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Upon that subject there is more or less conflict in the decisions of the courts; but we find it unnecessary to pursue or decide the question in this case, for the reasons already suggested. In the instant case the sale was made in exchange for stock in another corporation, with the intention by the board of directors of the Alice Company, as is claimed on behalf of the appellees, to thereafter apportion the stock so acquired among the stockholders of the company, or its cash value to such of them as preferred cash, and thereafter to wind up its business and disincorporate the company.

The appellees dispute both the validity of the exchange and the intent with which it was made; but we find it unnecessary to decide either of those questions, because of the views we entertain regarding the two remaining points presented by the record. It appears that Ryan was a director and the president of the Alice Company, the managing director of the Anaconda Company, a director and the president of the Amalgamated Company, and a director and the president of the Butte Coalition Company; that Thayer was a director and the president of the Anaconda Company, and a director of the Butte Coalition Company, while the latter company owned a large majority of the stock of the Alice Campany, and 500,000 shares of the stock of the Anaconda Company. And although the trial court acquitted both Ryan and Thayer of any intentional wrong, saying in its opinion that it saw nothing to "inspire belief that they aimed at aught but fair bargaining, or that they designed injury to Alice and consciously abused their trust," yet said that, though the common directors were not a majority of either board, it"is a difference in degree, but not in principle. They may have dominated the board. In both cases is divided duty, conflicting interests, possible impaired judgment of unknown effect, difficulty of proof, and danger to stockholders. In either case, inadequacy of price is unfairness, and condemns without further inquiry in an attempt to determine whether due to corruption or honest, but mistaken, judgment unconsciously swayed by adverse interest. There is no safety otherwise.”

[8] At the beginning of the suit Judge Hunt, in granting an injunction pending the litigation restraining the disposition by the Alice Company of the 30,000 shares of the stock of the Anaconda Company, held upon the showing then made that Ryan, as managing director of the Anaconda Company, “must have had some specific, detailed knowledge of ore bodies in the Alice, their extent, character, and value, which would warrant the payment of $1,300,000 for the property, is an irresistible inference. We all know that the science of mining has been so far advanced within the last 15 years that it enables engineers to express clear and definite opinion of mine values. Mere chances have given way to highly reasonable expectations based upon exploitation, study of geological conditions, assays, mineralogy, and improved commercial facilities for reducing ores," and further held (and, as we think, very correctly) that upon principle contracts between corporations having a common director should be regarded very much as are contracts between individual directors and their corporations, and that while such contracts are not prohibited, and are not prima facie void or fraudulent, they are voidable, and that the burden rests upon those who seek to

sustain them to show clearly and satisfactorily that they are entirely fair and free from wrong-citing with approval what is said upon the subject in 2 Thompson on Corporations, $$ 1242, 1243.

[9] The trial court held that by the evidence given that burden was not sustained, with which conclusion we agree, not only because of the inadequacy of the consideration, but because it appears in part from Ryan's own testimony that all of the knowledge respecting the Alice properties within the possession of the buying corporation of which he was managing director was not communicated to the stockholders of the Alice Company, of which he was likewise a director and also its president, and whose directors it is manifest from the whole record he dominated. From his testimony we extract as follows:

“The price was fixed by general conference; in the matter of the Alice Company the price was fixed more or less arbitrarily. There was nothing in the value of the mines; there was nothing demonstrated that anybody could fix any value on. It was matter of trade between the representatives of both companies. Of course, when I closed out with Mr. Heinze, I was on one side, doing the best I could for the Amalgamated, and Mr. Heinze was doing the best he could for his company. When we traded with Clark, Mr. Clark was looking after the interests of his company, and I was looking after the interest of the Anaconda and the Amalgamated Company. The Alice Company appointed a committee to confer with a committee representing the other companies. I think the board of directors appointed the committee, and I was president of the board at the time. I don't remember who the members of the committee were. My associates upon the board, representing the Alice negotiations, were Mr. Carson and Mr. Thornton. They were the two that I relied on more than anybody else in the Alice Company. They were not connected with the Anaconda, or with any of the other Amalgamated companies; but they were directors of the Alice, both men of very good knowledge of the Butte camp and its history, and as good a knowledge as anybody had of the Alice Company. Mr. Carson was manager of the Lexington mills, the adjoining property to the Alice, for years when it was in operation, and just before it closed, and probably had as intimate knowledge of that important district and Lexington districts as anybody who was then living. I don't recall who represented the Anaconda Company. There were committees representing the different companies that were in negotiation for the purchase on the part of the Anaconda Company and for the sale on the part of the other companies. I don't know that Mr. Thornton, Mr. Carson, and myself agreed readily upon the price; but I don't recall any dispute. In reality, the price was arbitrarily fixed. It had to be. It could not be otherwise. The price was not fixed by me; neither the price on that or any of the other properties. I was very careful to see it was not. I realized that just such a question as this would be asked. I don't know that I would have so little common sense as to order on the part of the Alice Company, prior to the sale of the Anaconda, an investigation to be made by anybody to ascertain the then value of the Alice property. The Alice had no value, except as to its mine. The whole matter of the value of the Alice mine was discussed pro and con at the time I took that option, and, as I say, all the talent in our organization was criticizing me for taking that option. Nothing had developed after that time, up to the time of the transfers of these properties to the Anaconda Company, in the Alice mine, or on the Alice mine property, that was worthy of investigation. We all knew the development of the adjacent property in a way, and enough to guide us in our judgment as to the effect of that value on the Alice Company. The committee that were looking after the Alice end of the trade certainly satisfied themselves what they thought was a reasonable value for the property, and made investigations accordingly, I have no doubt. All of the committees representing all the companies did that; that being a part of the arrangement.

I produced the statement which you requested-Complainants' Exhibit A, October 7, 1913, showing the production of copper, silver, and gold of the Badger State mine

since the commencement of operations on that property to June 30th of this year. At the present time the lowest level in the Badger State mine is approximately 2,000 feet in depth. The extraction of ore in commercial quantities began, I think, at about 1,200 feet. That vein is probably a continuation / of the Jessie vein (one of the veins that crossed the property of the Alice Company). I think there was a lean zone in the North Butte property at about that depth; but the Jessie was worked and produced ore practically from the surface, not in the same high grade bodies that were encountered from about 900 down. I think the 2,000 and 2,200 foot levels in the North Butte-by common repute; I have never seen them myself—are not as good levels as above and below. I can tell you, from my mine report, that I have here the distances east and west of the working shaft of the Badger State that the developments have extended. On the 2,000-foot levels the workings extend easterly 74 feet and westerly 69 feet from the cross-cut. I cannot find any report of Professor Kemp and Mr. Keller and Mr. Klepetko bearing particularly on the Alice property. I am quite sure that they did not make a written report particularly on that property, because they were employed by the different companies in the Anaconda consolidation to value plants, to inspect workings, and to generally pass upon the value of operating properties, which, of course, was impossible in the case of the Alice, as there was no plant, and the workings were not accessible, on account of the mine being filled up with water, up to about the 700-foot level. So far as the Alice Company is concerned, there was no written report from any engineer on the property preparatory to, or anticipatory of, the sale. Mr. Thornton and Mr. Carson, both of whom are engineers with considerable experience in the valuation of mining properties, particularly in Butte, were directors of the Alice Company, and conferred with me as president of the company, and very largely determined the value of the property for the purposes of the trade. Professor Kemp did not make any report to the Alice Company. Of that I am certain. The circular to the stockholders, issued by the directors, was all the information the directors or anybody else had, and was sent to the stockholders previous to the meeting at which they were asked to vote on the acceptance or rejection of the offer of the Anaconda Company to buy the Alice property. I did not have specific information concerning the property from Mr. Buzzo [for years superintendent of the Alice Company); but I had general information. Mr. Buzzo did not talk enthusiastically about the property, as I remember it; but he was very anxious to have the Alice property fall into the hands of some one who had money enough, or could find money enough, to open it up and develop it, in the hope that soinething could be developed to make it a valuable property. So far as I was able to judge, he gave me whatever information he had concerning the property.”

We find in the record no evidence that Ryan ever conveyed to any of the complaining minority stockholders of the Alice Company any of the information concerning its property, or its probable or possible value, communicated to the Anaconda Company by the experts referred to in the foregoing testimony. And certainly there is no such information contained in the circular letter to the stockholders of the Alice Company, referred to by the witness as having been signed by him and its other directors, advising the acceptance of the proposition of the Anaconda Company, which circular letter we insert:

“New York City, New York, April 27, 1910. "To the Stockholders of the Alice Gold & Silver Mining Company:

"You are advised that a special meeting of the stockholders of the company has been called to meet at the principal office of the company in the Utah Sav. ings & Trust Building, Salt Lake City, Utah, on Friday, the 27th day of May, 1910, at the hour of 10 o'clock a: m. The purpose of the meeting is to submit to the consideration of the stockholders, and to have them pass upon, a proposed contract of sale between the company and the Anaconda Copper Mining Company of Montana. The proposition, if approved by the holders of the necessary amount of the capital stock of the company, will result in the sale and


transfer of all of the property and assets of the company to the Anaconda Cor. per Mining Company, in consideration of the issuance and payment by the latı ter company of 30,000 shares of the full-paid capital stock of said company. In submitting this proposition to the stockholders, and advising its acceptance, the management wishes to state that the Alice Gold & Silver Mining Company was incorporated under the laws of Utah on the 16th day of March, 1880, with a capital stock of $10,000,000, divided into 400,000 shares, having a par value of $25 each, all of which stock was issued in acquiring certain mining properties near Walkerville, in the county of Silver Bow, state of Montana. The mines of the company were operated actively from 1880 until 1893, and afterwards for a short period during the years 1897 and 1898. The total dividends which were paid from March 15, 1881, to March 15, 1898, amounted to $1,075,000. During the period of active operation, silver was the chief product of the company. During the year 1893, because of the market decline in the market price of silver and the lean values of the ores which were developed in the lower levels of the company's mines, it became necessary to close down its property, and practically no operations have since been conducted by the company, and no revenues have been received, except a comparatively small sum realized from the royalties paid by lessees working in certain portions of the older levels of the mines. As a result of closing down the mines of the company, the same filled with water up to the 700-foot level, and the workings between that level and the 1,500-level have been and now are inaccessible. A balance sheet, showing the condition of the company on March 31, 1910, and a profit and loss account, showing the result of such operations as have been conducted by the present management, are attached hereto and marked respectively Exhibits A and B. In 1908 the Butte Coalition Mining Company acquired by purchase from the former owners a majority of the stock of the company. The market price of silver, taken in connection with the low grade of the ores exposed, has been such that the mines of the company could not be worked at a profit, and in view of the depleted condition of the treasury of the company the management has not felt endeavoring to carry out any extensive system of prospecting or development work. Recently the stockholders of other companies, to wit, the Boston & Montana Consolidated Copper & Silver Mining Company, Washoe Copper Company, Big Blackfoot Lumber Company, Butte & Boston Consolidated Mining Company, Trenton Mining & Development Company, Red Metal Mining Company, Diamond Coal & Coke Company, and Parrot Silver & Copper Company, have taken steps to effect a consolidation of all the property owned by them, by a sale of their respective properties to the Anaconda Copper Mining Company, for certain amounts of the capital stock of the Anaconda Copper Mining Company, and the last-named company, in pursuance of the same general plan, has offered to purchase all of the property of this company, paying therefor 30,000 shares of the capital stock of the Anaconda Copper Mining Company. By the consolidation above referred to the Anaconda Copper Mining Company has acquired the most important mining ground in the Butte district, and it is believed that it will be enabled, through the adoption of general systems of drainage, ventilation, and development, to prospect in an economical manner the undeveloped portion of the property thus acquired. This company is the owner of comparatively large areas of mining property which lie contiguous to some of the property belonging to the Anaconda Copper Mining Company, and which it is believed are of sufficient value to justify prospecting and development, provided the same can be carried op by a company strong enough financially to [bear the] burden of so doing. In addition to the cost which the resumption of active mining operations would entail, you are advised that it would be necessary to construct and equip new mills or reduction works of modern design and suitable character to handle the ores of the company economically, provided such ores were encountered in sufficient quantity to justify the continuance of mining operations. Such action would require the expenditure of large sums of money, at present unavailable. You are therefore advised that in the opinion of the management it would be to the best interests of this company and its shareholders to accept the proposition of the Anaconda Copper Mining Company. You are therefore requested to sign themscompanying proxy and return it in the inclosed envelope, wheth.

er you expect to be present at the meeting or not, in order that the stock owned by you may be represented and voted at the special meeting of the stockholders Very respectfully, John D. Ryan, J. W. Allen, W. D. Thornton, A. C. Carson, E. S. Ferry, Board of Directors."

There is in the foregoing letter, not only none of the information derived by Ryan from the experts of the Anaconda and its associated companies respecting the actual probable or possible value of the properties of the Alice Company, nor any intimation of any intention of the board of directors of the latter company to wind up its business and obtain its dissolution, and, as a matter of fact, as the evidence shows, no move to that end was made until about one year after the sale and conveyance of all of the property of the company. The court below, having found that an adequate price had not been paid for the properties in question, for which reason the appellees had not sustained the burden resting upon them to show that the sale was a fair one, and having held that it could not be legally made in consideration of stock in the Anaconda Company, based upon its interpretation of the decision of the Supreme Court in the case of Mason v. Pewabic Mining Co., 133 U. S. 50, 10 Sup. Ct. 224, 33 L. Ed. 524, entered an interlocutory decree to the effect that the entire property be offered at public sale by the master of the court, upon prescribed notice, and that if an amount in excess of the value of the stock given for it by the Anaconda Company-which the court fixed at $1,500,000—was not bid for it, the sale should stand confirmed; and, it having subsequently been shown to the court that at the offer of the property at public sale as provided in and by the interlocutory decree no bid was made, the court entered the final decree affirming the sale.

I am unable to see that the decision of the Supreme Court in Mason v. Pewabic Mining Co. in any respect sustains such decree. In that case a corporation of Michigan, with a capital stock of 20,000 shares of the par value of $25 each, afterwards increased to 40,000 shares, had become dissolved by the expiration of its charter on April 4, 1883, notwithstanding which fact the directors, who were elected in March of that year, continued the ordinary business of the corporation, and, among other things, made an assessment of $88,000 on the capital stock, which was paid. On the 28th of March of the following year, at a meeting called "for the election of directors and for other purposes," these resolutions were adopted, against the vote and the protests of the complainants to the suit, who were minority stockholders of the old company :

"Resolved, that the board of directors be authorized to sell and dispose of the property of the company for a sum not less than $50,000; that the president and secretary be authorized to execute all conveyances necessary to carry out the contract for the sale of the property of this company made by the board of directors; and that the board of directors be, and hereby are, authorized to close up the business of the company.

“Resolved, that it is the sense of this meeting of stockholders that the property shall be sold to a new corporation, organized under the laws of Michigan, on the basis of 40,000 shares, and that the stock of such new corporation shall be issued to and received by the stockholders of this company in payment for the same, stockholders to have the right to receive [an] equal number of shares in [the] new company, if they so elect, on surrendering cer

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