100 P. 784 | Ariz. | 1909
This is the second appeal which has been taken in this canse to this court. We reversed the case on the first appeal upon the ground that the judgment which was entered in the court below was not sustained by the findings. 10 Ariz. 221, 86 Pac. 7. The cause was remanded for a new trial. Upon the second trial, by stipulation of counsel, the case was submitted upon the evidence put in upon the first trial, except that certain testimony, deemed by the parties immaterial under the issues, was eliminated. As this record is voluminous, and as both parties have appealed from the judgment, a full statement of the facts is made necessary for a complete understanding of the questions presented for our determination.
Louis Zeckendorf, as a stockholder of the Silver Bell Copper Company and in its behalf, brought this suit against Albert Steinfeld, R. K. Shelton, and J. N. Curtis, individually and as officers and directors of said company, and against the Mammoth Copper Company, to recover for said Silver Bell Copper Company the sum of $838,710.15 and three hundred shares of the stock of the latter which he alleged had been wrongfully appropriated by the defendant Steinfeld, and to be in his possession, and which rightfully was the property of the said company; that this wrongful appropriation was made through the aid and assistance of the defendants Shelton & Curtis, as directors of the Silver Bell Copper Company. The plaintiff prayed for an accounting, the return of the money and shares of stock alleged to have been thus appropriated, and for costs, attorney’s fees, and the appointment of a receiver. The answer of the defendants contained a general and specific denial of the wrongdoing complained of, and set up that the money and shares of stock sued for were the property of Steinfeld and rightfully in his possession; that this money represented in part the proceeds from a sale of mining property which had been purchased by him and held in his own name, and which had been sold in conjunction with property belonging to the Silver Bell Copper Company; that the remainder of the money had been rightfully paid Steinfeld in the way of dividends upon the shares of stock of the Silver Bell Copper Company owned by him and standing in his name,
The court below gave judgment for the plaintiff for the sum of $20,800, being the amount of the dividends declared upon said three hundred shares of stock after deducting a certain sum paid out by Steinfeld in the purchase of the same from the original owner, and denied him any relief upon the cause of ’ action set up in the complaint based upon the alleged misappropriation of the proceeds of the sale of the mining property claimed by Steinfeld as his individual property, the title to which was in his name. The court appointed a receiver to disburse the money thus adjudged to be wrongfully appropriated among the stockholders of the Silver Bell Copper Company and to close up the affairs of the latter company. From this judgment both parties have appealed.
The court found the facts to be as follows: From 1878, and during all the times herein mentioned, the plaintiff, Louis Zeckendorf, and the defendant Albert Steinfeld were partners engaged in the mercantile business in Tucson under the name of L. Zeckendorf & Co. The defendant Steinfeld, under the terms of the partnership, was the active manager and in the control of the business of the firm. The plaintiff was a resident of the city of New York, and only occasionally visited the territory. As ancillary to their business, the firm became more or less interested in various mining enterprises. A property situated in Pima county, known as the “Old Boot Mine,” prior to January, 1899, was held by Steinfeld as trustee for William Zeckendorf and his wife, Julia Zeckendorf. One Carl Nielsen had been given a contract by Steinfeld for working and operating said property on a royalty, and had become indebted to the firm of L. Zeckendorf & Co. in the operation of the mine. On the last-mentioned date, in order to protect the firm on account of this indebtedness, Steinfeld caused a corporation to be formed under the name of the “Nielsen Mining and Smelting Company,” to which was transferred Nielsen’s interest under his contract, the machinery and other personal property owned by him and used in its operation, in consideration of' all of its capital stock and the assumption by the corporation of his debts to L. Zeckendorf & Co. At the time
Adjacent to and surrounding the Old Boot mine was a group of mining claims known as the “English group,” which was owned, at the time of the organization of the corporation, by residents of England. On the 1st of January, 1900, these mining claims were relocated by one Francis and one Volkert, under the claim that the title of the English owners had become forfeited. Steinfeld, through Curtis, and his relations to the corporation and from personal inspection, learned that the English group contained ore bodies of great value, and that the ore body in the Old Boot mine extended into the ground embraced in the English group, and was advised by Curtis that it was desirable that the title to the English group should be acquired so that the two properties might be held and sold as one group, thereby increasing the value of the company’s property. Early in the yéar 1900 Steinfeld became dissatisfied with Nielsen’s management of the property, and deter
The court found that Steinfeld’s purposes in closing the mine were to effect a purchase from Nielsen of the three hundred shares of stock held, by him, and also that the English group of mines might be purchased from the English owners, as well as the Francis-Volkert title, at a nominal or small sum; that although the mine was paying, and at the time worked at a profit, its closing down was to prevent the owners of the English group from obtaining knowledge that the ore body of the Old Boot property did and would extend into the ground covered by the English group.
At the time of the closing down of the Old Boot mine, the Silver Bell Copper Company was indebted to L. Zeckendorf & Co. about $30,000 in excess of the value of matte and bullion held by the latter as security for the company’s indebtedness. On May 16, 1900, Steinfeld purchased the title held by Francis and Volkert to the English group; at the same time he organized the Mammoth Copper Company for the purpose of taking over this title. The stock of this company was in fact owned and held by Steinfeld individually. On June 29, 1900, an agreement was entered into by and between Steinfeld and the Silver Bell Copper Company, as parties of the first part, and Nielsen and his wife, as parties of the second part, whereby the latter was to sell to the former the three hundred shares of stock belonging to Nielsen, together with an interest in two mining claims adjoining the Old Boot, in consideration of $2,000 to be paid Nielsen in cash, and the further sum of $10,-000 which was to be paid out of the proceeds of a sale of said mine. After this agreement was executed the three hundred shares of stock were thereupon transferred on the books of the company to Steinfeld as trustee. In December, 1900, Stein-feld went to England and there acquired the title to the English group from the English owners, and took the title in his own name. He paid for this title with his own money.
The court found that Steinfeld, in making the purchases of the Francis-Volkert title and of the English title to the English group, intended that the property should be his own and not the property of the Silver Bell Copper Company, but
“This agreement made this 20th day of May, 1903, between the Silver Bell Copper Company, a corporation organized and*258 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 Phoenix National Bank, of Phoenix, Ariz.; and
“Whereas, the parties hereto desire to settle and determine as between themselves, what disposition shall be made of the proceeds of the sale; and
“Whereas, the said Albert Steinfeld has assumed certain obligations with the said Imperial Copper Company, as more fully appears in the various agreements heretofore entered into by him in making this sale, and particularly in a certain guarantee agreement, wherein, amongst other things said Stein-feld guarantees the title to certain mining claims so sold or agreed to be sold, and the parties of the first part desire to indemnify him against loss by reason of any of the said matters or things so done by him.
“Now, therefore, in consideration of the premises, and of the sum of one dollar ($1.00) by each of the parties hereto to the other in hand paid, receipt whereof is hereby acknowledged, it is hereby mutually agreed that the purchase price paid and to be paid upon the sale, shall belong to and be the property of the said Silver Bell Copper Company.
“And it is further agreed that the four promissory notes of one hundred thousand dollars ($100,000.00) each, this day executed by the Imperial Copper Company, to the Silver Bell Copper Company, upon said sale, as well as the proceeds of said promissory notes when collected, shall be paid to the said Albert Steinfeld, as trustee, and as security for, and indemnity against loss, damage or expense which may arise to him for or out of, or by reason of any and all obligations and liabilities which he has assumed with the said Imperial Copper Company, or any other person whatsoever.
“And it is further agreed that no dividend shall be declared by the said Silver Bell Copper Company until the stockholders*259 of said company shall first have fully indemnified said Albert Steinfeld against loss, which might arise to him in the future, from or on account of any such obligations or liabilities so assumed by him. ’ ’
After the agreement of sale had been executed, and on the same day, the board of directors of the Silver Bell Copper Company met to take action upon the matter of the sale and the ratification of the above agreement. The minutes of the meeting recite that the president reported the fact of the agreement of sale and the terms thereof, and also of the agreement between the Silver Bell Copper Company, Albert Stein-feld, and the Mammoth Copper Company guaranteeing Steinfeld from any loss by virtue of his guaranty agreement with the Imperial Copper Company. They further recite that Steinfeld had again submitted for acceptance the proposition which had theretofore been submitted by him on the fifteenth day of July, 1901, and later extended until September 15, 1902, with the additional provisions that the company should assume and pay a commission which Steinfeld had agreed to pay for negotiating the sale to the Imperial Copper Company and should be indemnified against loss by reason of another asserted claim for a commission; and, further, that the company should indemnify him against loss, damage, or expense by reason of his having guaranteed the titles to the mines sold to the Imperial Copper Company as set forth in the guaranty agreement between the Silver Bell Copper Company, the Mammoth Copper Company, and Steinfeld. The minutes further recite that thereupon a resolution was adopted accepting Steinfeld’s proposition and ratifying, approving, and confirming the sale to the Imperial Copper Company and the agreement of indemnity made by the company with the Mammoth Copper Company and Steinfeld. After the execution of these agreements and the ratification of the same by the board- of directors the proceeds of the sale, including the promissory notes, were turned over to Steinfeld under the agreement and by him deposited in a bank in San Francisco, except the sum of $51,500, which had been attached in a suit against the Silver Bell Copper Company which was filed after the sale had been made to the Imperial Copper Company. The plaintiff, Zeekendorf, being dissatisfied with the disposition made of the proceeds of the sale, brought a suit in San
The court, in addition to these facts, found that all the money paid out by Steinfeld in the purchase of the Francis-Yolkert title and the English title to the English group of mines, and the $2,000 paid in the purchase of the three hundred shares of stock, was the personal money of Steinfeld, and that at no time prior to the twentieth day of May, 1903, did the Silver Bell Copper Company offer or agree to repay Stein-feld any of said money, or to assume any obligation which Steinfeld had incurred in the purchase of the Francis-Volkert title.
As we have stated, both parties have appealed from the judgment.
We will consider first Zeekendorf’s appeal. His essential grievance is in the refusal of the trial court to grant any relief upon the cause of action set forth in his complaint based upon the claim that Steinfeld, at the time of the sale to the Imperial Copper Company, held the legal title to the English group of mines as the trustee of the Silver Bell Copper Company. Counsel for appellant Zeckendorf present' two views of the case bearing upon this point. They urge, first, that -under the facts and circumstances surrounding the purchase of the English group of mines by Steinfeld, and from his expressed intention at the time, he should be held to be a trustee ex maleficio from the time of the purchase; they also urge that if he was not a trustee from the time of the purchase he became such under the agreement of May 20, 1903, and the resolution of the directors of the Silver Bell Copper Company of that date, accepting his proffer to renew the option of July 15, 1901. We will consider these in their order.
The law is that one may not purchase and hold, as his own, property which he is in duty bound to purchase and hold for another. Winn v. Dillon, 27 Miss. 494; Davis v. Hamlin, 108 Ill. 39, 48 Am. Rep. 541; Gardner v. Ogden, 22 N. Y. 327, 78 Am. Dec. 192. This rule applies to officers and directors of a corporation, as to other persons sustaining fiduciary relations to others. Whether in any case an officer of a corporation is in duty bound to purchase property for the corporation, or to
It is further urged that Steinfeld’s action in causing the closing down of the Old Boot mine prior to his purchase of the English group was unjustifiable, and an injury to the company, and was intended by him to make it easy to purchase the English group of mines and to affect the price for which the property could be bought. These arguments would be forceful if it could be determined from the facts that the closing down of the Old Boot mine prevented the corporation from obtaining the English group, or in any way so changed the relations of the corporation to the owners of the English group as to hamper or impede the corporation in any plan or purpose it had in relation thereto. Further, it is not apparent, either in the findings or elsewhere in the record, that the closing down of the Old Boot mine did, as a matter of fact, have any influence over the minds of the owners of the English group to induce them to sell to Steinfeld, or had any influence over the price for which they sold, even if we should regard either of these matters as bearing upon the duty of Steinfeld to the Silver Bell Copper Company in the matter of the purchase. Giving due weight to the facts connected with the purchase of the English group by Steinfeld, and the relations of Stein-feld to the company at the time, it cannot be said as a matter of law that Steinfeld in purchasing the property for himself violated any duty he owed to the Silver Bell Copper Company. It follows, therefore, that the finding of the trial court is in this regard fully sustained.
The court found that Steinfeld, before purchasing the English group of mines, had at different times written Zeck-endorf, his partner, that it was very desirable that the English group should be purchased so that it could be joined with the Old Boot property and the. whole sold as one group and one property, and that it was his intention to acquire the English
We find no ground for the application of the doctrine of equitable estoppel to this case. It is true that the Silver Bell Copper Company went into possession of the English group after its purchase by Steinfeld and was given by the latter the right of working the same and treating any ores that might be taken from the same in the company’s smelter. It it likewise true that maps and reports were made showing the
The facts found by the court show that the contract of May 20, 1903, between the Silver Bell Copper Company and Stein-feld and the Mammoth Copper Company, in which Steinfeld’s renewal of his option of July 15, 1901, with certain modifications, was accepted, among other provisions, was rescinded by the stockholders of the company, with the acquiescence of Steinfeld and the Mammoth Copper Company, on the twenty-sixth day of December, 1903. Upon the first hearing of this case we held that this rescission operated to put. the parties where they were before the contract was made. As the option to take over the English group given by Steinfeld had never been exercised by the company prior to May 20, 1903, and was only exercised then through said contract, the rescission of the latter left the parties as though the contract had never been entered into. On the record, therefore, there was no
Counsel for appellants urge that, without regard to the question of title to tbe English group, tbe plaintiff is entitled on behalf of tbe company to recover possession of tbe whole of tbe money paid over to Steinfeld, for tbe reason that tbe resolution of tbe board of directors, on January 16, 1904, under which tbe money and note were paid over to Steinfeld, was voidable if not void, at tbe suit of any party interested therein. Tbe reason given why this resolution is at least voidable is that Steinfeld was at the time a director of tbe Silver Bell Copper Company and voted for tbe resolution, and that one, if not both, of the other directors was under bis domination and control. Assuming tbe facts to be as thus urged, yet it does not follow that the acts done under tbe resolution should be declared null and void, and tbe money paid over to Stein-feld be required to be again placed in tbe treasury of tbe company, unless there be some unfairness in tbe transaction apart from tbe circumstances under which tbe resolution was made. Twin Lick Co. v. Marbury, 91 U. S. 587, 23 L. Ed. 328. Therefore, before Steinfeld should be required to pay back into tbe treasury of tbe company tbe money and note turned over to him, it should appear that be was either paid an undue amount, or that no distribution of tbe proceeds of tbe sale should at tbe time, in fairness to tbe company, have been made. There is no showing that tbe amount paid Steinfeld under this resolution as bis part of tbe proceeds of tbe sale due to him as tbe owner of tbe English group of mines was in excess of what be should have been paid, nor was it shown that tbe distribution was prematurely made. Tbe pleadings do not raise this issue- on tbe contrary, by stipulation of counsel, all testimony which bad been put in upon tbe first trial as to'the relative values of tbe Old Boot and English group of mines was eliminated upon tbe ground that tbe complaint proffered no issue as to such values. ■
We come now to tbe question raised by tbe appellees under their cross-appeal, and that is, Was Steinfeld a trustee of tbe Silver Bell Copper Company for tbe three hundred shares of stock purchased from Nielsen? We think tbe facts fairly
The action of the trial court in appointing a receiver under the circumstances is not subject to just criticism. It appears that the Silver Bell Copper Company had ceased to do business, and its affairs were ready to be closed. It is not contended that any different disposition of the money found to be due from Steinfeld should or would be made by the company than is to be made by the receiver, namely, its distribution among the stockholders of the Silver Bell Copper Company.
Counsel for appellant Zeckendorf complain of the amount allowed them by the trial court as attorneys for the plaintiff. As this was a matter within the sound discretion of the court, and as we cannot say as a matter of law that this discretion was abused, we may not modify or change the judgment in this behalf.
The judgment is affirmed.