The Scranton tribune. [volume] (Scranton, Pa.) 1891-1910, 1894-09-15
PHILADELPHIA, Sept. /

1
the United States circuit court
nj Of appeals today in favor Of Will
" liam Walter Scranton and WAL
ter Scranton in an important litigation
growing out of the organization Of the
Lacka wanna Iron and Steel company,
Of Scranton, Pa.
A number of stockholders of the for
mer Scranton Steel company charged
that $3.50, 900 in bonds of the new com
pany, paid to William Walter Scran-
ton, the president Of the old company.
and to Walter Scranton. its vice presi.
dent under an agreement that the two
Scrantons, who are brothers, should
not re engage in the business in COM
petition with the new company. should
not have been paid to thsm, but to the
old company itself.
The Scrantons claimed that the
$3.50, 900 In bonds was bonus to them,
The matter was originally heard by
Judge Acheson in the circuit court at
Pittsburg aud resulted In the bonds
being awarded to the Messrs. SorRn.
ton. The dissatisfied stockholders of
the old company took an appeal from
the finding. and the case was
argued here last March before
Judges Dallas, Butler and Green.
The complaining stockholders are:
Louis H. Bristol. Ezekiel G.. Stoddard,
Henry L. Hotchkiss, Charles L. john
son, Edward NJ. Reed. and Robert s.
Ives, of New Haven, Conn. Carlos
French. Of Seymour, Conn.,; Eugene
s. Bristol. Of Chicago; Charles N Yea
mans, of Westfield. Mass. William B.
Murdock. Of Barnes, La, and Joseph
P. and William A. Earle. of New York.
. THE PLAINTIFFS CLAIM.
At the argument it'was urged that
the old company was organized in 1881
with a capital stock OF 100000 In
1885 the stock was increased to $3.50,
600 The plaintiffs oontended that they
invested in their holdings of stock npon
the representation made by the defend
ants that they had special and par
ticular knowledge and skill in the
business to be carried on, etc.. 80 that
by obtaining control of the stock com
petition with other corporations could
be successfully carried on. The two
Scrantons owned about one half of the
stock, and besides being president and
vice president respectively, we're also
directors.
1t was urged by the complainants
that In 1890 the two Scranton's tried to
sell out the controlling interest by
selling their own stock ani that OF
some relatives and dependents. to q
rival concern. That in pursuance to
this, the Messrs. Scranton at that time
offered to sell stock of the par value of
100000 for 81, 100000 That this was
kept secret from the plaintiffs. but the
scheme fell through. That subse-
Quently in the same year the defend.
ants entered into negotiations with the
Lackawanna Coal and Iron company
also of Scranton, for the purpose oi
consolidating the two companies.
These negotiations were said also tc
have been kept secret from the com
planning stockholders. 'r
THE PRELIMINARY AGREEMENT.
In January, 1891. a preliminary
agreement was made by the two com.
panies. Under this the old company
was to transfer $780, 900 worth Of
property for which there was to b.
given $3. 000 900 Of Lnckswanna Iron
and Steel company's stock and $500. 00C
in bonds. Meetings were held. but 1t
was alleged the stockholders of the OLE
company were not informed that the
Messrs Scranton's had made q privat
assignment. under which they were tt
receive $3.50. 900 in bonds Of the new
company. Aftsrwar the arrange
ments mentioned were carried out.
1t Is said that President Scranton
held 1.645 shares Of stock In the oil,
company, and Vice President Scranton
held 920 shares, while tho coinplainin,
stockholders owned but 1.575 shares o
the capital stock of z. 800 shares. So,
Judge Green, in his opinion says
In our opinion the transaction as con
summated so far as the consolidat ion o
these two companies is concerned, is no
tainted by scintila OF fraud on the parl
| Of the defendants. 1t was conducte,
openly and fairly, was brought in Its
1
| of very large number, if not all, the stock
holders interested, who we're represented
by the defendants, and the terms OF tn,
consolidation. ss finally agreed upon, the
submitted to the stockholders Of the Scrau
ton company, including the complainants
was approved not only with entire unani
nifty, hut as well as great triumph. o
this point Of the case we accept and para
phrase the conclusion Of the court below
that the contract of consolidation was cor
ceived in integrity OF purpose, was born o
good faith, aud was indellibly marke,
with the impress of honor and fair dea
ings."
ANOTHER POINT SETTLED
After fully reviewing in favor Of tn
Scrantons, another point raised-tha
even IL there was no fraud the rslatio
which the Scrantons held TO the Scran
ton Steel company should have KEEP
them from making an agreemsn
which would enure profitably to then
personally and that such profits shoul
have gone to the company, Judge Gree
said:
The principle OF equity which Is relie
upon justifes itself on the ground ths
the agents interest must In no vice O
manner conflict with or antagonize, or n
least, be diverse from the interest Of hi
| principal. His fidelity in the discharge 9
the duty cast upon him by the relation
ship assumed must nots Be awakened b
the demands Of personal interest. Br