The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1900-03-13
1T is FILED BY THE DEFENDANTS
IN THE CARNEGIE STEEL
COMPANY SUIT
GIVES HISTORY OF THE COMPANY
CLAIMS THAT MIR. FRICK SECURED
HIS INTEREST FROM PROFITS
OF BUSINESS
MAIEvoLENcE is DENIED
Asserted That Mr. Frick Is of Such
ImperiOus Bearing That He
Forced Himself Out
of Power.

PITTSBURG, Pa, March 12.-Late this
afternoon the answer of the Carnegie
Steel company, limited, defendant in the
equity suit of P. c. Frick to determine
the value of his holdings in said COM
pany, was filed in common pleas court
No. l. An abstract to the bill follows
1t is denied that Andrew Carnegie and
others named In the plaintiffs bill, dur
ing April, May and June, 1892, executed
articles of association for the Carnegie
Steel company, limited, but they did sub
scribe to an amendment of the original
certificate under which Carnegie Bros. &
CO. had been organized as a limited part
nership association. Said amendment was
not for the purpose of creating a new
partnership or n-partnership associa-
ton, but for the modification of the
terms of the original certificate. At a
meeting of the shareholders, March 25,
1892, at which the plaintiff, H. c. Frick,
was present a resolution was passed pro-
yiding for such an amendment, and a
committee consisting of H. c. Prick. H.
M. Curry and F. T. F. Lovjoy, was ap-
pointed to carry out the details Of a gen
eral plan which had been outlined Mr..
Frick was the principal actor on that
committee
AT a shareholders meeting, July 1,
1892, Mr.. Frick submitted the amended
certificate with the statement that 1t
had been duly signed and executed by
every member, and had been recorded.
Upon Mr.. Frick's motion said amend
ment was approved and adopted. If
there was any defect in said articles, as
plaintiff now AYERS, he is primarily re-
sponsible for such, in not properly, and
in good faith, directing the details of the
amendment entrusted to him by the other
members Of the association.
The averments of plaintiff with refer
ence to change of business are denied. as
in the amended certificate the same Ian
guage was employed as in the original.
In fact there has not been any change
In the character of business.
1t is true the name of the association
was changed, and for the convenience OF
the business the principal offices were
removed from Bessen1cr to Pittsburg
The business was enlarged subsequent tC
the change Of name, but this in no wise
changed the legal status OF the associa-
ton. The capital of the association was
increased from $5, ,OO0, 900 to $25, 900, 600, anG
1t is acknowledged that no. provision was
made for the payment into the treasury
of the associations original capital, which
had. been subscribed in 1881.
With respect to the claim of plaintiff
In the fourth paragraph of his bill, the
defendants are ignorant and call for
proof. However, regardless of plain
tiff's legal advice, recent or remote, OIL
his belief as to the legal status of the
association, his own actions in connec-
tions with it and its business have been
such as to estop him from questioning
the validity of it's organization as a part
nership association.
MR.. TRICKS MEMBERSHIP.
The answer then sets forth the history
of Mr.. Frick s membership in the asso-
citation. To begin with his interests were
acquired in the same manner as other
young partners. He was not required
to pay for same, provision being made,
as in all cases of newly admitted mem
bers, for payment out of the future prof
it's Mr.. Fricks interest was acquired
about Jan. H. 1887, under the terms OF
what is known as the ''ironclad agree
ment," and amounted to 100000 of the
capital stock. In May, 1889, an option
was given to Mr.. Frick to acquire on
Jan. l, 1894, an additional interest of 3
per cent. This option was abrogated in
November, 1890, with Mr.. Tricks con-
sent, but as compensation he was cred
tied in his account with the association
with the sum of $13S, 1868, representing
the increase in the book value of the in
terest covered by his option from the
time it was given until abrogated. Sub
sequently he acquired an additional / per
cent and then per cent, for which he
made no cash payment, except as here
after stated.
In February, 1895, Mr.. Frick was the
owner of IL per cent of the capital, upon
which he owed Andrew Carnegie 81, ,S09, 1871,
balance of purchase price. He was not,
however, under the agreement with Mr..
Carnegie, personally liable, the interest
acquired being the only security which
Mr.. Carnegie held. 1t being at that time
a period of business depression, Mr..
Frick went to MIR. Carnegie and expressed
a desire TO reduce his holdings in the
association, requesting Mr. Carnegie to
purchase, at the book value, 5 per cent
of the II per cent he'd by him. Mr.. Car
negie had no fears, such as Mr. Frick
expressed, and agreed to relieve Mr..
Frick of the charge, which Mr.. Frick de-
clared to be burden upon him. MIR.
Carnegie paid him the then book value,
which was greatly in excess of the price
paid for it by Mr.. Frick.
After this transfer Mr.. Frick held only
per cent of the whole, and the balance
due on that percentage from F'rick for
the purchase price was finally adjusted
and paid to Carnegie, the payment con-
sisting of $4,000 In bonds of the II. c.
Frick Coke company, at par. and $191 SO
in cash.
MILLIONS FOR THOUSANDS.
This is all Mr. Frick has paid for his
interests in the Carnegie Steel company.
With the credits for his stock earnings, the
amount paid was only 100000 all told, for
an interest worth $50O0,00o. He accepted
without question the book value for 5
per cent of his holdings at time when
he was scared and feared the stock
would depreciate, but now refuses to ac.
cept book valuation for the balance of
his holdings.
One-third Of the interest he'd at the time
by Henry Phipps was also taken by Mr..
Carnegie at book value. Carnegie was,
it appears, always ready to buy, and
showed his unbounded confidence in the
merit of the association enterprises.
AS to the value of Mr.. Frick's services,
which, he claims, largely added to the
success of the association, Mr. Carnegie
saws that. since January 1885, Mr. FriclS' S