Myers v. Indiana Mining Co.

Me. Justice Benson delivered the opinion of the court. The testimony in this case is exceedingly voluminous and contains an unreasonably large amount of irrelevant and immaterial matter but, after a painstaking investigation, we have sifted the following essential facts which are practically undisputed. The plaintiff and his mining partner, Simmons, were the owners of a group of unpatented quartz mining claims which were undeveloped. In the month of December, 1902, they executed a written option to purchase the same in favor of Alonzo Cleaver for the purchase price of $75,000, of which $2,000 was paid by Cleaver a short time afterward. There was then in existence a corporation known as the Will Cleaver Mining Company which, in June, 1903, changed its name to Indiana Mining Company in accordance with the provisions of Section 6705, L. O. L. Immediately thereafter Cleaver proposed to sell his option to this corporation for 400,-000 shares of its corporate stock, bearing a par value of one dollar per share but having practically no market value. This offer was accepted and in January, 1904, the corporation tendered to Myers and Simmons 300,000 shares of its stock at a valuation of $30,000, and its three equal promissory notes for the balance of the purchase price of the claims, such notes to be secured by a mortgage on said claims. This offer was accepted and the necessary papers were duly executed. Thereafter Myers was elected a director of the corporation. An active campaign was then begun for the sale of capital stock for the purpose of securing funds [668] to develop and work the mine. Myers worked for the company as its superintendent for the wages of $5 per day and board. Development work upon the mine continued, and Myers worked therein with exceptional industry. Payments upon the mortgage debt were made from time to time until March 24,1906, when the president and secretary prevailed upon plaintiff to cancel the mortgage and accept new and unsecured notes for his share of the balance due, Simmons having been already satisfied. At a meeting of the board of directors on May 5, 1906, this action was ratified by a formal resolution of the board. Plaintiff continued in the employ of the company until June, 1908, when he quit work. He then urged the payment of the amount due which by this time included unpaid wages to the extent of about $2,000, and on December 12, 1908, the notes and mortgage involved in this suit were executed by the proper officers to secure the debt and at a later meeting this action was ratified. On October 25, 1910, the assets of the corporation were sold to one Bert German, and, on November 1,1910, the sale was ratified at a meeting of the stockholders. Immediately thereafter the Hot Springs Copper Company was incorporated to take over from German the assets formerly belonging to the Indiana Mining Company, and this corporation permitted stockholders of the former company to exchange their stock for an equal number of shares of the new by paying in cash an additional five cents per share, or to exchange two shares of the old for one of the new. If the plaintiff was a stockholder in the Indiana Mining Company at this time he accepted neither proposition, and was never associated with the Hot Springs Copper Company. ■ This latter company was adjudged a [669] bankrupt and tbe trustee in bankruptcy defends tbis suit. 1. Regarding the first defense, want of consideration, we observe tbat tbe debt represented by tbe notes and secured by tbe mortgage consisted of tbe balance due upon tbe mining claims, tbe purchase price of a small tract of timber and a balance due for wages. At tbe time of tbe sale the mining locations were of course entirely undeveloped and tbe plaintiff could no more foretell their future value than could tbe purchaser. The only evidence of fraud in tbis connection is found in tbe fact tbat subsequent work and large expenditure of money demonstrated tbat tbe hopes of all concerned were vain. These facts present a situation not at all unusual in any mining locality, and every sale of a “prospect” must necessarily involve tbe possibility tbat tbe purchase may result in disappointment and financial loss, but such a termination does not imply bad faith or fraud. There is no contention tbat plaintiff did not perform tbe services for which tbe wages are claimed or tbat tbe corporation did not acquire the timber land. Tbe trial court therefore properly found tbat tbe instruments sued upon were executed for a valuable consideration. 2. Tbe second defense goes largely into tbe question of fraudulent sales of capital stock and if we concede tbat tbis constitutes a defense in tbe foreclosure suit, still we are unable to find in tbe record any convincing evidence tbat plaintiff bad any part in any fraudulent transactions in tbat respect. 3. As to tbe third defense it is enough to say tbat there is no sufficient pleading nor is tbis a proceeding wherein tbe relief suggested could be granted: Sargent v. Waterbury, 83 Or. 159 (161 Pac. 443, 163 Pac. 416). Tbe decree of tbe lower court is affirmed. Affirmed. Rehearing Denied.