William A. Paine, Herbert I. Foster Thomas S. Dee, and Leonard D. Draper Copartners, Doing Business Under the Name and Style of Paine, Webber, & Company, Appts. v. Copper Belle Mining Company of Arizona. Arizona
Administrative Proceeding Supreme Court of the United States, Case No. 181

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232 U.S. 595

34 S.Ct. 440

58 L.Ed. 746

WILLIAM A. PAINE, Herbert I. Foster Thomas S. Dee, and Leonard D. Draper Copartners, Doing Business under the Name and Style of Paine, Webber, & Company, Appts.,

No. 181.

Submitted January 21, 1914.

Decided March 2, 1914.

Mr. Walter Bennett for appellants.

Messrs. James F. Mack and John B. Wright for appellee.

Mr. Justice Holmes delivered the opinion of the court:


This is an action brought by the appellants upon a promissory note for $265,416.72, made by the appellee. The defense is want of consideration, and depends upon the question whether certain payments made by one Moneuse were made by way of loan or for the purchase of stock; the note having been issued as for a loan to the company. The material facts are few. An earlier company, into the shoes of which the appellee has stepped, was in bankruptcy, and Moneuse, a stockholder, was suing certain others for the return to the company of a large part of the stock. On June 4, 1903, a compromise was made, reciting as one ground that the company owned mining claims which in the opinion of all the parties, were of great value, but which the company was in great danger of losing unless money was raised to work them. Moneuse agreed to 'provide and supply' enough money to 'pay off and discharge' the company's debts, and to work the company's mines for not more than three years until they paid for working themselves. He was to get the company out of bankruptcy and into possession of its property, subject to certain mortgages. The others were to get 50 per cent of the authorized stock into the treasury, and this amount, less what already was held by Moneuse, the company was to issue and deliver to him 'in consideration of the advance by [him] of the moneys which are to be paid and advanced by him, as above provided for, and without further consideration whatsoever.' Moneuse also was to have control.


This agreement was carried out and the total disbursements of Moneuse were more than the amount of the note. Nine months after the compromise a stockholders' meeting suthorized a transfer of the company's property to the appellee on the condition, among others, that it should 'assume and discharge the indebtedness of this company to Elie J. Moneuse;' but on February 29, 1904, the characterization of the advance as a loan and the portion of the resolutions quoted were 'withdrawn and rescinded' at the suggestion and with the concurrence and vote of Moneuse. Afterwards, on July 17, 1907, Moneuse being still in control of the company, the note in suit was issued. The case was tried on behalf of intervening minority stockholders without a jury. The trial court found for the defendant, and the judgment was affirmed by the supreme court of the territory. 13 Ariz. 406, 114 Pac. 964.


It cannot be said that the finding was wrong as matter of law. It is true that the agreement speaks of the money that was to be furnished by Moneuse as an 'advance' by him, but it was an advance to pay off the company's debts, not merely to change the creditor. The clause that throws the clearest light upon the meaning is the recitation that the company's mining claims were of great value in the opinion of all the parties to the contract. That being so, it was natural that a stockholder who had the money should be willing to pay off certain debts (about $45,000) as a consideration for getting the greater part of the stock, and should be willing to work the mines for a time if he had the company and the duration of the experiment under his control. It would seem to have been less natural for the other stockholders to part with the larger share in the rights they deemed so valuable simply as a bonus to induce Moneuse to take the former creditors' place and try his hand at the work. There are set forth in the statement some facts that we have not reproduced, because we think it unnecessary, in view of the present position of the case. It is enough to say that, in our opinion, the appellants would not profit by a fuller consideration. The meaning of the arrangement, to which neither company was a party, seems to have been matter for a finding. Rankin v. Fidelity Ins. Trust & S. D. Co. 189 U. S. 242, 252, 253, 47 L. ed. 792, 796, 797, 23 Sup. Ct. Rep. 553. Macdonald v. Morrill, 154 Mass. 270, 272, 28 N. E. 259. The evidence is not reported, and the finding has the sanction of two courts. There is not enough before us to enable us to say that it was wrong.


Judgment affirmed.


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