McIntyre v. Ajax Mining Co.

77 P. 613, 28 Utah 162, 1904 Utah LEXIS 64

Opinions

Action by Samuel McIntyre against the Ajax Mining Company. Judgment for plaintiffs. Defendant appeals. Affirmed.

While there is some apparent conflict in the testimony on some of the material issues, the following facts are supported by a clear Preponderance of the evidence: In 1894 Peter C. Burke and Frank Salisbury were the owners of 19/24 of the Champlain No. 2 mining claim, and all of the Fraction mining claim, situate in Tintic mining district, Utah. Burke and Salisbury conveyed their title to the foregoing mining property to John T. Sullivan, who held the same in trust for them. Certain parties, namely, Henry M. Ryan, W. I. Snyder, and Henry Shields, desired to form a corporation, and purchase the property and take the title thereto to the corporation, and in pursuance of this plan negotiated with Burke and Salisbury for the puchase of their interest in these mining claims. An agreement in writing was accordingly entered into between John T. Sullivan, Peter C. Burke, Frank Salisbury, and Henry M. Ryan, parties of the first part, and A. R. Holcomb, V. F. Clays, and W. I. Snyder, parties of the second part. This agreement, so far as material here, provided as follows:

"And whereas, certain litigations are pending between the American Eagle Mining Company, et al., plaintiffs, against said Clays, Holcomb and Sullivan, defendants, and said Snyder has by proper instrument in writing agreed to maintain and pay the expenses of said litigation on the part of said defendants.

"Now, therefore, in consideration of the premises and of the circumstances, and also of the matters herein recited, the said parties do hereby covenant and agree to form a corporation under the laws of the Territory of Utah, with a capital of $500,000, divided into one hundred thousand shares of the par value of $5 each, for the purpose of owning, acquiring and working the mining claims aforesaid, including the other five twenty-fourths of said Champlain No. 2, if the same shall be acquired, and to divide said stock as follows: 70 per cent thereof to said parties of the first part, to be divided among them in such manner as they shall agree, and 30 per cent thereof to said parties of the second part, to be divided among them in such manner as they shall agree upon.

"The said Snyder is to pay the expenses of said litigation to final judgment, that is to say, the retainer to W. H. Dickson of $2,000 and to Expert Brunton, of Colorado, not exceeding $1,000. Also the expense of witnesses, court reporters, experts, and other necessary expenses and costs upon the trial of said cause.

"It is further mutually agreed that the present interests of said parties of the first part is of a value of $34,000, and that the interests of the said parties of the second part for the purposes mentioned in this paragraph, shall be the actual sum paid out by Snyder for and on account of said litigation, as aforesaid, and that said two sums shall be paid back to said parties pro rata out of the proceeds of ore sales, compromises or otherwise, together with the payment of the matters recited in the previous paragraph, but the sum of $5,000 shall be paid to Salisbury, or his assigns, first of all. All of which are to be paid out and made good before any general dividend shall be paid out, or any other money except for necessary operations."

In accordance with the terms of the foregoing agreement, a corporation known as the Ajax Mining Company was organized, and after the litigation mentioned in the agreement was concluded it entered upon the development of the mining properties mentioned. Other mining properties, including the remaining 5/24 of the Champlain No. 2, were subsequently acquired by the corporation at a cost of $46,000, which amount was paid by installments to the parties, or their assignees, from whom the purchases were made. At a meeting of the board of trustees of the company held October 23, 1894, a motion was made and carried "that a mortgage be given to secure the payment of the amounts due Burke and Salisbury, and also the attorney fees, also money due Snyder, as per contract" (referring to the contract of June 7, 1894, portions of which are hereinbefore set out). At a meeting of the board of trustees held July 20, 1895, the following motion was made and carried unanimously: "It was moved and seconded that the action of the board of directors of this company, as reported by the president in adopting the contract of June 7, 1894, made between Salisbury, Burke, Ryan, Snyder, Clays and Holcomb, also in recognizing and agreeing to pay same, as also the amount due Ryan and Knox and McIntyre, and authorizing the trust deed and other suitable obligations and contracts to be issued therefor, be ratified, and in all respects adopted, which motion, being put, was carried." At a meeting of the board of trustees held February 9, 1895, as shown by the records of the company, "it was resolved and carried that the secretary be and he is hereby instructed to prepare an evidence of indebtedness in the form of a trust deed showing the indebtedness due to Salisbury, Burke, Snyder, Ryan, Knox and McIntyre, and providing for the payment of the same, and report at next meeting, or an adjourned meeting to be held February 16, 1895, at 7:30 p. m. Said indebtedness consisting of the following items: $5,500 advanced by Snyder on purchase money; $5,000 due Salisbury or assigns, to be a first lien; $29,000 due Burke and Salisbury or assigns, as per contract of June 9, and $19,634 due Snyder for expenses of suit, as per same contract, and $6,030 due Ryan and Knox; $4,000 due McIntyre, and $10,000 to McIntyre for water." On January 1, 1895, Samuel McIntyre, plaintiff herein, became a stockholder and officer of defendant company. On September 6, 1895, Henry M. Ryan, and Marian Ryan, his wife, by an instrument in writing, assigned to Frank Knox, president of the company, and Samuel McIntyre, a director, a block of stock of defendant corporation. The writing, so far as material in this case, provides, as follows: "Know all men by these presents, that we, Henry M. Ryan and Marian Ryan, of Chicago, Illinois, for and in consideration of the sum of $18,679.56 to us in hand paid by Frank Knox and Samuel McIntyre of Salt Lake City, Utah, do hereby sell, assign, transfer, set over and deliver unto said Frank Knox and Samuel McIntyre, 49,812 shares of the capital stock of the Ajax mining company, a corporation, of Utah Territory, standing in our names and upon the books of said company, as follows to-wit: 5,000 shares of said stock standing in the name of Marian Ryan and 44,812 shares thereof standing in the name of said Henry M. Ryan. * * * And the said Henry M. Ryan in consideration of the Purchase of said stock by said Knox and McIntyre hereby assigns, transfers and sets over unto the said Knox and McIntyre all claims of said Ryan against the said Ajax mining company, aggregating $9,015.00, and all securities held by said Ryan to secure the payment of said sum." McIntyre received and paid for two-thirds of the stock and account mentioned in the assignment and Knox received and paid for one-third. The $9,015 mentioned in the assignment was a part of the $34,000 purchase price of the Champlain No. 2 and the Fraction mining claims. $3,005 of the amount was credited to Knox on the books of the company, and McIntyre was given credit for $6,010 of the account, and the respective amounts charged against Ryan's account. The amount for which Knox received credit ($3,005) was subsequently paid by the company without objection, but it failed and neglected to pay McIntyre the $6,010 due him. On January 15, 1897, McIntyre commenced an action against the company to recover the $6,010. The defendant answered, and a trial was had, and when plaintiff rested his case a judgment of nonsuit was entered, and the case dismissed. An appeal was taken to this court, and the judgment of the trial court affirmed, without prejudice to the bringing of another suit by plaintiff. McIntyre v. Ajax Min. Co., 20 Utah 323, 60 P. 552. For a more detailed statement of the facts reference is hereby made to the opinion of this court rendered on that appeal. On January 24, 1901, McIntyre commenced the present action, alleging substantially the same facts as were set out in the complaint in the former suit, namely, that on or about the 1st day of February, 1895, at Salt Lake City, Utah, one Frank Salisbury sold and conveyed to defendant an undivided one-half interest in the mining claims hereinbefore mentioned for the sum of $17,000; that thereafter, on or about May 1, 1895, for a valuable consideration, the said Salisbury sold and transferred his said claim to Henry M. Ryan, and that on the 6th day of May, 1895, the said Henry M. Ryan, for a valuable consideration, sold, assigned, and transferred to the plaintiff $6,010 of said claim of $17,000; that defendant was immediately informed of said assignment and transfer, and accepted the same, and then and there promised and agreed to pay the said amount to the said plaintiff. The defendant denied the allegations of the complaint relied upon for a recovery. and alleged that Burke and Salisbury claimed and represented to W. I. Snyder and H. M. Ryan, two of the promoters of this mining enterprise, before the agreement hereinbefore referred to was entered into, that they had a perfect and absolute title to the mining property mentioned therein, subject only to the paramount title of the United States; and that said mining claims contained large quantities of valuable and paying ore. Defendant further alleged that said representations were untrue, in this: that there was no ore in said property, nor was the title to said property clear, perfect, and absolute, but, on the contrary, a large portion of said mining claims was then and there the property of others. Defendant further alleged that at the time plaintiff procured the assignment from Henry M. Ryan of the $6,010 sued for said plaintiff was a director and vice president of defendant company, and acting in a confidential and fiduciary capacity with respect to defendant and its stockholders, and that he paid nothing whatever for said claim, and that under such circumstances it became and was the duty of plaintiff to obtain said assignment for this defendant and its stockholders, and not for his personal profit and gain. The issues were tried by a jury, who returned a verdict for plaintiff, and from the judgment entered thereon this appeal is taken.