86 P. 7 | Ariz. | 1906
Lead Opinion
The appellee, Louis Zeekendorf, brought suit as a stockholder of the Silver Bell Copper Company in the district court of Pima County to recover, in behalf of said company, the proceeds of the sale of certain mining property alleged in the complaint to be wrongfully retained by the defendants, Albert Steinfeld, R. K. Shelton, and the Mammoth Copper Company, and to be the property of said Silver Bell Copper Company. The complaint charged that the board of directors of the Silver Bell Copper Company, which was made a party defendant, was composed of the defendants Steinfeld, Shelton, and one Curtis, and was dominated and controlled by the defendant Steinfeld, and that therefore the plaintiff had made no demand upon said board to bring the action, it being idle and purposeless to make such demand, for the reason that such action would not be prosecuted by said board in good faith; that therefore appellee, as a stockholder of said corporation, brought the suit for its use and benefit. From a judgment in favor of plaintiff, Zeckendorf, the defendants have appealed.
The record of the case is voluminous, and a complete statement of the facts would necessarily occupy more space than is desirable or necessary to a determination of the questions involved in this appeal. Such of the facts as bear directly upon the essential controversies are as follows:
The firm of Louis Zeckendorf & Co., during the times hereinafter mentioned, was composed of appellee, Louis Zeckendorf, and appellant, Albert Steinfeld, and was engaged in the mercantile business in the city of Tucson. In January, 1899, the Silver Bell Copper Company was organized for the purpose of taking over the title to a mining claim known as “Old Boot,” situated in the Silver Bell mining district, Pima County, which had theretofore been held by Albert Steinfeld in trust for one William Zeckendorf. The capitalization of the company wa,s twenty-five thousand dollars, divided into one thousand shares of the par value of twenty-five dollars each. At the time of the organization one Neilson was operating the mine under lease and was indebted to the firm of Louis Zeekendorf & Co. in excess of twenty thousand dollars. The stock of the company, with the exception of one share each given to Curtis and Shelton, was issued to Neilson, who divided it as fol
“This agreement, made this 20th day of May, 1903, between the Silver Bell Copper Company, a corporation organized and existing under the laws of the territory of Arizona, party of the first part, and the Mammoth Copper Company, a corporation organized and existing under the laws of the territory of Arizona, party of the second part, and Albert Steinfeld of Tucson, party of the third part, witnesseth: Whereas, the parties hereto have this day agreed to sell certain mining claims and property to the Imperial Copper Company, a corporation, as per written agreements heretofore made, and deeds for which property are now in escrow with the Phcenix National Bank, of Phcenix, Ariz. ; and whereas, the parties hereto desire to settle and determine
Prior to the execution of this agreement another agreement had been prepared, which recited that Steinfeld, in consideration of $18,117, paid by the company, transferred the
“Be it resolved: (1) That the said resolutions passed by the directors on the said 20th day of May, 1903, be and the same are hereby rescinded and repealed. (2) That the said agreement heretofore recited in full, be rescinded and declared null and void. (3) That the president and treasurer of this company
After the directors’ meeting and on the same day an agreement was executed between Steinfeld, the Mammoth Copper Company, and the Silver Bell Copper Company, annulling the resolution and rescinding the agreement of May 20, 1903, and Steinfeld thereupon repaid to Curtis, the treasurer of the Silver Bell Copper Company, the sum of $18,117, which had been paid to him on the twentieth day of May, 1903. The latter sum, Steinfeld testified, was paid him as consideration for the execution of the agreement of that date. Steinfeld thereafter turned over to Curtis, the treasurer of the company, the proceeds of the sale held by him, except the sum of $51,500, which had been garnished in a suit brought against the company. On the sixteenth day of January, 1904, the board of directors of the Silver Bell Copper Company made and adopted a resolution which recited that Steinfeld and the Mammoth Copper Company claimed the ownership of and right of possession of more than one half the purchase price of the property sold, and claimed that the value of the property conveyed by them exceeded in value the property owned by the companj'-; that it had been agreed by and between Steinfeld and the Mammoth Copper Company and the Silver Bell Copper Company that the former should receive one half of the said proceeds and the Silver Bell Copper Company the remaining half, less certain commissions and amounts paid out to attorneys for services rendered the company. The resolution provided that the distribution should be made in accordance with this agreement, and further provided the manner in which it should be made. On the same day an
It is obvious that the contentions arising from the record relate to the effect of the agreement of May 20, 1903, and of its rescission, upon the right of the Silver Bell Copper Company to all the proceeds derived from the sale of the entire property conveyed to the Imperial Copper Company, for the reason that the findings of the court do not determine the rights of the parties irrespective of these. The court expressly stated in the findings that it did not deem the issues raised by the pleadings as to the beneficiary ownership of the shares of stock purchased from Neilson by Steinfeld, and the beneficiary ownership of the “English Group” of mines prior to the twentieth day of May, 1903, as material to the judgment, for the reason that the agreement of May 20, 1903, established the beneficiary ownership of said stock and the purchase price of said mines in the Silver Bell Copper Company. The court found the facts above recited, which show that this agreement of May 20, 1903, was rescinded by the parties thereto on the twenty-sixth day of December, 1903, but found in the same connection that the resolution passed at the meeting of the stockholders of the Silver Bell Copper Company held on that day, while not procured by false representations, misconduct, or fraudulent practice, was not intended by the stockholders to advise, direct, consent, or assent to the rescission of any part of the agreement whereby the Silver Bell Copper Company became the owner of the entire purchase price of said property; and further found that in adopting said resolution the board of directors of the Silver Bell Copper Company did not intend thereby to cancel, rescind, or annul any part of the agreement affecting the ownership of the entire proceeds of the sale of said properties; that all of the actions
A mistake of law is an erroneous conclusion as to the legal effect of known facts. Anderson’s Dictionary of Law. It is a general rule that a mistake of law, as to the legal effect of an agreement, which is unconnected with a mistake of fact, and where there is no fraud, imposition, or undue advantage, will not be corrected by a court of equity. Bank of United States v. Daniel, 12 Pet. 32, 9 L. Ed. 989; Hunt v. Rousmaniere, 1 Pet. 14, 7 L. Ed. 27. A mistake of fact is defined to be, in general, a mistake not caused by the neglect of any legal duty on the part of the person making the mistake, and which consists in his ignorance of some fact, past or present, material to the transaction, or in his belief in the existence of some fact, material to the transaction, which does not exist. Such a mistake may afford ground for relief in a court of equity. It seems clear from the findings of the court that the misapprehension of the parties as to the effect of the rescission of the agreement of May 20, 1903, was as to the legal effect of the language used in the agreement, and did not arise from any misapprehension of fact. There is no room for doubt as to the meaning of the resolution of the stockholders or of the resolution of the board of directors of the Silver Bell Copper Company or of the agreement of rescission, as these were expressed. The former unequivocally
It is unnecessary to consider the question discussed in the briefs, whether the resolution of January 16, 1904, was void or merely voidable. It is quite clear that it is the subject of attack in this suit brought by Zeckendorf as a minority stockholder of the Silver Bell Copper Company, and that, should it appear that the company is entitled to any of the proceeds awarded to any of the appellees by the terms of the resolution, the latter is not binding upon him or the company.
For the reason that the findings do not support the judgment, it will be reversed, and a new trial granted.
Concurrence Opinion
I am' unable to concur in the conclusion reached by the majority of the court. The minutes of the meeting of the board of directors of May 20, 1903, record the following, among other transactions:—
*234 “The president reported that Mr. Albert Steinfeld, who had conducted the negotiations with the Imperial Copper Company, had again .submitted for acceptance, the proposition which he had heretofore submitted in writing on July 15th, 1901, with the modifications, however, that this company shall pay to him forthwith in cash, the sums of money, which in said proposition were required to be paid on October 15th, 1901, . . . and that this company shall also assume and pay all obligations, which he, said Steinfeld, has incurred in conducting the negotiations and in making the sale of said mining claims and property to the Imperial Copper Company and keep him free and harmless from any and all expense and loss which may arise by reason of any claim or asserted claim, of any person whatsoever, for or on account of or arising out of or connected with the present sale and, negotiations or any past negotiation or transaction in regard to said mining claims or any of them. And particularly that this company shall assume and pay unto N. O. Murphy the commissions which he, said Steinfeld, agreed to pay to said Murphy, to wit, the sum'of $25,000, said agreement being made for and on behalf of this company and also shall keep him harmless from loss, damage or expense, by reason of the asserted claim of one J. M. Burnett for commission.
“Also that this company shall indemnify him against loss, damage and expense, by reason of his having guaranteed the titles to the mining claims sold or agreed to be sold to said Imperial Copper Company, as is set forth in the guarantee agreement heretofore submitted to this meeting. . . . He then submitted the agreement between this company, the said Mammoth Copper Company, and Albert Steinfeld, on this point, and also covering the matter of guarantee.
“After a full consideration the following resolutions were unanimously adopted, to wit:
“(1) ‘Resolved, that all of the acts of the president and secretary of this corporation, and all papers, agreements and deeds signed by them for or on behalf of this corporation in the matter of the negotiation and sale by this company’s property to the Imperial Copper Company, be, and the same hereby are, ratified, approved and confirmed.’
“(2) ‘Resolved, that the proposition of Albert Steinfeld as herewith submitted be, and the same hereby is accepted, and*235 that he, said Steinfeld, be forthwith paid by this corporation the sum of eighteen thousand one hundred and seventeen dollars ($18,117.00) and out of the first moneys received by this company upon the promissory notes of the Imperial Copper Company, he, said Steinfeld, as treasurer of this company, shall retain sufficient moneys to pay the amount necessary to be paid to Margaret Francis and Julius H. Volkert under the agreement with them aforesaid; and to pay to the assigns or legal representatives of Carl S. Neilson (he being now deceased) and to Mary Neilson, the amount necessary to be paid under the agreement with said Neilsons aforesaid; and, when said amounts respectively become due, to pay the same to the parties entitled thereto.’
“(3) 'Resolved, that Albert Steinfeld, as treasurer of this company, be and he is hereby authorized to pay N. O. Murphy whatever commissions may be coming to him.’
“(4) 'Resolved, that the agreement this day made by the president and secretary of the corporation with the Mammoth Copper Company and Albert Steinfeld, in rega,rd to the disposition of the proceeds of the sale this day made to the Imperial Copper Company, and indemnifying said Steinfeld, be, and the same is hereby ratified, approved, and confirmed.’
''(5) 'Resolved, that the president and secretary of this corporation be, and they are hereby authorized, empowered and directed, in such manner and form as they deem necessary or proper, to indemnify said Steinfeld, against all loss, damage and expense that may arise to him by reason of his having guaranteed the titles to the properties so sold, or agreed to be sold to the said Imperial Copper Company and that he, and they hereby are, authorized, empowered and directed to do or cause to be done all things, and to execute all papers, documents or other writings, which they deem necessary in the premises.’ ”
The figures in parentheses prefacing the paragraphs of the resolutions are not in the original minutes, but are placed there by me for convenience of reference. The agreement mentioned in paragraph numbered 4 is that set forth in the majority opinion. I concur in the opinion of the majority of the court, that this agreement was rescinded in its entirety, for the reasons stated. But the proposition of July 15, 1901, referred to in the first portion of the minutes quoted, was a
Therefore, while the findings of fact seem to refer to the agreement quoted in the opinion, as establishing the ownership of the proceeds of the sale in the company, the error is not material; the offer by Steinfeld, and its acceptance, effected on the same day as the execution of this indemnity agreement, the execution of which was but a partial fulfillment of the conditions attached by Steinfeld to the offer, in my opinion accomplished the adjustment of the ownership of those proceeds, and of the Neilson stock. To determine this fact, a retrial is unnecessary.
There appearing no other error in the record, the judgment should be affirmed.