New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1902-09-20
STEEL CORPORATION WINS
ITS CONVERSION PLAN UPHELD BY NEW
JERSEYS HIGHEST COURT

! Trenton. n j.. Sept. 19-Ihe court .. En-. q
and Appeals this afternoon oF d fo'e VI . - -
! .no,11s - fo,,or Of the United States Steel Cor
! - - +aa suft brought by Mrs. Miriam
rareer tn restrain the corporation from coINei'
ine 5000 GOO 600 ! per cent preferred stock lntf
! ; per cent second mortgage nohos-
I VIC Chancellor Emery, in the ChancerA
co,,r+ Granted an INDUCTION restraining the com
many from carrying out its purpose. Inc oe
! nision of the Court of Errors and Appeals To-
do,, is reversal of the Vce-Chanceiiors de-
ot.io, ond leaves the United States Steel Cor
noration free to carry out its project 50 ial dc
The Berger litigation is concerned
| No ontnion was filed. the court simply an
.,, &c decision The opinion will be filed
| ,+ II &c TO be written by Associate Justice
49, c,,a, Justice Garrison will write the
| dissenting opinion
| rhe effect Of the decision upon the pending
! LITIGATION in the Court of Chancery TO en,oi1
| the nronosed conversion, will depend upon the
grounds Of reversal but it is asserted with Some
| oor6derca nv lawyers here that the decision
| viii virtually throw all the ntigatons out OF
| court.
The Court of Chancery was afnrmeo py the
| Court Of Errors in the Raymond suit. prought
~ - common stock holder. and in when an IN
i,,nction was refused by Vice-Chancellor Emery;
Mrs Berger is a holder of both preferred ana
ornr,on stock There still pending in the
| Cbancerv Court against the United states steer
| Cornoration a suit somewhat similar TO the
| Berger action and having for It's prime OBJECT
- 9,roy,antion Of the stock bond conversion
nIan. 1t is instituted in the name OF hodge
ct al. ,,zo ,xa bic .sSociot toe
altered in several important respects from that
Of Mrs Berger. For one thing. the TACT tnat a
majority of the board of directors was to share
a. 90 nrofts incident to the disposal of the
hords was brought out. as it was not in the
first action
Tho decision of the Court OF Errors and Appeals
naturally caused much satisfaction among the
leading interests in the United States Steel Cor
nora ton management, but neither they nor their
attorneys were willing make any statement con-
corning the matter before having had an oppor-
tunitv 10 read the courts opinion The belief was
expressed. however by one of the most prominent
directors of the corporation that the dismissal OF
the Berger case made virtually certain similar
disposition of the Hodge-C Smith the
legality of the proposed conversion Of S20o.Eo.eo
nreferred stock into bonds, which the leading
issue raised both actions. has now been definitely
established by the court of last resort in New
Jersey.
The news Of the decision had moderately stimu-
lating effect the steel shares, the common ana
preferred each advancing about a point ana re-
tanning at the close most of the gain.
The Berger suit is one of four actions which have
been brought against the United States Steel Cor
poration since its shareholders in May ratified by
directors for retiring $500 preferred stock and
issuing $250ea,eo second mortgage bonds. The pro-
ceedne was Instituted by Mrs Miriam Berger,
whose application for temporary injunction was
granted by Vice-Chancellor Emery on June 2. this
Injunction being made permanent week later. In
his opinion the Tce-Chancellor took the view that
retirement of preferred stock constitutes prefer
entail reduction of the corporations capital among
the shareholders asserting TO the plan. and cor
responding impairment OF the rights Of those not
.E,rr r1rafar N Ia c
would be without authority, statute author
izlng 1t existed He further held that the pur-
chaser of preferred stock had a vested property
right IN such stock. which could not be impaired
In the manner alleged in the compliments bill and
admitted by the defence.
on June %. Charles l. Raymond. of Boston, re-
ceived permission from the NiceChancellor 10 file
an independent bill the grounds as those
forth in the Berger bill stipulation being made
that the answer OF the Steel Corporation to the
Berger bill should serve answer also to the Ray
mond bill. Both Of these actions. therefore. have
now been disposed Of by the Court of Errors and
Appeals.
A third proceeding that of the c. II. Vedder
Company and James Polltz who asked for in
junction the ground that the New-Jersey law
OF March o. 1902 under which the conversion of
preferred stock into bonds be made. was
unconstitutional 1t impaired the obligation of a
contract. This transferred from the
State Courts 10 the United States Circuit Court
plication.
The only remaining case. that Of Hodge and
others begun July I. which day Vice
Chancellor Emery granted temporary injunction
the prayer OF the complainants These num-
bered five at the outset-J. AspinwaH Hodge Will
lam II. Curtiss, Bernard Smith. Franklin w Hop
kins and Allison r. Hopkins-with whom Russell
Sage day later Joined. Mr. Sage and
the Messrs, Hopkins, however promptly withdrew
their The Hodge-C urtiss- Smith bill differed
in several particulars from that filed Mrs Ber-
ger. 1t charged fraud. for thing alleging that
the firm Of J. p. Morgan & Co.-who were Joined i'm
the bill defendants with the United States Steel
Corporation its officers and direcorsand the cor
trived secure the alleged ratification Of the
scheme by unfairly inducing certain holders Of tbe
stock in allowing them to participate in the profits
of the underwriting syndicate and thus ena bling
said favored stockholders to get their bonds an =
much lower cost than other preferred stockhold-
ers.'' Another allegation that n large mart or
the cast In favor of the plan of Conyersion
was contributed by stockholders in whose ma me-
stocks carried margin stood, but who were nor
the real owners of the stock whose consent n va
alleged obtained Still another alegatinn
was that the assets of the corporation after de-
Quoting the amount of its Indebtedness did nor
equal the amount of the preferred stock now our
sta nding. this assertion being supported nv an
a ffdaVit by James H Lancaster. to whose GuaIi
hCations to speak expert much has since then
been set forth In court.
A motion made early this month by the
United States Steel Corporations attorneys for The
dismissal of the Hodee-Curtiss- Smith suit as a con-
spiracy but this motion denied.