Wheeling register. [volume] (Wheeling, W. Va.) 1878-1935, 1901-04-09
IMPORTANT DECISION ON
JERSEY CORPORATION LAW.
WILL NOT CONSIDER THE DEMAND
OF THE UNION THAT ITS YES
Sells BE TAKEN OUT OF
LAKE CARRIERS ASSOCIATION
ANY GRIEVANCES AGAINST THE
COMPANY WILL BE TAKEN UP
AND RESPECTFULLY CON-
SIDERED.

NEW YORK, April 8.-Justice Dixon
at Trenton, N. j., to-day filed the opin-
ion Of the court Of errors and appeals
in the case brought by minority stock
holders of the American Smelling and
Refining Company to enjoin the pur-
chase of the property of NJ. Guggenheim
& Sons. This opinion has been awaited
with great interest by corporation law
yers as it is considered most important
as affecting corporations in New Jer-
sey The Importance of the opinion
lies in the construction placed by the
court Of the forty-eighth and forty
ninth sections of the general corpora
tons act Vice Chancellor Stevens
held the court could not go beyond the
decision of the board of directors as
to the value of property to be purchas-
ed by the issuing of stock. The court
of errors, on the contrary, holds that
it must be clearly shown that the value
of such property is at least reasonably
near the price to be paid and that the
action of the directors is subject to re-
view at the instance of any stock
holder who considers himself ag-
grieved.
In considering the right of the court
to review the action of the directors
Justice Dixon says the language of
section 4S of the corporation act is not
questionable as to the fact that the
money paid in must equal the face
value Of the stock issued. The lam
guage of section 40 is even more eX-
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 much differ
ences are brought before judicial tri-
bunal. Justice Dixon says, the judg-
ment of those upon whom determining
the value is placed, must be accorded
considerable weight, but 1t is not final
Judge Dixon points out that under
section 40, when corporate stock has
once been issued for property pur
chased, the legislature has directed the
application for another rule. Under
such conditions nothing but actual
fraud in the transactions can impair
the right of the stakeholder to hold
his stock as full paid stock FREQ from
further 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 s45,-
900 Of stock. He finds it admitted
that the value of the Guggenheim plant
as physical possessions did not exceed
$4,000 900, and with the cash to have
been turned over, leaving about $23,-
600, 900 to lbe made up in the value of
the good will of the business and the
leases and contracts, 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 jutify an issue of
stock for an illegitinate enterprise.
In accordance with these views. the
court orders that the stay he continued;
enjoining the purchase, and that pro-
ceedings to increase the stock should
likewise remain in statu quo, pending
final argument and decision by the
court of chancery as to the real value
of the Guggenheim property.