The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-09-05
MACKArS MILL CONTRACT
His Ore Crushing Compact
With Senator Jones Yielded
Over 100000.
Fox Alleges That the Mining and
Milling Company Was Organized
With Fraudulent Intent.

Secretary Ravens of the Consolidated
California and Virginia Mining Company
was again called to the witness-stand yes
terday morning in the Fox-Mackay mining
suit and asked to read from the directors
minute-book records of certain special
meetings held by the board for the purpose
of considering charges of fraud preferred
by individual stockholders. The first of
these meetings, according to the directors
record, took place as far back as 1888. At
this time John Nelson, a stakeholder,
through his attorney, Sieberst, addressed &
communication to the board charging
fraud in the Jones milling contract. which
had been entered into three years previous.
The directors met to take some action in
the matter, and decided to ask Nelson and
his attorney to join them in an investiga-
ton of the charges. This invitation Nell
son declined on the ground that no salts
factory results could be obtained from a
conference with a board of directors elected
and controlled by Mackay, himself the
promoter of the alleged fraudulent contract.
Another letter from Fox plaintiff in the
present suit, dated Novem Der. 1891 TO the
same purport, was read by Mr.. Ravens
from the minute book. In this communi-
cation Fox reiterated the charges of Mel
son and threatened to bring suit if an in
vestigation in the interest of the stock
holders was not commenced at once. The
action of the directors was the same as on
the Nelson letter. They met and sent
note to Fox, asking him to join them in
conference.
Mr.. Ravens, in response to questions
from Sieberst, declared that he could not
find the much desired reports of the Com
stock superintendent for August, Septem-
Der and October, 1887.
These reports seem to Attorney Sieberst
to have an important bearing on the case,
and for the seventh time in two days he
has urged the court to order their produc-
ton. Ravens strenuously asserted that he
had looked diligently for the required re-
ports, but without success. He promised
to send to Virginia City for them, and the
Judge said that he would admit them as
evidence whenever produced.
At the afternoon session the attorney for
the plaintiff filed an amended complaint.
1t was practically the same as the original
and contained no new allegations.
This concluded the taking of evidence,
and Attorney Sieberst opened his argu-
ment for the complainants. He reviewed
the methods alleged to have been used by
Flood and Mackay in getting control of
the board of directors, and commented
severely on the system of proxies intro
complete. Getting down to 1885, he de-
clared that the organization of the Con-
solidated Mining and Milling Company by
Flood, Mackay and Jones, with the latter
as president and the other two in posses
sion of over two-thirds of the stock, was
secret move for the purpose of defrauding
the other stockholders in the Consolidated
California and Virginia Mining Company.
1.-The conduct of the affairs of this COM
pany," continued Mr.. Sieberst, CLEARLY
shows that there was fraudulent intent.
They paid this company-in other words
they paid hemselves-$6 and 81 ton for
handling ore that cost formerly to crush
only 81. The contract specified that the
mill company should have the tailings
Of course, this did not amount to much
only 81, 000,O or SIS 600, 600. and this esti-
mate is from the defendants. Ore of the
same grade bad been milled before for 81
per ton. Why this sudden increase in the
cost of milling? Jones went before the
directors and asked that the price be
raised from Sc to 81 a ton; Sc was not
enough. Flood and Mackay, who prac-
tically constituted the board, and who
also owned the milling concern, readily
agreed to an increase. Why not? They
were putting money into their own pock-
cts, but at whose expense? What about
the other stockholders Out of the opera
ton they got $62 900 and the mill COM
pany got 100000. Is this fair dealing?"
Mr.. Sieberst will conclude his argument
this morning.