The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-08-04

ated the entire amount of which the cor
poration and its stockholders were de-
frauded, namely, $1,0n 1886. The decision
continues:
HAYwARDs LIABILITY ESTABLISHED.
In some particulars the findings so beyond
the allegations of the complaint 1t is not al
legged but is found that Hayward and Hobart
and the other conspirators controlled and d.
rected the business and affairs OF the Vivian
mill, as well of the Nevada and Mexican
mills. The defendants, in support of their APP
peal from the judgment, contend that they are
erroneous in form and substance, and in sup
port OF their appeal from the order denying a
new trial, contend that the findings of the SUI
per1er Court are against the evidence, and are
yitiated by numerous errors committed in the
course of the trial in ruling upon objections to
the evidence and upon other matters.
The most important questions which we are
thus called upon to determine relate to certain
legal propositions as to which our decision
must become precedent in future contro-
versles. but the questions which have been
most deliberately discussed by counsel, and
which go most directly TO the merits OF this
case, relate to the suffcieney of the evidence to
sustain the findings of the Superior Court.
1t is contended that there is no evidence to
support the findings as to the alleged conspir.
acy to defraud the Hale & Norcross Company.
So far as the defendants Hayward and the other
mlll-owners are conce rned, it does not seem to
be OF much consequence whether these find
ings can be sustained in their full extent or
not, since their liability is sufficiently estab-
llshed by other and independent findings. But
with respect to the liability of the directors of
the Hale d Norcross Company, the findings as
to their active participation in the conspir acy
are very material.
Upon this point, the decision goes on to
say, the evidence which most nearly affects
the directors is that which relates to theA
election. They were elected by the ma
jority vote held by stockholders in San
Francisco apparently as trustees for owners
Of fhn clio 1f,{ l.
that it is not necessary for him to decide
who had the strict legal right to vote the
stock so held. When the election of 1887
was approaching HAYWARD, Hobart and
other stockholders of the Nevada Mill and
Mining Company, who were considerable
owners of the stock in the Hale 81 Norcross
Company, determined to contest with
Levy for the control of the board. A COM
promise was, however, effected, resulting
in the election of a board acceptable to
both parties and the retention of Levy in
the office OF president.
LEWIS SECRET PERCENTAGE.
Levy was to receive one-eighth of the
profit on the crushing ofall Hale & Nor
cross ores miIled by them. This agree
ment was secret, except to Levy and his
partner, Hoehich. Sell and Bridge, who
ceased to be directors in March, 1883, knew
of it after that time, but there is no direct
evidence that they had such knowledge
while in office
None of the directors had any substan-
tial interest in the corporation. A ma
.jority of them owned about five or ten
shares, respectively, out of total of 112,-
700 shares, and these trihing amounts of
stock had, in several instances, been trans
terred to them by Levy or the mill-owners,
Tor the express purpose of qualifying to
serve. They seem, one and all, to have
Entrusted the management of the entire
business to Levy and tothe superintendent
OF the mine, and, continues the decision:
II these officers by abuse of their,trust caused
the loss and damage to the mining company
which the court has found, the evidence war
rants the conclusion that the directors were at
ieaSt guilty OF gross negligence. But, except as
TO Levy, Hoefiich, Sell and Bridge, do not
think there is any evidence that the directors
knew OF the unlawful agreement between Lew
ana the mlll-owners, or that they were active
partcl pants In the conspiracy and frauds al
legged In the complaint. That this was the
view OF the Judge of the Superior Court seems
10 follow, not only from his decision. upon the
separate motion of the defendant Wheeler
Tor new trial, but from the amount of
the several judgments rendered against
him and the other directors. In DENYING
Wheelers motion, the Judge declared in effect
that he did not believe him to have any share
in the frauds upon the company, but he was
held responsible for the consequence of his
gross negligence-that is. he was held liable for
the excessive price OF SZ oO per ton paid for
milling the ore reduced while he was direc-
tor. The same judgment was rendered against
all the other directors except Levy, against
whom there was several Judgment for the
entire loss found 10 have been sustained by the
Hale & Norcross Company
This discrimination shows that notwithstand-
ing the sweeping language of some of the find
ings, the Superior Judge did not really intend
to convict the other directors of the fraudulent
charged, for if he had found them
equally guilty, they would have been liable to
the same extent as Levy.
For these reasons / think it must be held
Levy that they were participants in the frauds