The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-12-10

rpCeiVInr thlt aIllOunt IUSS WIS @fU.UVV
The application for the milling contract OF DE,
cember, 1885, was made by Jones alone. Inc rnli
company had nof yet been organized The al ecl.
ors OF the mining company did not know tiit
Flood or Mackay were be interested in the con
tract. In awarding the contract to Jones tney
could not have been Influenced by he considera-
ton that they werr advancing the personal inter,
ests of Flood or Mackay. In view OF the personal
relations which exise Ell between Mr. Flood and the
directors if the evidence showed that the contract
in question IVES unfair, there would be strong
presumption that it was procured by the use OF ui,
due influence. The uncontradicted testimony III
the case is that the contract was fair one ana
that at the time when the agreement OF December
20, 1888, was made So per ton was reasohapie
price for the transportation and milling OF sucn
as the mine then producing, ana that ~
turn to be made by the miller 10 the mine-owner
On December "a, 1886, the agreement of Decem-
Der %. 1856, was modified by providing that the
mill company should receive So per ton for all ores
yielding less than SIG per ton, ST per ton Tor all
ores yielding more than Sic per ton and less than
$40 per ton. ETC. No greater amount was ever
paid under the contract as modified than 81 per
ton. The reason given for this modification OF the
contract is that when the agreement OF December,
1885, made, fixing the rate at Yb per ton, all
the ore then known TO exist in the mine was OF
poor quality, yielding not more than Sl3 per ton,
and that it was not then supposed that any ore
would be milled which would materially exc ed
that value; that ores had since been discovered OF
greater amount of quicksilver in their treatment,
and that. by reason of the increased expense, the
mill company could not work such ores OF higher
grade with any profit ut the rate OF $6 per ton
In granting the application the Loard OF directors
appear 10 have been more liberal than is usual In
business transactions 1t does not follow that there
any fraud. The uncontradcted testimony OF
all the experts upon the subject was ttat ~ per
ton was a reasonable charge Tor the ores which
yielded over Sl6 per ton. 80
on October 2 1889 the contract of December rs.
modified in December, 1886, was continued In
force further period of three years from Janu-
AIRY 3, 1889. At that time Mr. Flood was not
living.
1t is further claimed by plaintiff that the mining
company was also defrauded a. by the lmperfect
milling of its and also GU by the mining ana
milling OF ores which would not pay more la1 ain
cost of milling. TO support the first charge plain
tiff relies upon the fact that in four months. VIZ.
October, 1857, June 1890, october, 1890 and NO
vember, SOL, the returns OF bullion were llttie
less than the stipulated 40 per cent OF the battery
assay; such returns being for the months named
6Sie 1888 and 6S.8l.
During these mouths the mill company paid
the full price of So per ton, Notwithstanding the
fact that less than the stipulated ~
per cent. Messrs. Mackay and Lowell testify that
it is impossible completely ascertain the returns
from ore which has been miIed until after clean
mp" During the process OF milling greater or less
quantities OF material containing gold and silver
are retained in and adhere 70 the pans or other
parts OF the milling machinery and cannot be cot
lected ami removed until the cleanup, wnch
takes place every three or four months If such IS
the case il is obViouS that complete return can
no, be made until after the cleanup and that II
the results of that operation when added TO the re-
turns previously made, during given run OF the
mill raise the entire average TO 70 per cent the
mill company should be deemed 10 have fully COM
piled with the terms of its contract. The returns
in evidence tend 10 cOrroborate the testimony OF
Messrs Mackay ana Lowell on this point.
While the return OF bullion in october, 1887, was
only &c. 81 per cent, that in the next month aver
aged S7.l9 per cent. In June. 1880, 1t was SO. 40
per cent, and in the following month s7.s7. 1t
1888 in November, 1890. During the entire
period from January, 1886. to December 1891, the
average returns exceeded 70 per cent
1t has always been the usage in the district
where the mines of the mining company are stu
ated for milling companies 70 retain Tor their own
use the .ailings. siimes aud resdues remaining
aftQ no mill n n a
the agreements above mentioned having been
made with knowledge of such usage must be con-
strued If it had been expressly Incorporated in
the agreements. There being no evidence that the
were milled in an unskilful or imperfect
manner. no reason appears why the mill conn any
should render any accoupt OF the tahngs, shines
residues.
The other charge is that ore was mixed and sent
to the mill which of sufficient value to pay
the cost OF milling and mining. The only instances
which have been brought to my attention are
the following: On March ] /, 1856, ore was milled
the Eureka MILL The average assay value of
which was only So 80 per ton and for the week
the Eureka mill, the average assay value per
ton of which was only SO SO. There Is no salts
factory evidence as to what the value OF the ore
must be in order TO pay the expense OF both mill
ing and mining, but l am satisfied that neither
81 s5 SIS SO, OF which onehalf would be silver,
would be sufficient to pay such expense
nworSing and developing a mine it is often
necessary TO extract and remove ore TO the sur
face, without regard TO the value OF such ore. 1t is
in the way and must be removed IN order 10 prop
erly work the mine. When such ore is hoisted 10
the surface all the expenses OF mining it have been
incurred, and it does not cost the mining company
any more to allow the mill company to transport
and mill it than /: would TO throw it away.
The few isolated instances where ore was sent 10
the mill which would not pay the cost of both
mining and milling not sufficient TO Justify the
Inference that there was auv collision between he
managers OF the mills and mines respectively for
the purpose of defrauding the mining company.
They do not tend TO prove that there
spiracy between Flood and Mackay to defraud the
stocKhouers Oh the mining company, anu WIN
out proof of such conspiracy the case of the plain
lift fails. Mackay and Jones merely stock
holders of the mill company. Neither he nor
Jones attended personally to the business OF mill
ing and both were generally absent from the state
OF Nevada. So far from the evidence showing any
fraud on the part of Jones or Mackay. L am salts
fled from the evidence that the employees OF the
mill company performed their duties honestly and
honorably; and in this connection L deem it
proper note the fact that, while the of the
mining company worked by the mill COM
pany under the said agreements the former paid
to its stockholders dividends TO the amount of over
S35OO,OOO.
None of the transactions assailed by the plaintiff
in this action concealed from the stock holders
OF the mining company. The varions propositions
of Jones and the milling company and the several
agreements in which they resulted, of which the
plaintiff com plains. were spread upon the minutes
OF he board OF directors OF the mining company.
and were at all times sublec. TO the inspection of
every stockholder. In his communication to the
directors requesting them TO commence this suit,
the plaintiff himself stated that 1.-The many facts
above stated should have been known to all OF you
individually, for they appear to large extent
books of your company, and form great par OF
the proceedings Of directors meetings and engrossed
upon your minutes or record books" In his COM
paint the plaintiff does not aliege that he any
other stockholder of the mining company was
ignorant of any of the matters of which he COM
plains except the fact that Flood and Mackay had
an interest in the mill company and owned n
majority of the stock and controlled the directors
OF he mining company.
During the trial and in his argument plaintiffs
counsel repeatedly asserted that IL notorious
as to scarcely require proof that Flood and Mackay
have always controlled the mining company. If
the milling contracts were reasonable and fair. IL
made with Jones alone. they not less
merely because Flood and Mackay interested
in them. The printed annual reports of the mir
ing company which were dis rbutei among the
stockholders in the years 1887, 1883, 1889 and
1891 give the names of all the mills at which the
worked, each year at each mil. the amount OF
bullion produced, the yield in gold and silver per
ton the amount paid for milling and the assay
value OF the ore per ton per battery samples The
stockholders having. during all this time. with full
knowledge of all material facts. acquiesced in the
transactions of which the plaintiff complains will
be deemed to have ratified them and have lost
by their aches the right. If any they ever had, to
demand that they be set aside.
Judgment will be entered for the defendants.
The second decision, regarding the payment
of $50 900 to W. f. Berry, is as follows:
This action is brought by the plaintiff as a stock
holder of the mining company defendant to require
defendant Mackay to account for and pay to the
mining company for the use of its stockholders
the sum of $4,000 alleged to have been paid by
the company to one w. f. Berry for the use of
said Mackay and one j. G. Flood, as the result Of a
conspiracy alleged to have been formed by Mackay
and Flood for the purpose of defraudlng the min
. hafF atp n11n that