The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-09-11
ARGUMENT FOR MACKAY,
The Big Suit Against the Mil
lionaire Nearing its
Completion.
FRAUD rs STRONGLY DENIED.
Exception Taken to the Charge That
Certain Directors We're
Controlled"

Argument was resumed yesterday in the
case of The odore Fox VS.. John W. Mackay,
ct al, which has been on trial before Judge
Seawell for the past few weeks. The suit
was brought by plaintiff for an account
ing of the business of the Consolidated
California and Virginia Mining Com pany,
for a period of about six years, ending
with the 1st of January, 1891. Iii charged
that defendants were stockholders in both
the Con. California and Virginia Mining
Company and the Comstock Mill and
Mining Company. and that they fraud
ulently conspired and secured for the latter
contract for milling the ore of the former
by which the other stockholders of the
Con. California and Virginia Mining Com
pany were deprived of their full profits in
that company.
Attorney Edmund Tauszky resumed his
argument for defendant where he had left
it at the last session of the court. He
claimed that the fact that large numbers
of shares we're issued by the Con. Califor-
MIA and Virginia Mining Company in the
name of trustees was no proof that such
shares were held for the benefit of Flood
and Mackay and others Tho are charged
with having control of the board of direc-
tors of the mining company. 1t was ex-
planned that large holdings of shares by
trustees is due to the greater convenience
resulting in the collection of dividends
and to the fact that many people desire to
conceal the knowl edge of their transactions
in minir stocks.
Attention was directed to the testimony
which showed that the directorate of the
liz la w
men who had been in the directory of the
two separate companies forming the new
companies. This, Attorney Tauszky
alleged, was evidence showing that the new
directory was not one selected and there
fore controlled by Mackay or Flood. He
added that the testimony of Mackay
showed that he never concerned himself
about the ELECTION of the directors of the
Con. Cal. & Va. Mining Company in any
way, nor attempted to control any such
election. The impression that they con-
troiled that corporation is wrong. "The
testimony of Mr.. Mackay," he continued,
'is that he took no further interest in the
Con, Cal. & Va. Mining Company after
1885,"
1t was then stated that the large num-
Der of shares voted by President Fish who
was known to be close to Flood, were OBJ
tanned by Secretary A. w. Ravens of the
Con. Cal. & Va. Company from various
brokers and large holders of the stock,
either as trustees or Pledges, in order that
he might be retained in his position, which
paid him $3.50 month It was argued
from this that the stockholders were salts
fed with the management of the directors
or they would not have allowed one of the
directors to vote their stoCk-either this or
they were negligent. In either case, it was
urged, the stockholders were evidently sat
isfied with the directors. There was no evil
dence, it was claimed, to show that a
single share of this stock belonged to Flood
or Mackay. and Mackay testified he
never tried to get proxy. There was no
evidence to show the directors were under
the corrupt control of Flood and Mackay
or either.
Reference was then made to the sale of
$1,000 shares OF the previously unissued
shares OF the company to Maurice DoIe on
December %, 1885. These were issued in
the name of George Grant, an employe OF
the Nevada Bank, as trustee, but it was
claimed that they never came to the hands
of either Mackay or Flood. The fact that
during 1886 some 10000 shares stood in the
name OF Grant as trustee was accounted
for by stating that many patrons of the
bank were purchasers of shares, and that
Grants name was used as trustee for their
accommodation.
The Jones contract was then considered.
It's terms we're reviewed and it was claimed
that he was asked to reliRquish his first
three-year contract, as the stockholders
thought he was making too much out of
it, when in fact he was out $40 900 after
working under it for two years 1t was
pointed out that he had surrendered his
contract at the end of two years with the
verbal understanding that he should have
the milling to do OF the Consolidated Cali
fornia and Virginia Mining Company, as
he had great deal of money invested in
milling plant. 1t was after this, it was
claimed, that Flood and Mackay became
interested in the Comstock Mill and Min
ing Company. which secured a three years
contract to mill the ore of the mining COM
pany for 80, after proposition for a five
year contract at 81 had been submitted to
the directors and thus modified. This &C
ton OF the directors, it was claimed.
showed they were not under the control of
Mackay and Flood.
Mr.. fauszky then adverted to the charge
that Flood and Mackay had concealed the
fact of their connection with and interest
in the Comstock Mill and Mining Com
pany from the directors of the CONSOLE
dated California and Virginia Mining Com
pany when the contract was made, and
said that there was no affirmative act on
their part to deceive the mining company's
directors; that the milling company was a
publicly incorporated body, and that the
mining company's directors had the privi-
lege of inquiring into the stockholders of a
company with which they had important
business relations. He admitted that
neither Mackay nor Flood appeared as
large stockholders, though they did appear
as incorporators of the milling company.
1t was argued that there was no evidence
of fraud in this transaction; that it was
fair legitimate contract.
file held that there was nothing to show
that any OF the directors of the mining
company were under the influence of any
one when they made the last Jones con-
tract. Six dollars was only fair price for
milling ore, and there was nothing to
show that the contract was an unfair one,
he commended. The price of quicksilver
was higher than before, and it took more
time to mill high-grade ores was the
reason assigned for some of the ore being
charged 81 for milling.
Then came the $4,000 paid to Superin-
tendent Patton for having, as claimed, ex-
tinguishing dangerous and destructive
fire in the mine while drawing his full
salary as superintendent. 1t was denied
that this money or any part of it went to
Mackay or Flood, and it was emphatically
stated that it all went to Patton, who had
risked his life in the work of putting out
the subterranean conflagration. and that
the price paid Patton was much less than
% A. he .ohf Co.