Strouse v. Sylvester

HAYNES, C. This action was brought by Mark Strouse, a director, and twelve others, stockholders in the Gold Ridge Consolidated Mining and Milling Company, against said corporation and Henry Sylvester, Albert J. Sylvester, William F. McLaughlin and Ira H. Chapman, who, with plaintiff Strouse, constituted the board of directors of said corporation. Said Mark Strouse having died, after judgment his executrix was substituted as plaintiff. A demand was duly made upon the board of directors to bring the action, and, the board having refused to do so, the action is prosecuted by the plaintiffs for the benefit of the corporation. No question is made as to their right to do so. The plaintiffs had findings and judgment, and defendants appeal from an order denying their motion for a new trial.

No question is made as to the rulings of the court during the progress of the trial. There is no appeal from the judgment, and hence the sufficiency of the findings to support it cannot be considered. Some question is made by appellant as to the conclusions of law, but upon an appeal from an order denying a new trial the conclusions of law are not reviewable: Bode v. Lee, 102 Cal. 586, 36 Pac. 936; Owens v. Water Co., 131 Cal. 530, 63 Pac. 850, 64 Pac. 253. The only question, therefore, is as to the sufficiency of the evidence to justify the findings. The Gold Ridge Consolidated Mining Company was incorporated and organized in January, 1894. Its capital stock consisted of 100,000 shares, of the par value of $100 each. It owned several mining claims in Nevada county, in this state, which then, and at the time this case was tried in the court below, were only partially developed, and were wholly unproductive. With the excep[800]tion of 15,000 shares of treasury stock, sold at ten cents per share, it had no resources wherewith to meet its obligations other than assessments upon its capital stock. Prior to 1896 neither of the directors named as defendants in this action had served as directors of said corporation. In 1896 the regular time for holding the stockholders’ meeting for the election of directors was May 14th. On May 4, 1896, the defendant Henry Sylvester owned 17,073 shares of said stock, one Phelan owned 19,000 shares, and one Lillie owned 15,205 shares, and on that day these three stockholders entered into a contract by which Phelan and Lillie were to transfer their said stock to said Henry Sylvester, he to vote and control the same for all purposes for the term of four years, but without the power of sale. These shares aggregated 51,278, a majority of the whole, and gave him the power to control absolutely, for that time, all elections of directors. On May 12th, Phelan and Lillie surrendered their stock to Sylvester, and a new certificate was issued to him therefor, and on that day he caused to be issued of his own stock five shares to each of the defendants» McLaughlin, A. J. Sylvester and Ira H. Chapman. Prior to this neither of the three owned any stock in said corporation, nor has either of them since acquired any other shares therein. The annual meeting for the election of directors was to have been held the second day after said shares were issued to said last-named defendants, but it was postponed until June 4th, and was held on that day, and resulted in the election of Mark Strouse (one of the plaintiffs) and B. P. Bicker, members of the preceding board, and the defendants Henry Sylvester, his brother, A. J. Sylvester, and W. P. McLaughlin, and on the same day the board organized by the election of Henry Sylvester as president, McLaughlin as secretary and treasurer, and A. J. Sylvester vice-president. On August 4th, at a meeting of the board, on the motion of A. J. Sylvester, Bicker was removed from the board on the ground that no shares were standing in his name on the books, and Ira PI. Chapman was elected in his place, and, being present, immediately took his seat. At the same meeting, on motion of A. J. Sylvester, seconded by McLaughlin, it was ordered that the president receive a salary of $250 per month, beginning from that date, and on motion by Chapman it was ordered that McLaughlin receive