126 P. 931 | Mont. | 1912
delivered the opinion of the court.
Action in claim and delivery. Plaintiffs seek to recover judgment awarding them possession of 200,000 shares of the capital stock of the defendant, the Dailey Copper Mining and Smelting Company, hereafter referred to as the company. They allege title and right to immediate possession, and unlawful detention by the defendants, to their damage in the sum of $10,000. They further allege that the company, through the other defendants, its officers, and such other defendants, have conspired together with one Heath, a stock-broker residing in the city of New York, to cheat and defraud the plaintiffs out of their stock, and that they, thus acting, have been guilty of oppression and malice. An additional sum of $10,000 is demanded in this behalf as punitive damages. The answer consists of a denial of all the allegations in the complaint, except the corporate capacity of the company, and alleges a counterclaim for money had and received by the plaintiff Lyon for the use and benefit of the company, amounting to $11,369, for which judgment is demanded. At the trial the counterclaim was abandoned.
The controversy grew out of certain engagements entered into by plaintiff Lyon with the Dailey Copper Company (the same corporation as the defendant company, the name having been changed, as will appear hereafter), the character and purport of which are disclosed by the following recital: Prior to February 20, 1908, the capital stock of the company consisted of 350,000 shares of the par value of one dollar each. The plaintiff Lyon then held a lease and bond upon all of its property, the term of which had not expired. He had been endeavoring to sell it in the market. The company held under lease and bond, with an option to purchase, the Steamboat quartz lode claim, which lies contiguous, to the property owned by it. At a meeting of the stockholders of the company held on the date above mentioned, and at the suggestion of Lyon, by resolution
“To the Stockholders and Directors of the Dailey Copper Company, Wiekes, Montana—
“Gentlemen: Understanding that you have voted to increase the capital stock of your company from 350,000 to 1,500,000 shares, and that the stockholders have agreed to accept 800,000 shares of said stock in exchange for the 200,000 shares heretofore held in said company, leaving 700,000 shares of unissued stock, I hereby make you the following proposition: I hereby offer you in exchange for and in full payment of the said 700,-000 shares of unissued stock that certain lease and bond which 1 hold upon the Steamboat quartz lode mining claim, said claim being known and designated as survey No. 690, lot A, situate at Wiekes in the county of Jefferson and state of Montana; I also agree to do and perform all necessary legal work in carrying into effect the action of your stockholders in voting to increase the capital stock of your corporation, and will pay all the necessary legal fees in connection therewith, so that the said action may be carried into full force and effect without cost to your corporation; in the event of this proposition being accepted, I also agree to turn over to the treasurer of your corporation, of*111 the 700,000 shares issued to me, 500,000 shares thereof, such stock to be sold as treasury stock at the best price obtainable, with a view to provide working capital for the corporation; I will also further agree with your board of directors to enter into a contract with them for the sale and disposition of the said 500,000 shares of treasury stock upon such terms and conditions as will net the corporation $200,000. Dated this 20th day of Feby., 1908.”
The offer was accepted by formal resolution, which also authorized the president and secretary, acting in connection with the board of directors, to contract with Lyon for the disposition of the whole of the treasury stock upon such terms as the directors thought proper. Thereupon, it having been agreed further that the directors might hold a meeting without the usual notice, the stockholders’ meeting adjourned. The board met and by resolution formally authorized the president and secretary to contract with Lyon for the sale of the treasury stock as proposed by him, which they did, as is evidenced by the following writing:
“This agreement made and entered into this 20th day of February, 1908, by and between the Dailey Copper Company, a corporation duly organized and existing under and by virtue of the laws of the state of Montana, the party of the first part, and T. T. Lyon, of Butte, Montana, the party of the second part, witnesseth: Whereas the Dailey Copper Company, party of the first part as aforesaid, having this day by a vote of its stockholders increased its capital stock from $350,000 to the sum of $1,500,000, divided into shares of the par value of one dollar each; and whereas, by an arrangement with its stockholders through proper proceedings had therefor, the said party of the first part, the Dailey Copper Company aforesaid, has set aside and placed in the hands of its treasurer 500,000 shares of its said capital stock, the same being full paid and nonassessable, and designated as treasury stock, to be sold and the proceeds thereof to be used for the benefit of said company, the party of the first part aforesaid; and whereas, the stockholders of the*112 Dailey Copper Company, party of the first part aforesaid, having by proper resolution adopted at their meeting held this the 20th day of Feby., 1908, duly authorized the board of directors of said the Dailey Copper Company to negotiate with and to enter into a contract with the said T. T. Lyon,'party of the second part, for the sale of the entire block of the said treasury stock consisting of 500,000 shares as aforesaid:
“Now, therefore, in consideration of the premises and the sum of one dollar in hand paid, the receipt whereof is hereby acknowledged, the said party of the first part agrees to and with the,said party of the second part as follows, to wit: That the said party of the second part shall have the exclusive right and privilege of selling the said 500,000 shares of treasury stock for a period of two years from the 5th day of March, 1908, at and for the sum of $200,000 net to the said party of the first part; provided the said party of the second part shall pay, or cause to be paid, into the treasury of the said party of the first part not less than the sum of $7,500, within ninety days from and after said 5th day of March, 1908, as the result of stock sold during said period; and within three months thereafter, as the proceeds of stock sold, the sum of $13,500, and will during the succeeding six months pay into the treasury as the proceeds of stock sold not less than the sum of $29,000, and will during the succeeding twelve months pay into the treasury the balance sum of $150,000, making the total sum so paid into the treasury of the said.party of the first part the sum of $200,000. It being understood and agreed that the said party of the second part shall have the right and privilege of accounting to the said party of the first part for the first 200,000 shares of stock sold at the rate of 25 ets. per share net to said party of the first part, and that the remaining 300,000 shares shall be paid for at the rate of 50 ets. per share net to the party of the first part. It is further specially understood and agreed that the said party of the first part will issue, and deliver to such persons as the said party of the second part may designate the number of shares that shall be paid for at the rates above set forth, the money*113 therefor to be deposited with some agent hereafter to be agreed upon, to whom such shares of stock may be delivered and who will collect therefor and remit the money received to the treasurer of the said party of the first part.
“In witness whereof, the said the Dailey Copper Company has caused its corporate seal to be hereunto affixed and its corporate name to be subscribed hereto by the president and secretary thereof, and the said party of the second part has hereunto subscribed his name and affixed his seal this the 20th day of February, 1908.
“W. W. Dailey, Prest.
“C. H. Dailey, Seety.
“T. T. Lyon. [Seal.]
“ [Corporate Seal.] The Dailey Copper Company,
“Wickes, Montana.
“T. T. Lyon, Direct.”
At the same time, and as a part of the same transaction, Lyon addressed to the company this communication:
“Gentlemen: Referring to the contract and agreement entered into by and between us this day, it is understood by and between us that when I have completed all the necessary work and have paid all the fees in connection with the increase of the capital stock of your corporation, I may have issued to me of the stock I am to receive 20,000 shares, which I agree not to sell, but will.use as a basis of credit, and that in the event of my failure to carry out the terms of my agreement with you to your satisfaction I will return all of said stock to you upon repayment to me of the moneys actually expended by me in paying of fees for the said increase of capital stock. It is also understood between us that in the event of my making a success of the sale of your treasury stock in accordance with our agreement, that should it become necessary for me to have more of the stock to which I shall be entitled, that there may be issued to me from time to time additional shares until the number so issued shall reach 50,000 shares. It is further understood that the remaining 150,000 shares shall remain with the seety. of*114 your company until the final termination of said contract; it being understood by and between all the stockholders of said company that they will all leave their stock with the secty. of the company until the termination of the said contract, unless by mutual agreement among all of them they decide to sell some portion thereof, in which event it is understood that each stockholder shall sell only pro rata with the others.
“T. T. Lyon.”
Lyon is an attorney at law, residing and practicing his profession at Butte. Prior to any of the transactions heretofore narrated, there had been negotiations between him and the officers of the company, and in a preliminary way it had been agreed to carry out the scheme which they perfected at this meeting. Lyon, being the attorney for the company, had theretofore prepared all the resolutions and the various writings quoted, and had them at the meeting. After entering into his engagement with the company, he assigned to each of the other plaintiffs an interest in the 200,000 of stock mentioned therein. He attended to all the steps necessary to legalize the change in the name and the increase in the capital stock of the company, paying the incidental expenses, amounting to $306. He also obtained a new lease and bond on the Steamboat claim and turned it over to the company. This, however, was without expense to him.- The 700.000 shares of treasury stock were never issued to Lyon. On March 20, 1908, the officers of the company having in the meantime procured a new stock-book, there was made a certificate for 500.000 shares in the name of Lyon. It was immediately assigned by him to the secretary of the company. A second certificate for the same number was then made out in the name of the secretary. Neither was taken from the stock-book. Two other certificates were made out to Lyon, one for 180,000, and the other for 20,000 shares. The latter was delivered to Lyon; 'the former remained in the stock-book. Five certificates for 180.000 shares each were made for each of the original stockholders, including the three defendant officers. These wTere also left in the stock-book, but were subsequently canceled and other
In another place in his testimony he said: “All of these agreements were a part of the same transaction, and had to do with the 200,000 shares of stock that I was to own. This agreement, if you will permit me to explain, had to do with the carrying out of my first agreement; that is, the incorporation of the company and the payment of fees. It had nothing to do with the sale of the treasury stock. That contract further provides that it was understood between us that in the event of my making a success of the sale of the treasury stock — that was the stock that was covered by contract referred to here as Exhibit A, attached to the answer; but at the time that was written the proposition arose — in fact, I think Will Dailey suggested: ‘You go down east. If you cannot sell any stock, cannot do anything, we do not want you stuck for the cost. If you cannot do anything, and want to give back the stock, we will give you back the money.’ ‘If it is impossible for me to do anything,’ I said, ‘I do not want the stock.’ There was never any objection on their part as to the sale of this stock. This agreement, like all of the others, contained the terms of the contract, with the exception that when I came back I entered into an altogether different contract.”
During the course of his examination, counsel for plaintiffs offered to have him testify that at different times after April, 1909, and prior to the commencement of this action, he made demand upon the defendants Dailey for the delivery to him of his shares, but that they refused such delivery, giving as their only reason for such refusal that they had entered into an arrangement with Heath, under the terms of which they would not deliver any stock to plaintiffs until the consummation of the agreement theretofore entered into between themselves and
At the hearing in this court, defendants objected to the consideration of the appeals because of the omission from the transcript of certain portions of the record, and because the brief furnished by counsel for plaintiffs fails in important particulars to comply with the rules of this court. Since, however, we are able to examine the case on the merits without inconvenience, we shall do so, though, under a strict application of the rules, the appeals are subject to be dismissed.
In directing judgment the trial court proceeded upon the theory that the three writings constituted one entire contract, and that, it being apparent from Lyon’s testimony that he had failed to consummate the sale of the treasury stock as he agreed, he never became entitled to the shares allotted to him. According to the terms of his offer as formally accepted at the stockholders’ meeting, title was to vest upon his performance of four engagements: (1) To secure a new lease and bond on the Steamboat claim and turn’it over to the company; (2) to take the legal steps necessary to effectuate the change ordered in the name of the company and the increase in its capital stock; (3) to pay the incidental expenses; and (4) to enter into a contract with the officers of the company, in connection with the directors, for the sale of the 500,000 shares of treasury stock upon such terms ás would net the company $200,000. That he fully performed all these engagements the record shows clearly. If nothing else appeared, the conclusion would therefore be inevitable that upon the formal signing and delivery of the con
In the light of Lyon’s testimony, as well as because of the recitals in the writings themselves, all having relation to the same
Lyon was the attorney of the company. He drew up all the
Contention is made that the court erred in excluding the
Affirmed.