RALPH H. WALKER, Appellant,
SOUTHWEST MINES DEVELOPMENT COMPANY, a Corporation; ARIZONA CONSOLIDATED MINING COMPANY, a Corporation; GENERAL SECURITIES COMPANY, a Corporation; W. A. NICKERSON, E. F. YOUNG, F. A. REID, CLAUD B. ANDREWS, FRED FORD, L. B. LeBEL; THE ROYAL AMERICAN CORPORATION, a Corporation; R. O. BARRETT, L. K. LINK, E. C. LOCKLEAR and MARK BRADLEY, Receiver, Appellees
APPEAL from a judgment of the Superior Court of the County of Yavapai. Henry C. Kelly, Judge. Judgment affirmed.
Mr. F. C. Struckmeyer, Mr. J. Bolivar Sumter, Mr. James E. Flynn, and Mr. F. C. Struckmeyer, Jr., for appellant.
Messrs. O'Sullivan & Morgan, for appellees.
[52 Ariz. 404] McALISTER, C.J.
This is an appeal from judgments rendered in two cases consolidated for trial in the superior court. The first was a minority stockholders' suit brought by Ralph H. Walker on behalf of the Southwest Mines Development Company, a corporation, himself and all other stockholders therein similarly situated, its purpose being to have the court set aside certain conveyances executed by that company to the Arizona Consolidated Mining Company and to restore the property thus conveyed to the Southwest Company. The second was an action by the assignee of the mortgagee to foreclose certain real and chattel mortgages executed by the Arizona Consolidated Mining Company on the property conveyed to it by the Southwest Mines Development Company, in which Walker, the plaintiff in the first action, intervened. The judgment in each case was against him and he has appealed from both.
The record is voluminous but the following statement discloses the facts necessary to a proper disposition of the appeal. The Southwest Mines Development Company, hereafter referred to as the Southwest, was organized in 1923 by W. A. Nickerson and E. F. Young with a capitalization of 750,000 shares of the par value of one dollar each, and according to its articles of incorporation the general nature of the business to be transacted by it was to acquire, exchange, sell or otherwise dispose of, mortgage and deal in mines, mining claims, mineral lands, coal lands, oil lands, water and water rights and other property, both personal and real, and to operate and develop the same; to purchase or otherwise acquire, erect, operate and sell milling, smelting and other ore reduction [52 Ariz. 405] works, railways and tramways to lead from the company's principal works;
"to own, purchase, or otherwise acquire and to sell, hypothecate and otherwise deal in shares and securities issued by itself or other corporations, persons or co-partnerships, and to cancel and re-issue its own shares and to vote shares of other corporations;... and in general to do and perform such acts and things and transact such business, not inconsistent with the law, in any part of the world, as the Board of Directors may deem to the advantage of the corporation."
In 1929 these articles were amended in such a way as to provide for a capitalization of 2,000,000 shares of the par value of one dollar each. From the date of its organization W. A. Nickerson had been the president of its board of directors and from 1929 E. F. Young, his sister-in-law, its secretary, and these two officers owned more than two-thirds of its outstanding stock of 1,000,000 shares, the remainder belonging to about one hundred stockholders in and out of the state, the plaintiff and intervener, Ralph H. Walker, of Phoenix, Arizona, being the owner of 12,000 shares. The five persons named by the original articles of incorporation as the board of directors never changed, though following their amendment neither Walker nor the other two, H. V. Young and Albert Oechsler, ever attended its meetings which were of an informal character, or took any part in its deliberations. Nickerson and Young, the secretary, conducted its affairs, the company being in reality the alter ego of the former.
Among its articles of incorporation was this:
"This corporation shall have power, at any time, to sell, transfer and dispose of its assets, upon the written consent of the owners of two-thirds of the capital stock then outstanding."
[52 Ariz. 406] In 1929 the Southwest became the owner of the mining property involved in this action, which is situated in Yavapai county, Arizona, and consists of four patented and thirty unpatented mining claims and four mill sites, together with the machinery, buildings and equipment of every kind located thereon. The value of this property does not appear, but according to the complaint it amounted to several hundred thousand dollars, though in 1932 the Southwest was unable to meet its obligations, Nickerson having written the stockholders that year that the company was about to lose its property, and the minutes of the board of directors under date of June 6, 1932, disclose that the "president ...