Porter v. Van Denburgh

SHENK, J.

The plaintiff filed an action to impress a trust on certain personal property and for an accounting. Judgment was rendered in her favor to the effect that she was the owner of and entitled to have issued to her, as successor in interest of her husband, L. E. Porter, 60,939% shares of the capital stock of Tungsten Reef Mines Company. The defendant appealed.

The question for determination is whether the evidence supports the 'findings and the judgment. There is practically no conflict in the evidence. The controversy centers mainly on the interpretation of an instrument relied upon in part by the plaintiff as the basis of her cause of action. Briefly, the following facts appear:

In 1916, L. E. Porter obtained an option from W. P. Yaney on the purchase of 18 tungsten properties in Inyo County, California, for a price of $30,000. The properties were in two groups, known as the Noble group and the Aeroplane group. The purchase prices of the groups were designated as $7,000 and $23,000, respectively. The Noble group was resold by A. J. Clark for $60,000. Book accounts of Clark received in evidence disclosed that a division was effected between the two men of an amount representing the original purchase price of the claims and that a balance was reserved for investment in an account designated as the Standard Tungsten Account kept by Clark. The Aeroplane and other groups of claims were transferred to Standard Tungsten Company, Nevada corporation formed about the same time, and two certificates of its capital stock, representing 55,000 shares each, were issued in the name of A. J. Clark. Advances to the extent of $45,000 were made to that company from the Standard Tungsten Account. Advances also were made to the company by persons named Fraser and Abercrombie. A cash dividend of 7% cents a share on the issued stock

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was paid to Clark and was divided equally with Porter. The record indicates that because of Porter’s financial difficulties the ownership of the stock was retained in Clark’s name.

The affairs of the Standard Tungsten Company did not progress satisfactorily, and its operations were discontinued. Its equipment was sold and its assets distributed. The amount realized was not sufficient to reimburse Fraser and Abercrombie fully for their investments after advances to the Standard Tungsten Account were repaid. Tungsten Reef Mines Company was then formed in June, 1918. Its entire capital stock consisting of 400,000 shares was issued in the name of Clark. The property of that company consisted of certain mining claims in Arizona, the option or down payment of which was paid for out of the Standard Tungsten Account. In 1921 the balance of the Fraser and Abercrombie obligations was satisfied by payment of cash and the transfer of a portion of the stock of the new company. A large portion of the stock of the company was held as treasury stock and sold to investors, until finally and at the time of Clark’s death 121,879 shares only remained in his name.