100 P. 807 | Ariz. | 1909
This is an action brought by Martin Costello against the Copper Belle Mining Company, a corporation of the state of West Virginia, and the Copper Belle Mining Company of Arizona, a corporation of the territory of Arizona (which we will hereafter refer to as the “West Virginia company” and the “Arizona company,” respectively), to recover on certain promissory notes given by the West Virginia company to one G-leeson and subsequently assigned by him to Costello, and to foreclose the liens covered by two mortgages upon certain mining property of the West Virginia company given to secure the notes. The complaint contained two causes of action; the first cause of action being on a certain promissory note for the sum of $15,100, secured by a first mortgage on the property and for a certain amount expended by Costello for assessment work upon the mines ■covered by the terms of the mortgage, and the second cause of action set up the execution of four certain promissory notes aggregating $53,000, secured by a second mortgage on the same property, and alleged that a certain amount of interest was due upon said last-mentioned notes, although the principal thereof was not due and payable at the time of the filing of the complaint. Judgment was prayed for the full amount of the principal and interest of the note set up in the first cause of action, for the amount expended for assessment work, for the interest due on the notes set up in the second cause ■of action, for a determination of the present value of the four promissory notes set up in the second cause of action, and for •a decree foreclosing the mortgage liens upon the property of the West Virginia company. Upon the first trial of the action, the district court found for the plaintiff for the full •amount of the claims set up in the first cause of action, and for a certain amount of interest due bn the notes set up in the second cause of action. An appeal was taken from the judgment so entered, and upon such appeal the judgment was affirmed by this court as to the amount found due upon the first cause of action, but modified by striking out therefrom the amount found by the trial court to be due for interest on •the notes set up in the second cause of action, for the reasons given in our opinion, reported in 95 Pae. 94, without prejudice to the plaintiff to thereafter enforce such rights as he
Except for the facts set forth in the supplemental complaint, the pleadings and the evidence upon the second trial were substantially the same as upon the first. A full statement of the ease is to be found in our former opinion (11 Ariz. 335, 95 Pac. 94), and need not be repeated here. It is proper to state, however, that, in addition to the facts established upon the first trial, the evidence showed and the court found upon the second trial the following facts: That on February 4, 1902, the West Virginia company executed and delivered to Gleeson, for value, its four promissory notes aggregating $53,000, secured by its second mortgage on the property. That according to the terms of the mortgage plaintiff was authorized to have the assessment work required by law to be done performed on said mining claims, and the
Of the numerous assignments of error set up by the appellants, many are not argued by counsel in his brief, and some, having been already disposed of by our former opinion, require no consideration. The appellants claim that the court erred in not granting a continuance of the trial at the time the plaintiff by leave of the court filed his supplemental com
A special demurrer was interposed to the complaint on the ground that the second cause, of action was prematurely brought, in that none of the notes sued upon in the second cause of action were due at the time the second cause of action was commenced, since the date of maturity of the first of the notes had1 not arrived, and there was no provision in the notes or mortgage that upon default of the interest the principal should become due and payable; but, on the contrary, by the provisions thereof the interest, if not paid, was to be added to the principal and draw like -interest therewith from the date of its accrual. This demurrer was overruled by the court, and its action in that regard is assigned as error. Each note contains the following provision: “The said interest to be paid yearly at the end of each year, and if not so paid to be added to the principal and to draw like interest from the date of its accrual.” The mortgage contains the following clause: “But in case default be made in the payment of the principal or of any interest for a term of three months after the said interest shall become due, as provided in said promissory note, then the said party of the second part, his executors, administrators or assigns, are hereby empowered to sell the hereinbefore described property with all and every of the appurtenances, or -any part thereof, in the manner prescribed by law, and out of the money arising from said sale, to retain the said principal and interest, together with costs and charges of such sale, and three per cent attorney’s fees, and also any and all sums of money that the said party of the second part (the mortgagee) finds it necessary to pay out to preserve the title to the property hereinbefore described, with three per cent per annum interest thereon, and the surplus, if any, on demand to be paid to the party of the first part, its successors and assigns.” Construing the note and the mortgage together, as we must, it seems plain that, where the mortgage gives power to sell the premises and retain the principal and interest upon default in the payment
The appellant claims that the trial court erred in not holding that the proceedings whereby the West Virginia company was adjudged a bankrupt, and a composition of creditors effected, extinguished the debt and the lien of the mortgage. The plaintiff did not prove his claim in the bankruptcy court and was not a party to the composition. We do not need to question the contention of the appellant that by the bankruptcy proceedings the West Virginia company was discharged from the debt and from any liability upon a personal judgment, since no personal judgment against tlie company has been entered in this action. The bankruptcy proceedings and the composition effected did not, however, discharge the prior lien of the mortgage on the property covered by it, or operate to prevent a judgment against the proceeds from the sale of such mortgaged property to which the lien had been transferred.
It is urged that the trial court erred in rendering judgment for the plaintiff, since the evidence showed that at the time of the execution of the notes and mortgage the West Virginia company was largely indebted in at least the sum of $35,000, and that the transaction was in fraud of the creditors owning these claims in whose shoes the Arizona company now stands by assignment thereof; it being contended that a corporation may not purchase its own shares of stock to the injury or detriment of its creditors. We held on the former appeal in this case that: “In the absence of any statute prohibiting the purchase by a company of its own stock, such purchase is a transaction not per se void, but its validity depends upon the circumstances of the case. The transaction might in some instances be avoided by stockholders who did not assent, if injured. It might be avoided by creditors who
It is claimed by the Arizona company that the notes and mortgage were void because the directors of the company that authorized the issuance thereof were not at the time residents of the state of West Virginia, the home of the corporation, as required by the statute of that state; but, if ineligible under the statutes of West Virginia, the force and effect of which we do not need to determine, the directors, having been elected by the stockholders and having assumed office without objection, were de facto directors, and creditors of the corporation may not object collaterally to acts done by the directors on the ground that they were not legally elected as such, for the contracts of an officer de facto acting within the sphere of his office are binding upon the corporation and its creditors. Cook on Corporations, secs. 623, 713. It is therefore no defense to a mortgage that the directors authorizing it were irregularly elected, the stockholders having acquiesced, and it has been directly held that the fact that some of the directors are not residents of the state, as required by statute, does not invalidate a mortgage given by them on land in another state. Wheelwright v. St. Louis Co., 56 Fed. 164.
We find no error in the record, and the judgment of the district court is affirmed.