New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1900-02-27
CARNEGIE COKE CONTRACT.
ALLEGATIONS THAT 1T WAS SECURED
AGAINST THE INTERESTS OF
MINORITY STOCKHOLDERS


schoonmaker and John Pontefract on behalf OF
themselves and such other stockholders OF the H.
c. Frick Coke Company as may choose to JOIN IN
the suit plaintiffs filed the much talked OF Dill
in equity TO annul the coke contract held with the
coke company by the Carnegie Steel Company. LIN
tied In Common Pleas Court No 2. this afternoon
The bill names as defendants the II. c. Frick Coke
Company, a corporation; Thomas Lynch, H. Z
Frick George Lauder a. NJ. Clemson, Andrew NJ
Moreland James Gayley and Thomas Morrison,
composing the Board of Directors of said corpora
ton and the Carnegie Steel Company, Limited
The action is remotely connected with the trouble
now existing between H. c. Prick, former chair
man of the Carnegie Steel Company Limited and
Andrew Carnegie and was precipitated by the
filing Of Mr. Tricks bill In equity in Common Pleas
Court No. /. to secure accounting Of the az
fairs of the Carnegie Steel Company. Limited
In this case the plaintiffs seek to restrain the
defendants by Injunction from selling, shipping or
delivering any coke to the Carnegie Steel Com
pany, Limited, under a contract dated January l.
1899 at a price of 81 80 ton the contract to run
for a period of five years and from settling with
the steel company for coke already delivered
under the contract 1t is also asked that the Court
annUl the contract and order accounting
The plaintiffs allege fraud in the obtaining OF
said contract. and accuse a majority Of the Board
of Directors of the coke company of working
solely for the interest of the Carnegie Steel Com
pany Limited, with the purpose of cheating and
defraudng all stockholders of the coke company
not members of the steel company 1t IS also
claimed that II the contract is carried out, the
Prick Coke Company will have refund to the
steel company $4,000 on account of coke sold to
said steel company in the year 1899. and in the
year 1900 it will loss to the coke COM
pany OF not less than 100000.
The bill sets forth that at the time the grievances
complained Of happened, SHOEMAKER owned 500
shares Of the capital stock of the coke company;
Walker 4,O96 shares for himself. and 116 shares
guardian of Andrew Carnegie Wilson, and Ponte-
tract. 556 shares.
MAKES SIX MILLION TONS A YEAR.
The coke company, 1t is stated. is a corporation
under the laws of Pennsylvania for the purpose OF
purchasing, owning and mining coal ard manu-
featuring coke and marketing the same. and for
many years past has been manufacturing upward
of six million tons of coke year in what is
known the ConnellsviIle coke region in West
moreland and Fayette counties. Penn The capital
stock Of the company is SlOOOOOOO divided in 100000
shares of the par value of $50.
The Carnegie Steel Company Limited it is
stated, pretends to be a limited partnership.
ganzed in 1892 and Is engaged in the manufacture
OF pig iron and steel requiring about 100000 tons
of coke annually. The bill then says: THE Board
of Managers of said steel company, at the time
of the grievances herein complained of, was and
still is composed Of c. NJ. Schwab George Lauder
A NJ Moreland. James Gayley, D. NJ Clemson
Thomas Morrison, L. c. Phipps W. H. Singer and
A r. Peacock. The said Schwab is president of
/ said partnership association, and the said More
land is the secretary thereof"
The capital of the company is s25,OOOOOO Andrew
Carnegie owning ssh per cent. while the other
members named, it is stated own varying interests
subject to the will OF Andrew Carnegie.
The Carnegie Steel Company Limited was the
owner of 591O4 shares of the capital stock of the
coke company. and Mr.. Carnegie was likewise
holder of 5l21S shares. which together constituted
more than majority of the coke companys capital
stock. This. it is claimed enabled the Carnegie
Steel Company. Limited and Carnegie to elect their
nominees directors of the coke company and
dominate and control their action.
Some time in the year 1899. 1t is stated. the steel
company and Carnegie set up the pretence that the
coke company had contracted to sell to II coke at
| 81 50 ton. and after this to the knowledge
of the president OF the coke company he submitted
It for the consideration of the Board of Directors
at its meeting held on October %. 1899. and there
| upon the Board passed the following: Resolved
That the president be authorized and instructed
| notify the Carnegie Steel Company Limited that
| the existence of any contract is denied. and that
claim to settle in accordance with the terms OF
the alleged contract for past present future de-
veries of coke to the said Carnegie Steel Company
Limited, will be recognized OF entertained by this
| company"
| HOW CARNEGIE SECURED CONTROL.
Previous TO January. 1900 the Board of d.
rectors of the coke company was composed OF
five members On that date. at meeting Of the
stockholders of the company, the membership
/ of the Board increased to seven, and Thomas
Lynch. H. c. Prick, George Lauder, James Gayley.
Andrew H. Moreand D. M SiemsTp s ana o Th0mas
| pose the Board Of Directors of the coke company,
rison being also members Of the Board Of Man
! Prior to January g. 1900, it stated that neither
! Gayley, Moreand, Clemson Morrison was
! owner of any stock of the coke company. and
| interests in the steel company About said date
j there were transferred out Of the shares OF the
! shares of the coke companys capital stock TO the
four defendants named. These shares. It is as
serted, are still the property of the steel COM
pany, and the transfers were made at the dicta-
ton of the steel company and Carnegie FOR the
! asserted that they We're so placed 70 manage the
| pany and Carnegie. and not for the interest of
| the other stockholders of the coke company. who
pecialiv so that the product of the coke company
| might be sold at prices far below the race value
Steel any sompany at the expense of the coke com
| pany Carnegie's interest being much greater In
| Durng the YEAR 1899 the coke company furnished
the steel company win al us cCKe' T n I was sold
to the steel company at prices ranging from 81 a
ton for Janudp5 Fe9uarS an 1Se shSeh be-
ing 76i tons all of which has been paid for.
HOW CONTRACT WAS VOTED.
To carry out the purpose for which they were
selected and to for themselves and Carnegie
an advantage as members of the steel company
1t is claimed, that knowing of the loss which
would result to stockholders OF the coke company
who were not members Of the steel company, OIL
whose proportionate interests in the coke company
greater than In the steel company, and IN
utter and fra1duent dsfegard OF their rgntS anG
II. G. Frick, the other two members of the Boarc
Coke coz S6 a and WS S g ihe ahd i'e
the market price would, probably, continue dur
toned to be much greater than the price
named In the contract, the majority Of the di
land, Clemson and Morrison, on January "a. 1900 a
a meeting Of the directors OF the coke company
thereto the coke company had contracted TO sci