Weede v. Emma Copper Co.

• Decision Date: 20 August 1921
• Docket Number: 3639
• Citation: 58 Utah 524,200 P. 517
• Court: Utah Supreme Court
• Parties: WEEDE v. EMMA COPPER CO

200 P. 517

58 Utah 524

WEEDE v. EMMA COPPER CO

No. 3639

Supreme Court of Utah

August 20, 1921

Appeal from District Court, Third District, Salt Lake County; W. H Bramel, Judge.

Action by Ruby B. Williams Weede against the Emma Copper Company. From a judgment for plaintiff, defendant appeals.

REVERSED AND REMANDED, with directions.

Dey Hoppaugh & Mark, of Salt Lake City, for appellant.

Dana T Smith and S. P. Armstrong, both of Salt Lake City, for respondent.

FRICK, J. CORFMAN, C. J., and WEBER, GIDEON and THURMAN, JJ., concur.

OPINION

FRICK, J.

The plaintiff, in her complaint, in substance, alleged: That the defendant corporation, hereinafter called defendant, on the 20th day of November, 1906, was duly incorporated pursuant to the laws of Utah with a capitalization of 1,000,000 shares, of the par value of $ 1 each. That the defendant was incorporated for the purpose of taking over, holding, and operating certain mining claims and mining property located in the state of Utah. That said mining claims and mining property were conveyed to the defendant by the owners thereof, in consideration of 600,000 shares of said capital stock, all of which was duly issued and delivered to the owners of the property aforesaid, who were the incorporators of the defendant. That the remainder of said 1,000,000 shares, to wit, 400,000 shares, were retained in the treasury of the defendant, to be disposed of for the purpose of developing and working said mining property. That the entire amount of said capital stock, including said 400,000 shares, was fully paid up by the conveyance of said mining claims and mining property. That it was provided in the articles of incorporation that the whole of said capital stock was "fully paid and nonassessable." That on or about the 1st day of May, 1911, the plaintiff purchased 1,000 shares of said stock, which was evidenced by a certain stock certificate, numbered 1,070, that theretofore had been duly issued and delivered by said defendant to one W. H. Havenor, and which certificate was duly indorsed and delivered by said Havenor to the plaintiff That the plaintiff, by virtue of the indorsement and delivery of said certificate to her, became and continued to be a stockholder of said defendant, and was entitled to have said certificate and shares of stock transferred on the books of said defendant in her name. That on or about the 15th day of February, 1917, the plaintiff notified said defendant that she was the owner of said 1,000 shares of stock, and produced said certificate, and offered to surrender the same to said defendant properly indorsed, and asked that the said stock be transferred on the books of said defendant in the name of the plaintiff, and that a certificate in due form be issued to her. That said defendant refused, and still refused, to issue to plaintiff a certificate therefor, for the alleged reason that said defendant "pretends and claims that its records evidence the sale of said stock for unpaid and delinquent assessments." That plaintiff has no knowledge respecting "any unpaid or delinquent pretended assessments," nor of any pretended sale, and is "unable to set forth or allege any facts as to such pretended assessment and pretended sale." That plaintiff is informed and states "that, notwithstanding the provisions of said articles of incorporation * * * that the capital stock is nonassessable," "on or about August 16, 1909, at a special meeting of the stockholders of said defendant, * * * an attempt was made to amend said articles of incorporation of said defendant in the following particulars, to wit: By adding to said articles of incorporation an article reading as follows: 'The capital stock of this corporation, when issued, was assessable, and the board of directors are hereby authorized and empowered to levy assessments upon the said stock, in accordance with the laws of the state of Utah.'" That when said special meeting was held the plaintiff was not the owner of any of said stock and was not a stockholder of the defendant, and was not present at said meeting, and had no notice or knowledge thereof, and had no notice or knowledge of said pretended amendment of said articles of incorporation "until on or about the month of May, 1915." That upon information plaintiff alleges that there were represented and voting at said special stockholders' meeting, 563,975 shares of stock out of the whole number of 745,350 shares, which number was then issued and outstanding. That the whole number of shares, to wit, 563,975, which were represented at said special meeting, voted for said amendment, and no votes were cast against the same. That said amendment, after being voted for and adopted by said stockholders, was, on the 18th day of August, 1909, duly certified and filed as provided by law. The plaintiff also alleged that the amendment aforesaid was unauthorized, and that the pretended assessments levied and the sales of stock made thereunder were void and of no force or effect; that plaintiff at no time assented to the attempted amendment of said articles of incorporation, or to the levying of any assessment or assessments thereunder. She then alleges the value of said shares of stock, and prays judgment that the attempted or pretended assessment and sale of said 1,000 shares of stock be declared void and of no effect; that plaintiff be declared to be the owner of said 1,000 shares of stock, and that the defendant be required to transfer said stock and to issue to her a certificate therefor, or, in lieu thereof, to pay to her the value of said stock, and for general relief.

The complaint is very long and contains many repetitions. We have tried to condense it so far as possible, and we think the foregoing statement contains all of the material facts alleged. We are obliged to state the allegations of the complaint somewhat in detail for the reason that it was assailed by general demurrer on behalf of the defendant, which demurrer was overruled; and, the defendant electing to stand upon its demurrer, the court entered judgment in favor of plaintiff as prayed for, from which the defendant appeals.

The only error assigned is that the court erred in overruling the demurrer and in entering judgment for the plaintiff. The question presented for decision is whether, in view of the provisions of our Constitution and statutes, the articles of incorporation, in which it is provided that the capital stock is full-paid and nonassessable, may be amended by the stockholders owning a majority of the stock, so as to make the stock assessable (without the consent of all the stockholders), and in case an assessment is not paid forfeit the stock.

In Garey v. St. Joe Min. Co., 32 Utah 497, 91 P. 369. 12 L.R.A. (N.S.) 554, it was held that, under the statute in force when the company which was the defendant in that case was incorporated and organized, for the reasons there stated, the articles of incorporation could not be amended, so as to make nonassessable stock assessable without the unanimous consent of the stockholders; while in the case of Nelson v. Keith-O'Brien Co., 32 Utah 396, 91 P. 30, it was held that, in view that the articles of incorporation in that case provided that the same "may be amended in any respect," the number of stockholders owning the required number of shares of stock could make an amendment to the articles of incorporation, so as to levy assessments against the stock, without getting the unanimous consent of the stockholders. Counsel for both sides conceded that, in view that the defendant in the case at bar was organized under a statute which in some respects differed from the one under which the defendants in the foregoing two cases were incorporated, those cases are not controlling here, and we have referred to them only for the reason that some of the questions here involved are to some extent considered in those cases, although not decided.

In view of the legal questions involved in this case, it becomes necessary to state with some particularity both the constitutional and statutory provisions of this state which relate to corporations like the defendant, and which were in force at the time the defendant was incorporated. Our Constitution (article 12, § 1) provides:

"Corporations may be formed under general laws, but shall not be created by special acts. All laws relating to corporations may be altered, amended or repealed by the Legislature, and all corporations doing business in this state may, as to such business, be regulated, limited or restrained by law."

Comp. Laws Utah 1917, § 861, which was in force when the defendant was incorporated, provides what the articles of incorporation must contain, and one of the things that must be stated therein is:

"Whether or not the private property of the stockholders shall be liable for its obligations."

The several sections hereinafter referred to were all in force when the defendant was incorporated. Section 879 reads as follows:

"The property of the corporation and the unpaid stock shall be liable for the debts of the corporation; but the individual property of any holder of full-paid capital stock of any corporation organized since March 8, 1894, or that hereafter may be organized, under the laws of this state, except as otherwise expressly provided in this title, shall not be liable for the corporate obligations, nor shall assessments be levied on such stock for any purpose whatever, except to such extent and in such manner as may be expressly provided in the articles of incorporation."

Section 886, so far as material here, provides:

"The articles of incorporation of any corporation now existing or that hereafter may be organized under the laws of this state may be amended in any...