Police responded to a call of two men holding clerks at gunpoint at the Maverik gas station in the 700 block of the Beeline Highway Saturday night.
The call came in at 10:26 p.m.
After arriving at the scene, police determined that the suspects had not been holding the clerks at gunpoint, and were no longer at the gas station.
The suspects were then reported to be possibly holding hostages in a residence in the 1000 block of North Easy Street in Payson.
Police determined that the suspects brandished a weapon, but had not threatened anyone at Maverik, and that a citizen had placed the call from the pay phone at the Maverik station.
Police surrounded the residence on Easy Street and were able to talk the suspects into surrendering peacefully, according to a statement released by the Payson Police Department.
Detective Sgt. Tom Tieman said Steven Martin Schade, 38, and Clyde Sneed, 41, were arrested and booked into Gila County Jail Saturday night on weapons violations and probation violation charges.
Schade was arrested on two counts of misconduct involving weapons, two counts of threatening and intimidating, one count of kidnapping and one count of aggravated assault with a weapon and booked into the Gila County jail.
A check of Sneed by deputies discovered an outstanding probation violation warrant and he was also arrested.