New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1902-09-10
DENIES STEEL TRUST NOTION
vICE-CHANCELLOR EMERY. AT NEWARK
DISALLOWS DISlnSSING OF SUIT
OF HODGE AND OTHERS

Vice-Chancenor Emery. at Newark. yesterday
denied the motion of the United States Steel Cor
poration for order dismissing from the Court
Of Chancery. Newark the suit of J. Aspinwau
Hodge. jr-. and others TO prevent the Steel Trust
from carrying out its plan of converting 600
OF preferred stock into bonds o. a like amount
Copies of the written decision of the Vice-Chan-
cellor were distributed among the counsel imnne-
diately after court opened In his written opinion
the Vice-ChancelIor SAYS:
The rule Is established. I think, that where the
only method OF protesting asserting property
rignt OF complainant is in court of equity, the
paait Upon LIZ tne question OF right merely be-
cause OF ms improper motive: in the acquisition
erty right is to be- b0ngbt ~ i ,t prey e
Diminishing the case and refusing to try the cues
uOn OF rlSnt Complainant is entitled 10 have the
question of such alleged equitable right tried II
the compIainant's rights are legal as We'll as
equitable. the court of equity may. perhaps on
injunction. consider the question of motive as
bearing upon the right TO equitable relief or re-
I1 coinpalhant 70 MS purely legal rights.
But where his property rights are equitable only.
tives in prosecuting the suit NAV be he is NOT
only entitled to have his case heard, but also 10
his right be sufficiently established and that pro-
tectlon Is absolutely necessary for the protection
In deciding the Berger case, l held that the uro-
posed conversion did impair the right OF a nonSas
senting stakeholder by depriving him Of his eoHsI
rights in the distribution of assets the reduction
OF capital This right IS equitable only and an IN
junction was granted as the only means by which
the right could be protected Pending decisfou on
the appeal from that decision and until il is de-
cided that the proposed conversion does not fpair
present complainant in Hodges case, so far as II
Is based on his alleged property rights. cannot be
considered false unfOunded claim bur on +ha
contrary. for the purposes of the preliminary in
Jq If may larry De urged TO be an established
status assorted by this bill OF equitable property
right vested in himself: which. if exists can only
be protected by an injunction, inquiry into the
motives OF prosecuting such rights seems to be
imateria for the purposes Of the present applica-
ton. II the status Of the complainant in this re-
come a purely representative suit based soieI9 ~
the assertion by the complainant OF the compauy's
cation will therefore De denied. but without preI1-
dice 10 me renewal OF the application or TO the
making or Sucn further applications as defendants
may be advised. upon such change of the Complain
ants status
The counsel present included Abrau r F1lfr,
and Edward B. Whitney, of this city; Alan Strong
Of New-Brunswick. and Frank Bergen. Of Eliza
beth. and Robert H McCarter Of Newark repre-
senting the complainant; with William D. Guthrie.
Of this city; Richard V ndabury. Of Newark and
Charles L. Corbin. of Jersey City representing thu
defendant MIR. Linda bury asked for formal order
setting forth the vice-chancelIor's ruling on the
motion the court had denied The vice-chanceiIor
said that the counsel were entitled to the order
There being no further motion. Mr. Strong. for the
complainant. proceeded to resume the argument on
the application for preliminary Injunction He
challenged the action of the defendants in pro-
posing the conversion plan Of the preferred stock
into bonds the general ground that the directors
who. by law. were required to call meeting Of
stockholders to pass upon the plan. were them
selves interested in It's success.
I'VE charge" said Mr.. Strong, that the firm OF
J. P. Morgan & Co, and the directors heretofore
named sought to obtain the consent Of stockholders
this conversion plan by unfair means
Mr. Strong also argued that at the time the plan
was proposed the general assets of the preferred
stockholders voting for the proposed conversion
were sufficient conform the OF 1892 and
that the plan therefore Illegal under the
statutes
In the circular issued to stockholders calling for
the meeting at which the directors ratified the
version there was. Mr.. Strong said. nothing to
show that directors were interested in the syrdi-
cate. There nothing to show that ten disinter-
ested directors had voted for the proposition Some
directors had entered the meeting wit~,a fraudu-
lent and dishonest scheme instead = n honest
one There ten directors " y were dls-
Interested having no dual interests AZ their action
was vftiated, Mr.. Strong held, consequently the
action Of the stockholders in informing the action
Of the directors must fall Mr. Strong quoted
authorities support of his argument and nao not
concluded when court adjourned
Mr. McCarter requested Of the vice-chanceiior
that Mr. Hodge be permitted to speak as he was
more familiar with the than others The re-
quest was denied. An arrangement was made Tor a
division of argument by the counsel engaged