|"Mr. Steinfeld Is In Sole Control: The Celebrated Case of Louis Zeckendorf vs. Albert Steinfeld and the Silver Bell Copper Company," by Bettina Lyons, appears with the expressed written permission of the Arizona Historical Society.
The Journal of Arizona History, volume 41, number 2, Summer 2000 p. 149-180
Published by the Arizona Historical Society, Bruce J. Dinges, Editor-in-Chief
CREDITS--The images of the photographs of the stock certificate and Louis Zeckendorf are courtesy of the Arizona Historical Society, Tucson. All other images of photographs are courtesy of the author.
Bettina Lyons earned a B.A. in Fine Arts from the University of Arizona and is active in Tucson community organizations. She is the granddaughter of Albert Steinfeld and Bettina Donau Steinfeld.
TUCSONANS READ WITH GREAT INTEREST the front-page story in the May 19, 1904 issue of the Arizona Daily Star. "MR. STEINFELD IS IN SOLE CONTROL," the headline announced. "THE SUCCESSFUL MERCHANT HAS MADE A HAPPY ENDING TO THE PARTNERSHIP DISAGREEMENT BY PURCHASING THE INTERESTS OF HIS PARTNER." Albert Steinfeld, the town's most important merchant, had taken over from his uncle, Louis Zeckendorf, control of L. Zeckendorf & Company, Tucson's oldest and finest department store. Steinfeld came to work for the firm at age seventeen in 1872, just six years after its founding. Six years later, he was made managing partner. Under his direction, the company had grown into the largest mercantile establishment in Arizona. Lately, however, a disagreement between Steinfeld and Zeckendorf threatened the future of the business. The dispute, which only recently had become public, arose over the operation and eventual sale of the Silver Bell Copper Company mines forty-five miles northwest of Tucson. Over the course of a decade, it escalated to the point where it destroyed the business partnership of nephew and uncle, and poisoned their family relationship for generations. Its story offers insight into the personal and business affairs of a pioneer Jewish merchant family in southern Arizona.
Born in Hemmendorf, Germany, in 1838, Louis Zeckendorf arrived in this country as a boy of sixteen when he joined his brother Aaron who, in 1854, had established a small general merchandise store in Santa Fe, New Mexico. Another brother, William, eventually joined the firm, which expanded under the name A. & L. Zeckendorf to Albuquerque and the mining camps along the Rio Mimbres. In 1866, Louis loaded twelve wagons with excess merchandise from the Albuquerque store and headed for Tucson, where he sold the entire shipment to storeowner Charles T. Hayden. Unable to dispose of a similar shipment the following spring, Zeckendorf opened a small store of his own on Pearl Street near Pennington. Thus began one of Tucson's earliest and most successful merchant families.1
Shortly before Aaron Zeckendorf's death in Santa Fe in 1872, the three Zeckendorf brothers hired their nephew, Albert Steinfeld, to work in the family business. It was customary for German Jewish pioneer merchants to hire their relatives. Having experienced discrimination in their native country, the wary emigrants realized that to succeed in America they had to be able to depend on their partners and employees. Albert, "being of a rather venturesome spirit" and believing that it was an opportunity to get ahead, accepted his uncles' offer. From his parents' home in Denver, the seventeen year-old youth traveled alone by train to San Francisco, where he boarded the weekly boat to San Diego and then took the tri-weekly stage to Tucson.
Exhausted after the six-day ride across the desert, Albert was sadly disappointed by his first view of Tucson and later recalled crying himself to sleep. "The conditions in Tucson were a great deal worse than I had expected," he reminisced. "So far as the store is concerned it was situated in an old adobe building on the corner of Main and Pennington streets which had been added to from time to time and was a regular ramshackle of a place where nobody could find anything." Albert, however, was undaunted. "I am going to make the best of the situation," he told himself, "and even if I don't like it I am going to teach myself to like it."2
Albert went to work for his uncle, William Zeckendorf, who managed the Tucson operation. After Aaron's death, Louis had sold his interest in A. & L. Zeckendorf, along with that of his deceased brother, to William and brother-in-law Theodore Welisch. The partnership did not last long and Louis reluctantly came back into the business with William as Zeckendorf Bros. By this time, Louis was living in New York, where he purchased merchandise and shipped it to the Arizona and New Mexico stores. William's decision in 1878 to leave the firm and open a competing store posed a dilemma for Louis, who had no intention of returning to frontier life. He probably would have sold the business, if he could have found a buyer. Fortunately, twenty-three-year-old Albert Steinfeld had proved himself a bright and capable employee. So, on February 18, 1878, Louis made Albert his partner and changed the name of the business to L. Zeckendorf & Company. In announcing the change, the Arizona Daily Star commended Albert as "a young man very popular with the public" and predicted that "through his good management the new firm will be as heretofore very prosperous."3
Because Louis rarely visited Tucson, Albert enjoyed leeway to manage the business as he thought best. Under his guidance, L. Zeckendorf & Company grew from a small adobe building to the largest, most elegant, and most successful department store in the territory. William Zeckendorf's business also thrived, at least for a time. But, after a few years of providing too generous credit to merchants who were slow in repaying, he found himself overextended. William closed his store and turned his attention to managing Arizona's Democratic party. Eventually, he opened another small retail business and invested in mining on the side.
As copper mining became a growing industry during the last quarter of the nineteenth century, the Zeckendorf brothers and Albert Steinfeld invested in and helped develop some of Arizona's most important operations, including the Copper Queen, the Ray, and the Omega mines. Mining was a risky business, but the opportunity for enormous profits induced capitalists to try their luck. It was around this time that Julia Zeckendorf, William's wife, became the owner of the Old Boot mine located in the Silver Bell mining district. How she acquired the mine is not known. We do know, however, that William, Julia, and their three children departed the Old Pueblo for New York City in 1891, leaving behind a failed business and many debts. It may be that William, foreseeing these unfortunate circumstances, had placed the Old Boot in his wife's name to avoid losing the mine to his creditors. Whatever the circumstances, he asked his nephew, Albert Steinfeld, to act as trustee. Without realizing it, William Zeckendorf set in motion a tangled chain of events that would eventually reach to the U.S. Supreme Court.4
Acting as his aunt's trustee, Steinfeld leased the Old Boot in 1897 to Carl S. Nielsen, a smalltime operator. The agreement allowed Nielsen the privilege of extracting and smelting the ore and provided him credit to purchase supplies from the Zeckendorf company, which loaned him a smelter from one of its other mining operations. In return, Nielsen agreed to pay a royalty of $1.25 per ton on the ore he extracted from the Old Boot. Any profits would be deposited to Nielsen's account at L. Zeckendorf & Company to offset the credit extended to him. After six months, Nielsen was in debt to the company for $16,000, a considerable sum of money in those days.5
To protect the company's large investment in the Old Boot, on January 14, 1899 Albert Steinfeld incorporated the Nielsen Mining & Smelting Corporation. He also appointed James Curtis, the mercantile firm's mining superintendent, to oversee the operation. As president of the new Nielsen company, Curbs would receive stock in lieu of a salary. The other directors were Carl Nielsen and Ralph K. Shelton, head of L. Zeckendorf & Company's mining and hardware department. "Curbs has been out at Silver Bell," Albert informed his uncle. "Everything has started up again . . . and [we] believe the chance favorable to develop something out of same." His ultimate objective was to persuade a large mining company to purchase the Old Boot.6
William and Julia Zeckendorf,
|Concerned about the mounting debt at the Old Boot, the Zeckendorf brothers traveled to Tucson in February and were given a tour of the mine workings. Curtis informed them that they would need to purchase the adjoining claims if they hoped to attract a substantial buyer. William then gave the Nielsen corporation an option to buy outright his wife's interest in the Old Boot for $25,000 to be paid in installments of $2,500 every three months. Louis insisted that L. Zeckendorf & Company must be the majority stockholder in the Nielsen corporation. The 1,000 shares of stock were divided with 499 shares going to L. Zeckendorf & Company; 300 shares to Carl Nielsen, after he transferred all his rights to the Nielsen corporation, which had assumed his debts to L. Zeckendorf & Company; 170 shares to James Curtis; 30 shares to Albert Steinfeld as trustee for Julia Zeckendorf; and one share to R. K. Shelton, so that he could vote as a director (Shelton's share remained, in fact, the property of L. Zeckendorf & Company). In June, Albert informed Louis Zeckendorf that "Curbs is out at the mine and the smelter is running well with only Nielsen in charge."7
As work progressed, Curtis noticed that the ore body was drifting toward adjoining claims owned by a group of English investors. Curbs strongly advised Steinfeld to buy out the Englishmen and he attempted to do so, offering them $5,000. "I have been writing and cabling London, owners of Silver Bell properties and looks very much now as if we shall get hold of these properties," Albert informed his uncle in New York. "This would give us a magnificent group which I believe could be placed in position for a good sale."8
Unfortunately, ownership of the adjacent mining claims suddenly became much more complicated. Before Albert could receive a response to his offer, Curtis informed him that Julius H. Volkert and John Francis, two local miners who had been doing assessment work for the Englishmen, were now in the picture. When their numerous requests for payment went unanswered, Volkert and Francis declared that the owners had forfeited their title and the pair filed "jumper claims" on the property. This meant that, in order to obtain clear title to the adjoining mines, Steinfeld would now have to purchase the claims from Volkert and Francis, as well as from the Englishmen.9
Albert's initial enthusiasm for the Old Boot quickly dampened. By the end of August, Steinfeld still had not heard from "the English people." Albert returned from a vacation in San Francisco with his family to find that the Nielsen corporation had "increased their indebtedness to about $70,000, which is enormous." But, on a positive note, he also learned that the new smelter had been completed, and Nielsen claimed that he would soon be extracting $30,000 worth of ore per month. "I will watch the thing close," Albert promised.10
Although still discouraged, by the end of October Albert had decided to give the Nielsen corporation another chance. "I know the ore is there in both quantity and value," he assured Louis, "and why such delay at great expense and increase in debt occurred, I don't fully understand yet." Steinfeld had sent his Uncle William the $2,500 installment toward purchase of Julia Zeckendorf's interest in the Old Boot, but admitted that "before another payment is due, the property must make an entirely different showing."11
Several weeks later, Albert reported that the mine was producing 1,000 pounds of ore per day. But even so, he reminded his Uncle Louis, "the property has been badly handled." He still hoped "to buy out the English Company for a nominal sum, then place the property for a big price. . . . The property is good . . . but I am so much disgusted with the affairs that [I am] willing to sell at any price. I believe the property would bring $150,000 and if you have a buyer bring him out to examine."12
Finally, in mid-December, Albert traveled by horse and buggy to examine the Old Boot operation. "[I] returned from Nielsen's yesterday and found everything very encouraging. . . ," he wrote his uncle. "Property could command $200,000-250,000 cash if we could only secure the English properties adjoining us. We could soon open up a very large property. I am still working to secure same. I should have gone last summer to London . . . . I have found the Nielsens have managed very poorly and . . . [are] largely in debt."13
Albert Steinfeld, c. 1880
|Louis Zeckendorf offered no words of encouragement for his nephew. Instead, he criticized Albert for extending credit without security on the Old Boot, as well as on the Azurite and Ray mines, which also owed L. Zeckendorf & Company thousands of dollars. "I see in the local paper," Louis wrote, "Mr. Christy has purchased the Azurite, if so we will likely receive our money. If you treat advances strictly like a bank I can't see how you can get involved in mines to a larger amt. than you have security."14|
At age sixty-one, Louis Zeckendorf was at a stage in life where he was reluctant to incur debt or get involved in risky operations. He frequently complained of ill health and was anxious to get his affairs in order. Albert Steinfeld, on the other hand, shouldered the day-to-day responsibility for profitably managing his and his uncle's business affairs. An optimist by nature, he nonetheless felt the weight of his duties and worried incessantly when things were not going well. Acutely aware of the financial drain that the large credit advances to the Ray, Azurite, and Old Boot mining operations were having on L. Zeckendorf & Company, the only thing he could think to do was get rid of Carl Nielsen as the source of his problem. On January 3, 1900, without consulting the Nielsen corporation's board of directors, Albert discharged Carl as manager of the Old Boot and ordered him to close down the operation. Curbs and Shelton, on behalf of the directors, made the firing official on February 1. "This is a great disappointment . . . very bad management," Albert explained to his uncle. Still, he predicted, "We will come out all right . . . [and] must make the best of it."15
In March, Albert began negotiations with Francis and Volkert to buy their jumper claims and with Tucson attorney Francis Hereford to acquire the Englishmen's rights to the same group of mines. He also instructed Curtis to purchase for himself several insignificant claims in the area for the benefit of Nielsen Mining & Smelting Company to be reimbursed, with interest, when the property was sold. Recognizing that the Nielsen company lacked the resources to purchase additional claims and fearing that Louis Zeckendorf, if asked, might not consent to increase L. Zeckendorf & Company's risky involvement in the Old Boot operation, Albert decided to purchase the Francis, Volkert, and English interests with his own money. To that end, he instructed his attorney, Selim Franklin, to incorporate the Mammoth Copper Company to hold title to those claims. In May, Albert paid Julius Volkert $1,875 and Margaret Francis, the widow of John Francis, $625 for their jumper claims, with an agreement to pay an additional $12,500 by November of 1903. Significantly, Albert did not inform his uncle of what he had done.16
Louis, meanwhile, continued to worry and to blame Albert for L. Zeckendorf & Company's financial shortcomings. In June of 1900, he wrote his nephew that "I hope the Old Boot will turn out satisfactorily yet--such an investment to tie up such large amounts of money does not pay us." Continuing with this theme, Louis scolded Albert for keeping the company "very short in money matters while we ought to be flush. . . . Our customers are not reliable and should not owe us such large amounts. . . . I am perfectly willing to do less business in order to be easy in money matters, which worries me."17
Albert knew that the only way to satisfy his uncle's concerns was to sell the Old Boot, but first he wanted to secure the English group of mines. With this in mind, Albert made plans to go to London. He decided to make a vacation out of the trip and booked a September passage from New York for himself and his wife, Bettina. In the meantime, it was important that the Englishmen not discover the value of their claims before he could secure them. When Albert learned that Louis was sending out a potential buyer to inspect the Old Boot, he wrote to stop him. "The mine is in no shape to show now and it would only be to its detriment to show same before additional work is done and the title to surrounding claims settled," he explained. "I agree with you that we should not have got involved in this enterprise and there was no reason or necessity for doing so, but we are in it now and we will get out of it all right, of that you can rest assured." Louis acquiesced, telling Albert that "whenever the Old Boot is in shape to be shown let me know and I will notify my party. I hate to have so much money tied up in various enterprises-which is actually dead Capital."18
At the same time, Steinfeld regarded Carl Nielsen, still a director in the Nielsen corporation, and his wife Mary as stumbling blocks in his plan to acquire the English claims and sell the entire group of mines for a good price. "I wanted to get them out of the way," he later recalled. "They were making trouble all the time." Consequently, on June 20 Steinfeld and Curtis met with Carl and Mary Nielsen at their camp at the Atlas mine. Albert offered to purchase Carl's 300 shares of stock in the Nielsen corporation for $2,000 in cash and a $10,000 note to be paid out of the workings of the Old Boot or out of proceeds from the sale of the mine. Desperate for money, Nielsen readily accepted and, on June 29, Curtis, as president of the Nielsen Mining Company, signed the transfer of stock to Albert Steinfeld.19
Bettina and the three Steinfeld children spent Tucson's long, hot summer months at the San Francisco home of her parents. Albert joined them in August, looking forward to a visit with his family before he and Bettina left for Europe. He was surprised to find Bettina depressed and agitated. She informed him that she was expecting a baby and was mortified by her situation. What would her friends think of her, a thirty-eight-year-old pregnant mother with three nearly grown children? Bettina told her husband that she intended to stay with her parents until the child was born, and nothing that Albert said could convince her otherwise. Instead, fifteen-year-old Lester accompanied his father abroad. After showing the boy a bit of France and Switzerland, Albert closed the deal with the English investors who--unaware that the Old Boot ore vein was headed into their property--readily accepted his $5,000 cash offer. His business concluded, Albert and Lester sailed for New York and a short visit with the Zeckendorfs.20
Louis, who was under the impression that Albert's European trip had been a family vacation, was surprised to learn of Bettina's pregnancy and her decision to remain behind in San Francisco. He counseled his nephew not to worry and offered to come to Tucson and watch over the business so that Albert could be with his wife when the time came. Very little was said about the real purpose of Albert's visit to England. Steinfeld later recalled that his uncle "asked me what I had done about those [mining] properties and I told him I had bought them and he asked me the amount I paid and I told him that I had bought them very cheap." Louis forgot that the subject was even mentioned.2l
Back in Tucson in early December, Albert provided Curtis with a full report of his dealings with the Englishmen. He turned the claims over to the Nielsen Mining & Smelting Company and instructed Curtis to begin development work. "Just do not bring any more debt," he cautioned his mining supervisor. Steinfeld had maps prepared showing the mining properties as a single group, with the intention of finding a buyer for the entire lot.22
As promised, Louis Zeckendorf arrived in the Old Pueblo on January 2, 1901, in plenty of time to settle into a house on Convent Street before Albert would have to leave to be with Bettina in San Francisco. Many years had passed since Louis was actively involved in the day-to-day operation of L. Zeckendorf & Company. His first order of business was to find out how matters stood with the Old Boot. He immediately noticed that Carl Nielsen's 300 shares of stock had been torn out of the Nielsen Mining & Smelting Company stock book. Albert explained that he had bought the stock with his own money and had advanced Nielsen $2,000.
Louis informed his nephew that L. Zeckendorf & Company would return the $2,000 to him. "Never mind about that," Albert protested, "they [the Nielsen company] owe a great deal of money to the firm already; let the $2,000 stand that way as $2,000 due me." Louis acquiesced but, to make sure there was no misunderstanding that the 300 shares belonged to the Nielsen Mining & Smelting Company, Zeckendorf issued a new stock certificate in the name of "Albert Steinfeld, trustee." At a meeting later that month, the Nielsen company stockholders ratified Louis's action. They also changed the firm's name to the Silver Bell Copper Company and elected Albert Steinfeld as director to replace Carl Nielsen. Albert left immediately to be with his expectant wife in San Francisco.23
L. Zeckendorf and Company
|As soon as Albert was gone, Louis Zeckendorf made the six-hour buggy ride out to the Old Boot and toured the operation with James Curtis. As the pair stood looking down on the mine workings, Curtis informed Zeckendorf that "the future of the operation is assured, that there is no question that we could now make a big property of it, because no matter where the ore went, we could now follow the ore." The mine president purposely did not mention that Steinfeld had purchased the English claims, feeling that revealing this important information was not his responsibility. Zeckendorf later recalled that Curtis "pointed out the country, and he said, for instance, on that side was the mine which belonged to the Silver Bell; and he pointed out the different locations, but I looked upon all of those things outside of the Old Boot as prospects, and I never paid much attention, even when the English mines were mentioned to me; Mr. Steinfeld wrote to me that he would be willing to pay $5,000 for the English mines, but I never paid much attention to it .... I didn't think any mine was worth anything except the Old Boot. The other properties were to me insignificant prospects."24|
Following the birth of a daughter, Viola Bettina Steinfeld, on January 31, 1901, Albert remained with his family in San Francisco until mid-March, when he returned alone to Tucson. He soon discovered that leaving Uncle Louis unattended had been a big mistake. James Curtis informed him that Zeckendorf had insisted that, as president of the Silver Bell Copper Company, Curtis write on the back of the new stock certificate: "This certificate no. 5 of three hundred shares is the property of the Nielsen Mining & Smelting Co. and is issued to Albert Steinfeld Trustee and held by him until certain contract & agreement made between him & Carl S. Nielsen & Mary Nielsen, dated June 29, 1900, is carried out." When Albert angrily disputed Curtis's authority to sign the certificate, it became clear to Curtis that he had a problem. Steinfeld was claiming that he owned the Nielsen stock and the English mines, while Zeckendorf believed that Albert was merely acting as a trustee for the Silver Bell Copper Company.25
Asked by Curtis to resolve the matter, company attorney Selim Franklin advised Albert that he had a fiduciary responsibility to the Silver Bell company and, therefore, he had no legal right to purchase either stock or mining property for his own benefit. He remained a trustee for the 300 shares of stock, even if the company never repaid the $2,000 he had advanced Carl Nielsen. On the other hand, Albert was obligated to give the company the opportunity to reimburse him for his outlays in purchasing the English claims; if the company declined, he would own those properties outright.
On July 15, Steinfeld presented to the board of directors of the Silver Bell Copper Company a proposition drafted by Franklin in which Albert agreed to hold all the mining properties controlled by him in trust for the Silver Bell company. In return, the company would pay for the annual assessment work and reimburse him for his expenses in acquiring the English group of mines. Most important, the company would pay him $15,192.45--the amount he had expended to buy the claims--and assume the outstanding payments under his contract with Volkert and Francis. Albert would then turn over to the Silver Bell Copper Company all the mining claims he had acquired and that were now held by the Mammoth Mining Company. The Silver Bell directors had until October 15 to decide. Unfortunately, Albert did not forward a copy of his proposition to his Uncle Louis, as his lawyer expected him to do. When Zeckendorf did not attend an October stockholder's meeting in Tucson, Steinfeld extended his deadline for acceptance until September 15, 1902.26
Probably because of Louis Zeckendorf's increasingly erratic behavior, Albert procrastinated in informing his uncle about his proposition. In July of 1901, Louis interfered in Albert's efforts to sell the Old Boot by entering into an option agreement without first informing his nephew. "You have given an option on the Old Boot," a startled Albert wrote to his uncle. "I am rather impressed you should tie the property up without having submitted the proposition. Let me know in what manner you have obligated yourself and if it is written contracts." Seven months later, in February of 1902, Louis informed Albert that he wished to be bought out of their partnership in L. Zeckendorf & Company, at the same time that he demanded that Steinfeld curtail expenses. "Everything is being done to reduce stock and liabilities," Albert reassured his nervous uncle. "I am sure everything will work out entirely satisfactorily to you but it can not be done in a short time . . . . You must not worry because I am being the very best I know how." It may not have seemed to Albert the best time to press Louis for reimbursement of his expenses in acquiring the Silver Bell claims.27
Nielsen Mining & Smelting Co. stock certificate issued to L. Zeckendorf & Co.
|And so the September 15, 1902, deadline came and went without the Silver Bell Copper Company taking action on Steinfeld's proposition. Nor had Albert informed Louis Zeckendorf that he had purchased the English claims, along with Volkert and Francis's jumper claims. This omission would have very grave consequences.|
In November, Zeckendorf increased the pressure when he informed his nephew that he planned to withdraw from their partnership within the next six months. Worried about the future of L. Zeckendorf & Company, Steinfeld tried to stall by explaining that "to liquidate our business would mean tremendous loses and shrinkages. . . . I shall do all I can to curtail our credits and purchases without impairing the business materially. I think we can reduce our liabilities within the six months as you state. I believe we will yet sell the Silver Bell ere long which will materially help us in this direction. We are very largely overstocked all over the house. . . . Mining business is very quiet in this section, which has affected our sales."28
The burden on Albert was enormous, but there was nothing he could do until a buyer could be found for the Silver Bell mines. With Zeckendorf's May 1903 deadline for dissolving their partnership fast approaching, on April 3 the Imperial Copper Company of Arizona entered into a thirty-day option to purchase the Old Boot, along with the adjacent claims belonging to James Curtis and to Steinfeld's Mammoth Copper Company, for $515,000. The buyers insisted that Steinfeld guarantee the titles for one year. This was the big sale--over $4 million in 1990 dollars--that Curtis predicted would happen once the Silver Bell company acquired control of the adjacent claims.29
On May 20, the Imperial Copper Company closed the transaction with $115,000 in cash and a note for $400,000 to be paid in quarterly installments over the next twelve months, at six percent interest. Curtis, Shelton, and Steinfeld signed the agreement for the Silver Bell Copper Company and Albert Steinfeld signed for the Mammoth Copper Company. At a meeting on the day that the contract was executed, the board of directors of the Silver Bell Copper Company finally accepted Steinfeld's July 15, 1901 proposition, paying Albert $18,117, with interest, and assuming all his obligations on behalf of the company. They also agreed to indemnify him against any loss, damage, or expense he might incur in guaranteeing the titles to the Silver Bell mines. They then turned over to him as treasurer the cash and notes received from the sale of the mines. He reserved enough from the initial promissory notes to complete payment to Margaret Francis and Julius Volkert for their jumper claims and to pay the balance due Carl and Mary Nielsen for his purchase of their stock in the Nielsen Mining & Smelting Company.30
An elated Albert Steinfeld immediately notified Louis Zeckendorf of the sale of the Silver Bell mines. "I wired you this morning that the Old Boot deal was completed and we received $115,000 in a check," he informed his uncle. "I am pretty well pleased and will write you more fully tomorrow. We may congratulate ourselves on the quick and businesslike manner, a deal of this magnitude was closed up." Louis Zeckendorf matched his nephew's enthusiasm. "I had great anxiety and feared something might happen, not to consummate the deal," he confessed. "I congratulate you for your success and I think we have all reasons to be very happy at the present and hope the purchasers will make a fortune out of it."31
The sale of the Silver Bell mines should have been the happy ending to this story. The deal was everything the partners could have hoped for, and Albert was extremely proud of his part in the negotiations. On May 22, he sent Louis Zeckendorf a full accounting of the transaction: out of the $115,000 in cash, $22,500 was used to pay the real estate commission; $18,117 was owed and paid to the Mammoth Copper Company and himself; $12,500 was set aside to fulfill the contract with Francis and Volkert; and another $10,000 would cover what was still owed on the purchase of the Nielsen stock. Albert must have thought that Louis would be so relieved that the Old Boot was sold, he would not scrutinize the accounting or complain about the payments to himself and others. "I have rendered some very valuable services for this company," he reminded his uncle, "for which I am entitled to compensation, which we will adjust later. . . . Am glad this [is] all over, as you have no idea what a strain this has been on me."32
|Steinfeld, in his euphoric mood, sorely underestimated Louis Zeckendorf. As the old pioneer read Albert's letter, it suddenly dawned on him that his trusted nephew and business partner had been withholding important information. "To my surprise, I see in your statement you paid to yourself and Mammoth Copper Co. $18,117 cash. What does this mean?" he asked.
"It is the first time I knew there was such a company as you have never said a word about it." A stream of pointed questions followed. "How did you arrive at such figures?" Louis demanded to know. "You surely can not deal with yourself. You mean those prospect holes are worth that amount? On the same principle you could have taken any amount and credited the Silver Bell with any thing you please." Neither could Zeckendorf understand "how Mr. Curbs can locate such mines while either employed by our firm [L. Zeckendorf & Company] or the Silver Bell. Such locations justly belong to the Silver Bell." Louis also professed ignorance of the $12,500 due Francis and Volkert, and expressed astonishment that Albert was requesting compensation for his services. "Did I ever dream of rendering a bill for untold labor I rendered in the Copper Queen, Ray, Carrie, Copper King, [and] Coxwell [copper companies]. Can you compare your services with mine? When I called on hundreds of people to buy stock," he asked. "I never heard of such a thing that one partner wants to charge the other for labor performed."33
Albert's careful response indicates how worried he must have been about his uncle's reaction. "You evidently do not understand the nature of the various properties transferred though I thought this was at various times explained to you," he wrote. "The Mammoth Copper Company was organized and controlled by me and was for the purpose of acquiring what was always called the English Claims. The 13 claims were jumped by Volkert and Francis, but I never considered their title to same good. . . . At the time these purchases were made by the Mammoth Copper Co., the Nielsens were still owners of their interest in the Nielsen M. & S. Co. and as you know I subsequently purchased the interest of the Nielsens in the Nielsen Mining & Smelting Co." Albert reminded Louis that "we had been trying for a long time to acquire these properties. It was necessary however to procure the original title from the English people, which in a measure I tried to secure by correspondence, through various sources, but was only able to consummate a transfer when I met the principals in Europe. Without these properties the value of our properties would have been very reduced."
As for his own actions, Steinfeld explained to his uncle that he had personally advanced the money to buy up the English claims and had offered, in writing, to turn them over to the Silver Bell Copper Company. He was entitled to reimbursement. "In no way have I charged one dollar more than was actually dispersed in these matters nor to have personally availed myself of acquiring the benefit thereof," Albert assured Louis. "In all this I was assuming all the risk and no obligation on part of Silver Bell to reimburse me unless they so chose." His patience wearing thin, Steinfeld reminded his uncle of "How unjust and unreasonable your insinuations are in inferring that I have aimed in any measure whatsoever to take advantage of either you or this company. I justly think that I am entitled to reasonable compensation for the valuable services that I have performed, not alone in negotiating these properties at a price & upon terms so reasonable, but in the services I have rendered in the sale just made, all of which has rebounded to the benefit of this company."34
Still not satisfied, Louis was growing suspicious of Albert's motives. "I [would] like to know how I could understand the transaction of the Mammoth Co.," he asked, "when you never told me a word about it, although the opportunity had offered itself [at] various times to explain matters to me." To any "intelligent person, [it would appear] you purchased those mines of Volkert and others for your interest and speculation with the expectations to develop another Old Boot and as these expectations were not realized, the Silver Bell had to reimburse you." Although Louis professed to believe that his nephew "meant well," he remained puzzled as to why Albert had kept him in the dark. And he insisted that his nephew was not entitled to compensation. "The firm pays you a regular salary for services rendered," he reminded Albert. "In this matter our firm was exposed to a great loss and for the risk is entitled to all the gain."
Louis was more determined than ever to terminate his partnership in L. Zeckendorf & Company. "My plan is to be in Tucson with my family in October and inventory to be taken," he informed Albert. "I will make a proposition . . . to sell to you my entire interest at such a price that you must profit in the purchase for cash and deferred payment secured. If we cannot agree, we [will] wind up the business and pay ourselves pro rata as our Capital appears. I think inside of four months the whole stock can be sold at cost or less." In the meantime, Zeckendorf requested that his nephew send him the balance of the Silver Bell stock due him. "I can assure you that I have no other inclinations than to do what is right and to our mutual interest," he concluded.35
By now, Albert was desperate to explain his actions in a way that would placate Louis. "The reason I never went into the details of these mining properties was that I did not want to burden your mind with the fact of the large disbursements I personally made and the large personal obligations I assumed in the carrying of same out," he offered. Steinfeld never expected that L. Zeckendorf & Company would became so deeply involved in the Old Boot operation; the Nielsen Mining & Smelting Company had been formed to protect the mercantile firm's substantial investment. "No one will or can ever know the worry and anxiety I went through in the various stages of the operation," Albert explained, "and it is needless to refer to same, except to say it was never contemplated that we should ever get involved to such an extent as we did."
Albert reminded his uncle that purchasing the English claims and the Nielsen stock was essential to the successful sale of the Silver Bell Copper Company. "I invested my personal money and undertook and assumed large obligations," he insisted. "I never aimed at any time to personally avail myself of same. I assumed all the risk and the company had all the profits." Moreover, Louis seemed to be confused over the nature of L. Zeckendorf & Company's relationship to the Silver Bell Copper Company. "You must not forget that this [the Silver Bell Copper Company] was not a co-partnership, but an incorporated company, in which our firm were simply shareholders and there is nothing that would have prevented me from maintaining an independent attitude. I assumed however to have this company avail themselves of my personal efforts and personal investments and obligations I have assumed, without any profit to me."
On one point, Albert was adamant. "I do expect . . . that this company shall pay me for these services and also for the successful and unprecedented negotiations which ended in the consummation of a sale of this property under terms and at an expense rarely heard of in a deal of this magnitude." At the same time, he reminded his uncle that "this claim I don't make of you, but of the Silver Bell Copper Co., a corporation in which our firm [L. Zeckendorf & Company] are simply stockholders. This company has all the benefits of my efforts, has made a handsome profit out of same and can well afford to pay me what . . . I am entitled to." He closed his letter "with much love to all. Your sincere nephew Albert."36
Feeling "much run down again," Albert spent the summer with Bettina and the children in San Francisco. Back in Tucson in October, he transferred the cash and notes from the Silver Bell sale to an account under his own name at the Bank of California in San Francisco. The arrangement was in accordance with his agreement with the Silver Bell Copper Company that allowed him to hold the sale proceeds for as long as he was responsible for guaranteeing the mining titles.
Louis Zeckendorf also arrived in Tucson in October of 1903. Prepared to stay for as long as it took to dispose of his interest in L. Zeckendorf & Company and to receive his share of the proceeds from the sale of the Silver Bell mines, he settled his family into a house at Stone Avenue and Washington Street. At the first opportunity, an angry Louis confronted Albert Steinfeld in his office. "Look here Albert," he announced, "I had no Uncle Louis to educate me, but I tell you one thing, anybody who takes me for a fool is badly left. My interest in that Silver Bell is equal to yours, isn't it? Now, I want to know why you keep $160,000 in your possession and I have no benefit of it; I tell you what I do; you take half of your money, the half due to you and I take half of my money and we pay all our debts. Out of the next payment you arrange it that I get $50,000 . . . , three months later you arrange for me to get $25,000 and the next $25,000 more on account."37
Although shocked by Louis's "very threatening and abusive manner," Albert stood his ground. "I told him then that I refused to comply with his demand," Steinfeld recalled, "that he had no right to ask me any such thing . . . , that any money he was entitled to he would get as a stockholder of this company, after a dividend had been duly declared." But Zeckendorf remained insistent. "If you don't give me that money," he threatened, "I will bring some legal proceedings and I will compel you to do so."38
Never a man to be trifled with, Louis immediately telegraphed the Bank of California and charged them not to turn over any of the money from the Silver Bell sale to Steinfeld. The next day he boarded a train for San Francisco where, with attorney at hand, he headed straight for the bank. Albert followed with his own attorney, Eugene Ives, in tow. Believing that "we were there to meet these gentlemen for a friendly conference," Steinfeld was "very much provoked" when he was served with an attachment lawsuit, freezing the Silver Bell account while Zeckendorf prepared a stockholder's action requesting an injunction to stop the delivery of the notes and the money.39
|Shortly after he returned to Tucson, Albert was served with a stockholder's suit. Filed in San Francisco Superior Court on December 3, 1903, the suit claimed that the May 20 resolutions of the Silver Bell Copper Company board of directors, whereby Steinfeld was paid $18,117 for his expenses in purchasing the English claims and in which the directors had turned over to him cash and notes from the Silver Bell sale, were void. Louis Zeckendorf insisted that Steinfeld had improperly joined in the vote and the other directors, Curtis and Shelton, were employed by Steinfeld and controlled by him. Moreover, Shelton did not own any stock in the corporation, since his was a dummy share owned by L. Zeckendorf & Company. Zeckendorf demanded that the court
issue an injunction against Steinfeld and appoint a receiver to hold the money and notes in the Bank of California. The sensational story appeared on the front page of the Tucson Citizen. Under the headline "ZECKENDORF SUES STEINFELD," the paper informed its readers that "The matters at cause are said to be many and complicated," and predicted "an extended and warmly contested fight in the courts."40
The twenty-five year partnership between Albert Steinfeld and Louis Zeckendorf was wrecked beyond repair. On December 12, Albert notified Louis that "the suits recently instituted by you in San Francisco indicate that the dissolution of the co-partnership of L. Zeckendorf & Co. is inevitable. I offer to give you an option to purchase my entire interest in the business on the basis of its value as ascertained from such report of the appraisers . . . or [for you] to give me a similar option to purchase your interest." Zeckendorf responded with a proposal that Albert considered "far in excess of his interest" in the company. Receiving no reply, Louis filed suit and applied to place L. Zeckendorf & Company in receivership. Uncle and nephew were far beyond dealing fairly and reasonably with each other.41
The Silver Bell Copper Company stockholders met in Tucson on December 26, 1903. Curtis, Shelton, and Steinfeld with his attorney, Eugene Ives, were present, as were Zeckendorf and his attorney, former judge William H. Barnes. Ives observed that "one of the chief contentions of Mr. Zeckendorf was that Mr. Steinfeld had the personal custody of the notes" from the sale of the Silver Bell mines. While insisting that "we will never be willing to admit that Mr. Steinfeld had the possession of these moneys wrongfully, Ives offered a resolution that the board of directors' agreement of May 20 be rescinded and declared null and void. The resolution passed and Zeckendorf left the meeting believing that everything had been resolved to his satisfaction--that the stockholders had removed the sale proceeds from Steinfeld's custody.
He should have been more cautious. Unbeknown to Zeckendorf and Barnes, Steinfeld, Curtis, Shelton, and Ives convened a director's meeting as soon as the pair had left the room, during which Steinfeld resigned as treasurer of the Silver Bell Copper Company in favor of James Curtis. Albert and his attorney believed that once the stockholders rescinded the May 20 agreement, ownership of the English claims and the Nielsens' 300 shares of Silver Bell stock reverted to Steinfeld. Consequently, Albert returned his check for $18,117 to Curtis. He then paid the $12,700 he owed to Francis and Volkert, and the $10,000 he still owed on the Nielsen stock.
Again without Zeckendorf's knowledge, Curtis, Shelton, and Steinfeld convened another Silver Bell Copper Company directors meeting on January 16, 1904 in Eugene Ives's office. This time, Steinfeld was asking for one-half the proceeds, less the real estate commission, from the sale of the combined English claims and Old Boot mine. Albert and his attorney believed that purchase of the English claims had doubled the value of the Silver Bell mines. Curtis and Shelton agreed, paying Albert $145,743.75 in cash, plus one of the Imperial Copper Company promissory notes, valued at $103,967, for a total of $249,710.75. Curtis knew when he voted to award Steinfeld one-half the proceeds that he was depriving himself of approximately $72,000 and Louis Zeckendorf of about $110,000. But, as a defendant in the suit Zeckendorf had brought against the Silver Bell Copper Company directors, he did not care. "I thought it was very mean of Mr.
Zeckendorf, after all the years I had worked for him, and the thousands of dollars I had made to turn around and charge me with fraud," he explained. "It was uncalled for." By voting half the sale proceeds to Steinfeld, Curtis reduced his own share from $90,000 to $18,000.42
Louis Zeckendorf first got wind of what was going on after the directors met again on January 20 and declared a dividend. Realizing that his $27,750 check was far less than was due him, Zeckendorf retaliated. On February 6, 1904, he filed a lawsuit asking that the Pima County District Court dissolve the L. Zeckendorf & Company co-partnership, consisting of an estimated $500,000 in real and personal property. The Tucson Post traced the origins of the trouble between Louis Zeckendorf and Albert Steinfeld to "their dispute over the sale of the mines at Silver Bell to the Imperial Copper Company. It was hoped that the affairs of the partnership here might not be involved in the dispute over the mining property, but they were eventually drawn into it, and a suit in court over the local concern proved inevitable."43
Albert Steinfeld notified his customers that the co-partnership between himself and his uncle, "under the firm name of L. Zeckendorf & Co., has been dissolved and our affairs are now being liquidated. . . . Beginning Tuesday, March 1, 1904, we will only sell our stock of merchandise, both at wholesale and retail, for strictly cash." On May 18, Albert offered $155,000 to purchase his uncle's interest in the firm's merchandise, accounts, bills receivable, money, and assets and agreed to assume all liabilities. In return, Louis Zeckendorf would permit Steinfeld to continue the business in the old location, rent-free for one year beginning in June of 1904. Louis accepted the offer, and the next morning the Star reported that "Mr. Steinfeld is in sole control." On May 26, Albert announced that the new business would be called Albert Steinfeld & Company. The Tucson Citizen regretted that "the great name of L. Zeckendorf & Co. is no more." For thirty-five years, it had been "synonymous with enterprise, business sagacity and sterling integrity throughout the commercial world of Arizona and Northern Sonora, Mexico."44
Steinfeld, meanwhile, moved swiftly to consolidate his control of the firm. In March of 1905, he allowed Zeckendorf to purchase at a courthouse sale of the L. Zeckendorf & Company mining property "fully half a million dollars worth of good mines and mining claims for less than five percent of their value." According to the Star, "Mr. Steinfeld seemed to be willing that his former business partner should make a half million dollars out of the deal. . . . Our good old pioneer and respected citizen, Louis Zeckendorf, ought to feel happy." At about the same time, Albert purchased property at the southwest corner of Stone and Pennington. The Daily Star announced that the site "will be the new home of the mammoth establishment on which will be erected a modern department store building which in size, up to date conveniences, appliances and arrangements will have no superior anywhere in the southwest."45
Albert Steinfeld & Co., c. 1905
|The case of Louis Zeckendorf vs. Albert Steinfeld, James N. Curtis, R K. Shelton, Silver Bell Copper Company and Mammoth Copper Company opened in Pima County District Court on May 16, 1905. In a trial that lasted two weeks, Zeckendorf sought to recover 300 shares of stock in the Silver Bell Copper Company and $338,'710.15 that he claimed Albert Steinfeld had wrongfully
appropriated from the sale of the Old Boot properties in the Silver Bell mining district. On September 16, judge John H. Campbell ruled in Zeckendorf's favor. In Campbell's opinion, Steinfeld's actions were "eminently fair, just and generous"--prior to the December 26, 1903 meeting of die Silver Bell Copper Company board of directors--and Zeckendorf's charges and insinuations in letters and in the California lawsuit were "wholly without cause or reasonable excuse." Campbell concluded that "however inexcusable" Zeckendorf's conduct had been it had not prejudiced his rights as a shareholder. He, therefore, set aside the directors' award to Steinfeld of one-half the proceeds from the Silver Bell sale. The judge also determined that the Nielsen stock belonged to the corporation, and not to Steinfeld. Not surprisingly, Steinfeld and his co-defendants appealed Campbell's decision to the territorial supreme court.46
In the meantime, Albert turned his attention to his commercial venture. On March 14, 1906, the old Zeckendorf store at Main and Pennington closed its doors forever and, on the following day, Albert Steinfeld & Company held the magnificent grand opening of its new department store on Stone Avenue. Over 5,000 people--about one-half the adult population of Tucson--poured through the building, with the lucky first 2,500 customers receiving souvenir silver bowls. The Citizen marveled that only two other department stores in the West--one in Denver and the other in San Francisco--rivaled Tucson's new emporium. "When Steinfeld arrived in Tucson, thirty-four years ago, the Zeckendorf business amounted to only $40,000 per year," it reminded its readers. "It had just two clerks to wait on customers and keep the books. Now the annual business of A. Steinfeld & Co. aggregated $1,500,000 and required a force of 150 people."47
On March 23, 1907, the Arizona Supreme Court reversed the district court ruling in Zeckendorf vs. Steinfeld on the grounds that the Silver Bell Copper Company stockholders' December 26, 1903 vote to rescind the May 20 board of director's agreement was valid. The higher court sent the case back to the district court to determine the ownership of the English claims and the 300 shares of Nielsen stock. The second trial opened at Tucson on January 2, 1908, with Judge Campbell again presiding. On July 30, Campbell reversed his earlier decision, ruling that Steinfeld was in fact the owner of the English claims and therefore was entitled to half the proceeds from the sale to the Imperial Copper Company, after expenses had been deducted. He let stand his ruling that the 300 shares of Nielsen stock belonged to the Silver Bell Copper Company. Both parties appealed the ruling back to the territorial supreme court, which eventually affirmed the judgment of the district court. By now the legal battle had been going on for five years, and neither side showed signs of giving up.48
On May 1, 1909, both Zeckendorf and Steinfeld appealed to the US Supreme Court. On March 15, 1912, Zeckendorf vs. Steinfeld; Steinfeld vs. Zeckendorf became the first Arizona case heard before the high court after statehood. On June 7, the justices reversed the judgment of the territorial supreme court regarding ownership of the English mines. In their opinion, the stockholders at their December 26, 1903, meeting had not given Steinfeld ownership of the proceeds from the sale of the English properties. Rather, the directors simply intended to transfer the money and proceeds of the notes from Steinfeld into the hands of the Silver Bell Copper Company treasurer, where it would be secure until the entire amount of the sale was distributed among the stockholders. The justices also affirmed the district court's ruling that the 300 shares of Nielsen stock belonged to the company and not to Steinfeld. In the end, the 1912 Supreme Court ruling confirmed judge Campbell's 1905 decision. On July 1, 1913, Arizona Supreme Court justice Fred Sutter ordered Albert Steinfeld to pay $464,705.83 in principal and interest to Hiram W. Fenner, receiver for the Silver Bell Copper Company, plus $2,000 in court costs.49
Albert Steinfeld and Louis Zeckendorf had been embroiled in their lawsuit for nine long years. Winning had become a matter of pride for both men. Louis had brought Albert into the family firm, made him a partner, and given him the opportunity to become a successful and important businessman. In return, he expected Albert's absolute respect and loyalty. For him, the family bond was broken when he realized that his nephew had not kept him informed of important matters regarding the Silver Bell and when he suspected that Albert had bought the English group of mines for his own benefit. Steinfeld, on the other hand, chafed under his uncle's demands and complaints. And so, he carried out his business in a way that he thought would avoid provoking worry and criticism. Under Albert's guidance, L. Zeckendorf & Company became the most important mercantile store in southern Arizona. The terms of the Silver Bell sale were unprecedented. Albert expected to be rewarded. Instead, Louis filed a lawsuit against him and pulled out of their business partnership. As so often happens in family businesses, the gap between the first and the second generation had widened to the point where Zeckendorf and Steinfeld no longer shared objectives and where neither could understand the other's point of view.
The Silver Bell Copper Company was still in existence on April 29, 1914, when its directors--Steinfeld, Curtis, and Shelton--appealed to the US Supreme Court the state supreme court's judgment. Their last-ditch effort proved futile. On November 1, 1915, the high court affirmed the lower court ruling. A motion for rehearing was made and denied. There was no possibility of further appeals. Louis Zeckendorf had finally won on all counts. Albert Steinfeld paid the judgment in 1916 and the case was closed. "Uncle and nephew are friends once more after being in litigation for over twelve years in the courts of the state," the Tucson Citizen observed. "Mr. Zeckendorf lives in New York and is now 79 years old, and [he and] Mr. Steinfeld have agreed to forget the past. They have settled all their differences and the association of years standing will be renewed where it was left off in 1904, when the suit was brought."50
Louis Zeckendorf lived out the remainder of his life in New York City, where he died at the ripe old age of ninety-nine on March 11, 1937. He outlived his nephew by two years. Albert Steinfeld died in Tucson, on February 8, 1935, at the age of eighty-one. Contrary to the 1916 article in the Tucson Citizen, uncle and nephew never forgot the past, nor did they settle their differences and renew their old relationship. Over the years, Louis and William Zeckendorf and their families in New York grew apart from the Steinfeld family in Tucson, until they became strangers to one another.
The Steinfeld children never got over the agony of their father's courtroom battle with his uncle. Among his personal effects, they found the mountain of business records from the old L. Zeckendorf & Company store and the legal papers from Louis Zeckendorf's lawsuit against Albert Steinfeld and the Silver Bell Copper Company. Wanting to bury the past with their father, Harold, Irene, and Viola removed everything from the storage house behind the family home and threw it on a bonfire in the back yard. Fifty years of business records went up in smoke. But the children were mistaken if they thought they were obliterating the one dark episode in their father's otherwise illustrious career. Zeckendorf vs. Steinfeld and the Silver Bell Copper Company remains a part of the legal history of Arizona and the United States.
After all those years in court, there really were no winners. Although Louis Zeckendorf prevailed at the bench, he lost a great deal personally and otherwise. The firm he and his brothers had founded under the old principles of Jewish family unity was no more. When L. Zeckendorf & Company closed its doors, Tucson lost its last great pioneer mercantile business. The famous lawsuit forced Steinfeld to move forward and create the community's first modern department store. Albert Steinfeld & Company continued in business at Stone and Pennington until the early 1970s, when the downtown property was sold and the store moved to El Con Shopping Center. Harold Steinfeld managed the store until his death in the Pioneer Hotel fire on December 21, 1970. Harold's nephews, Lee and Jim Davis, continued the business for another fifteen years before finally closing their doors in 1985, 135 years after Aaron Zeckendorf had founded the firm in Santa Fe.