94 P. 441 | Idaho | 1908
This action was commenced by tbe plaintiff, Peter Weber, as guardian ad litem of W. H. Watt, an incompetent, against tbe Della Mountain Mining Company,
“Plaintiff further alleges that on the date on which said contract and agreement was executed, to wit, on or about the 5th day of November, 1903, the said Watt was incapable of taking care of himself and mentally incompetent to manage his property or of knowing or realizing the consequences of his acts or of acting intelligently in relation to his business affairs or estate and never thereafter ratified, confirmed or in any manner approved the same.
“That subsequent to the date of said agreement and after said Rockwell had acquired the said 10,000 shares of stock thereunder, he, the said Rockwell, combined his holdings*409 of stock with those of sundry other stockholders in said mining company, particularly with the shares of stock held and owned by one Thomas Brennan, on which he had secured an option and authority to vote the same, and the stock of one Samuel Allen, thereby securing the control or ownership of a majority of the shares of stock in said Della Mountain Mining Company and the control of the operations and management of said company. ’ ’
Following these allegations, the complaint alleges that the mines had previously been operated by Watt at a great profit and without the necessity of levying assessments, but that immediately after this transaction and after the majority control of the corporation passed from the hands of Watt, the mines had been operated at a loss, and that one assessment had already been made by the directors of the corporation and paid by Watt, and that they were threatening to make further assessments, and “that after said defendant Rockwell secured control of said mines and the operation thereof, as and in the manner hereinbefore stated, he secured himself to be appointed manager of said mines at a salary of $250 per month to be paid by said Della Mountain Mining Company, and procured one F. B. Cross, an employee of said Rockwell, to be employed as superintendent at a salary of $150 per month, to be paid by said company, and otherwise to largely increase and multiply the cost and expense of operating said mines, while at the same time not taking, or endeavoring to take, sufficient ore from the said mines to meet the cost of operating the same,” etc.
It appears from the allegations of the complaint that upon receiving the first 10,000 shares of stock, Rockwell, together with the other stockholders, aside from Watt, held the controlling interest in the corporation, and if they voted their stock together could elect the directors and control the corporation. The plaintiff sought to have the contract between Watt and Rockwell decreed to be absolutely void and annulled and the stock returned to Watt and to have the collection of the assessment levied by the directors of the Della Mountain Mining Company enjoined and restrained. On filing the
The complaint is clearly insufficient as against a special demurrer in so far as it purports to state a cause of action against the Della Mountain Mining Company. On the former appeal from the injunction order, we held that it was sufficient on which to rest a temporary injunction pending further proceedings in the case, and at the same time refrained from expressing any opinion as to the merits of the demurrer which had been filed against it. The relief sought against the mining corporation is incidental to the main issue. It is sought to restrain the sale of the stock for the collection of the assessment. In order, however, to sustain the action against the company, and restrain it from proceeding to collect the assessment duly and regularly made by its board of directors, it is essential to state more definitely and with greater certainty than this complaint contains a cause of action against the company, or some unlawful, fraudulent or improper relation existing between its officers and the principal defendant, Rockwell. It would be necessary to in some way show by the complaint and the proofs that the assessment would never have been levied against the stock had it not been for the void transfer of this stock to Rockwell, and that Rockwell in some unlawful and wrongful manner controlled or influenced the board of directors to take this action.
It is likewise true that the necessity for an assessment on the capital stock of the corporation cannot be questioned by a stockholder. (10 Cyc. 487; Budd v. Multnomah St. R. Co., 15 Or. 413, 3 Am. St. Rep. 169, 15 Pac. 659.) In this case the plaintiff does not show that any change took place in the officers of the corporation subsequent to the transfer of the stock to Rockwell or on account thereof; nor does it show that any election of directors has ever taken place since that time, nor does it show that they have been under the control, in-
As to the sufficiency of the complaint as against Rockwell, a different question arises. While the complaint is, as we said on the former appeal, “meager and open to some objections,” still we are inclined to hold that it was sufficient for the purpose of charging that the transfer of the stock from Watt to Rockwell was void on the ground that Watt was insane at the time of making the alleged contract. As to whether that agreement was a contract of sale or of agency, we express no opinion here, for the reason that, as we view this case, the judgment must be reversed as to both defendants, and a new trial be granted, and since some of the evidence offered was improperly rejected, a somewhat different state of facts may be shown on the next trial. Touching the question as to the degree or extent of ineompetency or mental unsoundness on the part of the contracting party for or on account of which the contract may be avoided, we announced the rule to be followed in this state in the case of Ratliff v. Baltzer’s Admr., 13 Ida. 152, 89 Pac. 71. Should another trial take place, however, it will be necessary to determine whether the real contract was entered into on September 18th, or November 5th. All the evidence is before us on that question. The two agreements are in the record and all the circumstances under which they were made and executed are presented. The only changes whatever made by the agreement of November 5th were as follows: First. Under the agreement of September 18th, Rockwell was to make a payment of $9,000 at the time he received the first 10,000 shares of stock, and executed his promissory notes for $9,000 each
On the trial of the case the main question of fact which arose was as to the mental competency of Watt at the time of making and entering into these agreements or contracts. The plaintiff introduced a number of witnesses who testified as to Watt’s mental condition at the time these transactions were had and at various times prior and subsequent thereto. On the part of defendants, the defendant Rockwell, L. L. Sullivan and F. B. Cross were called, and it was shown in substance by each of them that they had known Watt continuously for a number of years, and that they were acquainted with him during the times mentioned by the witnesses of the plaintiff, and that they were present at the time of these transactions and were familiar with his demeanor and conduct. They were thereupon asked if, judging from his aets and conduct, and all that they observed in other respects, they believed Watt to be mentally competent, sound and sane at the time of these several transactions. The court refused to allow any of these witnesses to answer the questions. These rulings are assigned as error. It is too well settled law to require consideration
It was error for the court to refuse to allow these witnesses to answer the questions and testify and give their opinions as to the sanity or insanity of Watt and of his mental condition at the times in question.
Aside from the action of the court in overruling the mining company’s demurrer, the most serious and the gravest error committed in this ease, perhaps, was the ruling of the court in refusing to allow Rockwell to explain the affidavit that was introduced by the plaintiff against him. When the action was first instituted in the lower court, and after the issuance of the temporary restraining order, Rockwell filed an affidavit which was considered on the application for an order dissolving the injunction. That affidavit is set out in full in the previous decision. (Weber v. Della Mountain Min. Co., 11 Ida. 264, 81 Pac. 931.) After the plaintiff had introduced his evidence in the trial court, the defendants moved for a nonsuit, and it seems that the court intimated that the motion was well taken, whereupon the plaintiff moved to re'open
Our consideration of the sufficiency of the complaint as against the Della Mountain Mining Company disposes of the assignments of error with reference to the findings of fact made by the court, and renders it unnecessary for us to consider them further. We have considered all the questions presented in this record that are likely to arise on another trial of the case. The judgment must be reversed, and it is so ordered. The cause is remanded to the trial court with direction to sustain the demurrer by the Della Mountain Mining Company, and take such further action as may be proper and in harmony with the views herein expressed. Costs awarded in favor of appellant.