The San Francisco Call. Newspaper, December 10, 1895, Page 10

10 THE SAN FRANCISCO CALL, TUESDAY, DECEMBER 10, 1895 THERE WAS N FRAUD Judge Seawell Has Decided the Theodore Fox Suits. OPINIONS TFILED. Judgment Rendered for Defendants in Both Actions. HIS the CASES INVOLVING MILLIONS. No Evidence to Show or Fraudulent There Was Conspiracy Dealings. dge Seawell has decided the Fox case: against John W. Mackay and the Consolidated California and Virginia Min- ing Company, and in each case judgment | has been rendered in favor of defendants. The suits were brought bs Theodo Fox, a stockholder in the deferndant mir ing company for an eccounting of the fairs between the defendant corcpany and the Comstock Milling and Micing Com- pany, also a defendant in the suit foran accounting. The other is a smt for an ac- nting of $30,000, alleged to have been udulently paid by the mining comp br fra ] 1o W. F. Berry, acting for W. H. Patton. The opinions tell the story in each case. T rey are as follows: » defendants in this action is the Con- California and Virzinia Mining Coi . For the sake of brev it will be d nated in this opinion as miining company. Tae Comstock Mill and Mining Company, & cor- | poration orzanized under the laws of Nevada, is | 0 name but neither ap- h process. It will be gnated us the n . | The action is brought by plalntiff as a stock- | holder of the miniug compsny to_compel the de- 1 John W. Mackeay, John P. Jonesand the ill company., to account 1o the mining company for the moneys received by the mill company from | the mininz company for the reduction and milling | s ores, 1t be alleged that as the result of of a conspiracy price for | ors of | ndant he mining company was incorporated October 1884, and was formed by & consolidatlun of two prations, Known respecrively as the California | ng Company and the Consolidated Virginia | ning Company, 10 ail the assets and property of ining company succeeded. The capi- ie mining company is divided into | 216,000 shares, of which at_the time ot ihe com- mencement of this action the plaintiff was the owner of five shares. standing in his name on the books Of the compaly. time ot _the consolidation above ifornia Mining Company owned ginia City, known as the --California ie Consolidated Virginia Mining Com- mine_adioining the_other, known which the tal stock of me amineat V. mine,” an pany owned s ““Consolidated Vir: Prior to November 20. yie a large quantity of gold ana si that time (he working of them had ceas profitable. The mines were also in bad condition; aits had become decay he hoisting works ed repalring. and the addition of new ma- The mines had caved badly and required { retimbering. In the opi ne of the most | competent judg:s the mines had been practical: - exhausted. in this condition of the min Jones proposed to the Consolid e defendant irginia Min: ing Company and California Mining Company, re- epectively, 10 reopen and work that portion of their mines above the 1550 level. This proposi- tion resulted in the making on November 20, 1883, of an agreement_ by and between said Jones and the Consolidated Virginia Mining Company, the terms of which were, in substance, as follaw. Said company empioyed Jones to mine and mill 'l the ores which should be extracted by him | that portion of the Consolidated Virginia above the 1550 level jor the term of three said Jones agreed to explore for, mine, transport and mill said ores and account | tothe company for 70 per cent, in bullion, of the assay value of all such ores. The bullion was to be sola and the proceeds distributed i the follow- ing order, viz.: First, 10 the payment of the Sutro tunnel royaity ond, to the payment tothe cempany of 50 cents per ton for all ore mined and milied by Jones; third, 10 the payment of all min- senses incurred by Jones; fourth, to the 10 Jones of $9 per ton for the transpor- d milling of ores: fifth, to the payment to the comp: ¥ balance remaining after pay- ment of the other items. fhe agreement further provided for periodical accountines and_settlements, and akso contained other provisions for the protection of the company, one of which required Jones to_save the company harmless from all_liens or other claims and to exe- cute to it a bond, with sureties, in the sum of £10,000 for the faithful performance of that stipu- lation. On the s made an same provisions in reference to the California mine aswere in the agreement just mientioned in Teference to the Consolidated Virginia mine. Mr. Jones, upon the execution of the agreements just mentioned, immediately entered upon their performance. ie expended considerable money 1n the purchase of machinery and material and in working and developing the mines. No question is made as to the fidelity with which the agreements swere carried out on his part. On December 17, 1835, jones presented to the Dboard of directors of the mining company & writ- ten communication in which he proposed to sur- render the agreements of November, 20, 1883, aud release the company therefrom, on condition that the company would employ him exclusively forthe period of five years from January 1, 1886, o trans- port and mill all of the ores raised from its minesat ihe rate of $7 per ton: the yield therefrom to equal 70 per cent of the pulp assay, but that the mining company should 1ot be under any obligation to ex- tract or deliver any ore which would not pay the cost of mining and millin In the communication jnst mentioned Mr. Jones stated that under the terms of the existing con- tracts he would be entitled to receive irom the products of the ore then in sight a sum exceeding £50,000, which he had failed to make out of the are ‘already worked: that he fuily provided with all the facilities necessary for carrying out the contract and was not seeking a release from any of his oblizations, but that circumstances existed which tended o bring about a misunderstanding arising from the fact that the mine was at the same time under two distinct managements and that it would be advaniageous to the Company to Lave the full and unrestricted control of the whole of its mine and of ail the underground workings. “The board of directors of the mining company at the same meeting, held December 17, 1885, passed @ resolution that the company make and enier into an agreement with Jones for the trausporta- tion and reduction of all the ores raised from its mine during the period of three years from Janu- ury 3, 1886, at_the rate of $6 per ton, and provid- ing that the ore shonld be taken at the company’s dump and transported and milled in the usual manner, and should produce a yield equal to 70 per cent of the pulp assay: that pulp assays should he taken daily and reported to the mining com- yany's office in Virginia City; that the mining company might keep an agent in any mill where the ore was being worked to take samples and op- serve the working of the ore; that the company should not be obliged to take out any ore the yield of which would not pay the cost of miging, milling and transportation: that the company would not place any ore in the dump which would yfeld less than $6 per ton. and if it should doso such ore might be removed at its expense. but if Jones 100k any such oreand worked it he should only recelve the yield as his compensation for the transportation and milling. The president and secretary of the mining company were by said resolution authorized on behalf 0f the company 10 enter into an agreement with Jones embodying the stipulations contained in said resolution, end such an agreement was exccuied by Jones and the mining company on December 23, 1885, from mine pay tation ai me day the California Mining Company March 6, 1886, the agreement last mentioned was assigned by Jones 1o the mill company. The mill company was incorporated Jauuary 8, 1885 under the jaws of Nevada, and its capital stock as divided into 2500 shares, of which Jones ned X1314 shares, Jobn W. Mackay owned 31/ shares and J. C. Flood owned 3314 shares. Upon Its incorporation three mills were trans- ferred 1o the mill company, viz.: the Morgan, Eurexa and the California. Ever gince January 1886, the ores of the mining company have be reduced at these mills by Jones and the mill com: pany respectively. On_December 24, 1886, the mill company, by Jones as Its president, sent to the direc.ors of the mining company 4 writlen communication, in which he requested such a modification of the agreement of December 23. 1855, as would resu- late the compensation of the mill company for transpor:ing and working the ores according to the grade of the ores. In this communication the mill company stated that at the time of muking the agreement of December 23, 1885, the ore in the mives of the mining company was of poor quality and low ‘grade and did not yield more than $13 per ton,and that the rateé of compensation waus fixed 'in_that agreement at $6 per ton in view of the value of the ore then in the mine, and upon the supposition that all the ore to be worked would not, to any considerable amount, exceed that value: that since the making of sald agreement new discoveries bad been made of ore of & higher grade: that the working of such higher grade ore required more time and a greater quantity of quicksilver, and that for these reasons the expense of working was increased in a very sensible degree and the milling company could not work such ore with any profit to itself at the rate fixed, that while the mill company was required | They deny that Flood and Mackay, or eitner o them, ever owned a majority the sto the mining company or named or co by said agreement to make return of only 70 per | cent it had made an average retnrn of 82 per cent: that by the yield 1o 70 per cent it | could do the work for #6 per fon, but such a course would result in great 10ss to the mining company. The bourd of directors of the mining compar thereupon passed a resolution instructing the pro s ccretary thereof 10 sign & supolemental ) the mill company, fixing the price for the transportation and milling of ores, as fol- lows, viz. For 111 ores yielding 183 than $16 per ton, 86 per ton: for all ores vielding more then $16 per ton id less than $10 per ton, $7 per ton: 10r ail ores ding more (han $40 per ton and less than $60 er ton, §8 pe s vielding more than supplemen sl agre ted December 24. 1886, by boti since been altered. On agreemen December 23, hat of December 24, 1886, was, by an agreement executed by borh corpora- (-mn;nld in force for three years from Jan- 1589. original comp'ai was filed December 4, In the last amended complaint, which was i September 4. 1895, ut the ciose of the trial, it s alleg. d that flom time of the incorporation of the mining company until the death of Mr. Fiool, he and Detendant Mackay owncd and con- irolled a mejority of the shares of the mining com- 's stocs and named and controlled its sue- cessive boards of directors: and that since tne death of Mr. Flood in February, 1889, Mr. Mackay ¥i has owned and c(outroled a majority of the stock and has nuned and controfled said bosrls, andthat sad boards were always con- trotied by and always acted in subserviency (0 said Mackay and Flood during the latter’s lifetime and were thereaster controlled by and acted in sub- servieney o said Muckay: tiat Mackay and | I100a, having obtained conirol of the board of di- rectors, formed a conspiracy to cheat and defraud | the miniug compaay, and as oue of the devices ed by thew, i conjunetion wiih Jones, pro- «d the mining company o enter into the agre ment of December 3, 1885, above mentioned tha. it was agreed at the i1ime berween Macka, Jones and Flood that Mackay and K1ood shou' perticipue to the extent of two-thirds in all the profits of milling ores unéer that asreement; that ihe sum of $6 per ton for milling said ores x- cessive, end tha' $4 per ton would have been a liberal compensation therefor: that ever since De- cember 24, 1886, the milling company frandulently charged and was average sum o1 $7 per ton for all ores which averaged over $16 of the pulp as- suy, whereas $4 per ton would have bee on’ therefor; that between January 1, mber 1, 1831, 734,961 tons were { anberat | | overchirge ‘therefor amountad to | 204,183, which enured to the profit of ¢ and Flood before the death of th ce thi ot Mackay Jones; that, to the miil company ana 1S sa . milled and crosied in a very 50 that an unosually precious metals was seur s, he ores were superticial manner, small percentage of the extracted therefrom and | d to the mining company: that le 70 per cent was returned for more of ore mulled by the mill compz: of such imperfect mil:ing, ues which were uniawfully mill compauy, were worth, in the aggreg: the sum of $2,500.000: that Mackay and tlood srandulently concealed from the other stoekholders of the mining company the fact that they owned | # majority of its capits: Stock and contro.ied it fa s and directors, and also concealed fiom them | the fact that Flood and Mackay in conjunction with fcnes owned all or nearly @1l ihe capital stock of | the mill com ard that by reason of the con 0! by Maciay Of *Le direciors of the mining | compainy, it would be useless to request them 1o itute legal proceedinzs on 1:s behalf against cuy, Jonies and the mill company. | idants in their respective answers deny | the allegations of conspt ud wrongdoiig | | with which they charged in the complaint. trolled any of its directors. They alleg tween January 1, 1886, ana December 1 more than 712,000 tons of ore e that be- pany were crushed, of which 20,600 were milled by Jones and the balance, 692,000, by company. They deny that there has been any overcharge for milling the or>s, and alieze that prices charged therefor were reasonanle. They allege that during the whole period between Janu- ary 1, 1886, and December 1, 1891, there were only four months in which the average vield of the | | | the mili i | | ores milled was less than 70 per cent of the pulpassay, to wit: October, 1887. when the average per cent was 69.31, and June. 1890, October, 1890, and November, 1891, when the average pe ages, respectively. were 68.49, 65.63 and 6! that during the whole of said period between Jauu- | ary, 1886, and December, 1891, the average vield was over 70 per cent of the pulp assay. in numer- ous instences was over 80 per cent, and in a num- ber of instances over 90 per cent; that while, 10 unintentional causes, not superinduc mitl company and which conld not erage of the returns was, during the fou entioned, slightly below 70 per eent of assay: the average was made up in succeed months: and that it has always been the custom ever since mills were erected on the Comstock lode, where the mines of the mining company are | situated, for the milling companies to retain for their own use the slimes, tailings and residues, ter the milling of ores in & proper and honest mannes clief upon the theory ween Flood and Mackay to de mining company, and a dereliction of guty upon | the part of the directors by which Jones, Flood and | Muckay were enabled te succe-sfuly carry outthe | | | conspiracy. It 13 ciaimed on the part of plainift that the evidence shows that Flood and Mackay owned and controlled & majority of the Stock of the miting company and elected directors who | \ere entirely subservient to their will; and that any contrac: between the directors on the one hand and Flood and Mackay on the other was vircusily a Coutract made by Flood and Mackay with them selves. Even sssuming that Flooiand Mack owned a majority of the stock and controlled the election of directors, I do not think that & con- tract which the directors, acting on behal? of the corporation, made with Flood and Mackay could | be properly termed a contract which the directors made with themselves. The mandate of the law is that a director or other trustee shall notin the matter of his trust act for h's own benefit. This rule doos not forbld a director from entering 1nio & coniract with a stock- holder, whether owning & majority or less number of shares. 11 such & contract is. for any reason, in- valld, it is not so because the directors maude a con tract with themselves. 1f the stockholders. by Whose votes the directors obtained their office, Suouid use their influence Lo nequire an unfair ad: age over the corporation, account of equity Would set aside the transaction, not because the | directors make a contract with themselves, but be- Cause It was tainted with fraud. 1f a contract be- tween the direciors and a stockholder is fuir and Sree from fraud, 1t is entitled to the same pro- tection from he COUrls 43 & CODEACT belween other parties. 1 do not consider the question of the ownership | P Dby rlood and Mackay of a majority of the stock a controlling one in the case: but as it has been dis- | cussed by counsel at some length it is proper that I should express my views upon it. At ihe elec- tion of directors held in October, 1886. 107,209 hares stood in the name of George Grant, truste A proxy for these shares Wwas given by Gran 1o ¥ the president of the mining company. Grant was an employe of the Nevada Bank, of which Flood and Mackay were directors and 1arge stockholders. Included in these shares were 33,309 shares which had been purchased from the company by Mau Dore. There is no evidence that the purchase was for the benefit of Flood or Mackay. Grant testi- fied that it was an everyday practice for people to sk him 10 indorse certificates :n the name of George Grant, trustee, and that stock was put in | his name as trusice by many persons for the rea- son that his signature was well known and was good delivery in all the stock boards of the United States. There was at_times some stock standing in the name of iL. E. Bigelow, trustee, and some in the name of George Frier, trustee.’ Bigelow and Frier | were_emplyes respectively of the Nevada Bank and Fiood. Neither of them had any personal in- terest in the stock in their names, and both t fled that they did not know for whom they held the stock as trusiees. In January, 1887, a dividend was paid to F:0od on 94,790 shares standing in the name of either George Grant or partly in the name of Grant ana partly in that of Havens. There is no evidence that Flood and Mackay together ever owned more than 97,790 shares. Mr. Mackay testified_that dividends upon ail stock owned by him were paid to Mr. Flood, but that each owned his stock separately. Ihere s 1o evidence that Mr. Flood ever took part in the election of the directors of the mining company. Mr. Fish testifies that he was consulted as to the name (0 "e inseried in the ar icles of in- corporation when the consolidation took place, but it does not appear that he afterward interfered in any election or tiiat there was ever any contest for the office of director. Mr. Mackay was absent from the State most of the time and to0k no part personally in any election. Most of the stock of the company st6od in the names of yarious siock brokers, as trustees, and immedlately before every election Mr. Havens, the secretary, procured from them proxies to Mr. Fish, the president. These proxies were given to Mr. Havens out of friend- ship to him and to enable him to retain his posi- tion as secretary. Eut_while the evidence fails to show that Flood and Mackay owned a controlling interes: in tne stock, their relations—at least those of Mr. Flood— 10 the directors were such as to give them great influence with the directors. The personnel of tke directory was just about what it would have been if Mr. Flood had the selection of it. The mining company was the SUCCESSOF 0 WO COrporations, which, in what Mr. Mackay calls the “-bonanza’ days, had been controlled and principally owned by the firm of Flood & O’Brien, of which J. C. Flood and John W. Mackay were members. The first directors of the mining company were selected from the directors of the Cali:ornia and Con. Vir- ginie_companies, who were in office at the time of the consolidation in October, 1854, All the di- rectors so selected had reintions of a more or lesy intimate charzcter with Mr. Flood, Mr. Follis being his brother-in-law. The same may be said of the airectors chosen at ail subsequent elect.ons. Mr. Fish, the president,was in the habit of con- suliing Mr. Flood in all imvortant matiers con- nected with the management of the mine. The original contracts of November, 1883, be- tween Jones ana_the predecessors of the mining company, are not. involved - in this action, and are the material only 50 far as they throw light milling contracts of December, 1K85. original agreements Jones was limited in his w ing of the mine to that poriion which was ab the 1550-100t level. Allwork below Lhat was car- ried on by the mining company. ‘the mine was thus under two separate and indepenient manage- ments 1t appears by tie tesimony of Joues and Mackay that considerable friction arose between Jones' men znd the employes of the mining com- Dany, and_that their disputes interfered with the working of the mine, it was largely by the persus- sion of Mr. Mackay that Jones coticluded to apply 1o the mining company 10 be released from his isting contracts and to be given i lieu thereof a contract for the exciusive milling of the company’s ores. Iam satisfied that when Mr. Jones applied to the mining company for the milling coniraci it was understood beétween him and Flood and Mackay that each of them should have an equal interes: in the milling contract when obtained. In this there was nothing unlawful. provided the coutrict was rair and no unfuir advinuige taken. In his application Jones asked that he be given & con.rac. for five years ai $6 per ton. The bourd of directors authorized & contract for only three yearsat $6 per ton. They also consented to pay | the full price of $6 per to, notwithstai |, would be suflicient to p him $10.000 for the marerials which he turned over 1o the company, and the evidence shows that after recelving that amount his 1oss was $40.000. ‘I'he application for the milling contract of De- cember, 1885, was made by Jones alone, ‘The mill compaty had not yet beea organized. The direct- ors of the mining company did not know that Fiood or Ma~kay were to be interested in the cot: tract. In awarding the contract.to Jones they could not hiave been influenced by the considera- tion that they wers advancing the persona! inter- ests of Flood or Mackay. In view of the personal relutions which existed betwesn Mr. Flood und the directors, if the evidence showed that the contract in question wes unfair, there wouid be @ strong Ppresumption that it was procured by the use of un- due infitence. Tie uncontradicted testimony in the case is that fhe contract was a fair ope, and that a the time when the agreement of December 23, 1885, was made $6 per ton was a reasonable price for the transportation and milling of such ores as the mine was then producing, and that 70 per cent in bullion of the pulp assay was a fair re- turn to be made by the miller 1o the mine-owner. On December 24, 1886, the agreement 0f Decem: ber 23, 1856, was modified by providing that the mill company should recelve $6 per ton for il ores vielding less than $16 per ton, $7 per ton for all ores yielding more than $16 per (on and less than $40 per ton, etc. No grealer amount was ever paid under the coniract as modisied than $7 per ton. The reason given for this modification of the contract is that when the egreement of December, 1885, was made, fixing the rate at $6 per ton, all the ore then Knowr to exist in the mine was ot poor quality, yielding not more than $13 per ton, and that it was not then supposed that any ore would be milled which would materially exc ed that value; that ores had since been discovered of a much higher grade, requiring more time and a greater amount of quicksiiver in their treatment, and that. by reason of the increaged expense, the mill company could not work such ores of higher grade with aay profit at the rate of 56 perton. In granting the application the Loard of directors appear (o have been more liberal than is usual in business transuctions. 1t does not follow that there was any fraad. The uncontradicted testimony of all (he experts upon the subject was tuat $7 per ton wus & reasonable charge for the ores which vielded over $16 per ton. i On October 2, 1839, the contract of December 23, as modified in December, 1886, was continued in force for o further period of three years from Janu- ary 3, 1889. At that time Mr. Fiood was not livinz, It is further claimed by plaintift that the mining company was ulso defrauded (1) by the imperfect s ores and also (2) by the mining and milling of ores which would not pay more than the cost of milling. To suppor: the first charge plain R relies upon the fact toat in four months. v October, 1857, June, 1890, October, 1890, and No- vember, 1891, the returns of bullion were a little less than the stipulated 70 per cent of the battery sneh requrns belng_for the months named, assny respectively, per cent of the pulp assay 69.31, 68.19, 65.63 and 68.81. During these mouths the mill company was paid fact that the return was less than the stip per cent. Messrs. Mackay and Lowell test it is impossible to complet n the returns from ore which bas been miifed untilafter a “clean- During the process of milling greater or less up.” and silver quantiiies of material containing gold are retained in and adbere to the pans or other parts of the milling machinery and cannot be col- lected ani removed until the “clean-up,” which takes place every three or four months. 1f such is the case it is 0bViOns that & complete return can- no: te until after the “clean-up” and that it the results of that operation when added to the re- turns previously made, during a given run of the mill, raise the entire average to 70 per cen:. the mill company should be deemed 1o have fully com- P 1 with the terms of its contract. The returns in evidence tend to corroborate the testimony of a Lowell on this point. of bullion in October, 1887, was only 63.31 per cent, that in the mext month aver- aged 87.19 per cent. In June, 1860, It was 68.49 per cent, and in the following month 87.87. It was only 65.63 per cent in October, 1890, and 76.98 in Nouember, 1 During ihe entire period from January, 1886, to December, 1891, the average retu eded 70 per cent. It has always been the usage in the dlstrict where the mines’of the mining company are situ- ated for milling companies to retain ior their own 13 e use the tailings, sumes aud residues remaining | aster the miliing of ores in a proper mann All the agreements above mentioned having been e with knowledge of such usage must be con- ued as if it had been expressly incorporated in the agreements. ‘There being no évidence that the ores were milled in an unskillful or imperfect maner, no reason_appears why the miil com pany should Fender any accoupt of the tailiugs, slimes or residues. The other charge isthat ore was mixed and_sent to the mill which was not of suflicient value to pay the cost of milling and mining. The only instances which have been brought to my attention are the following: On March 11, 1856, ore was millcd ar the Eureka mill, the average assay value of which was only $7 85 per ton: and for the week ¥ st ending June 18, 1886, 1668 tonsof ore were milled at the Eureka mill, the average ussay value per ton of which was only $8 83. ‘here 13 no satis- factory evidence a3 to what the value of the ore must be in order to pay the expense of both mill- ing and mining, but 1 am satisfied that neither 85 nor £8 K3, of which one-half would be silver, ¥ st1ch expense. Inworking and developing a mine it is often necessary to extrac: and remove ore 10 the sur- face, without regard to the value of such ore. It is in the way and must be removed in order 10 prop- erly work the mine. When such ore i3 hoisted to the surface ull the expenses of mininz it have been incurred, and it does not cost the mining company any more to allow the mill cOmpany Lo transport and miil it than iz would to throw it away The few isolated instances where ore was sent to the mill which would not pay the costof both mining and milling are not sutticient to justity the inference that thers was any collusion betweenthe managers of the mills and mines respectively for the purpose of defrzuding the mining company They do 1ot tend o prove that there was & con- spiracy between Flood and Mackay to defraud the stockholders of the mining company. and with- out proof of such conspiracy the case of the plain- Uff fails. Mackay and Jones are merely stock- holders of the mill company. Neither he nor Jones attended personally to the business of mill- ing and both were generally absent from the State vada. So far from the evidence showing any on the part of Jones or Mackay, I am satis- fied from the evidence that the empioyesof the mill company performed their duties honestly and honorably: and in this connection 1 deem it proper to note the fact that, while the ores of the wining company were worked by the mill com- pany unaer the said agresments the former paid Nonc of (e transactions assailed by the piaintiff in this action were concealed from the stockholders of the mining company. The varions propositions Jones and the milling company and_the several ments_ In which they resulted, of which the ntiff compleins. were spread upon the minutes of ‘he board of directors of the mining company, and were at all times subjec: to the inspection of tockholder. In his communication to the directors requesting them to commence this suit, the plaintiff himseif stated that “the many facts above stated should have heen known to ali of you individually, for they appear (o a large extent on books of your company, and form & great par. of the proceedings of directors’ meetings,and engrossed upon your minutes or record books.” In his com- piaine the plaintiff does not allege that he or any other stockholder of the mining company was ignorant of any of the matters of which he com- plains except the fact that Flood and Mackay had an interest in the mill company and owned a majority of the stock and coutrolied the directors of the mining company During the trial and in his argument plaintifi’s counsel repeatedly asserted that it was so notorious as to scarcely require proof that ¥lood and Mackay Dbave always controlled the mining company. the milling contracts were reasonable and fair. If made with Jones alone. they are not less 8o merely becanse Flood and Mackay were interested in them. The printed annual reports of the min- ing company which were dis ributel among the stockhoiders in the vears 1887, 1888, 1889 aud 1891 give the names of all the mills at’ which th ores were worked, the number of tons of ore worked, each year, at each miil. the amount of builion produced, tiie vield in old and siiver per ton. the amount paid for milling and the assay valiie of the ore per ton per battery samples. The stockholders having. during all this time. with full knowledge of all material facts, acquiesced in the transactions of which the plalntiff complains, will be deemed to have ratified them and to_have' lost by their laches tire right. If any they ever had, to demand that they be set aside. Judgment will be entered for the defendants. The second decision, regarding the payment of $50,000 to W. F. Berry, i as follows: This action is bronght by the plaintiff as a stock- holder of the mining company defendant to require defendant Mackay to account for and pay to the mining company for the use of its stockholders the sum of $50,000 alleged to have been paid by the company to one W. F. Berry for the use of said Mackay and one J. C. Flood, as the result of a conspiracy alleged to have been formed by Mackay and Flood for the purpose of defrauding the min- ing company; it being also alleged that Mackay and Flood owned a majority of Its stock and named and controlled its directors. From and including the year 1884 until the 27th day of August, 1887, one 'W. H. Patton was the superintendent of the mine of the company at Vir- ginia City at a monthly salary of $187 50. in De- cemper, 1886, a fire broke out on the 1600-foot level of the mine. The fire was a serious one and of estensive proportions. It greatly interfered with the working of the mine and threatened great 10ss an dumage 1o the company. Patton. the su- perintendent, afier several months of effort, finally in June, 1887, succeeded in_extinguishing the fire, The result was that the company was able to re- open and work the entire mine and subsequently 10 pay large dividends to its stockholders. In August, 1887, Patton resigned his position as superintenaent and went to Australia. He did not recurn for two or three years. At a meeting of the board of directors of the mining company, held April 3, 1888, the following resolution was adoted : “‘Whereas, William H. Patton, the former super- Intendent of this corporation. has rendered efficient and valuuble services to thiy corporation during the past vear in the matter of extinguishing the fire in the mine and thus opening up to the com- pany a larze amount ot valuable ore that otherwise conid not have been extracted. Now, therefore, he it resolved. that this corporation, in consideration of said services, pay 1o sald William H. Patton the sam of $50,000 In full of all demands in four nay- ments of $12.500 each at the following dates, viz.: April 10, 1888 May 10, 1888; June 11, M888, and July 10, 1888 . Subsequently, at the dates specified in the reso- lution, the money was paid, &3 therein directed. The payments were made to W. ¥. Berry, the son- in-law and attorney-in-fact of Patton, by checks of the mining company upon the Nevada Bank, its treasurer, payable to the order of Patton. Berry was at the time an employe of the Nevada Bank. These checks, as they were received, were de- posited by Bercy in the Nevada Bank to the credit of Patton, who bad an account there, Immediately after depositing each check, Berry. as the attorney- in-tact of Patton, drew checks for the amount of the deposit in favor of the Nevada Bank. as & pay- ment @n account of & promissory note of Patton, held by the bank, bearing date October 11, 188 for the sum of $62,888 40, with interest at the rate of 6 per cent per annum. At the date of the resolution of the board of di rectors, above mentioned, the indebtedness of Pat 100 10 the bank on his note had been reduced to a little less than $20,000; and of the last installment L | 1o its siockholders dividends to the amouut of over | $ of 812,500 recelved from the mining company in July, 1858, £10,992 97 was suflicient to pay in full the balance then remaining due on the note. Flood and Mackay were directors of the Nevada Bank, and each owned about one-half of its stock. The theory of plaintii’s case s that Flood and Mackay formed a_conspiracy {0 get payment of Pation’s note by inducing the directors of the mining company. whom they controlled, to vote Patton a_ gratuity of $50,000, which the mining company did not owe, it being understood that the money, wwhen paid, would be turned over (o the ank in payment of Pation’s note. My views as to the relations of F100d and Mackay to the directors of the mining company have been stated in the opinion this day filed in the case of Theodore Fox vs, John W. Mackay et als. No. 35,089 und it is unnecessary to repeat them here. 1f Pation had been witiiout other means to pay his note to the bank it would icok very much as if the 50,000 was given to Pation for the benefit of the ank. It appears, however, that at the time of the pas- sage of the resolution and of making the several payments. the bank held as security for Patton’s note the following securities, viz: 7500 shares of sock of Combination Mining Company, 1500 shares o Comsolidated Californis and Virginia Mining Company, bonds of the Southern Pacific Company of Arizona to the amount of $30,000 and 200 shares of stock of anglo-Nevada Insurance Company. ‘The evidence is that at the dates last_mentioned, the Southern Pacific bonds were worth $32.100 and the stock of the Anglo-Nevada Insurance Company held by the bank was worth $21.600, making together $54,300, or several thousand dol- lars more than the balance due on the note. The bank held. in addition, 1500 shares Of stock of the nsolidated California and Virginia Mining Com- pany and 7500 shares of the Combination Mining Company. Pation died in 1892, leaving an estate appraied at over $400,000. A8 the noie of Patton was amply secured, the money was paid to Patton for his own benefit and nat for that of Flood or Mackay. _AS stockholders of the mining company they were losers by the transaction. =~ As siockholders of the bank’ they Were not gainers. From beginning to end Mackay is not shown o have had anything to do with the transaction, or even to have known anything about it. The sole ground of his alleged liability is that he was a stockholder 1 the Nevada ssan Ttis claimed on the part of plaintiff that when Patton extinguished the fire he was merely per- forming his duty as superintendent, and nat the payment 10 Patton of any money in excess of his salary for such service was without consideration and in excess of the power of the board of direc- tors. This question might have been more prop- erly tested in an action against the directors or Patton. The present suit is against Mackay alone, I1am of opinion that the board had power to au- thorize the payment. 5 T quote from the testimony of Mr. Fish as fol- lows: “There had been talk of hiring other men to extingnish the fire, and Mr. Patton said he could do it, but he should want extra compensation. He was instructed 10 go ahead. That was before he tried to put out the fire. 1 reported it to the board of directors. \We talked it over among ourselves.” Although 1o formal agreement was*made with Patton before he began the work of extingnishing | the fire, tie board of directors hiad the power 16 ratify afterward the acts of the president of which they knew at the time and 1o which they made no objection. After the fire had been put out Patton demanded compensation for his services. Action on the part of the board was delayed unti the following A pril. In explanation of the delay Mr. Fish says: *Per- haps w were walting to see whether the fire was completely extinguished, though 1 think that we wera pretty well satisfied.” Fish furiher testifies that before leaving for Aus- tralia in Angust, 1887, Patton instructed him to deliver the money to Mr. Berry when it was paid. Berry testified as follows: “At the time Mr. Pat- ton left for Australia I held Lis POWer of attorney and he told me before nis departure that the Con’ solidated Virginia Company had promised to pay him $50,000, and he Lad directed them to pay it to me gs his azent. He said: ‘When they pay that amount you apply it to my debt to the Nevada Bank of San Francisco. In case they do not pay it and the bank demands their mony, you sell my | securities—the bonds and the insurance stock and theother securities there—to pay that note.’ ‘According to the evidence Mr. Fiood's only con- nection with the matter was that upon beinz con- sulted in reference to paying Patton £50,000 for his services Lie expressed himself as satisfied wiih that amonnt, adding that the company was lucky to get off so cheap. That the payvment was not for the benefit of elther Flood or Mackay has already been shown. The resolution of April 3, 1888, has, ever since its adoption, been spread upon the minutes of the board of directors. At puge 18 of the printed an- nual report of the mining company for the year 1888, which was distributed among the stock- holders, is the following item of disbursement re- ferring to the paymencof Patton, “Fire extinguish- ment, $50,000. Under the circnmstances of this case, no fraud or concealment being shown and particuiarly when some of the principal actors therein have died. I think that an acquiescence by the stockholders for three vears and eight mo; which elapsed be- | fore the commencement of this action, should be deemed a ratification of the transaction comblainea of and a bar to any rignt which they would other- wise have had to set it aside. Judgment for defendants. The attorneys in the case were: For the plaintiff, H. G. Sieberst end Judge Regens- vurger of council; for defendants, W. E. F. neal} and Edmund Tauzsky and George R. Wells. I INVENTOR'S SUICIDE Rolf S. Rolfson Shoots Himself Because of Domestic Troubles. Among His Inventions Were a Nickel- in-the-Slot Machine and a Gas Engine. Because of an unhappy marriage Rolf S. Rolfson, a mechanical engineer and in- ventor, shot himself early yesterday after- noon in his lodgings over the shop, 425 Bay street, which he and his brother had been conducting jointly for several years. Rolf and Ole, the two brothers, were steady and hard-working mechanics, plod- ding along day by day in the hope that some time or other Rolf’s inventive mind would produce something which would bring them a fortune. Rolf so far had suc- ceeded in patenting a dynamometer, a car- buretor and a nickel-in-the-slot machine, and to this list he had added a gas engine, the patenting of which was not quite com- pleted. His carburetor was for the pur- pose of converting gasoline into gas and the dynamometer, as its name implies, for a contrivance for the measuring of mechan- ical force. Along the water front a report was in circulation that he had spent lots of money in trying to perfect a ship lamp, whici, placed at the masthead, would send a stream of light through dense fog, and also that he had been for some time work- ing on a flying-machine, but his brother Ole says this is not so. Rolf was 40 years of age. His wife had recently been traveling in Mexico and Arizona and kept him busy sending money to her. Lately she retutned, and the two have not lived happily together. They had nochildren. He seemed to be in a pleasant enough mood at noon, but about 2 P. M. he retired to his room. His brother followed him and was almost dumfounded to see Rolf with a 38-caliber hammerless Smith & Wesson revolver in his band and its muz- zle pointed to his own head. The younger brother attempted to prevent him from carrying out his evident design of destroy- ing ‘himself, but Rolf managed to insert the muzzle of the pistol into his mouth and sent a bullet into his brain. As he did not die instantly he was taken to the Receiving Hospital, but shortly after arriving there he breathed his last. His body was taker to the Morgue. The deceased was a past master work- man of Memorial Lodge No. 174, A. 0. U. W., and had $2000 insurance in that order in favor of his brother and $1000 in the ‘Workmen’s Guarantee Fund Association. He was fairly well to do financially, hav- ing $1300 insurance on his furniture and machinery. and a purse containing $41 in cash was found on his person. The unfortunate man had been working on an improvement in lubricators, and also a hot-air engine, as well as his gas- engine. In the gas-engine patent he had taken into partnership Samuel S. Simrek and Albert R. Herman, with the under- standing that theirrights were to be worth $20,000 in the aggregate ninety days from the date of the agreement. His wife and brother vacated their home soon after the suicide. Where Mrs. Rolf- son had gone the brother did not know, he said. Ole believes that Rolf had indulged in too much mental labor, and that this, aggravated by his domestic unhappiness, produced temporary insanity. ——————— New Sociallstic Paper. Le Quatrieme Etat is the title of & new French journal that has just made its appear- ance in the City. Tt is a three-column, four- page folio printed entirely in French. Dr. W. M. Korab is its editor, with headquarters at 736 Montgomery street. Le Quatrieme Etat is Lo be devoted to the spread of socialism. A very successful ball was given at Turk-street Tumg: Sunday night b{ the French branch of the San Francisco section of the Socialistic Labor party of the United States to raise funds to put the paper on a sound financial footing. WOMAN AGAINST WOMAN, Two Rivals Are Now in the Field Againsi the Fed- eration. OBJECT TO CERTAIN METHODS. Mrs. Kneip Says She Requires no Police Star to Secure Her Ad- mission Anywhere. AH is not plain sailing for the Woman'’s Federation organized shortly after the North Beach horrors came to light. Two weeks ago an independent organization with a membership of between 300 and 400 was formed. Yesterday a third ele- ment was injected into the woman's war on vice, and what with the side skirmish- ing, the three-cornered fight promises to be most interesting. The entire trouble seems to be over the manner in which the first mass-meeting, looking toward the formation of a woman's federation, was conducted. Those now opposed to that ‘organization declare it to be a scheme of a few to rule the many. To substantiate this they point to what ghey are pleased to call the ‘‘dic- tatorial methods” employed in saying who was entitled to participate in the prelimi- nary deliberations. Only church members and representa- tives of societies were allowed a voice in the proceedings, and in consequence of this, certain ladies were enabled to run things to suit themselves. There were over 2000 women at this meeting, it is claimed, yet only a few of this vast num- ber were allowed a vote or even a hearing. It is also claimed that the officers elected, particularly the president, are extremely objectionable to the majority of mothers of San Francisco, and that certain reforms advocated by them are as much disliked as the authors. One particularly disagreeable feature was the proposed scheme of having a woman inspector. So great was the op- position that Mrs. Kneip, at the solicita- tion of hundreds of mothers, she says, ap- peared before the Supervisors and asked that the request be pot granted. This was followed by a meeting of three established societies—the Woman’s Armerican Union, the Women’s American Liberal League and the Silent Workers. esolutions were passed condemning the methods employed in organizing the fed- eration, but indorsing the principles upon which it was founded. These three so- cieties will hold a mass-meeting at Metro- politan Temple Thursday evening, and it is not improbable that something sensa- tional will occur. This in brief is the situation among the San Francisco women who have pledged themselves to exterminate vice in this City. One lady remarked yesterday that with so many factions in the field, all working toward a common end, vet op- i posed to each other, it would not be at all surprising_if the movement finaily fell to the ground. At Red Men’s Hall, 320 Post street, the third wing of the much divided womer of San Francisco held their first meeting yesterday. Mrs. Kneip, at whose insti- gation the meeting was called, said it was not intended to form an organization at that time, if ever. The idea was to adopt sonie new plan by which all women inter- ested in such work would hav: equal voice and representation. Continuing, she said: “I did not intend to make any reference to existing organizations, but months ago, when I opened a girls’ reading-room, much useful m)ormutiou came to me unsolicited. The girls said that in these homes, there was no love, no Christian spirit. All the managers seemed to care for was the | money paid in. *The life is crushed out of us in these organizations,” said Mrs. Kneip. “There is too much red tape. Many rich people would furnish money if they could only be as- sured that it would be spent judiciously. Idleness, poverty and lust are the three demons which lead to all the evils in life. Let us correct the first and the task is half done. Mrs. French thinks she needs a police star to zain admission to certain places, but I have had no such trouble. })olneed to become a church member? Do I need a police star? Is there any work for me to do in that organization?” This Jast remark was addressed to a lady from the Woman’s Federation, who held out the olive branch, asking all those present to come over and join the parent organization. The invitation was not ac- cepted. f\lnny of the other ladies present ex- pressed themselves in vigorous language concerning the work to be done, though none ventured to formulate any direct plan of action. Mrs. Kneip said that she had some new ideas to lay before the next conference, which would be on December 16. She intended to get out of the old rut and was satisfied that every lady present would acknowledge that her plans were the most effective yet thought of. In the lecture-room of the Young Men’s Christian _ Association building Woman’s Federation also held a meeting. The only business of importance trans- acted was the ratification of the constitu- tion and by-laws. It was agreed to admit to membership any woman not connected with *some church or society, though the voting privilege was denied them. By the constitution it requires a two-thirds vote of all the. members of the federation for those seeking admission in the future. This is one of the features objected to by the two dissenting organizations. Another effort will be made to have the Supervisors appoint a woman inspector. The following petition was handed to tho mem bers for circulation: To the Honorable Board of Supervisors—Peti- tion for the Appointment of Women In- spectors. We, the undersigned, citizens of the City and County of San Francisco, do most earnestly pe- tition your honorable body to create the office of woman inspector for the City ana County of San Francisco, and to appoint at least one woman to fill such position at your earliest convenience. The duty of said inspector to be, in part, to investigate all business establishments, fac- tories and institutions where women or chil- dren are employed, and all public institutions maintained at public exvense; also schools, hospitals, prisons, asylums and other public institutions where women or children are taken, examined, tried or detained either by process of law or for the purposes of charity and the public Morgue when the dead bodies of women or children are to be cared for; also any other duties which, in your judgment seem to come within the province 07 such office, and to make reports of such investiga- tions to the proper authorities. A DAYLIGHT BURGLARY. The House of Louis Hagea, in the Richmond District, Ransacked by Thieve Thieves entered the cottage of Louis Hagea, out in the Richmond district, and in broad daylight, during the absence of Mrs. Hagea, got away with two suits of clothes belonging to Mr. Hagea—one a wedding suit worth $i0—also the gold wedding ring of his wife, her purse and a costly clock, altogether about $100, Hagea is a conductor on the Howard-street line. nnflcl;as put the case in the hands of the ‘L had noticed two suspici men,” said Mrs. Hagea, ._hl:nlfl‘::]:fo‘;igg the place several days before the house was entered. T thought they were tramps, and spoke to my husband about them. Soon after luuch I went ?uu for a few minutes tl:) one of the neighbors’, locking the door fehlnrl me. When I returned I found the r‘c.r_i.lh(‘l’o;: !a::;t‘lullg ovened, S ng I missed wa p] Then 1 began to suspect wn:et?l:li:z;l?: the | wrong. I feel worse, over my wedding ring than over anything else. gt “A girl that was hanging out washing next door told me_that she saw two men near the house while I was away, but she believed they were friends of ours and thought nothing more about it.” The house stands in a thinly settled part of the district on Twenty-second ave- nue, near the Cliff House railroad. THE WOMEN-SWINDLER. Arthur Arlington, With Many Aliases, Appears for His Preliminary Examination. Arthur Arlington, the man with a dozen aliases, who has served terms of five and ten years in San Quentin for robbing women on the strength of his promise to marry them, appeared in Judge Conlan's court yesterday to answer a charge of grand larceny. The complaining witness, Mrs, Mary Louise Patterson, a widow living at 867 Howard street. testified that she became acquainted with the defendant in July last by answering an advertisement for a housekeeper. She answered the adver- tisement for a joke. The defendant called upon her and told her he was a_wealthy man, having property in San Jose and other places. “Finally,” the witness continued, ‘he asked me'to marry him and promised to take me East. I'told him my diamond breastpin was in pawn, and he said he would take it out for me if 1 would give him the ticket. I did so, and after he left I never saw him again. Tben I found that my diamond pin had been redeemed.” Two witnesses gave evidence that the pin had been pawned, and one of them iden- tified a woman in court, who said she was the defendant’s wife, as the person who presented the pawn-ticket at Suisun, where it had been pledged. The case was continued till to-morrow. PEACE IN SALVADOR. A Cablegram From Gutierrez Denies That a Conspiracy Is on Foot to Assassinate Him. The dispatch to the New York World, which appeared in the Examiner yester- day morning, to the effect that a con- spiracy was on foot among the followers of Antonio Ezeta to assassinate President Gutierrez of Salvador, prompted Dr. Eus- | toezio Calderon, the Salvadoran Consul in this City, to cable Gutierrez concerning the reliability of the information. At 3 o'clock yesterday afternoon Dr. Calderon received a reply over the cable from Gutierrez himself. The dispatch says: There is complete peace. Affectionately, GUTIERREZ, “You see,” said Dr. Calderon, ‘‘these stories are put afloat by Ezeta’s followers. There is nothingin them at all. Iam glad the public here is beginning to see these fellows in their true light. They are only impostors and boasters. I received a long letter from Presiaent Gutierrez, dated No- vember 16. In it he says that everything | was quiet in the republic, and thai if the Pacific Mail Steamship Corapany dropped Ezeta and his small army off at Acapulco it was only according to the contract cele- Drated between the company and the Gov- ernment that no enemies to the Gevern- ment would be allowed to land on Salva- doran soil.” FOOTBALL FOR CHARITY. Olympic-Reliance Game to Aid Salva- tion Army Work. | A great deal of enthusiasm is felt over the Olympic-Reliance football game which will take place next Saturday afternoon at Central Park for the benefit of the desti- tute women and children of this City whom the Salvation Army is trying to aid. Among the people whoare tniing special interest in the Army’s relief plan may be mentioned Labor Commissioner Fitzger- ald, who knows how deep are the needs of the most helpless portion of the com- munity—the destitute women and the children. Judge Hunt is also interested in making the game a snccess, the Native Sogs are buying tickets and a number of i pedple who are not football enthusiasts have signified their intention of attending the game in order to assist a worthy cause. NEW TO-DAY. GOLDEN O0PPORTUNITY We have been compelled to change ourlocation to 111 Montgomery street, and com mencing at 11 A. M. daily we ‘will resume our AUCTION O0f WATCHES, DIAMONDS, JEWELRY and SILVERWARE, Commenced in our old storeon Sutter street. We are positively retiring frem business, and everything must bs sold at any sacrifice. It you want a suitable CHRISTMAS PRESENT, Elegant Plate Service or Jewelry for yourself, you can name your own price AND GET THE BEST. Salesat 11 A.M.and 2 P. M. M. WUNSCH & C0, (NEW STORE), 111 Montgomery Street. TO THE SICK RADAN'S MICROBE KILLER S THE ONLY KNOWN REMEDY THAT e will destroy the Microbe in the Blood without injury to the system. Millions of people testity to its wonderful cures. BY REMOVING THE CAUSE— IT DESTROYS ALL HUMAN DISEASES. Price, 83 per Gallon Jar. $1 per Bottle. Advice free. Write for pamphlet. RADAN'S MICROBE KILLER COMPANY, NEW TO-DAY. ONYX_TABLE—84.25. A handsome Table, polished Fire Gilt, with fine richly tinted Mexican Onyx top, for §4.25. NOT the cheap, flimsy kind sold at similar prices, but a solid, well-made table, worth regularly $6. This price holds good until Saturday night, but the tables may not—better come early. Two others also go on sale at $4.95 and $6.85. We cannot fill country orders for these tables. Thirty-five new designs in Onyx Tables, and 35 WHOLESALE PRICES. Here at last—Another big lot of B. & H. OIL HEATERS. Price $6: Shipped to any address on receipt of price. THAT BIG CHINA STORE— A Quarter of a Block Below Shreve's. WANGENHEIM, STERNHEIT & 0., 528 and 530 Market St., 27 and 29 Sutter St., BELOW MONTGOMERY. oosssossssseE! PRIGES WILLTELL We sell goods at lower rates this season than ever before. Immense reductions in Rattan work. Large Rockers reduced from $9.00 to $6.50 Ladies’ Roekers reduced from $7-50to $6.00 ! Beautiful designs for $3.50, $4.00, $5.00 JUST THE THING FOR AN ELEGANT CHRISTMAS GIFT. WAKEFIELD RATTAN G0, 125 Geary Street. ROB'T COULTER... <+ e Manager TOYS! DOLLS! GAMES! Don’t Wait Until the Last Week Before XMAS to Buy Your PRESENTS In order to induce our customers to " EARLY —AND— OFTEN We will allow a 10 per Cent Discount On all purchases of over one dollar in our Toy Department For week ending December 14 only. NOTE. R Goods delivered free of charge to Sausalito. RBlithedale, Mill Valley, Tiburon, San Rafael, Stock- ton, Haywards, Vallejo, Nupa, San- Lorenzo, Mei- rose, San Leandro, Oakland, Atameda and Berkeley. Send for our ILLUSTRATED CAT= ALOGUE. Mailed free to any coune 1330 Market St., San Francisco. Sfifi DISEASES AYNE'S . mx.n-m:w:!l OINTMENT le application of * Swavaws Oueruext wiliom .m.um.nm.xn.wfl-w-'"“ i o matter bow obetinate or long standiog. SeM by T E R G R STORRS' ASTHMA REMEDY, MA. HIOM Hhe SCVETe PAROXYAIN fiuk l% ?dal’f“l'll"l‘fi 100, Va0 ;IJ‘N\' I‘:;“ |.;:‘ drugglsts have ft, or any sive will be matied receipt of price to LER'S PHARMACY, !w.K(I!oBr.Bul‘lll\ W Turk Ste, r try address. 818-820 Market Street Phelan Building. hctorr—amut Street. «