Phillips v. Sonora Copper Co.

90 A.D. 140, 86 N.Y.S. 200
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJanuary 15, 1904
StatusPublished
Cited by5 cases

This text of 90 A.D. 140 (Phillips v. Sonora Copper Co.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Phillips v. Sonora Copper Co., 90 A.D. 140, 86 N.Y.S. 200 (N.Y. Ct. App. 1904).

Opinion

Ingraham, J.:

It is somewhat difficult to ascertain from this complaint just what was attempted to be alleged. The defendants, the Señora Copper Company and the Puertecito Copper Company, are foreign, corporations existing by virtue of the laws of the State of Delaware; and the defendant, the Empire Consolidated Quicksilver Mining Company, is a foreign corporation organized and existing under the laws of the State of Hew Jersey; and the individual defendants are alleged to control and handle the affairs of these corporations. The defendant Hallenborg is the treasurer of one copper company and the secretary and treasurer of the other copper company. There are other allegations scattered through the complaint which would seem .to indicate that these‘defendants, or some of them, are also directors, of one, or more of these companies, although I cannot find that that fact is directly alleged. The complaint then sets out a prospectus that was issued by the Sonora Copper Company which invited subscriptions to a limited number of shares of the treasury stock of the company at eight dollars per share, alleging" that this prospectus was signed by one Costello as vice-president, and by the defendant Hallenborg as treasurer of the Sonora Copper Company. There is then set out a statement issued by the Sonora Copper Company ; and this prospectus and statement are alleged to have been issued and circulated pursuant to some fraudulent scheme for the purpose [143]*143of promoting sales of stock of the Sonora Copper Company, and that certain statements in this prospectus and statement are not true. It is then alleged that as a result of the -issuance and circulation of this prospectus, notwithstanding the falsity thereof, and as a result of their personal efforts by solicitation and correspondence, and by making statements with regard to the properties of the Sonora Cop- per Company of the nature set out in the foregoing prospectuses, the individual defendants succeeded' in selling at various prices a large amount of the stock of said company to various persons in different localities in the United States.

• From this allegation it would appear that it was the individual defendants that sold the stock, and not the corporation; but it is not alleged that the plaintiff purchased any stock relying upon the statements of this prospectus, dr in the statements made by the companies or the individual defendants.

The plaintiff then alleges that the Sonora Copper Company is not now engaged in business, and “ that if the said Company now has any assets or claims of any sort of any value, there is grave reason to apprehend that said assets and claims will be dissipated and lost unless cared for by some. persons other than the defendants; ” that the individual defendants are connected with or are interested in the other corporate defendants and have circulated information among the stockholders of the Sonora Copper Company residing in the States of "Vermont and New York to the effect that the assets of the Sonora Copper Company have been turned over to the Puertecito Copper Company and that they"have.informed the stockholders of the Sonora Copper Company in Kentucky that the Empire Consolidated Quicksilver Mining Company possessed the assets of the Sonora Copper Company, and said defendants have endeavored to induce; the stockholders of the defendant Sonora Copper Company to exchange their stock for that of the said the Puertecito Copper Company and Empire Consolidated Quicksilver Mining Company; and for the purpose of preventing criticism of and inquiry into and action upon their acts in relation to these corporations, they are endeavoring to bring about such transfers, although there is no allegation that they have endeavored to or have succeeded in deceiving this plaintiff. It is also alleged that they are engaged in deceiv„ing and tricking persons to purchase stock of the Sonora Copper [144]*144Company in the manner before alleged; that the defendants, acting in pursuance of their false and fraudulent scheme to obtain money from the public and to turn over any assets of the Sonora Copper Company to the defendant, the Puertecito Copper Company, or the Empire Consolidated Quicksilver Mining Company, and for the purpose of preventing an investigation by the stockholders of the Sonora [Copper Company, with respect to their said deceitful and wrongful acts, caused and permitted to be issued and uttered to the stockholders of the Sonora Copper Company, resident in Kentucky, statements that said company had gone out of the copper mining business, and that there had been organized a quicksilver mining company; and that the assets of the Sonora Copper Company were held by the Empire Quicksilver Mining Company; that as a result of said statements and representations certain of the stockholders of the Sonora Copper Company, residing in Kentucky, were induced to exchange their stock in the Sonora Copper Company for stock in the Empire Consolidated Quicksilver Mining Company at par; that for the same purpose similar representations were made to stockholders of the Sonora Copper Company in Vermont and Hew York, and that by said statements various stockholders of the Sonora Copper Company were induced to exchange their stock for stock in the Empire Consolidated Quicksilver Mining Company. It is further alleged that the individual defendants have made other representations about these companies which are all alleged to be false and untrue; and that by reason of all of these false and untrue statements they are now engaged in persuading the stockholders of the Sonora Copper Company to exchange their stock for stock of the other companies, and that all of these very wrongful and fraudulent acts have been done in pursuance of some conspiracy to defraud the stockholders of the Sonora Copper Company. But it is not alleged that any of these false and fraudulent statements and representations have at all deceived the plaintiff or have caused him any injury, or have affected the value of the stock held by him. It is then alleged that large sums of money were obtained by the individual defendants from the sale of the stock of the Sonora Copper Company, but that said sums of money have been diverted from the use of the Sonora Company and have been delivered over to the other defendant cor[145]*145porations, and that all of the assets of the Sonora Company are in' the possession of the other defendants without right or authority and to the ends and purposes of the defendants herein other than the Sonora Copper Company. But it is not alleged that the stock' so sold was the stock of the Sonora Company, or that the defendants have misappropriated or misapplied any of the money or property of the Sonora Copper Company.

It is difficult to understand just what relation all of these alleged false and fraudulent representations as to the condition and affairs of these various defendant corporations have to do with any cause of action which the plaintiff, suing on behalf of himself and all other stockholders, can enforce. Just what disposition was made of the stock of this company by its various stockholders, whether it was exchanged or sold, is no concern of the plaintiff as a stockholder." It could make no difference to him who the other stockholders are, or how much they have been affected by the frauds of the individual defendants, as long as he has sustained no injury by their acts. Nor does it appear how the acts of the various stockholders of the' Sonora Copper Company in disposing of their stock or exchanging their stock could affect the Sonora Copper Company.

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Cite This Page — Counsel Stack

Bluebook (online)
90 A.D. 140, 86 N.Y.S. 200, Counsel Stack Legal Research, https://law.counselstack.com/opinion/phillips-v-sonora-copper-co-nyappdiv-1904.