The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1914-07-09

preferred stock, the preferred stock
had no voting power. In March of
1905, certain shareholders, including
, the then president of the company,
Charles Sweeny. sold substantially all
the common stock owned by them and
asgregating upwards of $4,000 shares
j, to Daniel Guggenheim This stock
was, however, not transferred into the
names of individuals, but was trans
ferred to the American Smelters Sc
curities company hereinafter referred
to as the Securities company. thus
making the latter a majority holder of
the common stock, the holders Of
which for all practical purposes con-
trolled the affairs of the Federal COM
pany, the owner Of the preferred stock
being limited as above stated 1t i
not claimed by the learned counsel for
the defendants that it makes any ma
terial difference so far as the question
of the control of the Federal company
is concerned by the Smelling company
eiActe ie' SUN VIZ ilJl Actually IttN Ill
the latter's name, but was held by the
Securities company. The Securities
company was organized with a capital
Of $77,000,0OO, divided into 100000
shares of preferred and 100000 shares
of common stock all of the par value
of 500 per share. Only the common
stock had power to vote for directors
In 1905 the Smelling company owned
a controlling interest in said company,
namely, 1850 shares of common
stock, and subsequently purchased all
of the remaining outstanding common
stock. The boards of directors of the
said two companies have at all times
been almost entirely composed of the
same persons. AS further indication
of the identity in interest of the two
corporations it appears that in 1909
the Securities company sold to the
Smelling company all of the common
stock owned by it in the Federal com
pany, but one year later, repurchased
the said stock. In these circumstances
the Smelling and Securities compan-
les may be regarded, so far as the
rights Of the parties in this action are
concerned, as one entity. The first
time, apparently, that said proposed
contract of 1905 was considered was
in June, 1905, or about three months
after the Smelling company got con-
troll of the Federal company, as above
stated. At this time there had been
no change in the directorate, notwith-
standing the said alteration in control.
AT meeting OF the board of directors
Of the Federal company then held
there was presented the proposed new
contract between the Federal and the
Smelling companies. This provided
years after the said year 1909, when
the existing contract expired of the
sale to the latter of the formers entire
product upon substantially the same
terms as the said agreement of 1903,
then in force. The board at this meet
ing took no action to adopt the con-
tract beyond referring it to the eXecu-
tive committee to consider and report
at subsequent meeting of the direct
ors. The next formal action taken by
the Federal company on this matter
was at meeting of the executive COM
mittee held on the 18th of October,
1905. (The executive committee, un-
der the bylaws and certificate of in
corporation Of the company, had all
the powers of the board Of directors
when the latter was not in session and
was composed of five members Of the
board Of directors.) In the meantime
the membership of said committee had
been changed so that either officers or
employees of the Smelling company be-
came three of the five members there
of. At the said meeting of the execu-
tive committee four members were
present, two of whom were said offic-
ers or employees. The minutes of the
meeting recite that form of the pro-
posed contract between the Federal
company and the Smelling company
was submitted that it was examined
in detail and duly considered. A res
olution was passed adopting the said
contract and authorizing the officers
to execute and deliver it. but provid-
ing that before the contract should
become effectual it should be submit
ted to the stockholders at their annual
meeting. No further action was taken
by either the board of directors or the
executive committee upon the contract
until at a meeting Of the new board of
directors held on the 10th Of October,
1905, following the annual stockhold-
ers' meeting on that day, and to which
reference will later be made. At said
board meeting eight members were
present, five of whom were either Off
GERS or employees of the Smelling COM
pany. No action was taken in terms
upon the contract, but the minutes Of
the executive committee meeting Of
october 13 were read and approved 1t