Alhambra-Shumway Mines, Inc. v. Alhambra Gold Mine Corp.

SCHOTTKY, J.

The Alhambra-Shumway Mines, Inc., a California corporation, on February 17, 1951, commenced this action against the Alhambra Gold Mine Corporation, a foreign corporation, to cancel a lease of mining property and equipment known as “The Alhambra Mine.” In February 1953 B. F. Parsons, as a stockholder and in behalf of all stockholders, joined as a plaintiff in the action.

Findings and judgment were entered in accordance with the following memorandum opinion of the trial court:

“One question only is presented by the plaintiffs for decision, namely, may the lease executed about January 1, 1947 by the plaintiff corporation to the assignor of the defendant corporation be rescinded because it was not approved by shareholders owning a majority of the plaintiff’s shares.

“The evidence is sufficient to support the following findings of fact and conclusions of law.

“1. The lease in question required the approval of the shareholders under Sec. 3901 of the Corporations Code.

“2. There is no misjoinder of parties plaintiff. Both have legal capacity to sue.

“3. No restitution is required as a condition precedent to rescind under the facts of this case.

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“4. The statute of limitations bars recovery by plaintiff corporation, but not by plaintiff Parsons.

“5. The principles of estoppel preclude any recovery by the plaintiff corporation. They do not apply to the shareholder Parsons.

‘16. However, because of the laches of plaintiff corporation and its shareholders, plaintiffs should not recover. Judgment herein should declare the lease in question to be valid and existing. ...”

Both the corporation and Parsons have appealed from the judgment.

The Alhambra-Shumway Mines, Inc., is the owner of a gold mine and certain mining equipment in El Dorado County. This mine operated until 1942 when pursuant to a government order the mine was shut down. In 1947 the corporation entered into a written lease of the mine with an assignor of the respondent for a period of 10 years. In 1948 this lease was amended by increasing the term and substituting respond-dent for the original lessee. The mine is substantially all the assets of the appellant corporation. The lease was never approved by the shareholders. For several years prior to January 1947 no annual meetings of shareholders were held. After that date and until January 1951 no annual meetings could be held because of the lack of a quorum. In 1949, after the respondent found a rich vein, the stockholders began to take an interest in their corporation. On February 8, 1951, the shareholders rejected the lease and thereafter attempted to rescind. This action was then commenced.