The Middleburgh post. [volume] (Middleburgh, Snyder Co., Pa.) 1883-1916, 1901-04-18
STOCKHOLDERS RIGHTS,
Justice Dixon Upholds the Claim
Of the Minority.
COURT GRANTED AN INDUCTION

s"e
and Refining Company From Pay
ing e42, ,0OO, 900 For = Plant the Real
Value Of which Is sIO,OOO.OoO.
Trenton, April s.-Justice Dixon yes
terday fled the opinion Of the court OF
errors and appeals in the case brought
by minority stockholders of the Amer
lean Smelling and Refining company to
enjoin the purchase Of the property Of
M. Guggenheim & Sons. This opinion
has been awaited with great interest by
corporation lawyers. as it is consider
ed most important as affecting cor
porations in New Jersey.
The Importance of the opinion lies
IN the construction placed by the court
on the %Sth and 49th sections O, the
general corporations act. Vice Chan
cellor Stevens held the court could not
20 beyond the decision of the board OF
directors as to the value of property to
be purchased by the issuing OF stock
The court of errors, on the contrary
holds that it must be clearly show
that the value of such property is 4
least reasonably near the price to /.
paid and that the action OF ..a dire,
tors Is subject to review at IN, '.'.u.
OF any stockholder who curs.d..s s. tai.
self aggrieved.
In considering the rirh' o. ''-
to review the action of t. C,.tr.u
Justice Dixon says the idUL.....r I,
section AZ of the corporatiIu &C,
not questionable as to the fact that H.
money paid in must equal the fac,
value Of the stock issued. The Ian
guage Of section 40 is even more OK
plicit. providing that the corporation
may issue stock to the amount OF the
value OF the stock
The distinction between the contem-
plated issue OF corporate stock for
property. and the issue for money.
Justice Dixon finds, lies not in the rule
for valuation, but in the fact that diff
ferent estimates may be formed of the
value OF property. When such dif-
ferences are brought before judicial
tribunal. Justice Dixon says, the judg-
ment Of those upon whom the duty of
determining the value is placed must
be accorded considerable weight, but it
is not final.
Justice Dixon points out that under
section 40 when corporate stock has
once been issued for property pur-
chased the legislature has directed the
application Of another rule. Under
such conditions nothing but actual
fraud In the transaction can impair the
right OF the stockholder to hold his
stock as full paid stock free from fur
ther call.
Applying the rule as above laid down
Justice Dixon discusses the actual
value Of the property. the purchase OF
which was contemplated by the issue
OF 5000, 900 OF stock. He finds II ad-
mitted that the value of the Guggen-
helm plant did not exceed $40, 1000 900
and with the cash to have been turned
over, leaving about S23 100000 to be
made up in the value Of the good will
or the business and the leases and con-
tracts, the nature Of which was not at
any time disclosed in the proceedings.
The court finds that the mere fact
that two-thirds Of the directors and
stockholders voted for the purchase
cannot prevent its review. pointing out
that this would not justify an issue of
stock for an illegitimate enterprise.
In accordance with these views tho
court orders that the stay be continued.
enjoining the purchase, and that pro-
ceedings to increase the stock should
likewise remain in statu quo pending
hnal argument and decision by the
court OF chancery as to the real value
OF the Guggenheim property.
Following close on the opinion given
out by Judge Dixon in reference to the
suit to restrain the American Smelling
and Refining company from purchasing
the Gugsenheim plant for $45, 200. 900
In stock OF the smelling and refining
company there was filed late last night
certificate increasing the capital
stock to 100000 900. The original
certificate Of Incorporation was for
t65, ,000. 900.