Speckert v. Bunker Hill Arizona Min. Co., 28053.

• Decision Date: 25 October 1940
• Docket Number: 28053.
• Parties: SPECKERT v. BUNKER HILL ARIZONA MINING CO. et al.
• Court: Washington Supreme Court

106 P.2d 602

6 Wn.2d 39

SPECKERT v. BUNKER HILL ARIZONA MINING CO. et al.

No. 28053.

Supreme Court of Washington, En Banc.

October 25, 1940

Action by Frank J. Speckert against the Bunker Hill Arizona Mining Company and others to recover the amount of illegal assessments against plaintiff's shares of stock in defendant corporation. From a judgment of dismissal plaintiff appeals.

Affirmed.

Appeal from Superior Court, King County; R. J. Meakim, Judge.

James R. Chambers, of Seattle, for appellant.

C. P Brownlee, of Everett, and Copass & Hall, of Seattle, for respondent.

MILLARD Justice.

This action was brought to recover against defendant corporation and three of its directors $1,600.32, the amount of illegal assessments against plaintiff's shares of stock in defendant corporation alleged to have been paid by plaintiff because of threat of defendants to sell plaintiff's shares of stock if plaintiff refused to pay the assessments. The defense pleaded was that the money was voluntarily paid with full knowledge of the facts.

The cause was tried to the court, which found that defendants did not at any time orally threaten to sell plaintiff's shares of stock and that the written communications from defendants did not induce plaintiff to pay assessments through fear that his shares of stock would be sold for nonpayment of the assessments. The court concluded that the payments were made voluntarily by plaintiff with full knowledge of illegality of the assessments and not because of fear, coercion, duress or compulsion; and that the action should be dismissed. From judgment entered in consonance therewith plaintiff has appealed.

The trial court correctly found that the assessments against the shares of stock were illegal. Respondent corporation's articles of incorporation and bylaws disclose that the shares of stock issued by it to appellant were fully paid and non-assessable. It follows that the shares of stock represented by the certificates issued to appellant are non-assessable and that respondent corporation was powerless to levy an assessment on those shares in violation of the contract between the corporation and appellant. The corporation did not, neither did its stockholders, directors or any one else have the right or authority to make the assessments of which appellant complains and those assessments were illegal. Moore v. Los Lugos Gold Mines, 172 Wash. 570, 21 P.2d 253.

The credibility of the witnesses and the weight to be given to their testimony were for the trial court, not this court. Unless the evidence preponderates against the finding that the payments of the assessments were made voluntarily by appellant with full knowledge of all the facts and not under any coercion, compulsion or duress, we would not be warranted in disturbing the judgment. Those rules should be kept in mind when considering the evidence, which is as follows:

On March 6, 1937 appellant, who had been engaged in business in Seattle since 1925 as a stock broker specializing in shares of mining stock, owned under his own name of Frank J. Speckert and an assumed name of L. B. Pennington 136,577 shares of the common stock, which was fully paid and non-assessable, of the Bunker Hill Arizona Mining Company. On March 9, 1937 at the annual meeting of the stockholders of respondent corporation in Phoenix, Arizona, at which meeting there were represented in person by the president, vice-president and three other stockholders 68,773 shares of the capital stock of the corporation and by proxy 1,569,875 shares or a total of 1,638,648 shares out of a total of 2,886,679 shares, the following resolution was passed:

'Whereas an emergency exists, due to necessary funds being unavailable to meet immediate demands, and

'Whereas after due consideration by all stockholders present in person and by proxy, it is felt that an assessment of one cent ($.01) per share will raise sufficient funds to meet such demands,

'Now therefore, be it resolved and it is hereby ordered that an emergency does exist and the stockholders present in person and by proxy do hereby subscribe to a one cent ($.01) per share assessment, payable one quarter ($.0025) at dates determined by financial requirements and we do recommend that such an assessment be endorsed.'

The appellant and the individual respondents were not present at that meeting; however, appellant sent to E. R. Anderson and Harmon I. Lee, two stockholders who were present at the stockholders' meeting in Arizona, his two proxies; one signed Frank J. Speckert and the other signed L. B. Pennington, together with a letter dated March 6, 1937, addressed to E. R. Anderson. At this meeting respondents A. H. Gunderson and Frederick E. Bolton were elected members of the board of directors.

On March 22, 1937, the board of directors of respondent corporation, including the three individual respondents, and E. R. Anderson, who was vice-president of the corporation, held a directors' meeting at which the following resolution was adopted: 'It was moved by Mr. Lamere, seconded by Mr. Anderson, that the Board proceed immediately to mail to all stockholders of record copy of the resolution passed by the stockholders at their Annual Meeting held March 9th, 10th, 11th, and 12th, 1937, in Phoenix, Arizona, authorizing a one cent ($.01) assessment on each share of issued stock, and that the Board declare such assessment to be payable in total on or Before April 10th, or in 4 monthly payments, said payments to be due on May 10th, June 10th, and July 10th, 1937, with the provision that all stock on which said assessments have not been paid on said dates shall be declared null and void. Motion carried.'

That portion of the resolution which declared that all stock on which the assessments had not been paid on the dates specified in the resolution would be declared null and void was not communicated to appellant in letter of March 31, 1937, from respondent corporation.

On April 1, 1937, appellant received a letter dated March 31, 1937, from respondent corporation respecting the assessment made against the stock by the resolution of March 9, 1937, quoted above. That letter contains no threat respecting the assessment. After quoting the assessment resolution, the letter quotes, in part, as follows from the resolution of March 22, 1937:

'The time for making the payment of one cent assessment was taken up at the first meeting of the new Board, held Monday, March 22nd, and it was then directed that the assessment should be payable as per the following Board of Director's resolution:

"It was moved and duly seconded that the Board proceed immediately to mail to all stockholders of record copy of the resolution passed by the stockholders at their Annual Meeting held March 9th, 10th, 11th, and 12th at Phoenix, Arizona, authorizing a one cent ($.01) assessment on each share of issued stock, and that the Board declare such assessment to be payable in total on or Before April 10th, or in four monthly payments of 1/4¢ each, said payments to be due April 10th, May 10th, June 10th, and July 10th,

"Motion carried."

The letter further recites that:

'* * * Most of the big stockholders have expressed their approval and indicated their willingness to comply promptly with the provisions, for they realize that this assessment will give the Company greater strength and stability in the minds of the public and all who contemplate taking stock or increasing their holdings. Hitherto many people have hesitated to buy stock because it was nonassessable no matter how acute the needs for immediate funds.

'Now, the first matter in which the stockholders are asked to cooperate is in helping to insure a full 100% payment of this assessment at as early a date as possible. This assessment had been discussed with many stockholders, large and small, Before the meeting was held and general approval given. It was passed by the unanimous vote of all stockholders in person or by proxy and over 50% of the total number of shares issued was represented.

'The payment of this assessment should not be burdensome to any of us. It takes only $10.00 to pay the full amount due on 1000 shares. Or if he so desires he can pay in quarters and that would only be $2,50 on each thousand shares each month for four months.

'This letter is being sent to you to request prompt compliance with the provisions in the resolution as quoted above. The funds derived from this call will be used to finish paying for the equipment and hastening the day of getting into production. So if you will please respond immediately by sending in at least the first installment of 1/4¢, you will be aiding materially in pushing the good work along.

'With no desire to boast or to win special approbation but only to prove his confidence in the future of Bunker Hill, it is not out of place here to state that the undersigned, in addition to other substantial personal sums advanced during the past year, has within the past four weeks advanced $2700.00 which amount was applied on the machinery itself or towards its transportation to the mine. An emergency existed and someone had to dig up the money. He was glad that he was in a position where he could do it at the time. But each stockholder must do his part now in order to insure the greatest benefit from the money already advanced.'

There is nothing in the letter suggestive of any intention or desire to sell or declare null and void the shares of stock of any stockholder in the event of his refusal to pay the assessment against the stock.

Appellant testified--his credibility was for the court--that in the latter part of March 1937, prior to transmittal of any written communications from respondent corporation, he had a conversation...