge.

HOOK Circuit Judge.

Certain minority stockholders of the Monte Rico Mining & Milling Company sued the company, its officers, its majority stockholders, and others, for a receiver, an injunction, and an accounting. This appeal by defendants is from an order granting an interlocutory injunction and other temporary relief.

The company was organized by defendant Lawrence R. Boyd, his father and another, under the laws of Arizona, with an authorized capital of 500,000 shares of the par value of one dollar each. At the first meeting of the incorporators, a board of directors was chosen, and on the same day Boyd proposed to sell to the company certain mining claims in New Mexico in consideration of its entire capital stock; he to donate to the company 200,000 shares thereof for its treasury. The proposition was accepted and carried out, and the records of the company showed the transaction. The idea was to make all of the stock fully paid and to use the shares in the treasury to raise funds for development.

The plaintiff stockholders acquired treasury shares sold by an agent employed by the company for that purpose. Part of the causes of action stated in the complaint are based upon alleged fraudulent representations, by Boyd personally, to induce the sale of the stock to them. It is averred that he represented that he had retained but 100,000 shares, that the remaining 400,000 were in the treasury, and that he (Boyd) was to serve as president without salary; that Boyd transferred the 300,000 shares retained by him to his wife and his father without consideration and to deceive and defraud creditors; that he caused dummy directors to be elected and irregular meetings of the stockholders and directors to be held; that of $40,000 or more received from sales of treasury stock he converted over $25,000 to his own use and refused to account for it; that the plaintiffs were denied the right to inspect the books and records of the company; that Boyd fraudulently caused the execution to himself and his brother of obligations of the company and mortgages securing them upon all its property without consideration; and that they were about to enforce them, etc. Without attempting to recite all the averments of the voluminous complaint, it is quite apparent that it proceeds upon the erroneous assumption that all controversies growing out of the organization and operations of the company and also individual dealings in its stock may be determined in a single suit. Plaintiffs have joined causes of action against Boyd personal to themselves with...