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Nesbitt v. Cherry Creek I. Co.

December 31, 1914

JAMES A. NESBITT, RESPONDENT, V. CHERRY CREEK IRRIGATION COMPANY, APPELLANT.


Appeal from Fourth Judicial District Court, Lincoln County; E. J. L. Taber, Judge.

Clay Tallman, for Appellant.

Charles Lee Horsey, for Respondent.

By the Court, Talbot, C. J.:

This action was brought to recover $1,814.39 for goods, wares, and merchandise furnished by plaintiff, and for $100 alleged to have been advanced and loaned by plaintiff, and for $1,544.29 for goods sold and delivered by the Hodges-Cook Mercantile Company on a claim assigned to the plaintiff. Judgment by default was entered against both defendants. Thereafter the Cherry Creek Irrigation Company, the only appellant, moved to set aside the default and judgment entered against that company, asserting that it had a meritorious and complete defense to their action. This motion was accompanied by affidavits, including one by the defendant G. G. Davis, stating that he was familiar with the causes of action set forth in complaint; that all of the goods and merchandise were purchased by him from James A. Nesbitt and the Hodges-Cook Mercantile Company, and that they well knew that he was personally liable for the indebtedness, and that the Cherry Creek Irrigation Company was not responsible for the same; that the $100 loaned by James A. Nesbitt was loaned to Davis personally. The court granted the motion to set aside the judgment, and that company filed its separate answer, denying the allegations of the complaint and the liability of the company, and the case went to trial on it merits.

There was no dispute over the goods furnished or the amounts of the claims sued upon. The company contended that Davis alone was liable. The essential facts shown by the evidence and the findings of the court are undisputed. Davis investigated and undertook an extensive irrigation project for storing and conserving the waters of Cherry, Cottonwood, and Pine Creeks, mainly in Nye County, by means of a reservoir at the junction of these creeks. The water so conserved was to be used in Lincoln County. Davis secured in his own name from the state engineer a permit to appropriate the waters of the three creeks, and also secured in his own name a reservoir right of way from the United States. It was a part of his original plan to organize a corporation for his irrigation

[38 Nev. 150, Page 152]

project. Before commencing the actual construction of the dam, Davis arranged with a number of men to work for a share of stock a day, this stock to be issued as soon as the corporation was formed, and their supplies were to be furnished free of charge. At that time the stock was valued at $3 per share. About the time the construction work was commenced Davis began buying supplies from Nesbitt, to be used at the project, and for many months he purchased from Nesbitt from $500 to $800 a month. For a long time these were practically cash transactions, and the accounts did not run more than one or two months without being fully paid. Davis paid Nesbitt all that was owing up to May 1, 1909, and did not pay any more to Nesbitt after that date, but continued to purchase supplies from Nesbitt in May, June, and July of that year, and also in the summer of that year obtained supplies from the Hodges-Cook Mercantile Company.

At the “organization meeting of the incorporators and stockholders” of the Cherry Creek Irrigation Company on December 16, 1908, G. G. Davis was elected secretary and treasurer. At that meeting the directors adopted a resolution authorizing the issuance of 130,000 shares to Davis, and the issuance of not to exceed 12,000 shares of stock for distribution to the men for their work in pursuance of their understanding with Davis. The stock was issued accordingly in April, 1909. Thereupon Davis executed and delivered a deed to the company, dated April 2, 1909, conveying to the company the reservoir, right of way, water rights, and improvements, with the appurtenances, privileges, and franchises incident thereto, and all the interests of Davis in the property, including the reservoir site, dam, headgates, culverts, ditches, and spillways. The deed was recorded in the office of the county recorder in Lincoln County on the 3d day of April, 1909. Davis was president and manager of the affairs of the company at all times after the directors' meeting, and thereafter had full charge of all that was done at the project.

The court found that in selling goods to Davis, the plaintiff and his assignor, while they necessarily gave

[38 Nev. 150, Page 153]

credit to Davis, not knowing any other person in the transaction, still held to the project, and extended credit to Davis chiefly because of his extensive operations in connection with this irrigation work. In May, June, and July, 1909, Davis and some thirty or forty men were engaged in completing a twelve-mile canal in connection with the project. The court further found that Davis, in purchasing goods and supplies from plaintiff and his assignor, did not buy any of the goods for himself or for his own benefit, but purchased all of them as the agent of the defendant company, and that it was, in fact, the company that bought all of the goods and supplies, through its manager and general agent, G. G. Davis, from the plaintiff and his assignor; that all of the goods were used by the company at the irrigation project, and that the company received the exclusive benefit of all goods and merchandise furnished; that Davis, in paying out his own money, did so, at least at all times subsequent to the organization of the company, not for himself, but for the company, and that the understanding on the part of the directors of the affairs of the corporation was that the money was to be spent in behalf of the corporation for its exclusive benefit, and that Davis was to receive stock, not only for all property which he was to deed over to the company, but for all moneys expended by him in connection with the project.

The judgment was rendered in favor of the plaintiff for the amount claimed and for the supplies furnished as alleged in the second and third causes of action of the complaint. The $100 alleged to have been loaned in the second cause of action was found to be for Davis personally, and is not included in the judgment.

[1] The main objection urged upon the appeal is that, as Davis was the agent and the company the undisclosed principal, the plaintiff should have elected to hold either Davis or the company, and is not entitled to a judgment against both. It does not appear that, at the time the judgment was taken by default ...


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