The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1900-02-27
PLAINTIFFS ALICE FRAUD
WHEREBY THE FRICK COMPANY
WILL LOSE MILLIONS OF DOLLARS.
Coke Worth S3 Ton, but Furnished
to the Carnegie Steel Plants at
the Low Rate of $1.35.

may choose to join in the suit as plaintiffs.
filed the much-talked-of oil in equity to
annul the contract held with the coke COM
pany by the Carnegie Steel Company. linn
tied. in Common Pleas Court No. 2, this
afternoon. The bill names as defendants
the II. c. Frick Coke Company, corpora
ton. Thomas Lynch, III. c. Prick, George
Lauder, d. NJ Clemson, Andrew Morland,
James Gayley and Thomas Morrison, CON-
posing the board of directors of said cor
poration. and the Carnegie Steel Company,
limited. d. T. Watson, Willis F. McCook
and John McCleave appear as counsel for
the plaintiffs.
The action is remotely connected with
the trouble now existing between H. C.
Frick, former chairman of the Carnegie
steel Company. limited. and Andrew Car
negie, and was precipitated by the filing of
Tricks bill in equity in Common Pleas
Court No. !. to secure an accounting of the
affairs 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 Company, limited under
a contract dated Jan. /, 1899, at a price Of
M;3o ton, the contract TO run for a period
OF nVe years, and from settling with the
steel company for cone already delivered
under the contract. Ii is also asked that
the court annul the contract and order an
accounting.
The plaintiffs allege fraud in the obtain
ing OF the said contract and accuse a ma
Jority of the board of directors of the coke
COMPANY or working solely for the interest
OF the Carnegie Steel Company limited.
with the purpose of cheating and defraud-
Ing all stockholders of the coke COMPANY.
not members of the steel company. 1t is
cIaimed that III the contract is carried out,
the Prick Coke Company will have to re.
Iund 10 the steel company s593.00O on ac-
6ornt OF eoEe SOLD Sd to said steel company
curing the year 1899, and during the year
l5VV IL Will cause a loss to the coke com
pany OF not less than 81, 900. 900. The bill sets
Iorth that at the time the grievances COM
piained Oh happened. Schoonmaker owned
900 shares of the capital stock of the coke
company. Walker 4.096 shares for himself
ana ITO SHARES as guardian Of Andrew Car
negle wilson, and Pontefract $50 shares
THE TWO COMPANIES.
The Coke Company. 1t is stated, is a cor
poration under the laws of Pennsylvania.
for the purpose of purchasing, owning and
mining coal and manufacturing coke and
marketing the same. and, for many wears
past has been manufacturing upwards of
100000 tons a year of coke in what is
known as the Connellsville coke region in
Westmoreland and Fayette counties. Penn
sylvania. The capital stock of the com
pany is sl0.00O.0OO. divided in 100000 shares
OF the par value of $50.
The Carnegie Steel Company limited, it
is stated pretends to be limited part
nership, organized in 1882, and is engaged
in the manufacture of pig iron and steel,
requiring about 2,500000 tons of coke an
nually The bill then says: 1.-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, j. NJ. Clemenson, Thomas
Morrison. l.. c. Phipps, W. II. Singer and
a. r. Peacock; the said Schwab is presi-
dent of the said partnership and the said
Moreland is the secretary thereof"
The capital of the company is So, O00. 900,
Andrew Carnegie owning 5Sh per cent,
while the others named. 1t is stated, own
varying interests. subject to the will of
Andrew Carnegie. The Carnegie Steel
Company. limited, was the owner of 50. 10i
shares of the capital stock of the coke
company, and Carnegie was likewise
holder of 5l.2lS shares, which, together,
constituted more than a majority of the
coke company's capital stock. This ii is
claimed. enabled the Carnegie Steel Com
pany. limited, and Carnegie to elect their
nominees as directors of the coke COM
pany and dominate and control their ac-
ton
Some time in the year 1899. it is stated
the steel company and Carnegie set UP
the pretense that the coke company had
contracted to sell to it coke at sl.35 a ton
and after this came to the knowledge OF
the president of the coke company. he SUBJ
mitted it for the consideration of the board
Of directors at their meeting held Oct %
| 1899. and thereupon the board passed the
| following:
Resolved, That the president be author
lied and instructed to notify the Carnegie
Steel Company. limited, that the existence
| of any contract is denied, and that nc
| claim to settle in accordance with the terms
| of the alleged contract for past, present
| or future deliveries of coke to the SAID
| Carnegie Steel Company, limited. will be
| recognized or entertained by his company.
THE BOARD OF DIRECTORS.
Previous to January. 1900. the board o.
| directors of the coke company was com
posed of five members. On that date. at
| meeting of the stockholders of the com
pany the membership of the board wa!
| increased to seven and Thomas Lynch
| II. C. Frick George Lauder, James Gayley
| Andrew NJ. Moreland, D. NJ. Clemson ant
1hos. Morrison elected members. The!
| now compose the board of directors of tn
| coke company, Lauder, Gaylor, More
| land Clemson and Morrison being ast
members of the board of managers OF tn
| steel company. Prior to JAN 8, 1906. ii il
| stated that neither GaylOr, Moreland
| Clemson nor Morrison were owners of an,
| stock of the Coke Company, and were in
| terested therein only by virtue of their in
! terests in the steel company. About sai'
| date there was transferred out of tn
shares of the coke company held b.
the steel company: five shares o
the coke company's capital stool
| to the four defendants named
| These shares. II is asserted. are still In
| property of the steel company and tn
| transfers were made at the dictation o
| the steel company and Carnegie for tn
| purpose of qualifying them as directors
1t is asserted that they were so placed {
| manage the coke company in the interes
| for the interest of the other stakeholder
Of the coke company, who were not mem
| bers of the steel company. and especially
| so that the product of the coke compan
| might be sold at prices far below the fac
| value of any market prices thereof, a
| to benefit the steel company at the expens
| of the coke company; Carnegie's interes
| teing much greater in the steel company
During the year 1899 the coke compan
| coke While the market price of COX
| steadily advanced coke was sold TO III
steel company at prices ranging from 81
| "a ton for January, February and March
| 1899. to $i.75 a ton for December 1880. TIL
shipments being 2.233. 764 tons, all of whsc
| has been paid for.
| WORTH 50. BUT SOLD FOR sl.35
To carry out the purpose for which the
were selected and to secure for themselve
and Carnegie an advantage as members G
the steel company, 1t is claimed tina
knowing the loss which would result {
stockholders of the coke company VIII
were not members OF the steel company. c
whose proportionate interests In the COX
xxro~o thar, In, ha ~