The Washington times., 1902-09-10
Sought Dismissal of the
Hodge Suit to Enjoin
Bond Conversion.
RULING OF VICE CHANCELLOR
Decision Accompanied by Order Direct
ing Investigation of Complainants'
Good Faith in Instituting Proceedings
Fight to Be Continued.

| NEWARK, n. j., Sept. 9.-Vice-C Chan
cellor Emery today denied the motion
of the United States Steel Corporation
| for an order dismissing from the court
of chancery the suit of ]. Aspinwall
Hodge, jr., and others to prevent the
Steel Corporation from carrying out the
plan of converting 5000, 100000 of its
amount. The motion also sought an or
der directing an investigation of the
complainants' good faith In instituting
the proceedings. In written opinion
the vice-chancellor gives the following
conclusions:
The right to such an order rests upon
the claim that the bill is bill filed by
stockholder of the company for the
purpose OF asserting the company's s
rights, and that in a suit where COM
plainants assert such representative
character proof satisfactory to the court
that the suit is brought by the COM
plainants for the purpose of extorting
money for their benefit and that of
others maintaining the litigation will
justify dismissal of the suit as an I'm
position upon the court without any trial
of the issues. and will disentitle COM
plainant to preliminary injunction.
Question of Motives.
I'm reference to the right of the court
to dismiss without hearing or to refuse
protection by preliminary Injunction
because of the mala fides or bad mo-
tives of the complainant in prosecut-
ing the suit. it has been declared in
suit is brought by a stockholder for
the professed purpose of asserting and
protecting the rights OF the company
and the complainants' rights are purely
representative, the suit must be bona
fide of the company, then the suit may
be dismissed, as not the suit of the
company and an imposition upon the
court. The rule is established | think,
that where the only method of protect
ing or asserting a property right of a
is in court of equity. the
court cannot refuse to decide or hear a
upon the question of right
merely because of his improper motive
in the acquisition or prosecution out Of
his rights.
Rights of Complainants.
That the motive for a complainant in
in equitable property right
Is TO be bought off is not reason for
the case and refusing to try
the question of right. Complainant is |
entitled to have such equitable right |
tried. If the complainant rights are
legal as well as equitable, the court of |
equity may perhaps, on the hearing OF
the application for preliminary injunc-
tion, consider the question of motive as
bearing upon the righ; to equitable re-
lief or remitting complainant to his
purely legal rights. but where his prop
erty rights are equitable only il would
seem TO be clear that whatever his mo-
lives may be he is not only entitled TO
lave mis- case heard, on final hearing. but
also to have the protection by prelimi-
lary injunction if his right be estab-
ished sufficiently and that protection is
absolutely necessary, for the protection
lite. is the equitable right.
In deciding the Berger case ] held
hat the proposed conversion did impair
he r1Snt oil non asserting Stockholder ,
" depriving HIM of his equal rights in
he distribution of assets on the reduc-
ion of capital. This right is equitable
My, and an injunction was granted in
he only measures by which the right
Guild be protected. Pending decision on
he appeal from that decision, and until !
is decided that the proposed conver-
ion does not impair the non ssentinc
tockholders' property right. the present !
omplaint, Hodges case, so far as it il ,
ased On his alleged property rights.
annot be considered false or unbound
claim, but, on the contrary, for the
urpose of preliminary injunction. ma.
-irly be urged 10 be an established
laim
so long as the complainant possesses ]
lis status asserted by his bill, Of an ]