The evening times. [volume] (Washington, D.C.) 1895-1902, 1901-03-06
TRYING TO STOP THE MERGER
A Warm Argument in the Guggen-
hein Smelling Case.

helm Smelling Case.
NEW YORK, March 6.-Argument IN
the suit of minority stockholders OF the
/ American Smelling and Refining Com
/ pany, TO restrain the directors from in
creasing the capital stock from $65,0G0C0l
| 10 100000 900. and from purchasing the
( plant OF N. Guggenheim's Sons for S42,-
/ coo, 600 was renewed yesterday before Vice
! Chancellor Stevens, in Newark. The pro
/ ceedings were begun by the reading by
Thomas Thatcher. OF counsel for the d.
rectorS, of a statement setting forth the
attitude Of the defence
We understand Mr.. Thatcher read,
that the Vice Chancellor puts two ques-
tions. First, the directors 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
sueu: does the law of New Jersey sub
stantiaIIy adopt the rule that a going
concern may issue stock for cash or
property al 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 should not attempt
to decide the question. which is one OF
great practical Importance, until case
shall be presented which requires it, and
this is not such a case"
In answer TO a point made by Edward
Z oh, Ia
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 combina-
tions We're viewed? 1t has paid 40 per
cent
R. Y Lindabury opened the argument
for the compliments.
This case he said. involves large in
terestS. both to the compliments and TO
the defence, and great interests. also, TO
the State or Sew Jersey, touching as 1t
does the justice aid the administration
of its laws. The Stat. has said that it
is not good business to Issue stock at
less than par for cash and prSFsrty, vet
financierS come over the river gender
with violations of the statute. 4 gihat
principle is involved This statute of n, y
Jersey Is being made a pIaything on Wall
Street by numberleSS concerns which are
getting money on fanciful and fiimsy pre-
tence- Nobody outside of q young ladies'
! boarding school is ever going to be de-
ceiVed by the suggestion that Mr.. Gug-
genheim gave $4,000 600 in cash for So
e0O,O,0 of the preferred stock, and So 600
COO of the common stock OF the American
Smelling and Refining Company
THAT is Inaccurate" INTERRUPTED Mr.
Untermyer for the defence. .-s-..s--
1t is accurate answered Mr.. linda
bury Cash and profits were mixed up
| in the transaction. To mix up cash and
profits is fraudulent in law, If not IN fact
This statute is being made a byWord and
a thing 10 be condemned, by Just such
transactions"
The Vice Chancellor interrupted Mr..
Lindabury's argument to say that as the
stock of the Smelling ana Refining Com
pany went up eighteen points after The
purchase Of the Guggenheim plant. the
advance Indicated that the plant was
worth al 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, rejoined Mr. Lindabury, should
not be taken as its real value bur the
general average, This stock did 80 up
Eut that was before the real nature o.
the transaction became known. Then il
TEL. and they accused US of bearing it -
Both Mr. Thatcher and Mr. CuJermyer
arose and protested against this aSser-
ton as inaccurate and unfair.