OCR Text |
Show SOLON SPIRO AND COMPANY ARE SUED FOR ACCOUNTING John C. Dugan, a Stockholder of Silver King Consolidated, Con-solidated, Makes Many Charges of Wrong-. Wrong-. ful Manipulation. SEEKING an accounting, which involves in-volves in its total of principal amount, dividends and interest approximately half a million dollars, dol-lars, John C. Dugan yesterday entered a suit in the Third district court against Solon Spiro and the Silver King-Consolidated Mining company of Utah. In a brief summary, Mr. Dugan, acting act-ing for himself and such other stockholders stock-holders of the corporation as may wish to join him, seeks to have Solon Spiro return to the company 72,180 5-6 shares of stock, $87,2Uo.'jU and a second item ot $20,000 in cash and an additional 20,000 shares of stock, all alleged to have been wrongfully obtained and appropriated ap-propriated by Spiro. In the event that tho corporation fails to appear in answer an-swer to the complaint the court is asked to appoint a receiver. Fraud, domination of the board of directors and misappropriation of funds form the main part of the lengthy complaint com-plaint filed by Mr. Dugan. Organization Set Forth. The main points of the complaint are as follows: The complaint recites that the plaintiff plain-tiff is a stockholder of the defendant corporation, holding 9000 shares of its stock, and that he brings tho action "ns well on behalf of the other stockholders stockhold-ers of said corporation who may desire to come in and seek relief, as on his own. ' ' The history of the Silver King Consolidated Con-solidated Mining company is given as its having been organized" February 24, 190S, with a capitalization of $500,000, which was later increased to $700,000. Solon Spiro is said to have been the promoter and organizer of the corporation corpora-tion ; ' ' that prior to its organization the said Spiro had been in control of the majority of the capital stock, and the manager and' director of the Silver King Consolidated Mining company of Wyoming; that upon the organization of the defendant corporation here, the said Solon Spiro caused the assets of said Wyoming corporation to .be transferred, trans-ferred, assigned and set over to the corporation defendantherein, said defendant de-fendant corporation " assuming and agreeing to pay an indebtedness of the Wyoming corporation, stated and agreed by the said Spiro not to exceed the amount of $102,913.39; that upon the organization of the defendant corporation cor-poration herein, the said Spiro came into in-to the control of a majority of the outstanding out-standing capital stock of the corporation corpora-tion defendent here and became the manager thereof.'' Concealments Alleged. It is further alleged that by reason of Spiro 's connection with the Wyoming Wyo-ming corporation he has dominated and controlled the business affairs of the Utah corporation; that he has had elected elect-ed as directors persons who are subservient sub-servient to his will "and that the business of said corporation, ever since its organization, has been and still is conducted and carried on according to tho individual dictation and direction of the said Solon Spiro, and not otherwise, other-wise, and for the individual benefit of said Solon Spiro and not for the benefit bene-fit of the corporation and its stockholders; stock-holders; that the various business transactions of the said Utah corporation corpora-tion have been kept and are still kept within the exclusive knowledge of said Solon Spiro and the persons who pretend pre-tend to act as directors, for the purpose of aiding and abetting the said Spiro in obtaining personal profit and .benefit .bene-fit from and out of the business of said corporation; that the plaintiff and other stockholders in a like situation have been excluded from a participation participa-tion in the business affairs of said corporation, cor-poration, and have been denied the right to receive that portion of the profits of said corporation to which they are entitled by reason of their ownership of capital stock in said corporation, cor-poration, and have been prevented from having a knowledge of the financial standing of said corporation and its methods of conducting its business transactions, and or the various transactions trans-actions which it has been caused to engage en-gage in by said Solon Spiro, his agents and persons under his control; that by reason whereof it is useless and idle for this plaintiff and other stockholders in a like situation to seek relief from the wrongs, hereinafter complained of, of the defendant corporation herein, or from its pretended board of directors and officers, or majority stockholders, all of whom are in control and under the domination of said Solon Spiro; and that by reason of the concealments and subterfuges of said Solon Spiro and persons under his control and domination, domina-tion, the plaintiff did not obtain knowledge know-ledge of said wrongs hereinafter complained com-plained of until on or about the first day of January, 1916, since which time the said plaintiff has been investigating investigat-ing the affairs of said corporation defendant." de-fendant." Not Notified of Meeting. The plaintiff alleges that on May 7, 190S, tho defendant corporation was and ever since has been and now is the owner of a certain block of its capital stock amounting to 72,180 ,5-6 shares, and that on the date mentioned Solon Spiro ' 1 wrongfully and unlawfully unlaw-fully and for his own gain and advantage, advan-tage, caused a pretended meeting of the board of directors of the corporate defendant de-fendant herein to be held, but that no notice of any kind or nature was given of said meeting, and that all of the directors di-rectors were not present, but that, nevertheless, nev-ertheless, notwithstanding such facts the said Solon Spiro caused and directed direct-ed a certain pretended resolution to be passed whereby and whereunder the corporate defendant herein pretended to sell and deliver to the said Solon Spiro, for cash, the said 72, ISO 5-6 shares of its capital stock aforesaid, and that thereupon, without paying any consideration consid-eration therefor, except a pretended check upon a bank in which he had no funds and no account, the said Solon Spiro entered into the possession of said 72. ISO 5-6 shares of the capital stock, thereby wrongfully converting the same to his own use and benefit, to the detriment and damage of said corporate cor-porate defendant and its shareholders.'' It is further stated that Solon Spiro still conti mies to wrongfully hold possession pos-session of this stock and lias received and collected dividends upon the same and "used the same for his own individual indi-vidual benefit. ' A further charge of the complaint says that although Solon Spiro, as promoters! pro-moters! the corporate defendant, agree. 1 that the indebtedness of the Wyoming corporation to be assumed by the Utah corporation should not exceed $102,-913.39, $102,-913.39, ' ' the said Solon Spiro, acting as manager of said corporate defendant and being in absolute control of its business affairs, and having absolute , domination over its other directors and i officers, wrongfully and unlawfully j caused to be credited to his personal ! account from time to time during his ' management of said corporate defend- 1 ant, and thereafter caused to be paid to him and out of the treasury of said l corporate defendant, , large sums of : money, receiving the benefit thereof upon his assessments as the same became due from him to the corporate defendant defend-ant from time to time, aggregating not less than $87,205.20." Itemizing this latter sum, the complaint com-plaint alleges that on March 2(3, 1908, Spiro " wrongfully caused to be credited to his personal account tho sum of $5000 as a bonus for alleged services claimed and alleged to have been performed by the said defendant, Solon Spiro, for the said Wyoming corporation.' It is alleged al-leged that such $5000 was not to be paid until the Wyoming corporation was placed on a paying basis, and that this never occurred, but on the contrary the" corporation went into a receivership. It is alleged that Spiro also credited his personal account with $900 as compensation com-pensation for the promotion of the defendant de-fendant corporation. Amounts Given in Detail. On February 24, 190S, it is alleged, Spiro took credit for $1000 and $350 as pretended salary, alleged to be due from the Wyoming corporation, while the property was being managed by a receiver re-ceiver "appointed bv the court. Other amounts , alleged to have been wrongfully obtained are set out as being: be-ing: $8600 on August 1, 190S, alleged to have been due Spiro for 4300 shares of his personal stock delivered in 1906 in satisfaction of claims against the Wyoming Wyo-ming corporation. It is asserted that during the years from 1905 to 1908, inclusive, in-clusive, such stock was without any ; value. Also $10,000 as principal and j $2133.35 as interest on March 1, 1909,1 claimed as an amount advanced by Spiro j to the Wyoming corporation. It is al- leged that this amount was not included in the indebtedness assumed by the Utah corporation. Also $14,070.35, on January Janu-ary 26, 1910, amount alleged to be due to Spiro on account of stock loaned to the Wyoming corporation; alleged that this credit was given him without the knowledge knowl-edge of the other directors of the corporate cor-porate defendant aud that at the time such stock is claimed to have been loaned by Spiro to the Wyoming corporation cor-poration the latter was in the hands of a receiver and insolvent and therefore its stock was without value. Also $14,-150 $14,-150 on -March 17, 1909, collected by Spiro as amount due for machinery, lumber lum-ber and other material said to have been sold bv Spiro to the corporate defendant, defend-ant, it is alleged that Spiro never had title to such property, but that in fact it belonged to the Little Bell Mining company. To Procure Evidence. For the puproso of procuring evidence, evi-dence, information, maps and reports for use in litigation with the Silver King Coalition Mines company, Spiro, it is alleged, wrongfully took credit for amounts as follows: $4122.30 on November No-vember 4", 1908; $11,076.91, January 12, 1909; $1837, April 10, 1909; $13,965.33, October 4, 1909. It is further alleged that on October 23, 1914. the board of directors, acting ; under the control and domination of Solon Spiro, allowed Spiro $20,000 in cash and 20,000 shares of treasury stock "under the pretense that he should be rewarded for special services for and on behalf of this corporate defendant, whereas, in truth and in fact, he had rendered and performed no service- for this corporate defendant, except to render ren-der and perform the duty of his office as manager of said corporation," for which he was fully paid. Demands upon the board of directors for an accounting of the stock and sums of money alleged to have been wrongfully wrong-fully credited to Spiro, it is alleged in the complaint, have gone unheeded. Accounting Is, Demanded. The prayer of the complaint is that: "The defendant, Solon Spiro, be required re-quired to account to the defendant corporation cor-poration for the 72,180 5-6 shares of its capital stock as owned by it, as aforesaid, afore-said, and so retained by him, as aforesaid, afore-said, and that said corporate defendant herein be decreed to be the owner of said shares of stock, and that said Solon Spiro be required to account to said corporation cor-poration and be adjudged to be indebted indebt-ed to said corporation for the amount of any dividends that he may have received re-ceived on said stock, together with all interest due thereon; and that said defendant, de-fendant, Solon Spiro, be adjudged to be indebted to this corporate dofendant in the sum of $87,205.20 and be required to account to this corporate defendant for. that amount, together with all legal interest in-terest due thereon; and that said defendant, de-fendant, Solon Spiro, be further ad- I judged to be indebted to this corporate defendant in the sum of $20,000, pretended pre-tended to be voted to him for special services; and that the said defendant, Solon Spiro, be required to account to this corporate defendant for the 20,000 shares of its capital stock pretended to ! be voted to him for special services, to- j gether with all dividends that he may ' have received thereon; and that the said : corporate defendant be adjudged to be , the owner thereof; and that if this cor- i porate defendant fails to appear in court the court shall appoint some appropriate i person as trustee for said company, to j receive and hold whatever money' and property may be found due it from the i said Spiro. ' ' |