New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1899-07-01
FEDERAL STEEL ENJOINED
RESTRAINED FROM PAYING DIVIDENDS
BY JUDGE THOMAS
{ TWO wRITs GRANTED. COVERING BOTH
| COMMON AND PREFERRED sfocK-ro

HOLD UNTIL FINAL JUDGMENT.
Judge Edward b. Thomas in the United
States District Court for the Southern District
OF New-York. late yesterday afternoon granted
two injunctions restraining the Federal Steel
Company from paying dividends on It's stock
one OF IA per cent on it's common stock and an
other OF Ia per cent preferred stock. both
payable on July - The injunctions oh
tanned by Louis schaener and Frederick e.
Marquand. brokers OF this city who are holders
OF preferred and common stock respectively In
the Federal Steel Company. The attorneys for
the compliments are Lamb 4 voss. Of No. ~
Nassau-st
The Federal Sieel Company has only been In
corporated about six months and the injuncs
lions were obtained on the ground that the big
/. company has no right. under its charter 10 de-
clare dividend before the end ~ the present
fiscal year. January. 1900. Al meeting OF the
Board OF Directors OF the company held on June
H. II was resolved that dividends would be paid
as follows: ~ per cent on preferred stock. pay
able October. 1880. Iia per cent preferred
stock. payable January. 1900. quarterly divi-
dend " IL per cent on preferred stock payable
July ~. and dividend OF IA per cent the
common stock payable July 20. 1899. II 10
against the payment OF the latter two dividends
that action IL taken. AT the meeting mentioned
the sum OF 1885,. s30 was ordered to be set
aside as fund To pay the dividends
This Is rot the first proceeding against the
payment Of dividends by the Federal Steel Com
pany. About two weeks ago a stockho'der
named Kern ~ Philadelphia. who holds pre-.
ferred stock. obtained an injunction 10 restrain
the company from paying dividends but Mr..
Kern. through his counsel. later announced that
he was satisfied with the explanation furnished
nv no ais ~ he wit
his suit Many other stockholders and among
them the two who obtained the injunctons yes-
terday not satisfied. and the new case 10
the result.
George Alfred Lamb. Of counsel for the com.
plalnants. who was seen last night at the Demo
cratic club. said. concerning the case.
The complainants take the ground that the
argument of ex-Judge Gary the president Of the
Federal Steel Company. that dividends may he
pad on the common stock. because the full
amount Of the dividends Tor the fiscal year had
been set aside for the preferred stock IL made
, quate for the reason that the same directors
who by resolution set this money aside could
later In the year. I'm case Of emergency or need.
/ recall this money to the use OF the company by
another resolution; unless. indeed they created
! IL trust fund ~ this money FOR the benefit ~ the
! preferred stockholders. and In this case theJl
! would be giving to the preferred stockholders
| title TO money not yet due to them and de-
! priving the COMPANY Of the use Of It.
The complaInantS appar, ntly TAX. issue Wit.
the whole financial policy OF the directors In
distributing the surplus at present on hand
! among the stockholders both common and pre-
ferred before the same are due. alleging THAI
| this has been done more with reference to the
| market value OF the stock than to the require
ments OF a sound financial administration"
The question Of dividends OF company in
! corporated urdcr the lave OF TIE state n New
Jersey. AZ the Federal Steel Company was. Is
covered by Section Il OF Chapter 10 OF the
Laws Of 1896 Of New-Dersey. which provides a.
! follows:
The directors OF every corporation created under
this act shall IN January in each year unless some
specific day or Snys for n" in bn case. hen
! the day fixed. after reserving over ana aooS" "
Corporation' sncS sum II any. as shall have been
| hxed by the stockholders. declare dividend amonf
! nroits exceeding the amount reserved and 10
! pay the same 10 such stockholders on demand.
Commenting on this act. Mr.. Lamb said: As
no specihc day or days arc fixed In the cnafte'
! NJ tho COMPANY II would seem that the directors
, Of the Federal Steel Company cannot pay dV'-
, dends until January OF next year.
! The complanants set forth the positloh tHheh
nv them in the bin as follows.
CounIainant believes mat the drectOts' IN heclsr-
ing diyiItnds based short period Of prosperity
and distributing surplus then on hann n,t wi,n .
oc,od In defiance OF the essentials or SOUND imam
aI Motley aud in defiance or the clear ana ansoiJe
.nJrements OF thelr charter. That " - not equ'-
ahfo that Tins money should p" distributed 70 ~
etockhoIders OF The Federal steel company, unln
sucb time as according to he terms OF ~ 'h'lr'
~ ,.inv.s In, "a me IL due them or that the COM
nonv ehoud meanwhile be deprived or me w" ~
80 oaonev. that calamity. nfe strikes or SUI
ssa ,i redction I'm the price OF the commodities
marketed by the company De O. ring "ui'ns
mainIno nortion NJ the fiscal year may snui,ry
ine ont The present surplus on mana ana y - i,n.
possible TO say that the Dusr"' ,yoootable one or
~, Hbsre are any profits until the hScal year "
, ended and all accounts sett''
, clause Of Section ~ the charter or tns
= Federal Steel Company. on which the pfss'"'
) coee Ia largely based. reads 1s follows.
} Tho common stock shall be- subject 10 the PILOT
hrs NJ the holders OF the preferred stock as mere
in declared. IT, after paovldns io ,be inferred
lu ,here sha,l remain any surplus net pron,s ..
sIch wear any and all surplus net PIon.ss ,n, s,,n
year and % any other nsca E"' o ~ IN. nre,erred
I diyidends shall nave been pal1 or IT. ~ na,,
uis .rau he Applicable 30 dividends upon ne co1
49,, etock when az from time 10 TINE me .an, W.,
shall De declared hy TIE 'oata % ,nr bc clos. OF
OF such surplus nv f''''N-'
any fiscal year
. ,r,, t,turctions are 10 hold until maj june.
,,ant Frederick Marquand II the hoIosr .'
-, sbares az common stock. ana LOUIS %
o. ~ eighty shares OF preferred stpch. ~"
oan ar. well known stock brokers OF this ...y.
Tha Federal Steel Company. when mas hh " III
IN = Rroadway IL capitalized Al s-tnps-
uo 20 ~; which 800 600 OG0 IL preferred and Slop-
Un0'ono "a common stock. The outstanding pre-.
, ,orrad stock amounts to about sotzs,,sss, h"'
J e.. on,.tanding common stock TO No'S'P"
.