Court Opinion

ID: 6632285
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:38:09.149855+00
Date Added: 2024-06-11T15:58:58.686814
License: Public Domain

Manning J.:
Complainant claims, under a written contract, a right to eight hundred shares of unassessable stock in the Vulcan Mining Company, and has filed his bill for the stock against the Minnesota Mining' Company, an incorporation, alleging they are one and the same company, or that the Minnesota Company is the Vulcan Company under a new name.
The testimony in the case does not sustain their identity. On the contrary, it shows the two companies are not one and the same, but separate organizations, having nothing in common between them. The Vulcan Company is still in existence, and the owner of the' mining location purchased for it of the Baltimore Company.
It follows, as a necessary consequence, that for the stock in question the bill should have been filed against the Vulcan Company, instead of the Minnesota Company; and that it should have been filed by the Baltimore Company, unless complainant is a trustee for the stockholders of that company, under the agreement of the 21st November.
Is complainant a trustee under that agreement ? To solve this question recourse must be had to the agreement itself, which is a contract between the Baltimore Mining Company, by complainant as its president and agent, and Hickok & Co. and their associates. It is not a contract between the latter on one part, and Titus on the other. This is not pretended; nor is there any ground for such a claim, as complainant’s agency is stated in the contract 'itself. The leases to be assigned were the property of the Baltimore Company, and the eight hundred shares of unassessable stock were the consideration, in *216part, of the, assignment, and must be regarded as the property of the company, unless by some act of the company the stock was to be severed from its effects, and to become the individual property of its stockholders. No act of the company making such severance or distribution of the stock, or authorizing’ it to be made by complainant, is shown; and the provision in the contract for the delivery of the certificates of the stock to complainant, to be in harmony with the other parts of the contract, and come within the scope of complainant’s authority, must be understood as an undertaking, and nothing more, on the part of Hickok & Co., and their associates, to deliver the certificates to complainant as the duly authorized agent of the company to receive them.
The supplementary agreement of Vm. Hickok, of the 23d November, is of no binding force whatever. There are several reasons why it should be discarded: 1st. It is an attempted alteration of the agreement of the 21st November, by Wm. Hickok alone, and not by Hickok & Co. and the other persons associated with him in that agreement; 2d. It is not supported or made binding by any new consideration passing between the parties to the original agreement; and, 3d. Its object would seem to be to give the unassessable stock to the shareholders of the Baltimore Company, instead of the company itself) and to create complainant a trustee to receive and make a pro rata distribution of it. As agent to sell, he had no authority, by contract or otherwise, -to make a partition or distribution of the proceeds of the sale among-the shareholders of the company. His authority “to make sale of the same (the leases), on such terms as he should think fit,” conferred no such power. If I am correct in this, then it was not in the power of the complainant and the other parties to the agreement of the 21st November, had they all joined in the supplementary agreement, to have changed it in the manner indicated by the *217latter agreement. Nor does the supplementary agreement appear to have ever been ratified by the Vulcan Company. By its articles of association, it is provided, in express terms, that the 800 shares of unassessable stock shall be “transferred to the Baltimore Mining Company.’’
For the reasons stated I think the decree should be affirmed; and I should feel it to be my duty to refrain from expressing an opinion on the case made by the evidence, if I could see that the rights of any one not before us might be prejudiced by it, although the cause was disposed of in the court below on its merits.
It was insisted, on the argument, that the Minnesota Joint Stock Mining Company was formed by a majority of the shareholders of the Vulcan Company, for the purpose of appropriating to their use, land to the exclusion of the other shareholders of the Vulcan Company, a mining location that the Vulcan Company had contracted to purchase of the Ontonagon Company.
The questions, who should be parties to such a case, and what relief should be given, and against whom, I shall not discuss,' as ¡ I do not think the case itself is made out by the evidence.
By whom was the north half of location ninety-eight purchased? I use the word purchased as including contract to purchase, the sense in which it is used by the witnesses.
Galloway says in his testimony, that “Knapp was authorized by the Vulcan Company to make the purchase;” and that “he did so, as the matter was understood in the 'office of the company.”
As to Knapp’s authority to make the purchase for the Vulcan Company, Galloway is clearly mistaken, as appears from the resolution of the company under which Knapp acted, and the testimony of Hickok, Knapp, Barry, Pears-all, and C. E. Smith, all of whom were at the meeting of the stockholders at which the resolution was passed, *218Galloway bimself acting as secretary to the meeting, and signing the record. By the resolution, Knapp was “instructed to make inquiries in Detroit and elsewhere, on his return, as to the possibility of purchasing the whole or a portion of the Ontonagon Company’s location, and to communicate to the company, as soon as possible, such information as he may be able to obtain on the subject.” No authority was given him to make any contract whatever.
The resolution was passed under the following, circumstances: Knapp, as agent of the Vulcan Company, had spent the preceding summer, with the workmen of the company in his charge, in making explorations for copper on the location purchased of the Baltimore Company, and had come to the conclusion that it was worthless for mining, and so stated to the stockholders at their meeting on the 20th September, at which the resolution was adopted. At the same time he called their attention to the Ontonagon 'Company’s location, which was for sale, and recommended its purchase. Ilickok and Galloway, as well as himself, were in favor of making the purchase. But the other stockholders were opposed to it — some, because the Baltimore Company would participate in the new adventure without contributing any thing toward the purchase; and others, because they were unwilling, from the experience they had already had, to embark in a new adventure, attended with so much hazard, and, requiring a still further outlay of money. To this last class belonged Barry, on whose motion the resolution was passed. His reason for offering it and asking its adoption by the meeting we will give in his own words. He says: “Mr. Ilickok evinced considerable feeling because his views were not favored by the meeting, and, in order to conciliate him, I suggested that time should be allowed to think and talk the matter over ; that I had no objection that Mr. Knapp, on his return to Detroit, might be directed to make in*219quiries, and ascertain whether the purchase of No. 98, or a jjart of it, could be made, and report to the company, by - which time we should probably be better prepared to act definitely on the subject. I, therefore, by way of compromise, offered a resolution to that effect, which, after some opposition and much discussion, was finally adopted unanimously by the meeting.”
Knapp, on his return to Lake Superior from the city of New York, where the meetings of the company were held, stopped at Detroit, and made a contract with Mr. Bates for the pinchase of one-half of the Ontonagon location. On the 5th October, he sent the contract, with a letter from Bates to himself, to Mr. Hickok, who resided in the city of New York, and on the 12th October, Hickok wrote Bates a letter, stating that “Mr. Knapp was duly authorized to make any purchase for the Vulcan Mining Company that he deemed best for then- interest; and in the purchase of one - half of the Ontonagon location, the trustees approved of his course.”
On the next day, or 13th October, there was a special meeting of the company, at which Galloway was present, and again acted as secretary. The record of the meeting, after stating that “ the minutes of the last meeting were read and approved,” contains the following entry only of business transacted at it:
“ Communications were presented [and read from Mr. Knapp, agent of the Company, from [Geo. C. Bates, Esq., of Detroit, and Jonas II. Titus. All of which, on motion, were directed to be entered on file.”
Mr. Pearsall, in speaking of this meeting in his testimony, says : “On the 13th October, a meeting of the stockholders was held, and this agreement submitted to them” (the agreement between Bates and Knapp), “ and a copy of a letter written by Wm. Hickok to George C. Bates” (the letter of the 12th October already mentioned). “I again expressed my decided opposition to this purchase, * * * *220most of the stockholders agreeing with me: Daniel A. Galloway was one of them.”
O. E. Smith, another witness, says: “On the 13th October I was present at another meeting, when, for the first time, I heard that Mr. Knapp had made a contract with the Ontonagon Company to purchase half of its location, thereby exceeding the power given him by the resolution passed at the meeting of the 20th September. I opposed the contract at the time, and all and evei’y measure that tended towards the company’s making a purchase of any new location. I also heard a letter read, written by Hickok to George C. Bates. I censured him for so doing, on the ground that he had no right to write such a letter without confeiring with the trustees. As a trustee and stockholder, I disapproved of the letter. All the other members present took the same ground, except Mr. Roberts, who was president of the meeting. I believe he did not express an opinion on the matter.”
If Galloway, when he says Knapp made the purchase “as the matter was understood in the office of the company,” intends to be understood as asserting that the company approved of what Knapp had done, he is mistaken, as clearly appears from the testimony recited, as well as that of other witnesses to which I might refer.
Knapp left Detroit for Lake Superior soon after making the contract with Bates, to take possession of the Ontonagon location. He proceeded as far as the Sault, and then, for reasons which it is not necessary here to state, returned to the city of New York to see Hickok. In speaking of his interview with Hickok at this time, he says: “Mr. Hickok informed me that there was a general difficulty existing in the company; that the difficulty had increased since I was there, and they had refused to ratify the contract which I had made with Mr. Bates. I did not know what to do then. I talked with Mr. Hickok considerably on the subject, and told him, as I *221had before, that I had a good deal of confidence in the location, and wanted to secure an interest in it, and wanted he should. I did the best I could to induce Mr. Hickok individually to go into the purchase. I bad learned from him that the Yulcan Company had flared up. He thought favorably of doing it, but did not give an answer directly; said he would look at it, and see what could be done. I understood from him that he had talked with some of his business firm, and he finally said that he would go into it.”
Knapp thereupon returned to Detroit, and consummated the agreement with Bates by taking a conveyance_from the Ontonagon Company to Hickok. He was authorized to do so by Hickok, who furnished him with means to pay the purchase money.
At an annual meeting of the stockholders of the Yulcan Company, on the 6th of December, thereafter, the following preamble and resolutions were adopted:
“ Whereas, The trustees of this company have reported to this meeting the fact of Mr. Knapp’s having left their location and ceased his mining operations thereon; therefore,
“Resolved., 1st. That the meeting do not consider it expedient to resume their mining operations at present.
“2d. That Mr. Knapp be requested to furnish the company forthwith with his accounts t fully made up to the date of his leaving said location, together with a statement of all balances due to workmen, &c., up to the same period, and an exact inventory of the property and effects of all kinds belonging to' said company.”
The evidence referred to, with other evidence bearing on the same points, it seems to me, establishes beyond dispute the following facts: 1st, That Knapp was not authorized by the Yulcan Company to make the purchase. 2d, That with a knowledge of the existence of the contract, the company refused to ratify it. And, 3d, That after the *222company had refused to ratify the contract, and not before, the purchase was made by Hickok, with more or less expectation, probably, on his part, that it would subsequently be taken off of his hands by the company.
Notwithstanding the resolution of the 20th of September, authorizing Knapp to make inquiries only, Hickok instructed him to make a barg-ain with Bates for the purchase of the location. And Knapp took possession of it, after its conveyance to Hickok, with the men under him in the ernjdoy of the Vulcan Company, and commenced and for several months continued to work it — giving them and others to understand it had been purchased by the Vulcan Company. It also appears, from the evidence before us, that complainant had reason to believe, from Hickok’s letters and the statements of Knapp, that the purchase was made for the Vulcan Company. In answer to such and other like acts of Hickok and Knajjpj or either of them, it is only necessary to say that they were wholly unauthorized ; that they were not the acts of the Vulcan Company, or of its authorized agent, but the individual acts of Hickok or Knap]3. Whatever effect, although,unauthorized, might be given to them in a controversy growing out of them between the Vulcan Company and a third person, none whatever could be given to them in a suit by the Vulcan Company against the Minnesota Joint Stock Company. It must be borne in mind it is that view of the case I am now discussing, and that, for that purpose only, I take it for granted the same relief could be had against the Minnesota corporation as against the Minnesota Joint Stock Company. The Baltimore Company has not, and does not claim, any other right in the Ontonagon location, than what it is entitled to by reason of the eight hundred shares of stock it owns in the Vulcan Company. Its claim is based on the rights of a stockholder of the Vulcan Company; and if the Vulcan Company has no rights, its stockholders have none. The Vulcan] Company might have *223ratified the contract made with Bates, but this it refused to do at the time, and there is no evidence before us that it was ever ratified. Having absolutely refused to ratify it at the time, it could not subsequently ratify it to the prejudice of intervening rights. Much less would it be allowed to show such ratification by proof of the subsequent unauthorized acts of its agents.
Our attention was particularly called on the argument to the following] language in the preamble to the articles of the Minnesota Association, viz: “The undersigned, parties to this instrument, having purchased through "Wm. Hickok,” &c,; and to the deed from Hickok to the company, which, after reciting the conveyance to him by the Ontonagon Company, states: “And whereas, the undersigned made and held such purchase for. himself and the other persons who have formed an association called the Minnesota Mining Company of New York; and whereas, articles of association have been signed,” &c.
While the parties to these instruments and those claiming under them would, in a proper case, be estopped from denying the truth of these statements — although from the evidence before us uthey do not appear to be true in fact — I am at a loss to perceive their bearing in the present controversy. They contain no recognition of a purchase by, or in trust for, the Vulcan Company; and there is not anything in the articles of association of that company, or in the nature of its business, to prevent, expressly or by implication of law, its members forming other associations for mining, or holding stock in as many different mining companies as they might think proper. And this being the case, Hickok or any other member of the Vulcan Company had a right to purchase the Ontonagon location in his own right. To suppose, therefore, that what took place at the meetings of the Vulcan Company on the 20th of September and 13th of October was^ intended, and was shaped with a view, [to pave the way for such in*224dividual purchase, or for the subsequent formation of a new company, or for the purpose of thereafter changing the name of the existing company, would imply simulation without any motive, not in one or two persons, but in a majority of those present at these meetings. It seems almost absurd to accuse Hickok and Knapp of acting a false part at the meeting of the 20th of September; and here, if anywhere, the supposed inquity must have commenced. For they, and they alone, were in possession of all that was then known in regard to the Ontonagon location; and they communicated all they knew about it to the meeting, and urged its purchase by the Yulcan Company. And they were then, and still are, stockholders in the Baltimore Company. How far a knowledge of this last fact may have influenced the action of those who were opposed to the purchase, we do not know. All we know in regard to it is, that the purchase was opposed by some for the reason that the Baltimore Company would have an interest in it without paying any part of the purchase money. At the second meeting — the one held on the 13th of October —Knapp was not present, but Hickok was, and his conduct on that occasion was consistent with the part he took in the first meeting. He was still in favor of the purchase; and notwithstanding the reprimand he then received for writing to Bates as he did, he appears afterwards to have cherished a hope the company would yet make the purchase. On the 6th of December thereafter the Company resolved to discontinue mining, and it Was not until the 6th of June following that the Minnesota Joint Stock Company was formed.
There is another important fact that should not be overlooked. When the purchase was made of the Ontonagon Company the location was not what it • is now. It has derived its importance and value from what has transpired since. Its value at that time was speculative, and the low price at which it was purchased, $1,600, shows *225the estimate placed on it for mining by the Ontonagon Company. It had been partially explored by that company, but the exploration had not been carried so far as to determine its ultimate-value for mining. It has since proved to be one of the best mining locations in the Lake Superior country. It is this that gives the present suit the magnitude and importance so justly attributed to it by the parties. When the acts of men are impugned as not truthful, the magnitude of the benefit or advantage to be derived from them is a circumstance always to be taken into consideration, with other evidence, in determining the truth or falsity of the acts themselves. But it must be the magnitude of the benefit at the time the acts were done. Like a ticket in a lottery, the value of the ticket before the lottery is drawn, and not after the ticket has drawn a prize. Apply this principle to the meetings of the Vulcan Company of the 20th of September, the 13th of October, and the 6th of December, and how very small was the motive for making the acts of those meetings speak a falsehood. If there is anything false, it is not in the records of the meetings, but in the acts themselves.
The Vulcan Company was formed for mining on the location purchased of the Baltimore Company, and our attention was called to the following words in the articles of the company: “Or on other lands in said district that may be leased, located or bought by this association for mining purposes.” These words, as I understand them, do not make it obligatory on the company, on the Baltimore location proving worthless for mining, to purchase or lease other locations. Besides, there is nothing in the agreement between the Baltimore Company and Hiekok and others, of the 21st November, requiring the company to be formed in pursuance of it to assume such an obligation.
The decree of the court below, I think, should be affirmed.