The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1894-02-02

The new board of directors of The
Groesbeck company held its first regu-
lar meeting yesterday afternoon Tor
the purpose of listening to the report
of the auditing committee, which is
composed of AIessrs. Hays, Whitney and
Hyrum Groesbeck That report was
something of a bombshell.
In the absence of President John
Henry Smith, the ex-president, John
A. Groesbeck, called the meeting to
order and thereby preeipitated a con-
test in the ranks of the directors.
number of them claiming that Mr..
SroeSbeck had no right whatever to
preside at the meeting. but that the
Vice-president was the proper person
to assume the chair in the absence of
the president. It then developed that
the vice-president was George J. Marsh,
and another cog slipped, several of the
directors claiming that according to
the recent decision of Referee Ritchie,
Mr.. Marsh had no right to his Office,
having obtained his stock through
fraud. Mr.. Marsh was finally per-
mitted. however. to assume the chair
and the report of the auditing commit
tee was submitted. 1t was as follows:
To the Stockholders of the Groesbeck
company-YOur committee beg leave to
report, that we have examined the
books of the Groesbeck company, ex-
tending over the transactions for the
year, 1893.
We find that the system of book
keeping, prior to February LIST, 1898,
was very crude, but that since that
time the books have been put in good
shape-and the same are now properly
kept
The stockholders of the company
prior to February 1898, We're in the
habit of collecting and appropriating
receipts of the company to their indi-
VidUal uses, and were afterwards
charged with the amounts. Under this
system-or lack of systematic various
stockholders of the company were Ow-
ing in February, $685. large sums Of
money, and, therefore, in February,
1893. a dividend of $24, 600 was declared
and the eight stockholders, the incor-
porators of the company-were given
credit on their Indebtedness for SO. 600
each in money, but no money was paid
oct thereon, but simply credit was
given.
This was the first settlement made
by the stockholders and under it the
amounts of their Indebtedness was as
certained. In this settlement 2540
shares Of stock of the Groesbeck com
-pany were taken by the corporation as
secaf1ty Tor the debts of William Groes-
beck and John A Groesbeck. and in
the settlement Of March 31st, 1893, the
Indebtedness of these two are shown
as secured by the said shares.
We find that the company afterwards
sold out the stock held as security on
these accounts, and acquired same by
bidding IL in at 60 per cent of
the par value. Instead of re-
tanning the stock, however. and
adding it to its assets, the COMPANY
T-1--
special stock dividend. We are of the
Iopopinion that this was improper and
unjust to the stockholders and to those
holding stock as collateral on loans.
However, we find that if by any
reason the dividend could be apologfzed
Tor, its distribution was not business
like in this; that certain stockholders
should receive dividends who We're at
the time owing the company for bal
ance on account and no effort was
made TO retain the shares distributed
to them as security for their indebted
ness, and, we believe, that ordinary
business sagacity should have caused
the officers to retain sufficient to
amply secure these liabilities from the
dividends paid to these stockholders.
inasmuch as a majority of them were
at the time insolvent
We find that John A. Groesbeck and
n. H Groesbeck were indebted in the
sum of S979.35; William Groesbeck, Sc
285; Helen NJ. Morgan. S1,767; and that
Joseph S. Groesbeck, Hyrum Groesbeck
and S. S. Groesbeck were indebted to
the company.
We find that on January l, 1S9S the
company was indebted on improve
ments, taxes and interest in a sum in
excess of $4,000. and there was at no
time in the year of 1893 a possibility
of a dividend being declared from the
profits, and that on the 81 Of February.
1898, the company was compelled to
borrow $1,000 of R D. Millett, On
which it is now paying interest at the
rate of IL per cent. per month, and
that, Notwithstanding its condition, the
following sums of money have been
paid to. or have been paid for and on
account OF the following named peo-
pie:
S. s. Groesbeck. observation-disclosures us 2e
William Groesbeck. 1S6 30
n. II. Groesbeck. 20 90