Presidio Mining Co. v. Overton

• Decision Date: 17 January 1921
• Docket Number: 3253.
• Citation: 270 F. 388
• Parties: PRESIDIO MINING CO. et al. v. OVERTON et al. [1]
• Court: U.S. Court of Appeals — Ninth Circuit

270 F. 388

PRESIDIO MINING CO. et al. v. OVERTON et al. ^[1]

No. 3253.

United States Court of Appeals, Ninth Circuit.

January 17, 1921

R. T Harding and Henry E. Monroe, both of San Francisco, Cal., for appellants.

William Denman and Wm. F. Rose, both of San Francisco, Cal. (Charles Clyde Spicer, of Los Angeles, Cal., and William B. Acton, of San Francisco, Cal., of counsel), for appellees.

Before GILBERT, MORROW, and HUNT, Circuit Judges.

PER CURIAM.

It should be stated that it appears that, after the filing of the amended bill and before the filing of the supplemental bill, an application was made to the court and to Judge Van Fleet for the appointment of a receiver and that after argument the court, by Judge Van Fleet, denied this motion and made an order refusing to dismiss the amended bill or to strike out parts thereof, and further that the application for the appointment of a receiver was denied without prejudice.

It also appears that after Judge Van Fleet had made this order of denial of receiver, a supplemental complaint was filed wherein the allegations of conspiracy to control the directorate of the corporation are made and thereafter trial was had on the pleadings as so amended. The receiver was not however, appointed until the trial and until testimony had been introduced by the plaintiffs which they contended supported their allegations of conspiracy.

The original opinion in this case is reported in 261 F. 933. That opinion is objected to by plaintiffs in this rehearing on the ground, among others, that the court treated the case as a trial de novo in this court and that the court did not give to the opinion of Judge Van Fleet that consideration it was entitled to receive under the practice in equity proceedings. The case was tried de novo in this court as required by the equity practice. In 4 Corpus Juris, 726, the rule in Equitable Proceedings is stated as follows:

'Under the old chancery practice and usually under the Codes of Procedure, suits in equity are tried de novo on appeal upon the entire record and evidence. The appellate court itself will sift the whole question and determine what the findings of the trial court should have been upon such evidence as was competent and proper. The court below and the appellate court are judges of both law and fact.'

See New Equity Rule 46, to which Hopkins in his new Federal Equity Rules adds this note:

'By empowering the trial court to pass upon the admissibility of the evidence and providing for the appellate review of questions of evidence, the rule restores the practice as it existed prior to 1842 as explained in Blease v. Garlington, 92 U.S. 1, 23 L.Ed. 521.'

In American Rotary Valve Co. v. Moorehead, 226 F. 202, 141 C.C.A. 129, in the Circuit Court of Appeals for the Seventh Circuit upon a petition for rehearing the appellant claimed that the court in affirming a decree of the District Court without filing a written opinion had either expressly or impliedly held that, under the new equity rules, the decree of the trial court upon a disputed question of fact was binding upon the appellate court. In answer to this objection, the court said:

'We had no intention of being so understood. Under the new equity rules, as well as under the old ones, the reviewing court has the right, and owes to itself and to the parties, the duty, of trying the question of fact de novo. Under the old rules, the findings of the trial court were entitled to be treated as very persuasive, and such findings were not to be disturbed, unless it appeared quite clearly that the trial court had either misapprehended the evidence or had gone against the clear weight thereof. We conceive that the new rules have made no change in those respects. Cases now are ordinarily to be heard by the trial judge in open court, while formerly they were ordinarily referred to a master. But under either set of rules, if the witnesses have been heard in open court, one element that rightly enters into the reviewing court's consideration of the evidence de novo is the opportunity of the trial judge to estimate the credibility of the witnesses by their appearance and demeanor on the stand. Espenschied v. Baum, 115 F. 793, 53 C.C.A. 368.'

Also Westermann v. Dispatch Printing Co., 233 F. 609, 147 C.C.A. 417, where, in an equity case on appeal, Judge Denison for the Court of Appeals of the Sixth Circuit said:

'It follows that we must decide the questions of fact as well as * * * of law, * * * save that, under familiar rules, the conclusion of the trial court on questions of fact will not be lightly disturbed.'

This is the established rule of this circuit. We believe this to be a correct statement of the equity rule. Where evidence is conflicting and the trial judge has had the opportunity of seeing the witnesses, observing their demeanor, while testifying, judge of their candor and intelligence, and thus be able to determine their credibility and the weight to be given to their testimony, the finding of the trial court is persuasive and presumptively correct, but not conclusive. U.S. v. Grass Creek Oil & Gas Co., 236 F. 481-484, 149 C.C.A. 533.

In the present case, the opinion of this court and its findings of fact were based upon the pleadings, letters, documents, exhibits, transcripts from books of accounts, the report of a public accountant appointed by the District Court, and the uncontradicted testimony of witnesses-- all in the record. This character of the evidence made it the duty of this court to examine the record and find the material facts for itself.

We are not here dealing with any serious or material conflict of testimony obtained from witnesses who appeared and testified in open court and where the court was called upon to determine the credibility of witnesses from their appearance or demeanor on the stand, but we are dealing with testimony, much of it uncontradicted and with the proper construction of a variety of written documents and accounts and their relation to each other in certain business transactions extending over a period of years. That this may appear fully and distinctly, we again refer to the facts as they appear in the record.

The Presidio Mining Company had owned and worked section 8 under the superintendency of the defendant Noyes since 1883. It was a silver-producing mine, and in 1907 the high grade ore had been practically exhausted and Noyes recommended to the board of directors of the company the installation of a cyanide plant for the more efficient and economical working of the ores. The stock of the company was divided into 150,000 shares of the value of $1 each. The installation of such a plant would require the levy of an assessment of at least 10 cents per share on the stock. The question of levying such an assessment was submitted to the stockholders for their action.

Objection was made by stockholders, coming mainly from General Anson Mills, living in the East, owning 17,000 shares and the predecessor in interest of the plaintiffs in this suit. This objection is contained in a letter to John F. Boyd, the president of the company, dated April 26, 1907, and states the objection as follows:

'My dear Boyd: Yours of March 1st, with inclosure, was duly received, and I beg your pardon for the gross neglect I have given you, especially as you have always been so kind and upright with me in our dealings with the Presidio business. I have now your second letter of the 18th instant. I had no adequate excuse for my neglect, but will explain that when your first letter was received the slump in the stocks of railways and industrials was in progress and as Mrs. Orndorff, who lives with me, and I have a great deal invested in that line we did not feel like taking any action until we saw how that matter was coming out, which is still in agitation. Then comes the great political excitement, which will probably keep the financial matters in a turmoil for the next year; then comes the silver slump, so we did not feel like joining you in the cyanide proposition and do not yet.

'Of course you know more about such matters than I do, but it seems that it would be rather risky to put $70,000 in the business as it stands now, I suggest that it would be better to shut down for at least a year; discharging all employees save two or three inexpensive men to watch the property; sell off all the transportation property and other property that is expensive to maintain and await for future developments. If the country settles down to the business basis of a year ago and silver rises to, say, 60 cents, I think we might start the cyanide process up at the mine, as you suggest in your last letter, saving the expensive transportation.

'Thanking you for your kindness and regretting that I had neglected you so long, I am,

'Very truly yours,

Anson Mills.'

In response to this objection of Mills, the board of directors directed the closing down of the mine and milling property of the company and the discharge of all the employees. At that time John F. Boyd, the president of the company, owned 36,966 2/3 shares of the stock of the company in his own name and 20,265 2/3 shares as trustee for his wife, Louise A. Boyd, making a total of 57,232 1/3 shares. Boyd immediately resigned the presidency of the company, and he and his wife transferred their stock to one Osborn, who had been the secretary of the company since 1887; but with the direction to Osborn that Noyes should have one half of the stock if he so desired.

Noyes accepted the stock but requested that it remain in the books of the company in the name of Osborn. Boyd's proposal to transfer half of his stock to Noyes was because Noyes had been the superintendent of the mine since its organization in 1...