New-York tribune., 1902-06-14
ANOTHER STEEL SUIT BEGUN.
BOSTON NAN FILES INDEPENDENT BILL
AGAINST BOND CONVERSION.

Charles l. Raymond of Boston who holds six
hundred shares OF common stock Of the United
States Steel Corporation yesterday received leave
from e-Chancellor Emery. at Newark. TO file an
independent bin against the corporation, on the
grounds in the suit brought by Mrs
Miriam Berger. OF Sullivan County, y. Y. who got
an restraining the corporation from converting
5000 0O0 of its preferred stock into bonds Ric-
ard V Linda bury the Newark counsel for the steel
corporation consented the filing OF the bill. on
the condition that the answer 10 the Berger BILL
which was printed yesterday in The Tribune. shal!
serve as the answer the Raymond bill. and that
argument the preliminary restraint order IN
both suits shnl be coincident
Robert y. McCarter. of Newark. counsel for Mrs
Berger. then opened his argument for the continu-
ance Of the restraining order granted on her appi
cation He first referred to the briefs Of counsel
the defendant corporation in proceedings before
Judge Lacombe in the Federal Court. New-fo
week, saying the court that It was apparent
those briefs that the counsel for defendant
would insist that rights Of the corporation are
paramount and that the right Of the directors 10
retire the preferred stock and issue bonds existed
prior the New Jersey act Of 1892. under the pro
Of which the bylaws Of the corporation were
amended so that the preferred stock could be re
tired and bonds issued proposed.
'I call the attention the court the fact said
Mr. McCarter that holders of sl35Goo,c0 OF pre-
ferred stock and more than $lo00oo000 OF the CON-
mon stock refused send IN their proxies But the
enormous influence welded by the men at the head
Of this corporation enabled them. without this great
amount Of outstanding stock. easily TO accomplish
their purpose
The directors made the mistake of assuming
that the country will be prosperous forever. The
act of the directors proposing to retire the
ferred stock a virtual assumption of the pow
ers Of a banking institution not provided for in its
corporation powers. and therefore was illegal"
Mr. McCarter asked the counsel for the defendant
to cite a statute in any State or country acting
under Anglo-Saxon Jurisprudence where the power
was given to a corporation retire preferred stock
secured by mortgage by issuing bonds likewise
secured by a mortgage the same property.
Francis Lynde Stetson. 0: New-York, replied for
the steel corporation that the laws OF Iowa pro-
vtded for such a trausa ton. and that such action
was taken in the Baltimore and Ohio Railroad
1T may be that in the case Of the Baltimore
and Ohio said Mr.. McCarter, the preferred
stockholders were glad to accept anything But
what l ask is a, citation in any court under the
English Jurisprudence where this action has been
Wicc-C hancellor Emery asked at this point If
there y@g s }n2 IN that 9 tRe m GT ISSUE
bonds would give to those bonds prior lien on
The pTopsTy over ttn the rights OF dissenting holders
u Mr. ' iinjabury replied that 1t was intended to
anpear In the answer that the bonds would be
prior lien over all stock but the Vice-Chanceor
insisted that the aT 6 f6@ 10 & be
agreed TO incorporate it in an amendment to their
Mr McCarter asserted that the New-Jersey law
Of 1902 was passed solely for the defendant cor
MI Stetson replied briefly TO Mr.. McCarter's ar
eument. He said that II the law of 1902
not valid the directors had a right to retire the
preferred stock and issue new bonds under the
The Vice-Chancellor said he desired to be fully
Informed on the question as to the right of a non
asserting preferred stoCkholder to the bond issue
ana he asked: What security has such a stock
cages the property. which is really the for
which the stock is issued? want counsel to make
Nj stetson said the point would be discussed
fully by himself and associates during their argu-
ments on the case