GROSSCUP, Circuit Judge,
after stating the facts as above, delivered the opinion:
Mining enterprises are essentially different from business enterprises generally. In a mining enterprise, initially, the visible asset usually is a little tract of ground staked out, and worth nothing except for what may be found underneath. What may be found underneath is a prospect only; so that the mining enterprise that begins with such a tract of ground is, to a large degree, a legalized gamble— legal and laudable because it is the only way in which useful minerals can be brought to the uses of civilization.
As the enterprise is different from enterprises generally, so its financing must be different. Those who take the largest chances are those in initially; they are, therefore, entitled to the largest reward in case the prospect materializes. Those who come in when ore is reached, its extent and paying qualities still uncertain, take a lesser chance; they are entitled, therefore, to a lesser reward. And those who come in when the quantity and quality of the ore is substantially apparent, take a still lesser chance — a chance more nearly measured by business ventures generally — and are therefore entitled to a still smaller reward upon the money advanced. The whole business of mining enterprise is compelled to accommodate itself to these practical considerations. Of course the mine, as an investment enterprise, continues to vary from time to time, which often makes it necessary that during its whole history there should be pliability in the method of raising money to finance it.
These practical considerations, and the pliability of financing to meet them, can be met either by allowing the more speculative issues of stock to be made at less than par and non-assessable (for non-assessability in that case would be essential), increasing the price as the speculative feature of the enterprise disappears, or by issuing the stock initially at par, increasing the price to figures beyond par as the ■enterprise proceeds. But which method shall be used, is a matter of policy for each State to decide for itself.
That Colorado differentiates between the incorporation of enterprises of this kind and general enterprises, clearly appears from its statutes. By the laws of that State, mining companies are put upon a basis distinctively their own. Whatever interpretation, therefore, is to be put upon the Colorado law respecting corporations generally, as to their stock being fully paid, either in cash or property, the value of which has been fixed in good faith, and whatever rights remain to •creditors of such corporations when their stock has not been fully paid, is not determinative of the same questions in Colorado mining companies. The policy of Colorado, as expressed in its statutes, respecting mining companies, must be derived from the interpretation of the statutes that relate to such companies only.
The statutes hereinbefore set out clearly show that the policy of Colorado, respecting mining companies, contemplates corporations (a) issuing “full paid” stock but assessable; or (b) “full paid” stock non-assessable; or (c) “full paid” stock, part of which should be non-assessable until the other' part had been fully assessed up to its par [981] value. Now this carries with it, it seems to us, the purpose that the “full paid” stock, whether assessable or non-assessable, or partly assessable and partly non-assessable, shall be less than par — in other words that that is the alternative method of financing above indicated, that Colorado has adopted — for there is nothing in the Colorado statutes that provides for, permits, or in any way looks to asscssability of stock paid up to par; and it is only in the light of this interpretation that any meaning can be placed upon the provision for stock, part of which is non-assessable “until the balance or whole amount of the capital stock shall have been assessed to the par value thereof and fully paid,” as provided in section 582. And that this means “assessable” or “non-assessable” in the sense of full final payment, as distinguished from merely the method whereby corporations generally obtain eventual full payment of their stock, is evidenced by the fact that it is only in mining corporations that there is any provision that “any company may issue all its stock assessable or non-assessable,” or that the certificates of stock “shall have plainly printed on the face thereof assessable or non-assessable” — provisions wholly inapplicable to assessment as a mere method of eventual full payment. No other interpretation of the Colorado statutes, relating to mining companies, seems to us to be open; and in the absence of interpretation by the Colorado courts of last resort (no Colorado decision of any kind upon this point has been called to our attention), we adopt this interpretation.
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GROSSCUP, Circuit Judge,
after stating the facts as above, delivered the opinion:
Mining enterprises are essentially different from business enterprises generally. In a mining enterprise, initially, the visible asset usually is a little tract of ground staked out, and worth nothing except for what may be found underneath. What may be found underneath is a prospect only; so that the mining enterprise that begins with such a tract of ground is, to a large degree, a legalized gamble— legal and laudable because it is the only way in which useful minerals can be brought to the uses of civilization.
As the enterprise is different from enterprises generally, so its financing must be different. Those who take the largest chances are those in initially; they are, therefore, entitled to the largest reward in case the prospect materializes. Those who come in when ore is reached, its extent and paying qualities still uncertain, take a lesser chance; they are entitled, therefore, to a lesser reward. And those who come in when the quantity and quality of the ore is substantially apparent, take a still lesser chance — a chance more nearly measured by business ventures generally — and are therefore entitled to a still smaller reward upon the money advanced. The whole business of mining enterprise is compelled to accommodate itself to these practical considerations. Of course the mine, as an investment enterprise, continues to vary from time to time, which often makes it necessary that during its whole history there should be pliability in the method of raising money to finance it.
These practical considerations, and the pliability of financing to meet them, can be met either by allowing the more speculative issues of stock to be made at less than par and non-assessable (for non-assessability in that case would be essential), increasing the price as the speculative feature of the enterprise disappears, or by issuing the stock initially at par, increasing the price to figures beyond par as the ■enterprise proceeds. But which method shall be used, is a matter of policy for each State to decide for itself.
That Colorado differentiates between the incorporation of enterprises of this kind and general enterprises, clearly appears from its statutes. By the laws of that State, mining companies are put upon a basis distinctively their own. Whatever interpretation, therefore, is to be put upon the Colorado law respecting corporations generally, as to their stock being fully paid, either in cash or property, the value of which has been fixed in good faith, and whatever rights remain to •creditors of such corporations when their stock has not been fully paid, is not determinative of the same questions in Colorado mining companies. The policy of Colorado, as expressed in its statutes, respecting mining companies, must be derived from the interpretation of the statutes that relate to such companies only.
The statutes hereinbefore set out clearly show that the policy of Colorado, respecting mining companies, contemplates corporations (a) issuing “full paid” stock but assessable; or (b) “full paid” stock non-assessable; or (c) “full paid” stock, part of which should be non-assessable until the other' part had been fully assessed up to its par [981] value. Now this carries with it, it seems to us, the purpose that the “full paid” stock, whether assessable or non-assessable, or partly assessable and partly non-assessable, shall be less than par — in other words that that is the alternative method of financing above indicated, that Colorado has adopted — for there is nothing in the Colorado statutes that provides for, permits, or in any way looks to asscssability of stock paid up to par; and it is only in the light of this interpretation that any meaning can be placed upon the provision for stock, part of which is non-assessable “until the balance or whole amount of the capital stock shall have been assessed to the par value thereof and fully paid,” as provided in section 582. And that this means “assessable” or “non-assessable” in the sense of full final payment, as distinguished from merely the method whereby corporations generally obtain eventual full payment of their stock, is evidenced by the fact that it is only in mining corporations that there is any provision that “any company may issue all its stock assessable or non-assessable,” or that the certificates of stock “shall have plainly printed on the face thereof assessable or non-assessable” — provisions wholly inapplicable to assessment as a mere method of eventual full payment. No other interpretation of the Colorado statutes, relating to mining companies, seems to us to be open; and in the absence of interpretation by the Colorado courts of last resort (no Colorado decision of any kind upon this point has been called to our attention), we adopt this interpretation.
The appellant was dealing with a mining corporation thus organized. Whether the appellant had notice or not (the Master finds that it had notice) that the stock issued to the appellee stockholders had been issued at less than par, seems of little consequence, for appellant did have notice of the laws of Colorado authorizing non-assessable mining stock (the corporation was a Colorado corporation), and that the stock issued to these stockholders was of that character. There is no room, therefore, for applying to appellant the doctrine that a creditor, dealing with a corporation, has a right to rely upon the assumption that the nominal capital stock of the Company expresses the amount paid in in property or otherwise; appellant was bound to know that, under the law, par value need not be paid in where the stock was made on its face, and by the charter of the company, non-assessable. This view of this case takes it out of the rules laid down in Handley v. Stutz, 139 U. S. 417, 11 Sup. Ct. 530, 35 L. Ed. 227; Richardson v. Green, 133 U. S. 30, 10 Sup. Ct. 280, 33 L. Ed. 516; and Scovill v. Thayer, 105 U. S. 143, 26 L. Ed. 968, and the other cases cited by appellant’s counsel, for those cases were interpretative of statutes entirely different from this Colorado statute relating to mining companies. The Kentucky statute, for instance, in Handley v. Stutz, provided that nothing in the act conferring corporate franchises “shall exempt the stockholders of any corporation from individual liability to the amount of the unpaid instalments on stock owned by them.” “The stock of a corporation” says the Court (the Court was speaking of the Kentucky corporation) “is supposed to stand in the place of actual property of substantial value, and as [982] being a convenient method of representing the interest of each stockholder in such property, and to the extent to which it fails to represent such value it is either a deception and fraud upon the public, or an evidence that the original value of the corporate property has become depreciated. The market value of such shares rises with an increase in the value of the corporate assets, and falls in case of loss or misfortune, whereby the value of such assets is impaired. And the increase of value of such stock is taken to represent either an appreciation in value of the company’s property beyond the par value of the original shares, or so much money paid to the corporation as is represented by such shares.” This language is wholly inapplicable to a mining venture, as contemplated by the Colorado laws relating to mining corporations; and it makes unessential, also, the principle underlying, the cases thus cited “that the capital stock of a corporation, when it becomes insolvent, is in law assets of the corporation to be appropriated to the payment of its debts.” For unless there is something due from these appellee stockholders upon their capital stock, under the Colorado statutes, there is no occasion for the application of this principle.
The decree appealed from is affirmed.