Anderson v. War Eagle Consolidated Mining Co.

72 P. 671, 8 Idaho 789, 1903 Ida. LEXIS 2

• Court: Idaho Supreme Court
• Decided: January 27, 1903
• Status: Published

Opinions

STOCKSLAG-ER, J.

— Appellant commenced his action in the trial court to recover on a certain hank cheek purporting to be the check of the Twin Springs Placer Company, alleging: That defendant is a Connecticut corporation, and that the Twin Springs Placer Company is a West Virginia corporation. That the defendant company was authorized by the laws of Connecticut to consolidate with other companies engaged in like business as said defendant, and that by virtue of and under the authority of the laws of Connecticut defendant company did consolidate with the Twin Springs Company, and absorbed tbe same. That defendant company was organized, among other things, for the purpose of purchasing, acquiring, holding, leasing, and operating mines, construction and operation of flumes, the purchase of stock or other securities of other corporations engaged in like business. That by virtue of the powers vested as aforesaid in defendant company, it acquired and became the owner of all the stock and all the property belonging to and owned by the Twin Springs Placer Company, situated in the state of Idaho, took possession of the property, and commenced the operation thereof, and has since about the 10th of January, 1900, been in the open, actual, and notorious possession of and operating the property theretofore in the possession of and operated by the Twin Springs Placer Company. That by reason of the acquisition of all the real and personal properties and the stock of the said Twin Springs Placer Company by said War Eagle Company said Twin Springs Placer Company became consolidated with, merged and absorbed into, the defendant company under the name of the War Eagle Consolidated Mining Company, which said company is now the owner of and in the possession of all the property, holdings, and stock heretofore owned -and claimed by the Twin Springs Company. That prior to the acquisition of the stock and properties of the Twin Springs Placer Company by defendant company said Twin Springs Company was a corporation duly organized in the state of West Virginia, and as such was doing business acquiring real and personal property in Idaho; was the owner of and operating mines situated in the state of Idaho, which said property is now owned, managed, and controlled by defendant company. That on the eighth day of March, 1900, at Boise, Idaho, said Twin Springs Placer Company, by the general manager, E. J. Anderson, made its certain check in writing, payable to plaintiff, to wit:

“Boise, Idaho, March 8th, 1900.

“Twin Springs Placer Company.

“Pay to the order of J. M. Anderson $1338.48, thirteen hundred and thirty-eight and 48/100 dollars.

“TWIN SPEINGS PLACEE CO., .

“By E. J. ANDEESON.

:<The Capital State Bank, Boise, Idaho.”

That at the time of making and .delivery of said check defendant company had entered into actual, open, and exclusive possession of all property within the state of Idaho, theretofore owned and controlled by the said Twin Springs Placer Com-, pany, and was managing and operating the same under claim of title thereto, and had assumed all the debts due or outstanding against the said Twin Springs Placer Company. That said check as aforesaid was on the 29th of May, 1900, duly presented to the said Capital State Bank of Boise for payment, but was not paid by defendant company, or at all. That due notice of nonpayment was given defendant company. That said defendant company has not paid said check, nor any part thereof. Then follows prayer for judgment for the sum of $1,338.48, with interest from 29th of May, 1900, and costs of suit.

The answer admits that defendant is a corporation as alleged. Denies that defendant company was authorized by the laws of Connecticut, or at all, to consolidate with other companies or corporations in any manner, or at all. Denies that toy virtue of or under authority of the laws of Connecticut, or at all, defendant did at any time consolidate with the Twin Springs Placer Company, or absorb the same. Denies that defendant was organized to operate, acquire, or own properties in connection with other parties or corporations, or to purchase stock or other securities of other corporations engaged in like business. Denies that defendant at any time, or at all, became the owner of all the stock or all or any of the property belonging to or owned by the Twin Springs Placer Company, or that it took or held possession of any property belonging to said company, or managed or operated the same in any manner other than as hereinafter specifically set forth. Denies that by virtue of any authority or acts or in any manner it ever consolidated with the Twin Springs Placer Company, or that the Twin Springs Placer Company was merged or absorbed into defendant company, or that there was ever any consolidation or merger in any manner between the War Eagle Consolidated Mining Company and the Twin Springs Placer Company, or that the War Eagle Consolidated Mining Company is now, or was at any time, the owner or in possession of all or any of the property or all or any of the stock of the Twin Springs Placer Company “other than as hereinafter specifically set forth.” Admits the Twin Springs Placer Company was and is a corporation dnlyj organized, etc., under the laws of West Virginia, and denies that it has ever been consolidated with the War Eagle Consolidated Mining Company, or merged or absorbed into the same. Denies that the property of the Twin Springs Placer Company is now owned, managed, or controlled by defendant company, “other than as hereinafter specifically set forth.” For want of information, knowledge, or belief, denies the execution and delivery of the check to plaintiff. Denies all the other allegations of the complaint, and on information and belief alleges that the Twin Springs Placer Company was not upon the eighth day of March, 1900, or at all, indebted to J. M. Anderson in the sum of $1,338.48, or in any sum whatsoever; and further alleges “that said check was given wholly without authority from said defendant company, and without any consideration of any nature or kind. Further answering, alleges that upon the fifth day of December, 1900, it purchased of the Twin Springs Placer Company certain properties for a valuable consideration, then and there paid, and that all the property formerly owned by the Twin Springs Placer Company now held cr owned by the War Eagle Consolidated Company was by virtue of said purchase, and that at the time of said purchase, to wit, December 5, 1900, the said Twin Springs Placer Company was not indebted to J. M. Anderson in any sum whatsoever; and the defendant further alleges that in no other respect has it owned or controlled or been in possession of any of the property formerly belonging to the Twin Springs Placer Company. Complaint and answer were verified.

Owing to the condition in which this case comes to this court, and the conclusions we have reached, we have deemed it proper to copy the pleadings almost entirely as they appear in the record. It will be seen that this is an action at law, as shown by the complaint, and was so treated in the trial court, by all parties to the action, and down to the time appellant filed his reply brief in this court. The findings of the court are as follows:

First and second find that defendant and the Twin Springs Placer Company are corporations, as shown by the pleadings; that R. J. Anderson was at all times mentioned in the comr plaint general manager of the Twin Springs Placer Company, which was organized about January 26, 1897.

Third shows the purpose for which defendant was organized to be to purchase, acquire, hold, and lease mines, timber and/ agricultural lands, the operation of mines, development and use of water or electrical power, the construction and operation of drainage or irrigation canals, flumes, and tunnels for the operation of the property of this corporation, or in connection with the properties, owned by other parties or corporations, or the construction of canals, flumes, or tunnels for the supply of water or electric lights, or domestic or corporate purposes, the construction, operation, and management of smelters, assaying and refining works, mills, foundries, factories, and stores engaged in the manufacture of any product.

Fourth sets up the check in full upon which this action is based.

Fifth finds that the check was not presented to the Capital State Bank for payment until the twenty-eighth day of May, 1900, and payment was not made.

Sixth finds that afterward plaintiff went to R. J. Anderson, general manager of defendant, and called his attention to the fact that said check had not been paid; that the residence of plaintiff from the time he received the check until it was presented for payment was in Boise City, and the bank where it was made payable was also in Boise City; that no notice of the nonpayment of said check had ever been given to the Twin Springs Placer Company.

Seventh finds that upon November 19, 1900, the board of directors of the War Eagle Consolidated Mining Company passed a resolution, whereby, under the terms of its contract with R. J. Anderson, it became the owner of certain obligations and evidences of indebtedness wherein the Twin Springs Placer Company was the obligor, amounting to $262,100, with accrued interest. Defendant also became the owner of nearly all the capital stock of said Twin Springs Placer Company, amounting at par to $1,599,910. That said Twin Springs Placer Company offered to grant and convey to defendant all the placer claims, millsites, water rights, ditches, etc., and any other real estate or interest therein situate in the state of Idaho, owned and controlled hy it; also to assign to defendant all its personal property used in connection with its mining operations in the state of Idaho, in consideration of having surrendered to it all of its aforesaid ohligations and evidences of indebtedness, as well as all its capital stock. That the officers of the company, deeming it to he the best interests that such offer should he accepted, duly transferred said evidence of indebtedness and surrendered the capital stock of said Twin Springs Placer Company, receiving in exchange therefor a deed for all the real estate and interest therein; also a bill of sale for all the personal property situated in Idaho belonging to said Twin Springs Placer Company. “Therefore, be it resolved, that the aforesaid action of the officers of defendant company be, and hereby 'is, ratified and confirmed.” That the aggregate amount of such ohligations purchased as aforesaid was $262,100. That the check sued upon in this action was nowhere referred to in said schedule.

Eighth finds that upon the thirtieth day of November, 1900, the Twin Springs Placer Company, by E. V. Douglass, executed and delivered to defendant a certain deed reciting a consideration of $36,000, by the terms of which said grantor granted, quitclaimed, etc., the Sea Gull placer mining claim and a large number of others enumerated in the finding, together with-water rights, ditches, etc. That said deed had attached to it a receipt, to wit:

“Received of the War Eagle Consolidated Mining Company, $36,000, full consideration herein mentioned in the obligations of this company, in accordance with the terms of a resolution passed November 14th, A. D. 1900, by the board of directors of this company.

“TWIN SPRINGS PLACER COMPANY,

“By F. S. LEWIS,

“Treasurer.”

Ninth finds, with reference to a deed by the Twin Springs Placer Company to defendant, that for a consideration of one dollar it sold a certain portion of the siphon and bridge across Middle Boise river, used in conveying water from Sheep creek across the river, together with flumes, etc.

Tenth finds that the evidence fails to show the value of the property deeded by the Twin Springs Placer Company to the War Eagle Consolidated Mining Company. Fails to show whether or not the Twin Springs Placer Company owned other property than that conveyed by the deed to the War Eagle Consolidated Mining Company. Fails to show what assets the Twin Springs Placer Company had after said deeds were executed; that the Twin Springs Placer Company was merged in-the War Eagle Consolidated Mining Company, or consolidated therewith. That there is no evidence that.the transfer from the Twin Springs Placer Company to the War Eagle Consolidated Mining Company of property above mentioned was fraudulent, or that said transfer was without consideration, or made for the purpose of defrauding the creditors of the Twin Springs Placer Company. That the evidence fails to show that the Twin Springs Placer Company was at the time of issuing the check, or at any time thereafter, insolvent, or unable to pay said check.

As conclusions of law the court finds that plaintiff is not entitled to recover against defendant, the War Eagle Consolidated Mining Company, upon the check sued upon in this action, and that the War Eagle Consolidated'Mining Company is not liable therefor.

Counsel for appellant, in their brief, have twenty-two assignments of error. They first urge that the denials in paragraphs 4, 5, 7, and 9 of defendant’s answer do not deny any allegation contained in the complaint. We cannot agree with this contention. The denials are in the usual language, and each one concludes' with, “other than as hereinafter specifically set forth.” If the pleader had not again referred to the particular paragraphs of the complaint, we think the denials would have been sufficient; but in the case at bar he did thereafter set up a separate defense, so far as those allegations are concerned, by alleging that defendant bought and paid the full value of said property.

It is next urged that “defendant company acquired all the property, stock, and business of the Twin Springs Placer Company, and hence cannot escape liability to the plaintiff in this action.” In support of this position counsel cite Blair v. St. Louis etc. R. Co. (C. C.), 22 Fed. 36, and quote from the decision to wit: “A transfer of all the assets from, one company to another, whereby, through a mere change of name, an attempt is made to defraud creditors, or which would operate as a fraud on them, will not be upheld as against them, and the transferee taking the property with notice takes it cum onere.”

Appellants next urge that by reason of the complaint alleging the acquisition of all the stock, property, and business of the Twin Springs Placer Company by defendant company, that the plaintiff was a creditor of the Twin Springs Placer Company, that the defendant company had knowledge of the debt prior to the acquisition of such property, that E. J. Anderson was the general manager of both corporations, a stockholder in both, and had full knowledge, management, and control of both, and such facts being the case, within the rule laid down in C. R. I. & P. R. R. v. Howard, 7 Wall. 392, 19 L. ed. 120, they quote from this • authority following: “Equity regards the property of a corporation as held in trust for the payment of the debts of the corporation, and recognizes the right of creditors to pursue it into whosoever’s possession it may be transferred, unless it has passed into the hands of a bona fide purchaser.” 1 Thompson on Corporations, section 375, is cited to the effect that, where several corporations are united in one, and the property of the old companies rests in the new, the corporation holds the property received from the absorbed companies with notice of any trust attached to it in favor of its creditors, and cannot claim the right of a bona fide purchaser without notice. McVicker v. American Opera Co. (C. C.), 40 Fed. 861, is cited. It holds that, where an insolvent corporation organizes under a new charter with a different name, its property is still liable for its debts, though transferred to the new corporation for a valuable consideration. Hibernia Ins. Co. v. St. Louis etc. Trans. Co. (C. C.), reported in. 13 Fed. 516, is relied upon by counsel, and is by them termed a leading case as to the liability of a corporation formed by the consolidation of two or more companies, or where one company is reorganized, merged, and absorbed into another corporation. A great number of other authorities are cited to the same effect, and, if the pleadings and facts in the case justify the position of counsel for appellant, and bring it within the rule of the authorities cited, the plaintiff should recover.

It will be observed that there is no allegation of fraud in the complaint; neither is it shown that the defendant company in any manner assumed the payment of this obligation. The obligations assumed by defendant, as shown by the list, amounting to $262,100, do not include the checks sued upon. It is also shown that defendant company, in addition to assuming the payment of the obligations of the Twin Springs Placer Company to the amount of $262,100, paid $36,000 for the property transferred to it by said Twin Springs Placer Company, and that the receipt for such amount was given at the time of the execution and delivery of the quitclaim deed for the property sold, which, as shown by the record, was on the nineteenth day of November, 1900, more than eight months after the execution and delivery of the check sued upon. By the pleadings and entire record in this case it is shown that it was never treated as a suit in equity. We are in harmony with the authorities that, if there was a fraudulent intent on the part of defendant in the purchase of the property of-the Twin Springs Placer Company, and the pleadings and proof established such fraud, then plaintiff might follow the property of the Twin Springs Placer Company, and recover the amount due on his obligation; but the mere fact that the War Eagle Consolidated Mining Company purchased a large portion, or even all, of the property of the Twin Springs Placer Company, the former being a Connecticut corporation, and the latter a West Virginia corporation, is not sufficient evidence to entitle the plaintiff to recover on the latter’s obligation, unless it is in some way shown that in the purchase defendant assumed the debt, or that fraud was practiced to defeat appellant’s claim. Neither is the fact that the same party was the general manager of both companies sufficient for such recovery. Had plaintiff established the allegation of merger in his complaint under the laws of Connecticut, and shown that by reason of a merger, as alleged, the absorbing company became liable for the debts of the absorbed company, then, we think, he should recover in this action. The evidence, as shown by the record, does not support the allegation. We are not informed by the record what the Connecticut law is on this subject, and the evidence does mot show a merger in fact. It is true in this state that no particular form is required in a complaint. It must contain “a statement of the facts constituting the cause of action in ordinary and concise language,” and, that being done, he is entitled to whatever relief his allegations and proof show him entitled to either at law or in equity.

A great many authorities are cited by counsel for respondent in support of his contention that defendant is not liable to plaintiff on the check sued upon under the pleadings and proofs in this case. We have examined them, and think they sustain his position. (See 1 Beach on Private Corporations, secs. 328-344; Southgate v. Railway Co., 61 Mo. 90; 7 Thompson on Corporations, secs. 8217, 8218; 6 Ency. of Law, 2d ed., 102; Pearce v. Company, 21 How. 441, 16 L. ed. 184; Shields v. Ohio, 95 U. S. 319, 24 L. ed. 357; Topeka Co. v. O. P. Co., 7 Okla. 220, 54 Pac. 445; 1 Thompson on Corporations, see. 263; Wyman v. Hallowell Bank, 14 Mass. 58, 7 Am. Dec. 194; Wenger v. Company (C. C.), 105 Fed. 796.)

We think the judgment of the lower court should be affirmed, and it is so ordered, with costs to respondent.

Sullivan, C. J., and Ailshie, J., concur.