Runkle v. Burrage

• Decision Date: 20 May 1909
• Citation: 202 Mass. 89,88 N.E. 573
• Parties: RUNKLE v. BURRAGE et al. (two cases).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

202 Mass. 89

88 N.E. 573

RUNKLE v. BURRAGE et al. (two cases).

Supreme Judicial Court of Massachusetts, Suffolk.

May 20, 1909

COUNSEL

Chas.

F. Choate, Jr., and Wm. R. Barbour, for plaintiff.

Walter I. Badger and Wm. Harold Hitchcock, for defendants Burrage.

Homer Albers, for defendant Lawson.

OPINION

KNOWLTON C.J.

These are two suits in equity brought against Albert C. Burrage his brother Charles D. Burrage and Thomas W. Lawson, for an accounting, and to recover moneys subscribed by the plaintiff and others towards an enterprise in the sale or management of mining properties alleged to have been undertaken by the defendants. The first suit was brought to recover money subscribed by the plaintiff personally, and the second to recover money subscribed by others who have assigned their interests to the plaintiff. The subscriptions represented in the two suits amount in the aggregate to $406,125, which sum with interest from May 10, 1899, the plaintiff seeks to recover. The subscriptions were made through one Dickey who was a close and intimate friend of A. C. Burrage both in social and business relations. A part of the master's finding is as follows: 'On that day (April 24, 1899) he (Dickey) met Burrage alone by appointment at the office of H H. Rogers in New York. At that interview terview Burrage mentioned that Dickey and some of his friends had asked to be allowed to participate in some of the new enterprises which he was inaugurating; that he now had options or agreements for options on a number of copper properties in Arizona and New Mexico, and that he was about to put them together into a new company to be capitalized at $10,000,000 or $15,000,000, and to be called 'Arimex,' a name derived from the words 'Arizona' and 'New Mexico'; that he was willing to let Dickey and his friends take part in the enterprise. He stated that the properties would cost several million dollars, and that Messrs. Rogers, Rockefeller, Daly, Lewisohn, Lawson and himself would be the parties interested and would be subscribers, but requested Dickey not to mention their names in connection with the enterprise. He spoke of the Santa Rita mine and the Sisson properties as the ones he intended to consolidate, stating that they were of great value. He mentioned the fact that one of Sisson's options expired on May 1st, that $225,000 was needed to take it up, that it would be inconvenient to raise this money himself, as he was at that time heavily committed to other enterprises, and that he would allow such of Dickey's friends as wished to become interested in the new enterprise to subscribe and contribute, as a part of the amount to be ultimately subscribed, the sum of $225,000, which was the sum then needed to take up the $225,000 option. He stated to Dickey that the Arimex was not to be a part of the great copper consolidation which was shortly to be made public and which would be called the 'Amalgamated Copper Company,' and for which he had been getting together properties in Montana when Dickey was there with him in January, 1899. This was the first time Dickey had heard the name 'Amalgamated,' and Burrage requested him not to mention it to any one. The foregoing is the substance of the interview. Nothing else of importance was discussed. Dickey at once went to his friends in Baltimore, Philadelphia, New York and elsewhere, and proposed to them that they should subscribe to the enterprise. He told them that Burrage was behind it, that it was a big copper proposition, and that Burrage had allowed him to obtain subscriptions to a limited amount, and that he was not at liberty to say anything about the properties or their whereabouts. In a very short time the $225,000 was subscribed, and Dickey telephoned Burrage, asking to be allowed to obtain subscriptions to the amount of $350,000. Permission was given and Dickey telephoned the next day for the right to subscribe $500,000. Again permission was given, this time with some reluctance. In four days at the outside, Dickey had obtained, on the very meager information above mentioned, subscriptions to the amount of $500,000, and this large sum of money was deposited to his credit in the Liberty National Bank.'

At the time of this interview Burrage expected that the Santa Rita mine would be included with the Arizona properties when the enterprise was established, but Dickey did not mention the Santa Rita mine to any of his subscribers. The purchase of the Santa Rita mine was not concluded until June, 1899. It was never included with the Sisson properties and still remains an independent company.

Some of the testimony of the witnesses as to the representations on which the subscriptions were made is as follows: The plaintiff testified that Dickey told him: "We have a copper proposition now which is better than anything I have been connected with, and will give more money than any enterprise with which I have been connected. I am permitted to let a few people into this enterprise, and will be glad to have you in it.' He said: 'I am not able to go into the details, but my expectation is that as soon as these properties are working and showing a profit, they will be taken into the Amalgamated Company." Dickey testified: 'I stated very little. I simply stated to Mr. Runkle that Mr. A. C. Burrage was going to put these copper companies together and asked him if he wanted to make a subscription to it.' Pritchard, a subscriber, testified of Dickey's statement: 'The substance of it was that Mr. Dickey, through his friend Mr. Burrage, had an opportunity to underwrite a venture which was to develop mining properties in Arizona and New Mexico, and if the amount was larger than he cared to put in himself, he was at liberty to take subscriptions from some of his intimate friends, and on those representations, that the properties were to have the personal oversight of Mr. Burrage and his associates, I ventured $5,000.' Dickey, referring to the subscribers whom he personally saw, testified as follows: 'I told these gentlemen that Mr. Burrage was putting together some copper properties which he was to make into a large company and bring out; that he had given me a limited amount to subscribe among my personal friends, and by his request I was asked not to mention the names of any one connected with him in this enterprise, or even mention the name which he had given me for the name of the properties. That is the sum and substance of the conversation.' This testimony fairly represents the only arrangements under which the several sums were subscribed. They were paid over to Dickey and 'it was suggested by the defendant, A. C. Burrage, that until the company could be permanently organized the enterprise should be known as the 'Arimex syndicate,' to be composed of all persons in interest, including Dickey's subscribers, and of which Charles D. Burrage should be the treasurer, and this was done. The syndicate was formed to take over the Sisson properties and such other properties as should seem desirable, to solicit and receive subscriptions, give receipts, pay out money for the enterprise, and do everything necessary to be done prior to the formation of the permanent company.' Neither of the defendants was a subscriber, but A. C. Burrage 'was the moving spirit in the enterprise. He determined the properties which were put into the permanent company, he advanced money, selected or supervised the election of the officers, passed upon all papers of importance and advised and directed in the conduct of the enterprise.' On April 28, 1899, $335,000 of this money was lent to Sisson by Charles D. Burrage as treasurer of the syndicate, and a conveyance of Sisson's mining properties was taken as collateral security, with an option to purchase them at a stated price and to treat the money lent as the first payment. Afterwards the purchase was consummated, and '$206,000 more was paid Sisson in July, 1899, of which $165,000 was the balance of the subscriptions made through Dickey and $41,000 was advanced by A. C. Burrage. Burrage received no note or other evidence of indebtedness, either from the Arimex syndicate or the Arimex Company, for this advance, or for more than $30,000 which he expended in the purchase of the Angang mine that was joined with the Sisson properties in the same enterprise, and was afterwards controlled by the Arimex syndicate, and later by the Arimex Company. Substantially all sums borrowed since the organization of the Arimex Company in August, 1899, have been borrowed from the defendant, A. C. Burrage. On September 14, 1904, he had lent the company $269,157, which was represented by notes of the company. The amount borrowed from him since that time were not disclosed by the evidence.

On May 10, 1899, receipts for the several sums which had been contributed by Dickey's friends, indorsed by Dickey, were sent to them in the following form:

'Boston, May 10, 1899.

'Received of Charles H. Dickey ----- dollars, being in full of his subscription of ----- dollars to an underwriting syndicate for the flotation of certain copper properties in Arizona and New Mexico.

'Charles D. Burrage, Treasurer.'

On August 4, 1899, the Angang Copper Company, the Oxide Copper Company and the Arimex Consolidated Copper Company were organized under the laws of New Jersey. The capitalization of the first of these corporations was $1,000,000, and that of the second and third was $5,000,000 each. The Table Mining...