The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1911-06-18
SUIT INVOLVES
FRAUD CHARGES
Defendants Alleged to Have
Levied Assessment on Stock
Without Authority.
SAY DIRECTORS MEETING
CONTRARY TO ARTICLES
Persons Accused Declare Ac'
ton Is Attempt to Malign
and Injure Them.

Harry c. Edwards and Fred O. Frlcs
OF the local law firm of Edwards &
Frick are made defendants in a suli
filed in the federal court yesterday III
which it is alleged that they caused
the levy OF an unlawful. fraudulent and
void assessment against the stocKhoid'
ers of the Gold Quartz Mining company
of Lander county, New; kooert ID
Malett a banker of Elko. New, ap-
pears as plaintiffs In the action, twenty
six other plaintiffs having assigned
their causes TO Mallett. The twenty
seven complaints are grouped III one
general suit representing that the de-
PENDANTS by the alleged methods Sc
cured more than $4,000 from the stock
holders of the company.
The suit brought against Edwards
and F'rick appears to be the outcome
of certain tangled finincial affairs OF
the mining company in which Chicago
and western men arc prominent stock
holders and promoters. According to
the complaint, the company was In
corporated under the laws of the state
of South Dakota, at a capitalization
of Sl,0o0,000. divided into 81 shares. 1t
is alleged that the stock was fully pald
and non-assessable under the articles
of incorporation. The complaint sets
forth that the officers and directors
2DdnuOnBu IaelI OiliCeo, NcaSSu iui
filling their duties and turned the
books and records of the firm over TO
the National Bank of the Republic III
this city on July Q, 1908.
Mallett then declares that Edwards,
as stockholder IN the company. rep
resented that he had been elected at
a meeting held at Chicago TO fill a
vacancy on the board of directors Ac-
cording to the complaint, directors
meeting was called December Is, 1910,
at 30 Newhouse building. in this city,
ut which Edwards as Il director and i.
J. Fabian. another director, were the
only members of the board present,
Frick also attending the meeting as a
stockholder. 1t is then avcrred that
Edwards by his own suggestion was
elected chairman of the meeting and
vice president Of the corporation, Frick
being appointed secretary and treas
urers
Levied an Assessment.
According to records attached to the
complaint. there were no funds or
treasury stock with which to finance
development work on the company S
claims or meet the 1910 annual assess
ment labor, by virtue Of which a reso-
luton was passed levying an assess
mcnt of / cent against each dollar s
worth of stock Notice thereof was
sent out through the mails and about
$1,000 collected. according to the COM
plant. This action was taken, it Is
alleged, by Edwards and t'ricl, Fabian
not appearing as 4 co-deteIdant. al
though he is asserted to have been
present at the meeting. 1t is further
averred that Frick was authorized to
indorse the incoming checks.
Mallett declares that on June ] last,
he discovered that in reality no direc-
tors meeting had been held that under
tine incorporation laws four directors
were necessary TO constitute a quorum
for the transaction Of business. and
that the assessment in any case had
been unlawful fraudulent and void.
The names of the plaintiffs and the
amounts which Edwards and Frick are
said TO have received from them as
assessments follow:
Robert Mallett, Elko. $3.50; George
D. Shultes. Elleo. 5000; r. f. Leonard.
Elko, 5000; G. S. Kimball, Berkeley.
Cal, $4,000; G. +. Montgomery, Beo.
wave, $50; c. H. Duborg, Beowawe,
$50; William G, Owens, Carlin. 1862 i;
1,l1 Thomas Hunter, Elko, $93; c, G.
Henderson, Elko, $50 T, S. Gedney.
Elko, $50; c. f. Williams, Elko $40:
Arthur J. Hood. Elko. $50: Mrs Leon
ard Patterson, Blko. $3.50; J. W.
DAVE. Elko, SO; Mrs. George Hunter,
Elko, S25; John Swan, Reno So; c.
s. Williams. Elko, So; J. W. Ebert,
Reno, SO; John Henderson, Ell<o. $25
T. r. Weber, Beowawe. $3.50; James
c. Raine, Beowawe, $3.50; W. H.
han. Beowawe. SO; John NJ. Higgins,
Beowawe. $3.50; w. w. Wvhe, Boe.
man, $500. Besides these it is said
there will be about ten other persons
enter the suit by application.
Edwards Charges Enmity.
When seen last night Edwards en-.
tered general denial Of the charges
contained in the suit. saving that it
was scheme TO malign and iniure
him by persons who had previously
evidenced ennlity toward him. He said
in part:
1.-THE articles of INCORPORATION are 81
lent on the subject of the stock being
assessable or non -assessable and also
as to how many directors constitute q
quorum. The laws of the state of South
Dakota provide that when one~fourf Ii
of the total capital stock has been sub
scribed for. an assessment may be lev
led for corporation debts or for the
transaction of company business, pro.
vided. however. that in no event should
the amount Of assessment exceed 10
per cent of the capital stock
An agreement was made between
the directors before the meeting re.
ferred to, calling for the assessment
of J cent on the dollar, and we we're
expected 10 pass the resolution, ire
spective of a quorum being present or
not. it was customary among them 10
do business that way. James T. Dunn.
general manager Of the company: NV
self and ". H. Miner had personally
exnended about $500 TO preserve the
title and property owned hy the com
many, which, being just debt by the
firm. Justly called for the assessment
every penny collected was depos-
tied in the bank to the credit of the
company. No expenditures were made
except to transact company business at
the instruction of Manager Dunn. Out
of the amount collected under the as
sessment. there is still about $500 re-
naming TO the credit of the company g
account at the bank, When the case
comes up for hearing it will be found
that the charges made are ridiculous
and that the procedures were lawfully
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