(230 P.) UNITED STATES SMELTING, REFINING (Supreme Court of Arizona. Dec. 10, 1924.) 1. Corporations 432 (5)-Burden of proving agency of party contracting on party alleging fact. Where written agreement, declared on as breached, contained no words indicating that one, with whom it purported to be made, was acting for another, it was incumbent on plaintiff to establish allegation that he was agent duly authorized to act for defendant corporations. 2. Corporations 397-Agency, in execution of contract, for corporation not then in being, impossible. One cannot act for corporation, not then in being, in executing contract; agent without principal being impossible. 3. Corporations 406(4)-That party mak 8. Mines and minerals 103-Corporations treated as separate and distinct in absence of common stockholders or directors. Corporations having separate charters and no common stockholders or directors must be treated as separate and distinct, though one or more were holding companies and another a subsidiary, organized to operate mines taken over by former under contract, in absence of averment of facts showing that separate corporate existence is mere sham, used to conceal truth, or that organization and control are such that one is but instrumentality or adjunct of another. 9. Appeal and error 1003-Jury's verdict on nonconflicting evidence not binding on Supreme Court. Where evidence in all material ways points same direction, and question is not its truth or weight, but its effect, jury's verdict is not binding on Supreme Court. 10. Evidence 597-Jury cannot conjecture and assume necessary controlling facts not in evidence. Jury, in arriving at verdict, have no legal assume necessary and controlling facts. Ing contract was general or field manager of right, in absence of evidence, to conjecture and corporation held not to show his agency therefor. That party executing contract was general or field manager of corporation at time and long afterward held not to show that he was its duly authorized agent in execution thereof. 4. Corporations 432(6)-Letter heads held not competent evidence of agency. Letters written by party to contract, bearing letter heads of corporations, of which he was employee, are not competent evidence of his agency therefor in executing contract. 5. Principal and agent 22(2), 122(1) Agent's declarations not evidence of fact or extent of agency. Declarations of alleged agent are not evidence of fact nor extent of agency, but, at best, are mere hearsay, not admissible against principal, whether oral or written, until agency is proved by other evidence. 6. Mines and minerals 105(2)-Officer contracting personally held not shown to be agent. That consulting engineer and general manager of company, which took over and operated mines under contract, declared on as breached, was also official of defendant corporations, one of which was not organized until after contract was made by him, held not evidence that it was defendants' joint contract, or that he or company operating mines was defendants' agent in so doing. 7. Principal and agent 19, 119(1), 147(2)One dealing with agent must ascertain fact of agency and nature and extent of authority; one claiming agency must prove it. To bind principal, one dealing with agent, whether general or special, must ascertain, not only fact of agency, but nature and extent of authority, and, if either is controverted, burden is on him to establish it. Appeal from Superior Court, Mohave County; E. Elmo Bollinger, Judge. Action by the Wallapai Mining & Development Company against the United States Smelting, Refining & Mining Exploration Company and another. Judgment for plaintiff, and defendants appeal. Reversed and remanded, with direction to dismiss complaint. Carl G. Krook, of Kingman, and Alfred Sutro, of San Francisco, Cal., for appellants. C. W. Herndon, of Kingman, and Frank Pierce and R. L. Alderman, both of Los Angeles, Cal., for appellee. ROSS, J. The Wallapai Mining & Development Company, as plaintiff, recovered judgment against the defendants United States Smelting, Refining & Mining Exploration Company and the United States Smelting, Refining & Mining Company, corporations, for the sum of $20,000, and the latter appeal. We will designate the Wallapai Company as plaintiff and the two defendants as defendants, or as the Exploration Company and the Mining Company. Briefly, plaintiff states its cause of action as follows: That on December 14, 1909, it was the owner of mining claims known as the Tennessee group of mines, situate in Mohave county, Ariz.; that on that date it granted to A. P. Anderson the sole and exclusive right and option to purchase at any time within ten years, upon the terms therein stated, said group of mines, together with all the personal property, consisting of buildings, machinery, and improvements; that said Anderson (who was also made a party defendant but dismissed, not having been served For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes ploration Company, were introduced, not that their contents had any bearing upon the issue of agency, but upon the theory that the letter heads themselves were evidence of Anderson's agency. There were also two letters on the letter heads of the Mining Company introduced, but they were written subsequent to December 14, 1917, the date the Tennessee group of mines were surrendered to the plaintiff. with process) was in the making of the contract "acting for and on behalf of the said defendants, and the said defendants then and there pursuant to the terms of said agreement entered into possession of said premises and control of the aforesaid properties, and worked and developed the same and extracted and shipped ores therefrom"; that one of the covenants of the agreement was that Anderson, or his assigns, or the parties for whom he was acting, if property was surrendered, would leave in good repair and working order, reasonable wear and tear thereof excepted, all tools, machinery, buildings, appliances, and personal property situate thereon belonging to plaintiff; that on December 14, 1917, said mines and premises were surrendered to "The agency must be proved by other eviplaintiff by defendants, but that defendants dence before his (the agent's) acts and statefailed to keep said covenant and did not leave ments can be shown against the principal. At the tools, machinery, buildings, appliances, best such declarations are mere hearsay. The and personal property, but on the contrary rule applies equally to oral statements of the destroyed, removed, and converted such prop-agent and the written statements, contained in erty (enumerating it), to plaintiff's damage in the sum of $22,665. The defendants filed separate identical answers denying the allegations of the complaint. The case was tried before a jury, whose verdict was in favor of plaintiff. There are a number of assignments, but as we view the case it will not be necessary to consider them all. It is contended by the defendants that the verdict and judgment are not supported by the evidence, and that the court erred in the admission, over their objection, of certain evidence. Our attention will be confined to these two assignments. [5] These letter heads were not competent evidence of such agency and the court erred in admitting them for that purpose. The rule is well established, not only in this state but elsewhere, that the declarations of an alleged agent are not evidence of the fact of agency, nor the extent thereof. letters, letter heads, receipts, or other docu ments implying, admitting, or claiming authority to act as agent in the negotiations with the third person." 31 Cyc. 1652. See, also, Navajo-Apache Bank & Trust Co. v. Willis, 21 Ariz. 610, 193 P. 297; Franklin v. Havalena Mining Co., 18 Ariz. 201, 157 P. 986; Petterson v Stockton, etc., R. Co., 134 Cal. 244, 66 P. 304; Smith v. Liverpool, etc., Co., 107 Cal. 432, 40 P. 540; Blanke Tea & Coffee Co. v. Rees Printing Co., 70 Neb. 510, 97 N. W 627; Klumpp et al. v. American Hardware Mfg. Co., 50 Misc. Rep. 662, 99 N. Y. S. 326; Heimerdinger v Lehigh Val. R. Co., 26 Misc. Rep. 374, 56 N. Y. S. 188. [6] The allegation of the complaint that the defendants, Exploration Company and Mining Company, "then and there pursuant to the terms of said agreement entered into possession of said premises and control of the aforesaid properties, and worked and developed the same and extracted and shipped ores [1-4] The written agreement, declared on as breached, on its face is between plaintiff as party of the first part and Anderson as party of the second part, and contains no words indicating or suggesting that the latter was acting for any one except himself. It was therefore incumbent upon plaintiff to establish by competent evidence its allegation that Anderson in entering into said contract | therefrom," has no support in the evidence. was the agent of the defendant companies, As we have stated, the Exploration Company duly authorized to act for them. This the was not organized until more than two years plaintiff did not do. At the time of the mak- after the making of said contract. It was ing of the contract the Exploration Company not an entity and could not, by agent or othwas not in esse. It was not organized until erwise, take possession of the Tennessee February 24, 1912, over two years after date group of mines, work and operate the same. of contract. So far as this defendant is con- It is undisputed that six days before Andercerned, it was impossible for Anderson to son entered into contract with plaintiff there have acted for it in the execution of contract. was organized a corporation known as the It is inconceivable that there should be an Needles Mining & Smelting Company, of agent without a principal. The evidence which Anderson was the consulting engineer, upon this point, as it affects the Mining and that it was this company that "then and Company, is that Anderson was its general there" took possession of the Tennessee group manager or Pacific Coast manager at the time of mines, worked and developed them, exof entering into contract, and for a long time tracted and shipped ores therefrom; that Anthereafter. But this of itself proves noth- derson and wife on September 11, 1910, asing. Over objection, many letters written by signed his contract to the said the Needles Anderson and other employees of the Ex- Company; that thereafter, on August 26, ploration Company and the Mining Company, | 1910, Anderson and wife quitclaimed the Ten (230 P ) "The mere fact that one is a director, president, secretary or other officer of a corporation does not make all his acts or declarations, even though relating to the affairs of the corporation, binding upon the latter. Such persons are mere agents, and their declarations are binding upon the corporation only when made in the course of the performance of their authorized duties as agents, so that the declarations constitute a part of their conduct as agents-a part of the res gesta." it was against this company the property was, Mining Co., 18 Ariz. 201, 157 Pac. 986, quotassessed by the county and state taxing au- ing from Browning v. Hinkle, 48 Minn. 544, thorities and that it paid the taxes on said 51 N. W. 605, 31 Am. St. Rep. 691: property from 1909 to 1917; that it employed and paid the miners who worked in mine; that it was sued, according to the court records of Mohave county, for personal injuries by employees injured while working in mines; that it rendered (as the agreement with Anderson required) regular statements to the plaintiff of the ore produced; that it paid plaintiff, in conformity with the terms of contract, on the 14th day of December of ́each year, for eight years, the sum of $10,000 fixed royalties; and that it was the entity that was openly and unquestionably operating the Tennessee group of mines the eight years they were operated under the Ander son contract. The plaintiff in its brief admits that the operations at the mines were carried on by the Needles Company, but claims such company was acting as the agent of the defendants. Its position is stated in these words: "We do not claim that the Tennessee busiNeedles Mining & Smelting Company, but we do assert that that company was not the real party in interest; that it was a subsidiary and agent of the defendants; that it was directed and controlled in the operation of the Tennessee mine by these defendant companies, and that it had no independent will of its own, and that the wrongs committed during the operation of the Tennessee property were under the direction of defendants, the 'parent organizations.' ness was not conducted in the name of the [7] It appears that during all this time Anderson was an officer in three or four other companies, all of which, as their names would indicate, were engaged in mining. They were: Gold Road Mines Company, Mammoth Copper Mining Company, and Rainbow Mining Company. If Anderson in some of his letters had used the letter heads of one of these companies, the claim might just as reasonably have been set up that it was a party to the contract and to the alleged conversion, as to claim the defendants were parties. In Brutinel v. Nygren, 17 Ariz. 491, 154 P. 1042, L. R. A. 1915F, 713, the question was not whether Dunn was the agent of the defendant, but the extent of the agency. In discussing that question the important rule, which we understand to be the general one, was thus stated: "The mere fact that one is dealing with an agent, whether the agency be general or special, should be a danger signal, and, like a railroad crossing, suggests the duty to 'stop, look and listen,' and if he would bind the principal is bound to ascertain, not only the fact of agency, but the nature and extent of the authority, and in case either is controverted the burden of proof is upon him to establish it." The evidence to support the assertion that the Needles Company operated the mines as a subsidiary and agent of defendants, that it was directed and controlled by defendants, that it had no independent will of its own, and that it was not the real party in interest, [8] The defendants and the Needles Comis more attenuated, if possible, than that of-pany were distinct entities. Each had its fered in support of plaintiff's contention that own charter. There is no showing whatever Anderson in executing optional contract was that their stockholders were the same either acting as the agent of defendants. The only in whole or in part, or that they had a compossible clue in the evidence to such a conmon directorate, or that any director of one clusion is that Anderson, who was the con- was also a director of the other. There is sulting engineer of the Needles Company the bare statement by a witness for plainfrom its organization until 1914 and there- tiff that the defendant companies were the after its general manager, was also Pacific parent companies, or that one of them was Coast manager of the Exploration Company, such, and the Needles Company a subsidiary. or, as one witness (the plaintiff's president) Whether it was meant by this that the Exexpressed it, the field manager of defendants ploration Company, or the Mining Company, in charge of their principal business. The or both of them, were the holding companies, fact that Anderson was an official of the and the Needles Company was organized to Needles Company and also of both the defend-operate the Tennessee Group, we have no ants would not of itself be any evidence what- way of knowing. But, if that be the meanever that the contract entered into by himing, still they would be separate and distinct personally with plaintiff was the joint con- corporations, to be treated as such "unless," tract of the defendants, or that he was acting as the agent of defendants in securing contract, or that he or the Needles Company was their agent or agents in operating the mines or in paying the royalties. As was said by this court in Franklin v. Havalena as is said in Martin v. Development Co. of America, 240 F. 42, 45, 153 C. C. A. 78, 81, "facts are averred which show that such separate corporate existence is a mere sham, or has been used as an instrument for conceal ing the truth, or where the organization. control are shown to be such as that it is but an instrumentality or adjunct of another corporation." See, also, Pittsburg & Buffalo Co. v. Duncan, 232 F. 585, 146 C. C. A. 542; Comm. v. Muir, 170 Ky. 435, 186 S. W. 194. Plaintiff does not try to meet this proposition either by averment or proof. It nowhere appears that the Needles Company was a sham corporation organized to conceal the truth or hide the real facts of the situation. Its organization and subsequent operations were open and aboveboard. [9] The plaintiff's attitude, as manifested in brief and argument, is that it succeeded in getting a jury's verdict in the trial court, and that such verdict ought not to be disturbed; the contention being that the verdict is binding upon the court. We grant the rule and its binding effect when there are two sides to the evidence and the only question is which way the scales tip; but where there is but one side, where the evidence in all material ways points the same direction and the question is not its truth or weight, but its effect then clearly the jury's verdict is not binding upon the court. [10] The conclusion in the Brutinel v. Nygren Case, supra, seems so appropriate to the facts in this case that we adopt it. We there said: ROSS, J. This suit was brought by the county of Graham against W. C. D. Cochran, court reporter, and M. E Du Bois, James A. McBride, and E. M. Claridge, as the members of its board of supervisors, to recover from them the sum of $229.05, which it is claimed was unlawfully paid by said supervisors to Cochran, on a demand of the latter, for services as court reporter of the superior court of Graham county. It appears from the record that such item was a shorthand notes of the evidence, in the crimcharge made by Cochran for transcribing his inal case of State v. Lee, for the use of the defendant upon his appeal to the Supreme Court. It also appears that defendant Lee made and filed his affidavit with the clerk of the superior court showing that he was without funds and wholly unable to pay for a The judgment of the lower court is re-transcript of the evidence, and that unless versed, and the cause remanded, with the direction that complaint be dismissed. "To sustain the judgment in this case it would be necessary to hold that the jury in arriving at their verdict have a legal right, in the absence of any evidence in regard thereto, to conjecture and assume necessary and controlling facts, which, under the law. is beyond the province of a jury. The plaintiff may have a valid claim for remuneration. If he has, the wrong defendant has been selected to pay it." MCALISTER, C. J., and LYMAN, J., con cur. GRAHAM COUNTY v. COCHRAN et al. (No. 2219.) (Supreme Court of Arizona. Dec. 10, 1924.) 1. Courts 57 (2)-Court reporter entitled to receive from county compensation for copy of notes furnished poor defendant for appeal in criminal case. it was furnished him free of charge he would be denied its use on his appeal. It further appears that such transcript of the evidence was furnished by the defendant Cochran with the understanding that it was “at the expense of the county," as provided in section 1163, Penal Code. The case was tried before the court and judgment rendered in favor of the defendants, and the county prosecutes this appeal. [1] It is claimed by the county attorney that the court reporter's salary is his entire and full compensation, and that he is not entitled to charge or collect any fees for any of his services. In support of this claim he refers to section 9 of chapter 61, Laws of 1917. That section is perhaps broad enough in its terms to cover court reporters. It undertakes to limit the compensation of all persons who serve the county, including em In view of Civ. Code 1913, pars. 619-622, and paragraph 623, as amended by Laws 1921, c. 175, § 1, compensation of court reporters is not limited by Laws 1917, c. 61, to salary provided, and hence reporter was entitled to receive from county compensation for transcrib-ployees, to the salaries provided by the laws ing evidence in criminal case furnished under creating or authorizing their respective posiPen. Code 1913, § 1163, for appeal by impe- tions, or acts amendatory thereof. If it be cunious criminal, notwithstanding Laws 1922 conceded that section 9 was intended as a (Sp. Sess.) c. 22, § 1, amending Civ. Code | prohibition against court reporters receiving (230 P.) anything except their salaries, it was subject to change by amendment by any subsequent Legislature; and, as we shall later show, if it ever affected their compensation by limiting it to a salary, it is not the present law. To begin with, the Legislature in every instance that it has noticed the subject of court reporters has treated it independently of every other subject. While the Legislature has several times acted upon salaries of county officers and their deputies and clerks, in none of such acts has it specifically included the salary of court reporter. On the contrary, since the creation of the office of court reporter in 1912 the Legislature has twice, by acts exclusively devoted to that subject, amended the law. It has treated the subject of court reporters as in a class to itself, and for that reason any legislation about salaries of county officers and their deputies, even though general in terms, should be restricted to its obvious purpose. As we said in the beginning, the item the recovery of which is sought in this suit was for furnishing an impecunious appellant in a criminal case a copy of the evidence. It is not for any copy furnished the county attorney or Attorney General. By virtue of one statute it is provided that the court reporter shall receive for transcribing his shorthand notes a fixed sum per folio (amended paragraph 623, supra), and it is provided by another statute that it shall be furnished "at the expense of the county" (section 1163, Penal Code), when furnished, as in this case, to an appellant in a criminal case. [2] It is also suggested that since it is provided that no court fees or costs shall be charged to or collected from any county (chapter 22, Laws 1922), it is unlawful for the court reporter to collect from the county for furnishing a copy of his notes to a poor defendant wishing to appeal. This act is an amendment to section 636, being part of chapter 23, pt. 2, title 6, Civil Code, concerning "Costs." This whole chapter is devot ties litigant. The evident purpose of section 636 as amended is that when the county is a party litigant it shall not be required to pay fees and costs to the clerk, or sheriff, or other officers who may serve it. This does not mean, however, that a county may not be mulcted the costs of litigation. If a county is sued and successfully prosecuted, any judgment obtained against it would include all legal costs incurred by its antagonist. The Legislature took a separate act to create the position. Chapter 22, pt. 2, title 6, Civil Code. This act provides for the reporter's appointment by the superior courted to the assessment of costs as between parjudge and makes the tenure of the office subject to the appointing power (paragraph 619), requires that he take an oath of office (paragraph 620), prescribes his qualifications and by whom and how determined (paragraph 621), enumerates his duties (paragraph 622), and in paragraph 623, as amended by chapter 175, p. 433, Laws of 1921, the matter of his compensation, consisting of salary fixed by the judge and fees fixed by the Legislature, is taken care of. This amendment being subsequent to the classification act (chapter 61, Laws 1917), and providing for compensation in two ways, takes the place of said act, if it ever applied, and becomes the source and measure of the reporter's right to collect fees for transcriptions of his notes. The plain explicit language is that he "shall also receive, for transcribing shorthand notes, fifteen cents per folio. The only exception is, when requested in advance of his transcribing his notes in a criminal case, he must furnish a copy to the county attorney or Attorney General, and to the Attorney General when the state is a party. The copy of the transcript sued for was not furnished by Cochran to the county, but to an impecunious criminal desiring to appeal, and what he collected for it may well be regarded as a part of his compensation. Doubtless items of this kind were taken into consideration by the superior judge in fixing the court reporter's salary for Graham county. For the reasons given, we are satisfied that the judgment of the lower court was correct, and the order will be one of affirmance. MCALISTER, C. J., and LYMAN, J., con cur. |