Turley v. Thomas

• Decision Date: 01 May 1909
• Docket Number: 1,758.
• Citation: 101 P. 568,31 Nev. 181
• Parties: TURLEY v. THOMAS et al.
• Court: Nevada Supreme Court

101 P. 568

31 Nev. 181

TURLEY v. THOMAS et al.

No. 1,758.

Supreme Court of Nevada

May 1, 1909

Appeal from District Court, Washoe County.

Action by W. E. Turley against W. B. Thomas and C.J. Bower. From a decree for plaintiff, defendants appeal. Affirmed.

Under date of August 21, 1906, the appellants, Bower and Thomas who were doing business as copartners under the firm name of Nevada Real Estate Mining & Development Company, entered into a contract with the Selby Consolidated Mining & Smelting Company, wherein it was recited that this company was desirous of arranging for the procurement of funds to be used in the development of its mining claims, and wherein it was agreed that in consideration of their acting as the agents and promoters of the company the latter would increase its capital stock from 300,000 to 1,000,000 shares, that one-third of this increased capital stock should be treasury stock, and that the other two-thirds thereof should be divided, one-half thereof to the stockholders of the company at that time, and the other one-half to these appellants. It was also agreed therein that all stock outside of the treasury stock should be pooled for one year from that time.

Two agreements bearing date on that day were executed and signed by those parties carrying several similar provisions, and apparently intended for the same purpose, but one of which was more complete and detailed in its provisions. One provided that it was conditioned upon the parties who are appellants here raising, through the sale of treasury stock or otherwise, the sum of $15,000 with which to begin operations, while the other provided that they must raise at least $1,500 for that purpose; and in both that they should use their best endeavors and abilities to sell treasury stock to secure funds for the prosecution of the work. It seems that the one providing for $15,000 was not executed until several days after its date.

There is testimony to the effect that a day or two later, or on or about August 23, 1906, appellants offered one Edwin Arkell one-fourth of the promotion stock to which they were entitled under this contract which they had just made with the Selby Consolidated Mining & Smelting Company for promotion of that company, if he would furnish them with $500. Arkell was unable to supply that amount, but he brought to the appellants the plaintiff, Turley, who wished to see the company's properties before accepting the proposition but was informed by them that the $500 must be paid by noon that day or the deal would be off. Thereupon Turley declined and, with Arkell, left appellants' office, but subsequently returned; and it is testified he agreed to accept the offer, if Bower and Thomas would give them some guaranty for the $500, and that appellants then agreed to give them their note for the amount, payable on or before 90 days after date; that Turley and Arkell understood that the $500 was paid to preserve the rights of appellants in their contract with the company; that they were to be repaid if the contract between the appellants and the company was not consummated, but otherwise the note was to be canceled. On the other hand, appellants testified in support of their claim that the $500 was merely a loan to relieve them from financial embarrassment; that they were willing to let Arkell in on the proposition, if he would help promote it and loan them the money for 90 days; and that, if plaintiff and Arkell had not loaned them the $500, they never would have made any agreement with them.

Aside from this conflicting testimony, a note dated August 23 1906, for $500, payable 90 days after date to W. E. Turley and Edwin Arkell, and an indorsement on the back thereof to the effect that the note would be due and payable 30 days from its date in the event that the Selby Consolidated Mining & Milling Company should not have increased its shares to 1,000,000, were signed and delivered by appellants, who received $250 from plaintiff and a like sum from Arkell; and at the same time the following agreement was also executed:

"Whereas, the undersigned, Wilmer B. Thomas and Charles J. Bower (of the Nevada Real Estate Mining and Development Company) are entitled to one-third (1/3) of the capital stock of the Selby Consolidated Mining and Milling Company's stock of Nevada, as promoters, under and by virtue of a certain contract made between the said Selby Consolidated Mining and Milling Company and the undersigned. Said contract dated August 21st, 1906.

"Now therefore, in consideration of one (1) dollar to us in hand paid, the receipt whereof is hereby acknowledged, and of other valuable considerations, we, the undersigned hereby contract and agree to transfer and deliver to W. E. Turley and Edwin Arkell one-fourth of our promoters' interest, being 83,250 shares, which stock is to be transferred as follows: 41,625 shares to the said W. E. Turley, 41,625 shares to said Edwin Arkell.

"It is understood and agreed that this agreement is subject to the receipt of such stock from said Selby Consolidated Mining and Milling Company to the undersigned.

"It is further understood and agreed that said W. E. Turley and Edwin Arkell will, to the best of their ability, use their best energies towards the securing of the sale of treasury stock in such company, and do all in their power to assist in advancing the interests of such company.

"It is understood that all promotion stock shall be pooled.

"Nevada Real Estate M. & D. Co.

"By W. B. Thomas.

"C. J. Bower."

As had been agreed, the stock of the Selby Company was increased to 1,000,000 shares, and about September 1st the company authorized the sale of 100,000 shares of its treasury stock at 20 cents per share.

A day or two after the execution of the note and this agreement, a subscription paper was prepared by appellants and Arkell, and after being typewritten in their office was delivered to him. Beginning about September 1st, plaintiff and Arkell, armed with this one paper between them, went around soliciting and obtaining subscriptions for the treasury stock of that company. Arkell kept the list, and plaintiff went with him and introduced him, as plaintiff knew more people than Arkell. Later, it was thought more advantageous to have plaintiff first introduce Arkell to several of the persons approached, and then have Arkell solicit subscriptions from them alone. There is contradicted evidence to the effect that plaintiff kept working on the proposition until October. At many times he took people to the office of the Selby Company in Reno to see the ore; that he wrote more than 100 letters to persons in the east; that several of the people to whom he introduced Arkell bought stock-Thomas told him that $12,000 worth of stock had been sold. At the time the subscription list went out from appellants' office there was placed upon it a number of fictitious subscriptions for stock, and also the names of prominent people who had been given or promised shares in order to make it appear that they were subscribers or interested in the promotion of the company. Bower, the secretary of the company, and the president on October 10, 1906, deposited with the Washoe County Bank a pooling agreement dated October 6th, with the shares issued to the old stockholders of the company and the promoters.

Plaintiff and Arkell testified that about the time of these dates in October they went to appellants' office and inquired whether their stock had been put in the bank, and were led to believe that it had been placed there for them; but appellants deny that they were so told, although admitting the use of language from which such inference might have been drawn. Arkell ascertained that his stock had not been placed in the bank, and insisted upon and succeeded in having it placed there in escrow with the other. Appellants did not complain about respondent's services at that time, and they were willing that he should believe that his stock had been pooled although it had not been placed in the bank. The 100,000 shares of treasury stock, which about September 1st had been authorized to be placed at 20 cents a share, was mostly sold by the 20th of October, excepting some that the subscribers failed to take. One witness testified that all of it had been subscribed for by about the middle of October and Thomas stated on the stand that all of this stock had been sold, and that notice to that effect had been given in the paper for several days prior to the receipt of a telegram sent from California by plaintiff, which was an order for more stock that was not filled. Plaintiff wrote a letter about the same time asking for a commission on the sale of this stock, stating that he had been to the expense of a special trip to see the intending purchaser. He testified that he desired the commission to pay to the party who had notified him and assisted him in obtaining the order for this stock, who asked for the commission. Upon plaintiff's return from San Francisco on November 25th after an absence of about 12 days, he was informed by Arkell that his stock was not in the bank. Upon inquiring next day at the office of appellants, he was told by Bower that they had concluded to repudiate the contract, that they were not going to deliver the stock, and he was referred to their attorney. There is some dispute as to whether dissatisfaction was expressed at this time regarding respondent's services, but he testified that no particular complaint was made to him concerning his efforts to sell stock and fulfill his contract at that time or prior thereto. Any subscription he had obtained was accepted by appellants down to the time of his letter and telegraphic order, which was refused about November 21st, which was after the notice...