The Anaconda standard. [volume] (Anaconda, Mont.) 1889-1970, 1898-07-06
IT IS A BODY BLOW TO
WILDCAT MINING SCHEMES
One of the Most Important Decisions Ever Rendered by the SUI
preme Court of the State - Liability Where Capital
Stock Is in Excess of Actual Value.

That the capital stock or a mining com
pany neither bears nor is intended 10
bear the slightest relation to the real
value of the property-'a value nearly
always conjectural and very often i'm
aginary.' A complete answer to both
points lies ID in the constitutional pro-
vision Of this state which says that no
corporation shall issue stocks except for
money or property actually received
n (2) I'm the law, Sec. ass. Fifth DIV.
Comp. ST. 1887, wherein the grant OF
power TO the trustees of a corporation
10 purchase mines necessary for their
business enables them To issue stock to
the amount Of the value thereof. which
stock so issued shall be declared and
taken 10 be the full paid stock and not
liable TO any further call. There was
no such statute IN California when the
cases cited were decided, and. 80 far as
we are advised. no such constitutional
limitation as is found in the Montana
organic law Judge Sawyer also wrote
OF the common custom and said that
mining corporations I'm California were
organized and carried on upon principles
in respect Of their capital stock wholly
different from banking and Ike com
neutrality-suspicious. having a subscribed
capital stock. No reference is made 90
statutory rules fixing liability for un-
paid shares or extending authority to
buy mines. Custom and common knowl-
edge allowed and ooked for any capital
ization OF a mining company, and moth
ing TO the contrary justified the court
In holding against the weight OF these
arguments. Sue is fairly the quite per-
suasive reasoning Of the learned Judge"
"Sifted OF specious considerations ad-
dressed TO Judges to regard practices
long prevalent In certain mining
states where no laws exist placing min
ing and manufacturing corporations
on an equality, and the warped doc
trine we are asked to lay down leads
to this: Incorporators OF mining com
panies should be permitted to violate
the law and deliberately deceive the
public, hut the incorporators of man
ufacturing enterprises should not-and
this Notwithstanding the truth that the
same specific statute grants no greater
powers to one than another and fixes
he same liabilities upon the share
holders in each.
Counsel assert positively that there
is no such thing as the market value
OF a mine. This court said In Montana
Railway company VS.. Warren, 6 Mont.
2t5, that even a prospect has a value.
The only questions are whether a pros
pect has a value that may In law be
called a market value: and. II so.
whether there Is proof In this case OF
my mar hfl Ndlut. has a prospect -
an undeVeloped mine-any. market val
ne? A full positive answer is that
prospects are sold i'm the market every
day. Certainly property so sold has A
market value. The records OF Silver
Bow county will probably show more
transfers by sale OF property, such as
IL known az prospects, than of any
other kind OF real estate. They are
frequently sold upon execution. fore
closure and partition sales. They are
subject 70 daily litigation i'm our courts.
The rationale Of the California cases
can be accounted for not only by an
absence OF statutory conditions which
confront the in%corporators Of mining
companies In Montana, but by remem-
bering the additional fact that when
the opinions of Judges SAWYER and
HOFFMAN were delivered I'm 1881 and
1882, the science of mining was ana
had been always far behind It's
present systematism. The engineer Of
mines was by no means so accessible or
so well Informed by knowledge Of past
experience of development in mines m
this country as he has since become.
and the light OF his professional learn
ms was not nearly so universally
spread. IL was only a few years before
those decisions were pronounced that
the universities of America first con-
feTred degrees for proficiency in special
courses In mining. In such surround
lngs ana amid the fewer opportunities
for ascertaining with reasonable relia-
bility the value OF a mine, the custom
or which the California judges wrote
sprang up in the early DAYS OF CaIifor-
MA, and because OF It's origin, the law
and the courts were reluctant 10 inter-
fere with IL. But that IL was 4 perni-
ciousc custom il indisputable. 1t led 10
deceit to fictitious estimates being
placed on mining property by the in
corporators for their own gain. shares
In a mine at a few cents each allured
the u~nsuspectipg and venturesome The
experiences Of the custom are nlled
with disappointment and ruin 20 in
Vestors rich n poor. All these mat
ters may have been the controlling
reason for the adoption OF the more
honest policy of our avs. Judge Buck.
whose opinion as a district Judge was
case, adverted 10 the argument Of Gus
tom In this way: This custom has
made the very word mine. In 6nanctll
centers Of the world. almost synony-
nous with conspiracy TO defraud. The
caution Of capital has become so trepid
mat l believe II rs no eNaggeration 10
state that many a half worked rich
mine lies idle to-day I'm the mountains
this state through this cause alone
The supreme court OF Utah. in Salt
Lake n. Co. vs.. TintiC Co, g Pac. 20
makes no exception i'm favor Of minuS
corporations, nor does the supreme
Of Illinois i'm Thayer vs.. FL Pom5
NJ. Co, supra: nor does the supreme
court Of Wisconsin in Gogebic Ins. Co
Iron Chief Min. Co. a. n. w. az,
nor does the supreme court Of Iowa ~
Oliphant vs.. Min. Co, 81 Iowa. $50: nor
does the supreme court OF Oregon in
Hodges VS.. Min. Co, 3 ore, 200, nor did
the court Of appeals IN New York in
Douglass vs.. ireland. supra.
But whatever may Rave been the
reason OF the old system. things have
changed. Estimating the value Of a
mine Is no longer the result Of hasty
conjecture Former methods have
given away 10 scientific tests. based up
on geological conditions. underground
surveys and measurements, divers eN-