95 P. 94 | Ariz. | 1908
— The appellants have assigned numerous errors, Which we will consider separately, so far as it seems necessary so to do. The appellants claim that the trial court erred in sustaining the demurrers to the petition of intervention of the stockholders. If the case was a proper one for an intervention by nonassenting stockholders, it is not necessary to consider the correctness of the trial court’s ruling in sustaining the demurrer to the petition in intervention, since the petitioners have not appealed therefrom, but are content with the ruling of the court, and the corporation cannot be heard to complain of the court’s action in that respect.
It is claimed that the court erred in admitting in evidence, as against the Arizona corporation, the mortgage securing the $15,100 note; the objection being that the acknowledgment thereto did not recite that the officers executed the same “as the act and deed of the corporation, ’ ’ and hence it was not entitled to be recorded. Our statute provides: “If the acknowledgment is made by the officers of a corporation, the certificate shall show that such persons as such officers (naming the office of each person) acknowledged the execution of the instrument as the free act and deed of such corporation, by each of them voluntarily executed.” Rev. Stats. Ariz. 1901, par. 739. The acknowledgment was in the following terms: “Before me, Oliver W. Beals, a notary public in and for the county aforesaid, on this day personally appeared B. Brunner and George E. Crawford, both personally known to me to be the president and secretary, respectively, of the Copper Belle Mining Company, the corporation that executed the foregoing instrument, and they each for himself acknowledged to me that he executed said instrument as president and secretary, respectively, of the said corporation, by the authority of a resolution of the board of directors of said corporation passed the first day of February, 1902, for the purpose and con
The principal assignments of error relate to the action of the court in rendering judgment on the $15,000 note and foreclosing the mortgage given to secure the same. It is claimed that the corporation was not authorized or empowered by its charter to make a note and mortgage, and the same was, therefore, ultra vires and void. In the absence of any restrictive-provision, either in the charter or in the laws of the state under which it was organized, a corporation such as the one in question is not prohibited from executing a note or mortgage by reason of the fact that the charter itself does not expressly authorize such an act. It is a necessary power that exists by implication of law, and as incident to its right to incur an indebtedness. Cook on Corporations, sec. 779, and cases cited.
It is further claimed that the note and mortgage were given by the corporation in payment for the purchase of shares of its own stock from Gleeson, a director; that the corporation was not authorized or empowered by its charter to purchase its own stock; and that the transaction was therefore ultra vires. It is claimed that Reilly was acting in this transaction on behalf of Costello, and that Reilly had full knowledge of all the facts, and that his knowledge must be imputed to Costello; that at the time of making the note and mortgage the company had no profits in its business, and no surplus; that the mortgage covered all the property of the company, and was virtually a conveyance of all the company’s property to* Costello for the benefit of Gleeson, in effect making Gleesbn a preferred stockholder, in fraud of the other stockholders and creditors. We think the evidence discloses that, while Reilly was the local attorney for the company, he was also the legal adviser of Costello, acting generally for him, and that in the matter of the loan in this instance he was acting as the representative of Costello, and that his knowledge must be
In the case before us, we think the .purchase by the company of its stock was a valid one, as against the corporation. It was done in the discretion of the officers of the company in good faith, and in the exercise of their control of the affairs of the company, for the purpose of getting rid of a superintendent, the owner of a small amount of stock, whose management of the company was believed to be injurious. At the time of the purchase there is no evidence that the company was insolvent, or that any of the officers or directors of the company, or any of its stockholders had reason so to believe, or that Costello or Reilly had any knowledge on the subject whatever. The answer of the defendants in terms
It is further alleged that the notes and mortgage are invalid for the reason that no proper notice was given of the special meeting of the stockholders, and that all the stockholders of the company did not vote for the resolution. The evidence shows that the total outstanding shares of the stock of the
It is further urged that there was no consideration passing from Gleeson to the corporation for the making by the corporation of the note and mortgage to Costello; it being claimed that Gleeson did not transfer the 8,000 shares of stock to the corporation, and could not transfer if by reason of a pooling agreement by the terms of which the stock was held in escrow for a certain length of time after the date of the giving of the mortgage. It is to be noted that the stock was only a part of the consideration for the arrangement, and that, if the claim alleged were true, it would only be a partial failure of the consideration. It appears, however, from the evidence in the ease, that the stock did come into the possession of the defendants, since a tender of the stock was made in court by them to Costello in connection with their demand for
The next assignment relates to the alleged error of the court in rendering judgment for the $802.75 expended by Costello in performing the assessment work not done by the company on certain claims. It is claimed by appellants that the mining claims in controversy, of which there were ten, form one group, and that the company had already performed several thousand dollars’ worth of work upon one of the claims for the year in question, and that the work so performed was for the benefit of the whole group, and rendered unnecessary any assessment work on the other claims by Costello. However this may have been, as a matter of law, we think Costello, under the facts, was justified in the performance of the work, and that it was a proper subject of recovery in the action. The mortgage provided that the company should “do and perform the annual assessment work on each of the said mines and mining claims not patented hereby mortgaged during the continuance of this mortgage, and in case the said party of the first part shall fail to do and perform said annual assessment work on any of said mines and mining claims, and the said party of the second part shall consider it necessary to do and perform said assessment work on any or all of said mines and mining claims in order to secure the title and right of possession thereto,” such expenditure should be a further lien on the mines described by the mortgage. Under this explicit provision of the mortgage, we think Costello was within his rights in performing the assessment work on such claims as the company had omitted to do the work upon, and that he was not, by reason of the performance of a large amount of work by the company on one of the claims, obliged to accept such work as work done for the benefit of all the claims, and thereby risk the chance of an adverse determination of the legal question as to the sufficiency of such work for such purpose thus presented.
It is further urged that the court erred in ordering a sale of the property as an entirety, “for the reason that the same comprised ten separate mining claims, and each claim could be sold separately. ’ ’ The contention of the appellants in this respect seems to be at variance with their contention that the ten claims comprise one group of mines, upon which the assessment work for one would accrue to the benefit of all. We do
The court refused the application of the defendant companies for an accounting between Gleeson and the West Virginia company, and for a reference for that purpose; and the appellants claim that this was error, since they had a right to have determined what recovery should be had by the company against Gleeson on account oí any judgment that might be rendered in favor of Costello against the company. Apart from the fact that no circumstances had been developed upon the trial that made necessary or proper the ascertainment of such facts by means of a reference, rather than by proof adduced in court, the facts sought to be thus proved would have afforded no defense upon this note as against Costello, and were not within the issues in the action. The court was right in denying the application.
It is urged that the court erred in refusing to allow the testimony of the witness Mack to stand as to representations made to him by Gleeson with respect to the indebtedness of the company at the time in question, and as to Mack’s reliance upon such statements. It is true that such testimony might have supported the allegation of the answer that Gleeson made representations to the officers of the company that the company was at the time solvent, and that Mack relied thereon; but, whether made or not, such representations, and their effect upon the officers, were not material, in the absence of proof of insolvency or financial embarrassment of the company.
The defendants offered in evidence a certified copy of a list of debts proved in bankruptcy against the West Virginia company. The offer was objected to, and was refused. The list is not preserved in the record, and we have no means of knowing whether the document was in itself competent. The evidence was material, if it showed the existence of the debts at
The nineteenth assignment of error is as follows: “The court erred in rejecting defendants’ offer to prove that the Copper Belle Mining Company of West Virginia was largely indebted at the time Gleeson was superintendent of its mining properties, and at the time the mortgage was given to Costello, and that the company thereafter went into the hands of the bankrupt court, and subsequently while in the bankruptcy court, all the creditors’ claims were purchased by E. J. Moneuse and thereafter transferred to the Copper Belle Mining Company of Arizona.” The evidence referred to in this assignment of error was clearly material, and its exclusion would have been error prejudicial to the appellants. The difficulty with the assignment is that it is not founded upon fact, as no such testimony was excluded. There was no evidence offered at any time of the purchase by or assignment to the Arizona company of the creditors’ claims, and no offer of proof thereof refused by the court. The only evidence offered of the financial condition of the West Virginia company at the time of the execution of the note and mortgage was adduced from Gleeson upon his cross-examination by defendants’ counsel. The court allowed all the questions put by counsel with regard to such condition to be answered, and the testimony of the witness (which was the only testimony on the subject, except as to the indebtedness to Reilly of $650) showed the assets of the company at the time to be largely in excess of its indebtedness. It is also claimed that the court erred in not admitting in evidence a certified copy of the claim of Reilly filed in the bankruptcy proceedings. This document is not preserved in the record, and we cannot, therefore, determine whether it was admissible or material. But the appellants do not seem to have been injured by its exclusion, as subsequently evidence was introduced which showed that
Other errors are assigned in regard to the rulings of the trial court in the rejection of evidence, but it is not necessary to consider whether the court was right in the rulings referred to, as the exclusion of the evidence would not, under our view of the case, be prejudicial error.
Passing to the second cause of action in the complaint, relating to the four notes, for $13,250 each, running to G-leeson and assigned by him to Costello, we find numerous errors assigned as to the action of the trial court in respect to this branch of the case. A demurrer was interposed on the ground that, under the allegations in the complaint, neither the principal nor interest on these notes was due at the time the action was brought. The first of the notes was due February 4, 1906 (subsequent to the commencement of this action). The notes were dated February 4, 1902, and each provided that the interest was to be paid yearly at the end of each year, and, if not so paid, to be added to the principal and to draw interest therewith from the date of its accrual. The trial court was of opinion that under this provision the interest was not due, in the sense that would warrant a foreclosure of the mortgage, as there was no provision in the mortgage for default in case of nonpayment of the interest at any time prior to the maturity of the notes; but on the contrary, the notes provided that if the interest was not paid, it should be added to the principal and draw interest. The demurrer, however, was overruled on the ground that, the court having had its attention called to the existence of the notes and the second mortgage lien on the property, it was proper to take evidence of the value of the notes in order that the surplus on the sale, if any, should be held subject to the claims of the second mortgage. Upon the trial the four notes and the mortgage were offered in evidence and objected to, on the ground, among others, that the action was prematurely brought, since none of the notes, or the interest thereon, was then due. The court, in passing on this objection, held that the notes had not yet matured, and that the terms of the mortgage did not provide for the foreclosure of the mortgage because of the nonpayment of the interest at any date before the maturity of the notes, and that the validity of the mortgage did not necessarily enter into the trial of the cause, but, inasmuch as the mortgage had been executed by the company to secure the
The judgment of the district court is therefore modified, in so far as it adjudges the defendants to be indebted to the plaintiff in the sum of $3,523.07, or any other sum, upon the second cause of action set forth in the complaint, or provides for a foreclosure of the mortgage to satisfy the same, without prejudice to the plaintiff to enforce such rights as he may have thereunder. In all other respects, the judgment is affirmed, with costs in this court to the appellants.
SLOAN and CAMPBELL, JJ., concur.