Paine v. Copper Belle Min. Co. of Arizona

• Citation: 13 Ariz. 406,114 P. 964
• Decision Date: 27 March 1911
• Docket Number: Civil 1149
• Parties: WILLIAM A. PAINE, HERBERT I. PORTER, THOMAS S. DEE and LEONARD D. DRAPER, Copartners Doing Business Under the Name and Style of PAINE WEBBER & COMPANY, Plaintiffs and Appellants, v. COPPER BELLE MINING COMPANY OF ARIZONA, a Corporation, Defendant, and JAMES B. RILEY, Intervener and Appellee
• Court: Supreme Court of Arizona

114 P. 964

13 Ariz. 406

WILLIAM A. PAINE, HERBERT I. PORTER, THOMAS S. DEE and LEONARD D. DRAPER, Copartners Doing Business Under the Name and Style of PAINE WEBBER & COMPANY, Plaintiffs and Appellants, v. COPPER BELLE MINING COMPANY OF ARIZONA, a Corporation, Defendant, and JAMES B. RILEY, Intervener and Appellee

Civil No. 1149

Supreme Court of Arizona

March 27, 1911

APPEAL from a judgment of the District Court of the First Judicial District, in and for Pima County. John H. Campbell, Judge. Affirmed.

The facts are stated in the opinion.

Kibbey Bennett & Bennett, for Appellants.

John B Wright, for Appellee.

OPINION

LEWIS, J.

This is an action by the plaintiffs and appellants, copartners as Paine, Webber & Co., against the defendant, the Copper Belle Mining Company of Arizona, for the recovery of $265,416.72 and interest upon a promissory note alleged to have been executed and delivered to Duparquet, Huot & Moneuse Company and transferred to the plaintiffs. The defendant failed to answer below and is not represented in this court. Prior to the entry of the default of the defendant, one James B Riley, as a stockholder, filed a petition in intervention, asking leave to defend on behalf of the defendant corporation, which petition was denied. The default of the defendant was thereupon entered, and judgment granted the plaintiffs as against the defendant in the amount prayed for. Thirty days thereafter, but during the term, said Riley moved the court to set aside and vacate the judgment theretofore rendered, and allow him to intervene and defend on behalf of the defendant corporation, and to rehear his motion for intervention, and to grant a new trial. He submitted as a part of his motion a proposed plea in intervention, answer, and affidavits, setting up facts tending to excuse the delay in the presentation of a sufficient petition in intervention, showing want of consideration for the note, fraud in the securing of the note, and additional matters which, if presented in due time, would have justified the trial court in allowing intervention. The minute entries disclose that the hearing of this motion was continued from time to time and finally over the term. At the succeeding term of the court, an order was entered, granting said motion and ordering that the judgment theretofore entered be vacated, and that the intervener be granted leave to file a petition in intervention, Thereafter the cause was tried upon the complaint and answer in intervention, and judgment was rendered that the plaintiffs take nothing by their action. From the judgment and the order denying a motion for new trial, this appeal is taken.

The appellants contend that the trial court erred in setting aside the judgment and ordering a new trial when no motion therefor was made within the five days after the entry of the judgment, as required by Revised Statutes of 1901, paragraph 1478. The trial court had complete power over its judgment during the term, no appeal having been perfected. Spicer v. Simms, 6 Ariz. 347, 57 P. 610; Svea Ins. Co. v. McFarland, 7 Ariz. 131, 60 P. 936. It had discretionary power to entertain a motion to set aside and vacate its judgment, and to grant a new trial, at any time during the term. Spicer v. Simms, supra. This discretionary power was not lost by the lapse of the term, where the record discloses that the motion was entertained by the court and was continued over the term. Goddard v. Ordway, 101 U.S. 745, 25 L.Ed. 1040; City of New Orleans v. Fisher, 91 F. 574, 585, 34 C.C.A. 15; Watson v. Le Grand Roller Skating Rink Co., 177 Ill. 203, 52 N.E. 317; Black on Judgments, secs. 306, 310. Nor was the jurisdiction of the court to grant the motion lost because the motion was made by one not a party to the action; he having, nevertheless, an interest in the subject matter of the suit affected by the judgment. O'Keefe v. Foster, 5 Wyo. 343, 40 P. 525. The case of National Metal Co. v. Greene Consolidated Copper Co., 9 Ariz. 192, 80 P. 397, is distinguished in this essential feature, that the motion there considered by this court was one filed at a subsequent term.

The appellants further complain that the court erred in permitting the intervention of Riley after final judgment had been rendered in the case, as the statute only permits such intervention before judgment. The right to intervene under paragraph 1278, Revised Statutes of 1901, is limited to any time before the trial. Prior to the trial the court must hear and determine an application in intervention. Subsequent to the commencement of the trial, leave to intervene may be granted in the exercise of sound discretion, but is not a matter of right. We have held that it is within the power of the trial court to set aside a judgment rendered during the term, or at a subsequent term to which its jurisdiction has been extended by the continuance of a motion therefor. Upon the judgment being vacated and a new trial ordered, applications to intervene are to be determined by the same rules as if no judgment had been theretofore rendered. The sufficiency of the petition in intervention not being questioned, there was no error in the trial court, in the exercise of its inherent power, vacating its former judgment and granting a new trial, and thereupon considering and permitting the intervention of Riley.

The appellants complain that the trial court found by its judgment that no consideration existed for the execution of the note sued upon. It is conceded by the parties to this appeal that the consideration for the note is to be found, if at all, in the furnishing of money for the use of the Copper Belle Mining Company of West Virginia, the predecessor in interest of the defendant corporation, and for the defendant corporation, under a certain contract entered into between stockholders of the company. The question is thus stated by the appellants: "The real controversy and difference between the plaintiffs and the intervener is whether this contract, construed in the light of all the surrounding facts and circumstances existing at the time it was entered into, created the relation of debtor and creditor between the Copper Belle Mining Company and Mr. Moneuse for the money 'provided,' 'supplied,' and 'advanced,' or whether the money so 'advanced, provided, and supplied' was the purchase price of the stock issued to him."

The contract to be interpreted is long; its recitals are thus summarized by appellants: "That at the time the contract was entered into the corporation owned or had owned some mining property in Arizona, believed to be valuable, if properly managed and worked. That its capital stock was divided into 200,000 shares of the par value of $5 per share; that the majority of this stock stood on the books of the company in the names of Riley, Crawford, and the Brunners, the first and second parties to the contract, and that the legality of the issue of at least 85,000 shares of this stock to them was then being investigated in the supreme court of the state of New York; that Riley, Crawford, and the Brunners owned or had standing in their names a large majority of the stock of the corporation, and had been in the absolute control of the corporation; that under their administration the company had contracted debts exceeding $45,000, besides mortgages to Gleason and Costello of $85,000, and the company had been declared bankrupt by the district court of Cochise county; its property was taken from it and was in the hands of the trustee in bankruptcy and was about to be sold at auction and the proceeds distributed to its creditors."

"In this situation," say the appellants, "the evidence shows the stock of these majority stockholders, whether honestly or dishonestly acquired, was worthless, and not worth further litigation over. Moneuse was a small stockholder, holding only 1,000 shares; but he had money and had faith in the value of the company's property, if it could be redeemed and properly managed, and by the contract in evidence he agreed that, if these majority stockholders would turn over to him by means of surrender to the company and reissue to him so much of their holdings of stock as would amount to fifty per cent of the stock of the company, and place him in the complete control of the company by the election of directors and officers of his choice, he would 'advance' (loan) to the company sufficient money to pay its debts, restore its property to it, and pay its operating expenses for three years, believing that in that time he could place it on a paying basis."

The essential provisions of the contract follow: "First: The party of the third part shall provide and supply, on or before the twentieth day of June, 1903, a sufficient sum of money to pay off and discharge all of the just debts due or owing by the said company and in addition thereto, as required from time to time, sufficient funds to enable the said company to work and operate the claims and mines which have been heretofore operated by it, and agrees to apply the said moneys to the payment and discharge of the said debts and for a period not exceeding three years, to the working and operation of the said claims, until the said claims shall yield sufficient returns to pay for...