Hannah v. Knuth

Timlin, J. To maintain the issues arising upon a complaint charging that the defendants were a voluntary association and copartners, at the times mentioned, engaged in operating a mine in Montana, and that a large number of persons469 named during such time performed services or sold and delivered material to the defendants, and that all these claims,, aggregating about $4,000, were assigned to the plaintiffs; and an answer amounting to a general denial; the plaintiffs, introduced in evidence a writing signed by each of the defendants with a sum set opposite his or her name, and this, writing was as follows: “Milwaukee, Wis., May, 1908. “We, whose signatures appear below, hereby subscribe the amount set opposite our names to a fund to be used in buying such articles as are necessary to operate the mill of the Milwaukee Gold Extraction Co., and to pay such bills as are. pressing by having them assigned to our representative, the balance to be used to operate the mines and mill of said company, providing the directors pledge to us the gross output of the operations or enough of the product to repay us the money subscribed and guarantee to us that none of the money received by the operation of the mill shall be used for any other-purpose than running said mill until we have been repaid. “It is understood that the property bought with this money shall remain our property until we have been fully repaid, and that in case that after making the repairs of the mill should anything prohibit us from operating the mill that we-shall stand as creditors of said company. “Subscription: $100.00, II. Knuth, 1114 Chambers St., paid 6/16/08,” etc., etc. This written contract was supplemented by written evidence consisting of (1) the corporate records of a meeting of the directors of the Milwaukee Gold Extraction Company held June 15, 1908, showing that the writing first mentioned was produced at that meeting by Mr. Dwight, the president of the corporation and one of the signers of the first mentioned writing, and that thereupon resolutions were adopted in effect accepting that proposition, permitting such an association to operate the mill until such time as the output thereof has repaid to them the money advanced by them and six per cent, interest, not, however, to exceed four months from and after July 1, 1908, and providing that the board of di — 470 — rectors advise with, consult, and co-operate with the subscribers to said writing in all things pertaining to the operation of the mill, the purchase of material, and the payment of pressing bills against the company. It is contended by appellants that the record of the meeting of the corporation directors was incompetent as against the subscribers to the writing first mentioned. (2) Minutes of a meeting of the subscribers held on the evening of June 15, 1908, reciting that thirty-three subscribers were present and organized and that there was read to them the minutes of the directors’ meeting mentioned and that three of the subscribers were by this meeting elected to act with the board of directors of the corporation as an advisory board and that Mr. Dwight was elected trustee for the subscribers. It is contended that this writing was not competent evidence. Other evidence was introduced which showed (1) that all the subscribers were stockholders of the Milwaukee Gold Extraction Company and O. F. Dwight, one of the subscribers, was its president and a director, and that all of the seven directors of the Extraction Company were subscribers; (2) that on the afternoon of June 16, 1908, four of the seven directors of the Extraction Company and one of the advisory board of the subscribers held a meeting and employed one E. Hiland Pitcher to take charge of the mine and mill in Montana, fixing his salary. Mr. Dwight was present at this meeting and Mr. E. Hiland Pitcher went to Montana, took charge of the property, and under his administration the liabilities alleged were incurred. Considerable gold was realized by this operation, but it was used' up in paying expenses, leaving the claims sued on unpaid. Appellants contend that there is no evidence identifying the thirty-three subscribers present at the subscribers’ meeting of June 15th, and no subsequent meeting of the subscribers, hence the latter were not bound by these doings of Dwight, Pitcher, and the directors, and the so-called advisory board, because these men were not ap — 471 — pointed by all tbe subscribers, and while tbeir action might be binding upon the subscribers who procured and secured their appointment it could not affect subscribers who were not shown to have been present at such meeting and who are not shown, to have taken any part in appointing E. Hiland Pitcher, or any one else, to take charge of the property and operate it, or in appointing the advisory board, or in appointing Dwight as trustee. It is contended by appellants that the subscription agreement above referred to and presented at the directors’ meeting of the Extraction Company was not at that time signed, but we think the evidence tends more strongly to show that before that it was signed by most of the defendants. It is further contended that this paper was not at that time signed by all the defendants, and we .think this is correct. There seem to be forty-six signers, and Schissler, Buschman, and Dwight are the thirty-third, thirty-fourth, and thirty-fifth names. There seems to be evidence by inference that the eleven names following were added after the meeting of June 15th. It is quite certain that Dwight and the other directors of the Gold Extraction Company had signed the paper before it was presented to the directors’ meeting of June 15th. All points made by the appellants rest upon the basic proposition that the evidence does not tend to show anything more than a subscription of money by a certain group of stockholders for the purpose of paying present and pressing obligations of the corporation mentioned and operating the plant only so far as -the money thus subscribed would carry on such operation. This case, however, largely turns upon the construction of the written instrument above quoted. A proper construction of that instrument solves all the questions in this case relating to the competency of evidence and to the right of recovery. Whoever signed that instrument before the directors’ meeting of June 15th and permitted one or more of his associates to present that paper bearing his signature to the di — 472 — rectors’ meeting for acceptance is certainly bound by such acceptance, and whoever signed it after that meeting, signed it with the knowledge that he promised a sum of money “to be used in buying such articles as are a necessity to operate the mill.” To be used by whom ? Each signer knew that there was to be an agency for the disbursement of the fund. He knew that the bills were to be paid by some one acting as agent for the subscribers and that the paid bills were to be assigned to the representative of the subscribers. “The balance to be used to operate the mines and mill of the said company.” To be used by whom ? Manifestly not by all acting in mass, but by some reprosentative person or persons. It was next provided- that the directors pledge to the subscribers the gross output of the operation or enough of the product to repay them the money subscribed and that the directors should guarantee to them that none of the money received by the operation of the mill, that is to say, none of the proceeds of the operation, should be used for any other purpose than for running said mill until the subscribers had been fully paid. This informed every signer that the directors of the company, all of whom were also signers, would continue' to have a voice in the operation of the mill and in the receipt of the proceeds of such operation. Without continuing this analysis it is apparent that every man who signed this subscription agreement did so with the understanding that he was to be represented by some person or persons in buying articles of necessity, in paying present bills of the corporation, in holding such bills as trustee for him and his cosigners, and in operating the mines and securing the proceeds of such operation for the benefit of such subscribers. After signing such an instrument he' could not disable the other signers from proceeding with the enterprise by merely neglecting or refusing to take any part in the selection, appointment, or authorization of such agents. In this respect he would be bound by the action of his associates who did take such part, because by this writ — 473 — ing, by clear implication and by tbe necessity of tbe situation be conferred upon bis associate subscribers tbe power to create tbe agency necessary to carry out tbe purposes of tbe subscription contract. Eor tbis reason tbe minutes of tbe directors’ meeting of June 15tb accepting tbe proposition were competent as res gestee. Eor tbis reason tbe minutes .<?f tbe meeting of tbe subscribers on June 15tb were in tbe nature of admissions and competent, because it was affirmatively shown that tbirty-tbree of tbe subscribers were present at that meeting and some of those present were identified by name. Tbis cause having been tried by the court without a jury, tbe admission of incompetent evidence cannot be assigned as error on appeal unless some proposition essential to sustain tbe judgment has no evidence to support it other than such incompetent evidence. We find no such situation here. There seems to be ample evidence, oral as well as written, to support tbe finding that pursuant to- tbe subscription agreement quoted parties representing tbe subscribers, acting with' tbe directors of tbe Gold Extraction Company, operated tbe mines and mill of tbe latter company for tbe purpose of attempting to repay to tbe subscribers tbe amount advanced by each. They were unable to make such payment, but in tbe attempt they incurred tbe liabilities for which judgment has been rendered against them in tbe court below. These liabilities were therefore incurred by agents of all tbe subscribers acting under tbe authority of all, although appointed by less than all, because tbe subscribers entered into a contract which could only be carried out by and through agents appointed for that purpose, thus conferring upon their associates authority to appoint such agents in case they failed or neglected to make tbe appointment or to take part in tbe appointment themselves. No other construction would give force and effect to tbe subscription contract. Whether tbe representatives of tbe subscribers were acting under a lease or a license or a mere informal agreement with tbe directors is imma — 474 — terial. It was not necessary to prove each of the assigned claims by the testimony of the person who did the work or furnished the material, although such testimony was competent so far as it went. The testimony of Pitcher, the manager who incurred these obligations, was sufficient. The trial court properly ordered judgment to be enforced against the joint property of all the defendants and the separate property of each except the separate property of the defendant E. Hi-land Pitcher, because the latter was not served with process and did not appear in the action. We believe other findings of fact are well supported by competent evidence, and the judgment should be affirmed. By the Court. — Judgment affirmed.