The sun. [volume] (New York [N.Y.]) 1833-1916, 1892-12-20
SENATOR PROCTOR ACCUSED
OF ENGINEERING A FREEZE OUT IN
THE VERMONT MARBLE COMPINY

I" The Marble Mansion from which lie NJ
reefs the Political Dcstinics OF Vermont"
said by Lawyer ChOate to Have Bcen
Buiit with some orthe Compnny's Money.
Charges OF fraudulent mismanagemont OF
the affairs OF tho Vermont Marble Company by
Senator Redneid Proctor Of Vermont were
made before Justice Patterson OF the Supreme
Court yesterday on the demurrer interposcd
to tho complaint in n suit OF Edmund NJ. Smod-
berg for dissolution OF the company and the
appointment OF receiver.
Tho company was incorporated In this state
in 1880. and has n capital of $3,OO0.O00 Tho
plaintiff owns 100 500 shares and sues as u
stockhol,ler. He makes tho following persons
defendants. most OF whom are officers or di.
rcctors OF the company: senator Rcdfleld
Proctor ex-Secretary of War. his wife Emily
J. Proctor. his son Fletcher ID. Proctor: Fisher
A. Baker Adolphus smcdberg Frank c. Part
ridge. Francis b. Riggs. John II. Myers. +. j.
Ormsbce. and W. W. Grout. Tho charges are.
however. only made against Rcdneld Proctor
Eedned Proctor was President of the COM
pnny from its incorporation until November.
1857. when he resigned and his sor Fletcher
became President. At its organization tho
company bought the Sutherland Falls Marble
Company's quarrics near Rutland for $4,000
600. OF which Sl.oUO,OuO was Paid In capital
stock OF the now company and 100000 was
secured by bonds with the other half OF tho
stock. Quarrics were purchased from tho
Rutland Marble Company for S2OOOOoO sub
ject to mortgages for 100000. These mort
cages were taken up with 100000 in bonds OF
the new company.
1t is declared in tho complaint that the bust
ness was properly managed until 1894. The
profits UP to tho close of the year 1888 aggre-
Dnf nl NJ ,;r MN
used to decrease the Indebtedness. SlS5.OOO
for new machinery. S25OOO for moro realty.
and sls0.00O had been paid in dividends.
In 1884. 1t is alleged. Eedied Proctor began
scheme to depreciate tho value of the stock
in order 10 secure 1t for himself and friends
and freeze out other holders. i is ayerred
That the profits In TINT year we're S2'5. OGO: nut
UOU. Senator Proctor is accused of causing
the difference by returning the product Of tho
Huarries as less than it actually was by 300
ooo square feet of two-inch sawed marble.
worth SGOO0O. and not putting it in the assets.
ana OF charging to the expense account s1O.Oup
creditinG tho improvement. as an asset At
this tan, time tim . the c1mpany,s indehtedness had
%ss t due on Tonds and +
open accounts.
The senator owned 1900 shares and with
is charged that no SO managed the company
as to depreciate the value Of the property.
srsyent Irther diydsnis and fome hold
he chose to pay, All OF this was a scheme. nc.
c39rdinE to edberG. for tho freezing out"
u In 1889 tho Senator transferred, l2.ool
o" "r W for Certain sa' III:
does d not own any shares" Mr.. smedIerE;
controls tho acts Of the comrany's officers.
as he and his friends had 17.0Oo of the
made eostns $4,000 Wilhout the f Mnfs
tion of tho trustees. this being in line.
saws. with the Senator's policy
profits and revenue Of the company so as to
max an excuse for the non payment of dv-
nna sssn pS se' 4ns g"
cspt 500 in 1890. and yet large improvements.
some unnecessary. had been made AT pres
1t cost Of many thousands Of dollars. Smed-
berg says 1t is unnecessary. He AYERS that the
to no Systematically undeistated and Under.
valued since 1894 and has spent 100000 Of
the sompnnys money e tiRmPr9perly
sla1, 7!,up to Jan: i. ISL, Of the marble com
pay ing in consideration stock OF the railroads
to the officers Of tho marble company. II is
@oeey ' tn sGn n,:res i1 e
Or for the transportation OF marble from Italy
to San Francisco.
noldor in 1890 says Smedlcrg. that the Sena-
tor made certain entries in the Improvement
and asset accounts. Ha charges hat false
books have been kept to mislead stockholders
and that the books have now been taken from
his State to Vermont. Plaintiff says the Soma
tors management has increased the unfunded
k494.2 OJ on Jan. !. 1891. and the total indebt-
.dness IN the same, period from s0+4.ss5 10
fl.5lo.537. Mr.. Proctor has represented.
according to Mr.. SmedherR. that the stock was
If little value. that tho company's affairs were
IN bad shape and that dividends need not he
for years. and has offered to buy
stock. which plaintiff says Is worth so IA
share. for from 80 to 40 per cent. OF its face
,alue.
The demurrer maintains that a dissolution
# the company cannot be demanded because
he company is not, insolvent and because an
tction for dissolution should be brought by
he ACKNOWLEDGEMENT. or nfter his approval. |
which had not been secured. Fisher II. Baker
lraued for the demurrer.
In arguing for the plaintiff Judge II. Choate |
'aid that part OF the S5OO.OOO Improperly ex-
pended had been used TO build "a marble |
mansion from which Senator Proctor directs
he political iestinies OF Vermont" He said
hat only $120. 900 had been paid in dividends |
lincs 1884. although tho company had earned |
about II million dollars.
Justice Patterson reserved decision.
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Wnylald By Seven HIphwaymcnI