SENTENCE. --- Hermosillo, Sonora, 2nd of April, Two thousand two. Taking into consideration the stage of appeal of W H E R E A S:

Transcription

1 SENTENCE. --- Hermosillo, Sonora, 2nd of April, Two thousand two. Taking into consideration the stage of appeal of Civil Case number 1/2992, and, W H E R E A S: I. The sentence of the Twenty-fifth of October of Two thousand one, dictated by the Third District Judge of the State of Sonora, located in that city, in Plenary Mercantile Lawsuit number 1/96, brought by DAVID LESLIE HERMISTON CHESTER against MINERA SUMMIT DE MÉXICO, S.A. DE C.V. and FARALLÓN MINERA MEXICANA, S.A. DE C.V. and FRANCISCO JAVIER MORENO MOLINA, RAÚL FERNANDO LEMAS POMPA, PEDRO VILLAGRÁN GARCÍA, JESÚS PEDRO VILLAGRÁN OCHOA, KILBY DANIEL BRUCE, FIDEL J. GONZÁLEZ LEWIS, THE PUBLIC REGISTRY OF MINING and the PUBLIC REGISTRY OF PROPERTY AND COMMERCE OF THE JUDICIAL DISTRICT OF HERMOSILLO, SONORA, concluded, among other things, with the following analytical points: "FIRST.- This Court has been competent to hear and resolve the present controversy and the Plenary Mercantile Lawsuit selected by the plaintiff has been the correct recourse.--- SECOND.- The plaintiff, DAVID LESLIE HERMISTON, did not accredit the factual allegations of the main, subsidiary or supervening actions exercised.--- THIRD.- MINERA SUMMIT DE MÉXICO, S.A. DE C.V., FARALLÓN MINERA MEXICANA, S.A. DE C.V., FRANCISCO JAVIER MORENO MOLINA, RAÚL FERNANDO LEMAS POMPA, PEDRO VILLAGRÁN GARCÍA, JESÚS PEDRO VILLAGRÁN OCHOA, KILBY DANIEL BRUCE, FIDEL J. GONZÁLEZ LEWIS, THE PUBLIC REGISTRY OF MINING and the PUBLIC REGISTRY OF PROPERTY AND COMMERCE OF THE JUDICIAL DISTRICT OF HERMOSILLO, SONORA,

2 ARE HEREBY ABSOLVED, from payment of the benefits claimed by DAVID LESLIE HERMISTON, for the reasons stated in the legal bases set forth under numbers NINTH, TENTH, ELEVENTH and TWELFTH of this sentence.--- FOURTH.- DAVID LESLIE HERMISTON is hereby sentenced to pay, in favor of the respondents, MINERA SUMMIT DE MÉXICO, S.A. DE C.V., FARALLÓN MINERA MEXICANA, S.A. DE C.V., FRANCISCO JAVIER MORENO MOLINA, RAÚL FERNANDO LEMAS POMPA, PEDRO VILLAGRÁN GARCÍA, JESÚS PEDRO VILLAGRÁN OCHOA, KILBY DANIEL BRUCE, FIDEL J. GONZÁLEZ LEWIS and THE PUBLIC REGISTRY OF MINING, who answered the lawsuit against them, the expenses and costs incurred in the procedures of the present lawsuit, after having been established by means of the corresponding incidental procedure, in the terms of the TWELFTH Considering clause.---" II.- The legal Attorney in Fact of the plaintiff, DAVID LESLIE HERMISTON CHESTER, filed an appeal against the preceding decision, which was admitted for both effects. Once the case was opened, the recourse was substantiated through the appropriate legal steps and it is now proceeded to dictate sentence. C O N S I D E R I N G: 1st. This First Unitary Court of the Fifth Circuit is competent to hear the present matter, pursuant to Article 29, Section III of the Organic Law of the Judicial Power of the Federation, in relation to precept 1339, section I of the Commercial Code, inasmuch as this is a recourse of appeal brought against the sentence dictated in the first instance by the District Judge of the territorial

3 jurisdiction of this same Court. 2nd. That to pronounce on the decision being appealed, the resolving judge based his judgment on the following reasoning: "...SECOND.- The plenary mercantile proceeding selected by the plaintiff party is correct, in accordance with the provision contained in Article 1377 of the Commercial Code, since the actions exercised do not require a special proceeding.--- THIRD.- The contending parties are justified both in the procedure as well as in the cause. In the proceeding, the plaintiff party is an individual person, of adult age, in full use of his civil rights; as are the respondents, FRANCISCO JAVIER MORENO MOLINA, RAÚL FERNANDO LEMAS POMPA, PEDRO VILLAGRÁN GARCÍA, JESÚS PEDRO VILLAGRÁN OCHOA, KILBY DANIEL BRUCE, and FIDEL J. GONZÁLEZ LEWIS.--- As refers to THE PUBLIC REGISTRY OF MINING and the PUBLIC REGISTRY OF PROPERTY AND COMMERCE OF THE JUDICIAL DISTRICT OF HERMOSILLO, SONORA, it has been evidenced that such entities are juristic persons, the first two of a private nature, duly constituted, and the latter two of a public nature, who appeared at the proceeding through the conduct of a person with the authority to do so and, therefore, it is concluded that the contending parties may be constituted as parties in the proceeding, pursuant to Article 55, Sections I and II of the Code of Civil Procedures for the State of Sonora, of suppletory application to the Commercial Code.--- The contending parties have legal standing in the lawsuit because the lawsuit was brought by DAVID LESLIE HERMISTON, natural person to whom the Law grants authority to do so, against

4 individual and corporate persons against whom the action may be exercised, this not to imply that the basis of the matter shall be prejudged.--- FOURTH.- By reason of technical procedures, the exception of prescription indicated by FRANCISCO JAVIER MORENO MOLINA must be analyzed, who asserted that the right of the plaintiff to oppose the resolutions taken in the meetings of MINERA SUMMIT, is precluded, inasmuch as Article 201 of the General Commercial Companies Law, establishes that the term for interested parties to oppose a resolution is fifteen days.-- In this respect, this judge considers that the exception of prescription is not applicable inasmuch as Article 201 of the General Commercial Companies Law upon which the respondent bases his case, establishes the term for the stockholders to legally oppose the resolutions of the meetings, but not to exercise actions such as that being brought by the plaintiff which is based on the consideration that the principal actions in the lawsuit are because of the nullity of several mandates.--- FIFTH.- Upon summoning each of the respondents, the legal procedural relationship was duly integrated, complying with the formalities referred to in Article 171 of the Code of Civil Procedures for the State of Sonora, of suppletory application to the Commercial Code.--- SIXTH.- The parties enjoyed the equality and the probatory term conferred in Articles 1194, 1195, 1196, 1197, 1198 and 1199 of the Commercial Code, and were able to offer the means of conviction they considered ideal and pertinent. SEVENTH.- Satisfied that the necessary procedural requirements have been met for the

5 present lawsuit to have legal existence and formal validity, it is proceeded to enter into the question of law of the present lawsuit, in accordance with the provisions of Article 48 of the Code of Civil Procedures for the State of Sonora, of suppletory application to the Commercial Code.--- The case for the present lawsuit was established in the complaint, in the clarification and broadening of the answer thereto, as well as in the incidental lawsuit of supervening action, the contents of which were established in the chapter on the whereas clauses of this sentence, the aforesaid being cited as if reproduced to the letter, to avoid unnecessary repetitions and for the purpose of economy in the proceedings, the foregoing based on Articles 1396 and 1405 of the Commercial Code.--- NINTH.- As one of its principal actions, the plaintiff party exercised the action of nullity or nonexistence of the mandate executed on the Sixteenth day of November of Nineteen hundred and ninetytwo, in favor of FRANCISCO JAVIER MORENO MOLINA, and in consequence, in a supplementary manner, the statement that the plaintiff was not legally present at the Stockholders' General Regular (1) Meeting of MINERA SUMMIT DE MÉXICO, S.A. DE C.V., held on the Twenty-third of December, Nineteen hundred and ninety-four; the nullity of the agreements or resolutions taken in the above mentioned General Regular (1) Meeting; the nullity of the appointment of JESÚS PEDRO VILLAGRÁN GARCÍA as Sole Administrator of MINERA SUMMIT DE MÉXICO, S.A. DE C.V. agreed at that Meeting; the nonexistence of the option agreement entered into between MINERA SUMMIT DE MÉXICO, S.A. DE C.V. and FARALLÓN MINERA

6 MEXICANA, S.A. DE C.V.; and the cancellation of the registrations filed at the Public Registry of Mining and the Public Registry of Property and Commerce of this Judicial District of Hermosillo, under number 152, Page 124, Volume 3, of the Book of Mining Acts, Contracts and Agreements, and 11,652, Book One, Volume 49, Commercial Section, respectively (actions identified as A, B, C, D, E, F, G and H), supplementary with respect to the actions exercised in clauses c) and d) in which the resolution adopted in the Stockholders' General Regular (1) Meeting of MINERA SUMMIT DE (1) In Mexico, Stockholders' Regular (1) General Meeting ("Asamblea General Ordinaria de Accionistas", i.e. Stockholders' 'Ordinary' General Meeting). MÉXICO, S.A. DE C.V., held on the Twenty-third of December, Nineteen hundred and ninety-four be declared legally null and void, and as a consequence of the previous statement, the cancellation of the subject agreement at the Public Registry of Property and Commerce under number 11,652, Book 1, Volume 49, Commercial Section. In addition, a certified copy is found in the records of public deed number 4992, volume one hundred and eighty-four, dated the Thirteenth of October of Nineteen hundred and ninety-two, executed and attested to by Notary Public number 32, exercising in this city of Hermosillo, which certifies the organization of the corporation with the name of "MINERA SUMMIT DE MÉXICO, S.A. DE C.V."; certified copy of public deed number 6,010, Volume 242, dated the Fifteenth of June, Nineteen hundred and ninety-five, executed and attested to before Notary

7 Public number 32, exercising in this notarial district, relative to the Meeting of Stockholders held on the Twentythird of December, Nineteen hundred and ninety-four in which the appointment is certified of JESÚS PEDRO VILLAGRÁN GARCÍA as Sole Administrator of MINERA SUMMIT DE MÉXICO, S.A. DE C.V., as well as the certified copy of deed number seventy thousand eight hundred and fifty-eight dated the Twentysixth of January, Nineteen hundred and ninety-six, executed and attested to before Notary Public number 74 of the Federal District, certifying a document dated the Eleventh of January, Nineteen hundred and ninety-six, containing an option agreement with respect to the exclusive right (illegible) of "FARALLÓN MINERA MEXICANA, SOCIEDAD ANÓNIMA DE CAPITAL VARIABLE" (A VARIABLE CAPITAL STOCK COMPANY) to acquire one hundred percent of the mining concession for the exploitation of the CAMPO MORADO mine and the "LA ALINA" mining concession, documents which must be taken into account inasmuch as they were exhibited with the complaint, the aforesaid in accordance with Section II, Article 266 of the Code of Civil Procedures for the State of Sonora, of suppletory application to the Commercial Code, and which have the probative value conferred by Article 1192 of the Commercial Code, from which the existence of the facts upon which the plaintiff founds his claim are evident. However, this judge concludes that such claims are unfounded.- The foregoing, based on the fact that although it is true that Article 192 of the General Commercial Companies Law establishes that, "Neither the administrators nor the statutory auditors may be legal representatives of the

8 corporation", it is also true that entering into a contract contravening said provision does not have the legal consequence of declaring the invalidity of the meeting of the minds therein contained, in view of the fact that there is no express provision in this regard in the same General Commercial Companies Law or in the Commercial Code, indispensable requisite to judicially declare the nullity of an act.--- Indeed, if it is true that Article 2225 of the Civil Code for the Federal District, of suppletory application in commercial matters, as provided in Article 2nd of the Commercial Code, provides that illegality in the object, in the purpose, or in the condition of the act, produces its nullity, either absolute, or relative, it is also true that the same device indicates "as provided by Law", from which it is concluded that since it is not invalid as a matter of law, set forth in the Law as such, to be declared by the judge, it must be expressly contemplated in a legal precept which provides that sanction and its causes in a clear form.--- Accordingly, if there is no article whatsoever establishing the nullity of a power of attorney granted to the administrator or statutory auditor of a corporation, it follows that the action exercised to declare the nullity of the power granted on the Sixteenth of November of Nineteen hundred and ninety-two by the plaintiff party to FRANCISCO JAVIER MORENO MOLINA is unjustified; and therefore, the nullity or nonexistence of the acts referred to by the plaintiff in the accessory benefits derived from the nullity of the subject mandate is also unwarranted.- TENTH.- In the benefits identified in clauses H, I, J, K, L

9 and M, the plaintiff requests that it be declared that he was not present in the Stockholders' Meeting of MINERA SUMMIT DE MÉXICO, S.A., held immediately after its incorporation and, as a consequence thereof, the nullity of the resolution taken by the Stockholders' General Regular (1) Meeting of MINERA SUMMIT DE MÉXICO, S.A. DE C.V. in which JESÚS PEDRO VILLAGRAN OCHOA was appointed general attorney in fact for lawsuits and collections, acts of administration and ownership, in the broadest possible terms; the declaration of nonexistence due to a lack of consent by MINERA SUMMIT DE MÉXICO, S.A. DE C.V. of the contract entered into between MINERA SUMMIT DE MÉXICO, S.A. DE C.V. and FARALLÓN MINERA MEXICANA, S.A. DE C.V., set forth in the document dated the Fifteenth of October, Nineteen hundred and Ninety-five; the nonexistence, due to the lack of consent of MINERA SUMMIT DE MÉXICO, S.A. DE C.V., of the powers of attorney granted by MINERA SUMMIT, through the conduct of JESÚS PEDRO VILLAGRÁN OCHOA in the names of FERNANDO LEMAS POMPA and KILBY DANIEL BRUCE, as well as the cancellation of the registrations filed with the Public Registry of Property and Commerce under number 11,750, Book One, Volume 5, Commercial Section order (sic.), and in number 12,126, Book One, Volume 71, Commercial Section, and in a supplementary form, the actions identified in subclauses i) and ii), which in content are identical to those exercised in clauses K) and L).--- A copy is found in the records of the Letter of Proxy granted on the Twentyfourth of September, Nineteen hundred and Ninety-two, by DAVID LESLIE HERMISTON to FRANCISCO JAVIER MORENO MOLINA,

10 ratified in signature and contents before Notary Public number 58, in exercise in the city of Hermosillo, which in ruling of the Thirteenth of June, Nineteen hundred and Ninety-seven, was admitted as an exact copy of said document; certified copy of Public Deed 4992, Volume 184, dated the Thirteenth of October, Nineteen hundred and Ninety-two, executed and attested to before Notary Public number 32, in exercise in this city, in which the appointment of JESÚS PEDRO VILLAGRAN OCHOA is certified as general attorney in fact for lawsuits and collections, acts of administration and ownership, in the broadest possible terms; document subscribed on the Fifteenth of October, Nineteen hundred and Ninety-five; a copy of which was exhibited and accepted as authentic in the ruling dated the Thirteenth of June, Nineteen hundred and Ninety-seven; in addition, there are certified copies of public deeds 6,4000 (sic.) and 6,326, volumes 262 and 268, respectively, confirming that JESÚS PEDRO VILLAGRÁN OCHOA granted to KILBY DANIEL BRUCE and RAÚL FERNANDO LEMAS POMPA a general power of attorney for lawsuits and collections and a general power of attorney for lawsuits and collections and acts of administration, respectively, documents which pursuant to the provisions of Article 266 of the Code of Civil Procedures for the State of Sonora, of suppletory application to the Commercial Code, 1192 of the Commercial Code, have full probative value to accredit the facts indicated by the plaintiff in his lawsuit. Nevertheless, the principal claim contained in Clause H) is unfounded. To that effect, the plaintiff indicates as facts of the subject

11 action that on the Twenty-fourth of September, Nineteen hundred and Ninety-two, he granted power of attorney to FRANCISCO JAVIER MORENO MOLINA solely to represent him as a stockholder at the incorporation of the corporation, MINERA SUMMIT DE MÉXICO, S.A. DE C.V., but not to represent him at the Stockholders' Meeting of SUMMIT.--- The Letter of Proxy of the Twenty-fourth of September, Nineteen hundred and Ninety-two in which the power of attorney was granted in the name of FRANCISCO JAVIER MORENO MOLINA, in its relevant part, states: "BROAD, FULL AND SUFFICIENT POWERS TO APPEAR IN MY (OUR) NAME AND REPRESENTATION AT THE ACT OF INCORPORATION OF THE CORPORATION DENOMINATED MINERA SUMMIT DE MÉXICO, S.A. DE C.V. TO ASSERT MY CAPACITY AS STOCKHOLDER".--- Consequently, taking into consideration the contents of the subject power of attorney, as well as the contents of Article 6th of the General Commercial Companies Law, which establishes a series of requisites which must be included in the Articles of Incorporation of the corporation, among others, the appointment of the administrators and the designation of those persons who shall carry the corporate signature, it is considered that FRANCISCO JAVIER MORENO MOLINA did not exceed his functions as a mandatary of DAVID LESLIE HERMISTON, since the Regular Meeting in which JESÚS PEDRO VILLAGRÁN OCHOA was appointed general attorney in fact for lawsuits and collections, acts of administration and ownership, in the broadest possible terms of MINERA SUMMIT DE MÉXICO, S.A. DE C.V., formed part precisely of the incorporation of that corporation, particularly if it is considered that the power

12 of attorney granted by the plaintiff in the name of FRANCISCO JAVIER MORENO MOLINA was not limited in that aspect.--- ELEVENTH.- With regard to Clauses O, P, Q, R, S, T and U, and subclauses i) ii) and iii), the plaintiff requests that it be declared that the power granted to FIDEL J. GONZÁLEZ LEWIS, on the Eighth of December, Nineteen hundred and ninety-four, did not include the express authority to the mandatary of making donations in the name and for the account of the plaintiff; and as a consequence thereof, that a declaration of nonexistence be made, due to a lack of consent, of the gratuitous assignment or stock donation of the plaintiff in favor of RAÚL FERNANDO LEMAS POMPA, set forth in the document dated the Twentieth of June, Nineteen hundred and ninety-five, and any property endorsement made in the name of the plaintiff by FIDEL J. GONZÁLEZ LEWIS, in favor of RAÚL FERNANDO LEMAS POMPA with respect to the shares, indirect object of the gratuitous assignment or donation; that RAÚL FERNANDO LEMAS POMPA be sentenced to deliver the stock certificates representing the shares which were the object of the gratuitous assignment or donation to the plaintiff; that MINERA SUMMIT DE MÉXICO, S.A. DE C.V., be sentenced to cancelling and leaving without effect any registration which might have been made of the shares, as well as of the subject gratuitous assignment or donation, this judge finding himself unable to proceed with the study of the aforementioned shares.-- The foregoing is due to the fact that although it is true that a copy of the power of attorney granted by DAVID LESLIE HERMISTON on the Eighth of December, Nineteen hundred and ninety-four to

13 FIDEL J. GONZÁLEZ LEWIS is in the court files, the shares contained in clauses P, Q, R, S, T and U and subclauses i), ii) and iii) depend on the nullity of the power of attorney in question, document which in ruling dated the Thirtieth of June, Nineteen hundred and ninety-eight was admitted as an exact copy of the subject document, accompanied by a translation into Spanish (Exhibit 10), that is not translated in its entirety, and in some spaces the phrase "illegible word" appears, document which is a necessary requirement for this judge to be able to analyze what powers were granted to FIDEL J. GONZÁLEZ LEWIS and thus determine whether he was given the authority to make donations in the name and for the account of the plaintiff; making it necessary therefore, for the plaintiff party to offer the expert proof in the translation of the language because in this case special knowledge is required to clarify the sense of the power of attorney granted, pursuant to Article 1252 of the Commercial Code in force.- Under these conditions and taking into consideration that Article 1194 of the Commercial Code establishes that, "he who affirms is obliged to prove.- Consequently, the plaintiff must prove his action and the accused his exceptions", it is unquestionable that the plaintiff had the obligation of proving that among the powers granted to FIDEL J. GONZÁLEZ LEWIS, making donations in his name and for his account was not included, which did not occur in this case. This Judge is not unaware that in communication received by this Court on the Twenty-second of September, Nineteen hundred and Ninety-nine, said party offered several means of proof.

14 Nevertheless, such proof was not admitted because his offer was made extemporaneously, this determination being firm, by reason of the fact that the Court of Appeals rejected the appeal brought by the plaintiff against said determination.- -- On the other hand, it should be stated that it is unnecessary to begin the study of the proofs submitted by the respondent parties, FARALLÓN MINERA MEXICANA, S.A. DE C.V., MINERA SUMMIT DE MÉXICO, S.A. DE C.V. and JESÚS PEDRO VILLAGRÁN OCHOA, based on the fact that the plaintiff did not prove their actions, for which reason the actions exercised by the plaintiff referred to in this "CONSIDERING", are declared unfounded and inadmissible, and the respondents are absolved from payment of the benefits claimed in the lawsuit. TWELFTH.- Concerning the supervening action brought by the plaintiff in communication dated the Third of April, Nineteen hundred and ninety-eight, considering that the Second Unitary Court of the Fifth Circuit, in Sentence of the Seventeenth of February, Nineteen hundred and ninety-nine, dictated in Civil Case 677/98, confirmed the admission of said action, the study of its legal basis was omitted, and it is therefore proceeded to analyze the elements of proof offered to accredit the facts supporting the case.--- In his incidental complaint, the incidental plaintiff indicated that by means of the document entitled, "CONTRACT OF ASSIGNMENT OF MINING RIGHTS", dated the Tenth of January, Nineteen hundred and ninety-seven, VILLAGRÁN GARCÍA (in presumed representation of SUMMIT) and JUAN MANUEL GONZÁLEZ OLGUÍN, supposedly representing FARALLÓN, made the following statements: That

15 the representative of Summit has the necessary powers to bind (its principal) in the terms of the present contract, such being confirmed in public deed number 6,329 dated the Tenth of January, 1996; that the total price of the assignment was the result of adding the amount of the payments that Farallón has made to Summit in cash and in common stock; that the assignment contract refers to the two mining concessions referred to in the "option agreement"; that the "assignment contract" was not the document by means of which Farallón supposedly acquired the concessions from Summit, since that contract was only a form of confirming that Farallón had complied with the nonexistent obligations which, in exchange for the pretended transfer of the concessions, had been agreed upon for the account of Farallón in the so-called "option agreement", presumably entered into between Summit and Farallón. Also commented was the fact that it was established in the "option agreement", that with the object of exercising the option, and consequently being able to receive and acquire 100% of the indivisible rights, Farallón should pay to Minera Summit a total amount of One million two hundred thirty-five thousand three hundred and eighty-eight pesos ($1,235,388) and issue, in the name of Minera Summit, Seven hundred and fifty thousand (750,000) shares of fully paid-in stock, with no encumbrances of Farallón capital. Upon having paid the amount indicated and giving instructions with respect to the issuance of the Seven hundred and fifty thousand (750,000) shares in the name of Minera Summit, it would be considered that Farallón Mexicana had acquired one

16 hundred percent (100%) of the indivisible rights of the property, free and under no encumbrances whatsoever.--- It was also stated that the previously indicated benefits agreed upon, are the same ones which were considered to have been paid to SUMMIT in the terms of Clause Third of the "assignment contract", the nullity of which is pretended by means of the supervening action. For this reason, the "assignment contract" is not considered a legal act independent of the subject "option agreement", but rather a form of filing the change in ownership of the mining concessions, from Summit to Farallón, at the Public Registry of Property, considering that as a logical and legal consequence, upon declaring the nonexistence of the "option agreement" as requested in the initial communication of the lawsuit, the legal nonexistence of the "assignment contract" should also be declared. Along this same line of thoughts, if in "CONSIDERING" Ninth of this sentence, the nullity action of the "option agreement" was declared unfounded, the same consideration must be made with respect to the "assignment contract", taking into account that the complainant derives the nonexistence of the latter contract from the nonexistence of the "option agreement".-finally, pursuant to the provision of Article 1327 of the Commercial Code, which establishes, "the sentence shall exclusively cover the actions deduced and the exceptions opposed, respectively, in the lawsuit and the answer thereto", from which it is inferred that the case in the plenary mercantile lawsuit was established based on the facts on which the plaintiff bases its action, expressed in its initial

17 complaint, and those on which the respondent bases its exceptions; consequently, if the plaintiff bringing the incidental action does not indicate the cause of the pretended nullity in its incidental complaint, it is unquestionable in this respect that it did not form part of the case, so that aside from the fact that proof was offered and contributed tending to demonstrate such facts, this Judge is not obligated to study the matter nor the proof submitted for that purpose. For this reason, the analysis of the different means of conviction offered by the incidental plaintiff is omitted, of which the "CONFESSIONAL" depositions were admitted, on the part of JESÚS PEDRO VILLAGRAN GARCÍA, JESÚS PEDRO VILLAGRÁN OCHOA, RAÚL LEMAS POMPA, FRANCISCO JAVIER MORENO and FIDEL GONZÁLEZ LEWIS, and the DOCUMENTARY EVIDENCE consisting of the ASSIGNMENT CONTRACT and Public Deed 6,329, Volume 261, executed before Attorney Rubén Díaz Vega; in view of the fact that to do so would be contrary to the principle of congruity which must prevail in all judicial resolutions.- THIRTEENTH.- Aware of the sense of the sentence and pursuant to Section I of Article 1084 of the Commercial Code, the plaintiff is sentenced to the payment in favor of the respondents, MINERA SUMMIT DE MÉXICO, S.A. DE C.V., FARALLÓN MINERA MEXICANA, S.A. DE C.V., FRANCISCO JAVIER MORENO MOLINA, PEDRO VILLAGRÁN GARCÍA, JESÚS PEDRO VILLAGRÁN OCHOA, KILBY DANIEL BRUCE, and THE PUBLIC REGISTRY OF MINING, who answered the lawsuit against them, the EXPENSES and COSTS incurred in the procedures of the present lawsuit, after having been established by means of the corresponding incidental

18 procedure.--- 3rd. Attorney Antonio Collado Mocelo, Legal Attorney in Fact of DAVID LESLIE HERMISTON, set forth the following injuries: "The final sentence being appealed has caused the following injuries to his principal: FIRST ERROR.- The A quo Judge caused an error detrimental to my principal, in indicating on page 17 of the sentence being appealed.--- "CONSIDERING" THIRD.- The contending parties are legitimized both in the procedure and the cause. In the process the plaintiff party, being an individual person, of adult age, in full use of his civil rights, in the same manner as the respondents, FRANCISCO JAVIER MORENO MOLINA, RAÚL FERNANDO LEMAS POMPA, PEDRO VILLAGRÁN GARCÍA, JESÚS PEDRO VILLAGRÁN OCHOA, KILBY DANIEL BRUCE, and FIDEL J. GONZÁLEZ LEWIS".--- As refers to Minera Summit de México, S.A. de C.V., Farallón Minera Mexicana, S.A. de C.V., and the Public Registry of Property and Commerce of the Judicial District of Hermosillo, Sonora, it has been evidenced that such entities are juristic persons, the first two of a private nature, duly constituted, and the latter two of a public nature, who appeared at the proceeding through the conduct of a person with the authority to do so, and therefore, it is concluded that the contending parties may be constituted as parties in the proceeding, pursuant to Article 55, Sections I and II of the Code of Civil Procedures for the State of Sonora, of suppletory application to the Commercial Code".--- The contending parties are legitimated in the lawsuits, the lawsuit having been brought by DAVID LESLIE HERMISTON, individual person

19 to whom the Law grants authority to do so, against individual and corporate persons, against whom the action may be exercised, this not implying that the basis of the matter be prejudged.--- This indeed causes injury, in virtue of the fact that it fails to correctly apply the provisions of Article 192 of the General Commercial Companies Law which, to the letter states: Article 192: "The stockholders may be represented at the meetings by agents, whether forming part of the corporation or not. The representation shall be conferred in the manner prescribed in the By-Laws and, in the absence of a stipulation, in writing.--- Neither the administrators nor the statutory auditors may be legal representatives of the corporation".-- - As can be seen in the preceding transcription of the article invoked, it provides that the Third District Judge should have officially proceeded to pursue the matter since it was an act of public order and because it was a prohibitive law, whereas in the court files, the judge, in dictating that MINERA SUMMIT DE MÉXICO, S.A. DE C.V., appeared at the proceedings through the conduct of a person with the powers to do so, reasons in an erroneous manner; accordingly, in conclusion, this is inadmissible since it is contrary to the provisions dictated in Article 192 of the General Commercial Companies Law. For this reason, the personality with which Mr. MORENO MOLINA is accredited is null and void, since he cannot be accredited as the attorney in fact of DAVID LESLIE HERMISTON, because the power of attorney given to him authorized only one legal act which was solely

20 to represent Mr. DAVID LESLIE HERMISTON at the incorporation of the corporation denominated, MINERA SUMMIT DE MÉXICO, S.A. DE C.V., at the Meeting held on the 13th of October of It is therefore necessary to mention that all of the legal acts realized by Mr. MORENO MOLINA subsequent to the aforementioned date are null and void because he did not have the personality with which he presented himself.--- Due to the fact that Mr. MORENO MOLINA was appointed Secretary of the Board of Directors of the corporation on the 13th of October, 1992, and inasmuch as Article 192 provides that "administrators and statutory auditors may not be legal representatives of the corporation", and the corporation was formed as follows: Mr. DAVID LESLIE HERMISTON was named as Chairman, Atty. FRANCISCO JAVIER MORENO MOLINA, as Secretary, and Atty. JESÚS PEDRO VILLAGRÁN, as Treasurer, the legal acts carried out by Mr. MORENO MOLINA subsequent to that date are null and void because they fragrantly violate specific articles contained in our commercial legislation that from every point of view are fraudulent, since these acts are intended to cause a false appreciation of the reality. It is because of this that the Board of Directors of the subject company must be declared null and void, inasmuch as a representative cannot be a director and if it is a director, it cannot be a representative, since one precludes the other. The powers granted were only to incorporate the corporation and this is not a reason to violate Article 6th of the General Commercial Companies Law. What should have been done was to issue a call with the necessary quorum

21 present, in accordance with the By-Laws, and hold a stockholders' Meeting to appoint a board of directors.--- Based on the foregoing, it is respectfully requested that said Court of Appeals revoke the sentence which in an evidently illegal form has been dictated, causing irreparable damage to my principal by considering that said legal acts which violate federal law, such as the Commercial Code and the Civil Code for the Federal District, of suppletory application to the matter under discussion, are valid.--- SECOND ERROR.- The often cited sentence, dated the Twenty-fifth of October of the present year, dictated by the Third District Judge in Civil Matters of the State of Sonora, causes an error in my principal's case with respect to "CONSIDERING" Sixth of said sentence which, to the letter, states: SIXTH: The parties enjoyed the equality and the probatory term conferred in Articles 1194, 1195, 1196, 1197, 1198 and 1199 of the Commercial Code, and were able to offer the means of convention considered ideal and pertinent.--- "--- In the first place, the "A quo" judge, in dictating said sentence, is violating Article 81 of the Code of Civil Procedures for the Federal District, with suppletory application to the Commercial Code, since it is not being done in a coherent, clear and precise manner.--- In the same manner, and as Your Honor may observe, my principal at no time enjoyed the equality and probative opportunity as the judge would make us believe, since the provision set forth in Article 1054 of the Commercial Code is being violated, which indicates, as well as serving to support, the following jurisprudence:--- Art. 1054: In the

22 event that no agreement exists between the parties on the procedure before the courts in the terms of the preceding articles, unless commercial laws establish an express special or supplemental procedure, commercial lawsuits will be governed by the provisions of this book and with respect to their rights, the respective law of local procedures shall apply".--- "Novena Época". Instance. Twentieth Circuit Court of Associate Justices.- Source: Judicial Weekly of the Federation and its Gazette. Tome: 11, November, Thesis: XX.54 C - Page NOTIFICATIONS. IN THIS ASPECT THE CODE OF LOCAL CIVIL PROCEDURES MUST BE APPLIED IN A SUPPLETORY MANNER TO THE COMMERCIAl CODE. (LEGISLATION OF THE STATE OF CHIAPAS).-... (Transcription of thesis).--- Based on the above, we can see that when the Commercial Code lacks a certain legal provision, the Local Code is applicable, which in this case is the Code of Civil Procedures for the State of Sonora, so that to be able to offer the probative means and have them taken into account, the criterion that should have been applied by the "A quo" with respect to the usual term and the period of time counted so that the parties may offer the necessary evidence to be able to prove their statements, must be that of the provisions stipulated in Article 180 of said code, which in its pertinent part indicates, "when there are various parties and the term is the usual one, it will be counted from the day following the date on which all parties have been notified...", which statement provides, and it is necessary to indicate, that in not admitting the proofs offered in time and form, the Third District Judge

23 left my principal in a total and absolute indefensible state.--- In this same order of ideas, the plaintiff did not have the obligation or the duty to offer such proofs by counting the term from the date of his notification, but rather, to the contrary, the term to present them began as of the date of notification of the last co-respondent, as realized today by the appellant, since it was within the time given to the parties to render the proof accrediting their respective rights.--- Since the term was counted in an inexact manner, as has been shown, my principal cannot prove his statement in the same manner and in accordance with the articles indicated by the Third District Judge, it being evident that the plaintiff must prove his action, offering the pertinent evidence to do so, clearly expressing the facts which it is intended be demonstrated, which was realized in the term given in accordance with local legislation. For this reason, the decision dictated by the A quo in the often cited sentence dated the 25th of October, 2001, must be revoked. To support the foregoing, the comments made by Jurist Eduardo Pallares, in his book entitled, "Dictionary of Civil Procedural Law", emphasize "... that the usual term is that which concerns the two parties. When it is the usual term it will begin to elapse only from the day following the date on which all of the parties (illegible)..." Based on the preceding arguments wielded, it is evident that the A quo violated our legislation, applying the law erroneously, as has been demonstrated in the respective rulings. In the same manner, as set forth in the records,

24 Your Honor will observe that the responsible authority did not apply the law correctly. Therefore, the proofs offered by my principal must be admitted in the lawsuit under discussion, so that a level of procedural equality is achieved between the parties, as well as to be able to dictate a just, clear and coherent sentence.-- THIRD ERROR.- The A quo judge caused an error in my principal's lawsuit in dictating the "CONSIDERING" Seventh of the sentence handed down on the 25th of October of the present year, which was published on the 26th of the same month and year, which to the letter states: "... SEVENTH.- Satisfied that the necessary procedural requirements have been met for the present lawsuit to have legal existence and formal validity, it is proceeded to enter into the question of law of the present lawsuit, in accordance with the provisions of Article 48 of the Code of Civil Procedures for the State of Sonora, of suppletory application to the Commercial Code.--- From the above, it is apparent that the A quo judge violated and transgressed the stipulations of Article 48 of the Code of Civil Procedures for the State of Sonora, which provides: "Art. 48: The respondent may announce to the judge and assert as exceptions, the necessary procedural requisites for the lawsuit to have legal existence and formal validity, and in addition, all of these can be enforced or be officially amended by the Judge, without a request from the party, when it has knowledge thereof.--- In the first place, the A quo judge at no time studied or put together the procedural requisites of the respondent party which are necessary for the lawsuit to have legal

25 existence and formal validity, as provided in the article preceding; further, as confirmed in the court files and as Your Honor shall see, the personality that Mr. J. PEDRO VILLAGRÁN OCHOA manifests, is not legally supported, since the power of attorney granted at the time it was conferred was outside of all legal order and is, therefore, null and void, which has been demonstrated within the present communication, but is not transcribed for the purpose of procedural economy.--- In the same manner, the representation and personality that PEDRO VILLAGRÁN states he has with the corporation denominated, MINERA SUMMIT (sic.), S.A. DE C.V. is also null and void, because said personality is accredited in the same minutes of the Stockholders' General Meeting in which Mr. MORENO MOLINA, who did not have the powers to realize the act, gave his vote to appoint him as Administrator of said company. In the second place, as is well known, the personality of the parties must be officially studied and authenticated, the following jurisprudence serving as support of the above: "Novena Época". Instance. Second Court of Associate Justices of the Fifth Circuit.- Source: Judicial Weekly of the Federation and its Gazette. Tome: III, April, Thesis: V.2o.24 C- Page PERSONALITY. UNOFFICIAL STUDY OF, IN APPEALS... - (Transcription of thesis).--- It is evident that the A quo judge failed to study the personality of the co-respondents, omitting and violating the local legislation, causing serious damage to my principal.--- Following this same order of ideas, with respect to the fact that the judge, in "CONSIDERING"

26 Seventh, indicates that "it proceeds to enter into the question of law of the present lawsuit...", this is erroneous, since in not evaluating the proofs presented by the parties, it is legally impossible to study the question of law of the case under discussion, inasmuch as he did not take into account the means of conviction of the parties. Because of the aforesaid, I request that you, Citizen Magistrates, kindly revoke the sentence being appealed pursuant to the previously expressed statements. FOURTH ERROR.--- The A quo judge who committed the error in the lawsuit of my principal as set forth from Pages 19 to 22 of the sentence being opposed):... (Refer to the reasoning of the judge in "CONSIDERING" Ninth).--- In effect, the Judge caused the error because he failed to correctly apply the provisions of Article 192 of the General Commercial Companies Law, in relation to Articles 6, 8, 10, 11, 12, 19, 1801 and 2224 of the Civil Code for the Federal District, which to the letter, states: Article 192 (GCCL).- "The stockholders may be represented at the meetings by agents, whether forming part of the corporation or not. The representation shall be conferred in the manner prescribed in the By-Laws and, in the absence of a stipulation, in writing.--- "Neither the administrators nor the statutory auditors may be legal representatives of the corporation".-- - It is evident that upon being appointed Secretary of the Board of Directors in the Meeting held in October, 1992, Mr. FRANCISCO JAVIER MORENO MOLINA was legally impeded from representing Mr. DAVID LESLIE HERMISTON CHESTER at the Meeting held on the 23rd of December, 1994, in virtue of the

27 provision of the previously invoked article, containing the rule prohibiting administrators and statutory auditors from being attorneys in fact of stockholders at stockholders' meetings. Therefore, the A quo judge has incorrectly interpreted this article, causing an error against my principal, as established in the Civil Code for the Federal District, of suppletory application to commercial matters.-- - Article 6, Civil Code of the Federal District.- The will of individual parties shall not exempt them from observing, nor shall they alter or modify, the law. Only those private rights not directly affecting the public interest may be waived, provided such waiver does not damage the rights of third parties.--- From what is evident, supposing without conceding that my principal had signed the power of attorney in question, with knowledge of the provision of Article 192 of the General Commercial Companies Law, this legal phenomenon is null and void because the will of private parties cannot be placed above what is set forth by the legislator in the rules of public order. To the contrary, and in accordance with the article that in the same manner has been violated by the A quo judge, transcribed hereinbelow, the contents of the aforesaid Article 192 is a prohibitive rule of public order, which society requires be rigorously observed.--- Article 8, Civil Code of the Federal District.- The acts performed against the nature of prohibitive laws or those of public interest shall be invalid, except in the cases in which the law orders the contrary.- This Article 8 was also ignored by the natural judge who has general jurisdiction over the issue. If he

28 had complied therewith, because the law must be observed without argument, he would have evidently concluded, as the judge did, in the legal bases for the actions studied in "CONSIDERING" Ninth, in which an error is committed against my principal, that, "...entering into a contract in contravention of said provision does not have the legal consequence of declaring the nullity...". Because from the article previously studied, it is apparent that the law does provide a logical and legal consequence for those acts which are in contravention of the stipulations of Article 192 of the General Commercial Companies Law, there being no argument whatsoever to the contrary, therefore indicating that the A quo judge did not apply the provisions of Article 10 of the Civil Code for the Federal District.-. The disuse, custom or practice to the contrary cannot be argued against the observance of the law.--- It is thus clear that Article 192 of the General Commercial Companies Law, establishes an express prohibition, which evidently results in the absolute nullity of the act. It is pertinent to emphasize that in no part whatsoever of the commercial legislation cited is there an established cause for exception which justifies its lack of application, so that the Third District Judge of Sonora, omits the application of the provisions established in Article 11 of the Civil Code of the Federal District.- The laws which establish exceptions to the general rules are not applicable to any case whatsoever which is not expressly specified in the same laws.--- This is another error against my principal because if a hypothesis of exception does not exist, it is evident

29 that Article 192 of the General Commercial Companies Law will be brought up to date by any act performed by a member of the Board of Directors who is the attorney in fact of a stockholder in a stockholders' meeting; it is clear, in accordance with the legislation invoked and not applied by the A quo judge, that it will end in the nullity of the act; since in this concrete case, these provisions must be applied because the acts we are requesting be annulled, were realized within the national territory, and finally, the Third District Judge failed to consider the spirit of Article 12 of the Civil Code for the Federal District.- Mexican law governs all of the persons located within the Mexican Republic, as well as the acts and events occurring in its territory or under its jurisdiction, and those persons subject to such laws, except when such persons take steps for the application of a foreign right, and also with the exception of the provisions of the treaties and conventions in which Mexico participates.--- From which it is obvious that although Mexican law governs the matter under discussion, the A quo judge failed to apply Mexican law, and because the natural judge should have resolved the matter by strictly adhering to and applying same, and in not doing so, also failed to apply the law, again causing an error against my principal. Article 19, Civil Code for the Federal District, indicates: Article 19, Civil Code for the Federal District.- The judicial controversies of civil order must be resolved pursuant to the letter of the law or its legal interpretation, and in the absence of the law, these shall be resolved in accordance with the general

30 principles of law.--- Finally, the A quo judge does not take into consideration that the contents of Article 192 of the General Commercial Companies Law, is closely linked to Article 1801 of the Civil Code for the Federal District which, in a much more conclusive manner than the first, indicates that: Article 1801, Civil Code for the Federal District.- No person shall enter into a contract in the name of another person without authorization thereby or by the law.--- That is, the subject Article 192, in prohibiting that administrators may not be attorneys in fact of the stockholders at stockholders' meetings, it is evident that the law does not authorize contracting in their name, which is evidence of the lack of legality of its acts, and its consequent nullity, provisions which the A quo judge fails to apply, continuing to cause an error against the appellant.--- In conclusion, therefore, since the administrator is not able to represent the stockholder at the meeting of the corporation, it is clear that no representation exists and for this reason there being an absence of will that, according to Article 2224 of the Civil Code for the Federal District, as well as Articles 1792 to 1811 of the same ordinance, provides a nuance of nonexistence or nullity of the act carried out, circumstance which is neglected by the natural judge, therefore causing an error against my principal.--- Article 2224, Civil Code for the Federal District.- A nonexistent juridical act which due to a lack of consent or of objective which could be the subject thereof, shall not produce any legal effect whatsoever. It is not susceptible to confirmation, nor by

31 prescription; its nonexistence can be invoked by all interested parties.--- Once it has been clearly understood that Mr. DAVID LESLIE HERMISTON was not legally represented at the meeting held on the 23rd of December, 1994, the A quo judge, in not declaring that the intended actions were admissible (which he declares to be contrary to law in the "CONSIDERING" Ninth being commented), an error was caused against my principal, since he failed to apply the provisions of Articles 186 and 187 of the General Commercial Companies Law, which are hereby provided: Article 186 of the GCCL. The call to general meetings shall be made by means of the publication of a notice in the official gazette of the entity of the domicile of the corporation or in one of the newspapers of major circulation in said domicile within a period in advance of the meeting as established in the By-laws or, as the case may be, fifteen days prior to the date indicated for the meeting. During all of this period of time, the report referred to in the general statement of Article 172 shall be at the disposal of the stockholders, at the offices of the corporation.--- Article 187, GCCL.- The call to Meetings shall contain the agenda and carry the signatures of the person(s) issuing same.--- In fact, these two articles shall not apply, since in reading the minutes of the Meeting of December 23rd, 1994, it has been observed that the corresponding call was not issued and, therefore, it is evident that the resolutions adopted in same appear to be null and void, situation which was not declared by the A quo judge, causing an error to the appellant in not applying said articles in