The times. [volume] (Washington [D.C.]) 1897-1901, 1901-03-06
TRYING TO STOP THE MERGER.
4 Warm Argument in the GuEgea-
helm Smelling Case.

NEW YORK. March 5.-Argumeut In
the suit of minority stockholders of the
American Smelling and Refining Com
pany. TO rcst-ain the directors from in
creasing the capital stock from SsS. eo0. C0l
to Sl000O000o and from purchasing the
plant OF N. Ciuggenheim's Sons for si5.-
000.000. Vas renewed this morning before
Vice Chancellor Stevens. In Newark. The
proceedings today were begun by th,.
reading by Thomas Thaeher of counsel
for the directors. ot statement setting
forth the attitude OF the defence.
We understand Mr. Thatcher read.
that the Vice Chan ;eIlor puts two ques-
tlons. First. the dir ectors propose to is
sue stock for property when in their
Judgment the property Is not worth the
amount OF the par of the stock to be is
sued: does the law of New Jersey sub
staptially adopt the rule that a going
concern may issue stock for cash or
property at the fair value instead Of the
par value of the stock? We answer this
question in the negative. that the direc-
tors are not Justified under the New Jer-
sey law in issuing stock whether for cash
or for other property. to amount at
, par greater than what. in their judgment,
that which they are to receive is worth.
Second If it is evident that the directors
intend to go counter to this rule. may
equity enjoin them? Upon this question
we admit that there is large room for
doubt, but the court rhould not attempt
TO decide the question which is one of
great practical importance. until a case
shall be presented which requires 1t, and
this is not such case"
In answer to a point made by Edward
Lauterbach yesterday that the combina-
ton and merging OF corporations had
proved disastrous in numerous cases,
counsel continued:
How about the Sugar Trust. whose
stock largely Increased in value. and the
stock of the National Tube Company,
which was at first stunned because Of the
apprehension with which such conbina-
lions were viewed? 1t has paid 40 per
cent
R. " Lindabury opened the argument
for the compliments.
This case" he said, involves large in
terests beth to the compliments and to
the defence. and great interests. also, TO
the State OF tScE Jersey. touching as 1t
does the justice sE3 the administration
of it's laws. The Stai. has said that il
Is not good business 10 Issue stock at
less than par for cash and property. yet
S~SaiiS rNtf t3it river
with violations of the statute. A sinat
principle IL involved. This statute of N.r
Jersey Is being made a plaything on Wall
Street by numberieSS concerns which are
getting money on fanciful and fiimSy pre-
tence. Nobody outside Of young ladies'
boarding school is ever going to be de-
ceived by the suggestion that Mr.. Gug
genheim gave Sl2. 900 in cash for &c.
co1.0J9 of the preferred stock, and s6. 0g9-
t00 of the common stock or the American
Smelling and Refining Company"
That is Inaccurate" interrupted Mr..
Untermyer for the defence
1T is accurate" answered air. Linda
bury. Cash and profits were mixed UP
in the transaction. To mix up cash and
This statute Is being made byword and
transactions
The Vice Chancellor interrupted Mr..
Lindabury's argument to say that as the
stock of the Smelling and Refining Com
pany went up eighteen points after the
purchase of the Guggenheim plant. the
advance indicated that the plant was
worth all that was paid for it. This re-
mark was taken by the defence as ex-
tremely favorable
The selling price of a stock on any one
day." rejoiHed Mr.. Lindabury, SHOULD
not be taken as its real value. but the
general average. This stock did go up.
hut that was before the real nature Of
the transaction became known. Then it
fell. and they accused us of bearing ii. -
Both Mr.. Thatcher and Mr.. Untermyer
arose and protested against this asser-
ton as inaccurate and unfair.