The record-union., 1891-03-13

actual fraud. And we think that an allie
CATION of such fact in terms is sufficient.
No amount of circumlocution or amplifi-
cation can convey the meaning better than
to say that transfer by the directors of Il
corporation for one-tenth of the value of
the property, was for the purpose, or with
the intent, of defrauding the stockhold
erS. 1t may be necessary to add other
facts. But so far as this fact is concerned,
the mode of statement is sufficient. All
that the code requires is to state the facts
in ordinary and concise language.
The foregoing facts, taken together,
constituted actual fraud, and were suffici-
entity alleged.
1t may be added that it was not neces-
sary TO specify the particular water rights
which were attached to the land con-
veyed. The several tracts were suffici-
emily described. And it was not material
to the case to specify what rights We're
carried with them as incident or appur-
tenant thereto'
2. The second cause of action begins
by stating in detail how the corporation
acquired its rights to the property, and
shows i'll substance the following facts:
Before the corporation was organized,
Howes, Bonebrake and Merrill had a
contract Of purchase from one Henry
Pierce and associates, for 2S414.63-100
acres Of land for the sum of S426,2l9 40.
This contract was executed on October
10, 1886, and $4,000 was paid thereon in
cash. The remainder of the price was to
be paid in annual installments of $4,000
each, bearing interest at 8 per cent. per
annum. But it was provided by said
contract that 'ssaid Howes, Bonebrake @
and Merrill might pay the whole or any
part of the purchase money at any time
before maturity" (Fols. 40 to 4S.) 1t is
not expressly stated when the convey
ance was to be made; but the presump-
ton from what is stated is that it was not
to be made until the price was fully paid
The said defendants also acquired a
smaller tract known as the Morse place.
But it is not necessary to dwell upon that.
In February, 1887, the defendants
Howes, Bonebrake and Merrill caused
the Semi-Tropic Land and Water Com
pany to be incorporated, and on April 10,
1887, they conveyed to it ''the properties"
above referred to, and agreed to pay off
and satisfy at maturity the debts then
existing against the property g, such
debts being then owing by Howes, Bone
brake and Merrill upon the above de-
scribed land and water rights, purchased
from Pierce and associates, and from
Morse, on account of the unpaid purchase
price of said properties" In considera-
ton of the foregoing transfer and agree
ment the corporation transferred 1896
shares of its stock. But only Is, 995 shares
were transferred directly to HoweS, Bone
brake and Merrill. The remaining 10. 900
shares were transferred to one S. B. Hunt,
to be held as security for the performance
by said Howes, Bonebral1e and Merrill of
their agreement to pay off said unpaid
purchase money. tFols. 81 to 65l.
After this the plaintiffs acquired their
stock, and it is alleged that certain rep
reservations were made to them by de-
PENDANTS. But we do not consider such
representations material to the case.
This division of the complaint goes on
to allege that ''the directors of said cor
poration, other than said Howes, owned
only one share of the stock of said COM
pany, and were only nominal directors
thereof, and had no interest in the man
agenlent and conduct OF its affairs, except
as the implements and representatives of
the interests and wills of defendants
Howes, Bonebrake and Merrill" Fol. 20. }
In this condition of affairs it is alleYed
that said defendants effected an arrange
ment with the directors whereby the ten
thousand shares, held by the trustee as
security for the performance by said de-
PENDANTS of the agreement to pay off the
unpaid purchase money above men
toned, was allowed to be withdrawn by
them upon condition that the same should
be sold at not less than $40 per share, and
the proceeds Qess 5 per cent. commission
applied las received to the eXtinguish-
ment of the debts affecting the property.
The statement of this agreement or con-
dition is somewhat loose. (See folios "a
to 79.) Butthe counsel for the defendants
have not made any criticism upon it, but
have assumed that it is q sufficient state
ment of the condition or agreement upon
which the stock was given up to said de-
PENDANTS; and following the lead of coun-
sci we have so assumed for the purposes o1
this opinion.
This arrangement was made on August
q, 1887. Previously to that date, Howes,
Bonebrake and Merrill had negotiated q
sale of said stock at S42 80 per share (fol
79), and it was finally sold at that price
making an aggregate of $425,000 for the
10000 shares. OF this sum said defend
ants received Sl25,000 in cash on October
Is, 1887. (Fol. S0-1.) The remainder was to
be paid in installments drawing interest
at per cent per annum. (Fol. ST. 1t does
not appear whether these inStallmepts
| were ever paid, or what was done with
the evidences of the Indebtedness.
Howes, Bonebrake and Merrill did not
comply with the condition upon which
they obtained said stock. Prior to the re-
ceipt by them of the Sl25,000 they had
made the following payments on account
of the purchase money of the property
| transferred to.the company, viz: S50, ,00(
on the execution of the contract of pur-
chase from Pierce and associates (fols. &
| and 4S); S42, 900 on August 81, 1887 (tol. 49,
and S34, 800 on September 10, 1887 (ol
50-D. On the day of the receipt of the
Sl25, 900 they made a further payment o
S29, ,1S9 4S. (Fol. 52.) Now as the first three
payments were made before the Sl25 ,00(
was received, it is manifest that they
could not have come out of that sum
And it is expressly alleged that ''all o.
said So, 900 received by said Howes
Bonebrake and Merrill, saving and ex-
cepting the said S29, ,lS9 4S, or thereabouts
has been appropriated and used by SAID
| Howes, Bonebrake and Merrill, for theil
own individual use and benefit, in viola.
ton of the rights of said corporation ano
the stock kholders thereof CFol. S5-6.) AnC
it is further alleged that mo other or fur.
ther sums of money than those above
mentioned have ever been paid by sale
! Howes, Bonebrake and Merrill. or either
of them, to said Pierce and associates OF
account of the purchase price of sale
! premises" (Fol. 53.)
The plaintiffs further allege the refusa
of the corporporation to sue, etc., ano
that the suit is commenced by them OF
behalf of all the stockholders.
In support of their demurrer to this
division of the complaint the defendants
make the following points:
%. 1t is said that the sums which arr
admitted to have been paid on account o
j the purchase money on the property were
| sufficient to pay the first two annual in
stallments thereof; that it is no
alleged that the other installments were
due at the time of the commencement o
the Action; and that the court will no
compel the defendants to pay them before
maturity.
But the defendants had the privilege o
paying all of such installments ''at any
time before MATURITY fol. Az; and the
condition on which they received the
stock was that they would apply the pro
ceeds, in the way mentioned, ''as re
ceived.' {Fol. 75.)
b. 1t is said that the plaintiffs have no
alleged that any installment of the pur