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Leete v. Southern Pacific Co.

December 31, 1914

B. F. LEETE, AND ISABEL M. LEETE (HIS WIFE), WILLIAM M. LEETE, BEN M. LEETE, AND MATT LEETE, RESPONDENTS, V. SOUTHERN PACIFIC COMPANY (A CORPORATION), APPELLANT.


Appeal from the Second Judicial District Court, Washoe County; John S. Orr, Judge.

Cheney, Downer, Price & Hawkins, for Appellant.

Mack, Green & Heer, for Respondents.

By the Court, Talbot, C. J.:

On the 29th day of June, 1910, the defendant brought a suit in the district court of Churchill County against the Eagle Salt Works Railroad Company, a Nevada corporation doing business in Lyon and Churchill Counties, to recover $30,245.43 and costs of suit upon a note mortgage dated the 26th day of December, 1903, executed by Eagle Salt Works Railroad Company to defendant. During the time mentioned the plaintiffs were owners of all the capital stock and were directors of the Eagle Salt Works Railroad Company. While that action was pending, and on or about the 11th day of October, 1910, the plaintiffs and defendant herein and Eagle Salt Works Railroad Company entered into the following: “Memorandum of Agreement. Eagle Salt Works stockholders

[37 Nev. 49, Page 50]

will execute to the Southern Pacific Company bills of sale of the stock that the Southern Pacific Company holds as collateral security. Will cancel that stock on the books of the company and issue the entire capital stock of Eagle Salt Works to the Southern Pacific Company. Present officers will resign and put the succeeding officers or the Southern Pacific Company, in possession of the Eagle Salt Works. Present owners step out and succeeding owners step in without interruption of business. The competent authorities of the Eagle Salt Works Railroad Company will issue the capital stock of the Eagle Salt Works Railroad Company to the Southern Pacific Company, resign and turn over the property of the Eagle Salt Works Railroad Company to the succeeding owners. Present owners step out and succeeding owners step in without business interruption. It is agreed that the present owners will collect all outstanding accounts and close out stock in Reno and Beckwith agencies, also pay current bills to the day that the present owners turn the property over to their successors. Also that the present owners will pay the August pay roll, the Southern Pacific Company to dismiss all suits against the Eagle Salt Works and against the Eagle Salt Works Railroad Company at its own expense and charge. Mack & Green, Attorneys for Eagle Salt Works and Eagle Salt Works Railroad Company. Chas. R. Lewers, Attorney for S. P. Co. Oct. 11th, 1910.”

Under this agreement, on the 18th day of October, 1910, the defendant took over from plaintiffs and became the owner of all the capital stock of the Eagle Salt Works Railroad Company, and took possession of the property and affairs of that company.

In the amended complaint it is alleged that by virtue of this agreement the plaintiffs became the owners of and entitled to collect all outstanding accounts then due the Eagle Salt Works Railroad Company, and that the plaintiffs paid all the current bills and August pay-roll of the Eagle Salt Works Railroad Company, as provided by the agreement. It is further alleged that between the

[37 Nev. 49, Page 51]

3d day of March, 1906, and the 18th day of October, 1910, the Eagle Salt Works Railroad Company was carrying on the business of a railroad, transporting and hauling goods between Leete and Luva, a station on the line of defendant, a distance of 14 miles, and that during those times the defendant was engaged in the business of a railroad company, transporting and hauling wares and merchandise through the State of Nevada and other states; that prior to the 3d day of March, 1906, the Eagle Salt Works Railroad Company and the defendant entered into an agreement to transport and haul goods and merchandise over the respective railroads, and providing that defendant was to retain part of the charges for its services in hauling, and was to pay to the Eagle Salt Works Railroad Company its share for the transportation of merchandise; that between the 3d day of March, 1906, and the 18th day of October, 1910, the defendant collected for hauling merchandise over the railroads of the two companies $11,958.62, of which sum the amount of $3,724.53 became due from the defendant to Eagle Salt Works Railroad Company as its proportion on freight or charges so earned, no part of which has been paid by the defendant, and that the same was due to the Eagle Salt Works Railroad Company at the time of the making of the aforesaid contract, and by reason of that contract became, upon the 18th day of October, 1910, and is now, due and owing from the defendant to the plaintiffs, with interest.

In the answer it is alleged that the defendant has fully complied with the terms of the agreement before mentioned, and it is denied that by virtue of the agreement, or otherwise, the plaintiffs became the owners of and entitled to collect the outstanding accounts due the Eagle Salt Works Railroad Company, or that the plaintiffs paid the current bills of that company, as provided in the agreement, or that the sum of $3,724.83 became due from the defendant to the Eagle Salt Works Railroad Company as its portion of freight charges, or otherwise. It is alleged that there was credited to the Eagle Salt Works Railroad Company by the defendant as its

[37 Nev. 49, Page 52]

division of freight earnings the sum of $3,825.71; that prior to the 1st day of October, 1906, it paid to that company on account of that credit $336.42; that after that time, by agreement, the defendant applied all of the credits on the division of freight earnings toward the cancellation of the indebtedness of the Eagle Salt Works Railroad Company to the defendant.

Not only has the defendant denied all indebtedness, but by way of defense the answer details items relating to interline freight charges collected and regarding the ...


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