New-York tribune., 1901-03-29
SMELLING TRUST HARD HIT
HELD OK APPEAL THAT<PRIcE PAID
FOR GTGGENHETM PROPERTY MUST
BE REVIEWED BY COURT.

Trenton Y j. March 2s.-The Court Of Er-
rors and Appeals. by vote Of 2 10 .. to-day re-
versed Vice-Chancellor Stevens's decision IN
which he denied the application for a perma-
nent Injunction 70 restrain the American Sfneil-
ing and Refining Company from purchasing the
riants Of II. Guggenheim's Sons for S4o'-voooo-
The effect Of this decision is to send the case
hack 10 the Vice-Chancellor to determine
whether the value Of the property to be pur-
chased is commensurate with the price proposed
20 he paid Meanwhile the restraining order Is
continued pending a decision Of the case on us
merits The record in the Court OF Errors VIII
he sent 20 the Court OF Chancery wltnh ten
DAYS. and date for final argument viii tneh
5e fixed. The opinion viii be fled by Justice
Dixon in few days.
Justice Dixcn fled with the Secretary Of state
the following memorandum directing the form
which the decree Of the Court of Errors sha
take:
and that an INJUNCTION issue to restrain ne Aner ,
Ia. . i Z3Iy any further step Cor the in
crease OF the capital stock Of such conpanSS. "a
The stockholders as stated in the bill ana IRON ON
taking any further step Cor the execution oi ell
bearing Of the cause il be made 10 appear that
te stock 70 be isep & raT @eT o 70 be purchased in
ciuding therein the cash TO be paid.
The courts decision is regarded as one Of the
most important affecting corporations whlch mas
been given in New-Jersey Just how far reaeii-
ing II NAV be cannot be determined untll the III
ing ~ the opinion. The case irvoives the con-
struction 81 the forty-ninth section or the gen
eral corporation act, which provides that any
corporation may purchase stock Of another cor
noratioa and issue stock in payment THEREFOR
land in the absence Of actual fraud in the trans
sc,ior the Judgment Of the directors as 10 me
value of the property purchased shall be con-
elusive"
. Il VAS on the ground that the directors tudg-
,nent was final as 10 the point Of value that the
Vice-Chancellor refused 10 continue the restrain
inc order ,trf some Of the most prominent law
,-srs Of The state who were in court to-day IN
ier7reted the order made by Justice DIXON d
placing q different construction on 'le a.
other construction of the order is thal lhe t'uI
did not consider the evidence submitted suIhclelt
20 disurove clearly the charges OF fraud on tie
part of the directors.
McCarter. n Newark. declared that it was the
most severe blow to corporations mat mas Eet
been delivered He argued that II the courts
were 10 undertake n fix hy any rule, aroluary
or otherwise the value Of property 10 he Pur-
chased by corporations il would mean me otLH-
ing away Of hundreds of corporations from inns
State. II would. he said undoubtedly mean that
the newly formed steel trust would never oper-
ate under the NewJersey laws
The decision Of the Nev-Jersey Court of Err
rors and Appeals reached Wall Street just before
the close Of business yesterday afternoon. and
resulted I'm a sharp break in the Smelling issues
The common stock which closed on Wednesday
at ISIS and opened at an advance yesterday
broke from 57ia 10 53ls between sales and then
went down to -, closing at 52l2 The preferred
stock opened at 3Gl2 and broke to 90ls. with the
close at 81. making the net declines for the day
59s on the common and , per cent on the pre-
ferred stock
The following statement by President Nash
Of the American Smelling and Refining Com
pany WAS given out last night:
The decision will not prevent union of ohe two
interests. The desire of the stockholders is almost
unanimous in favor of this trade The court has
said that the bargain is advantageous one for
the American company's stockholders as anyone
can see. All that The Court Of Errors decides IS
that the plaintiffs in the present suit are allowed
10 have trial before the present plan is carried
out. But IL does not by any follow that
we need adhere TO that precise plan or suffer any
DELAY.
The decision intended and will in
terfere with effective consolidation Of the two
interests on lines that being considered.
II Meantime both businesses are highly prosperous.