The Jersey City news. (Jersey City [N.J.]) 1889-1906, 1902-12-08
MERCER ORDER
SIGNED
Prudential Fidelity Case
Will Now Go to the
Court of Errors.
v. c. sTEvENsON's VIEWS
Just What Directors May and
May Not Do in the Scheme
for Interchange of
Stock.

Two weeks ago Vice Chancellor Stew
enson announced that he would grant
preliminary injunction restraining the
Prudential Insurance Company and the
Fidelity Trust Company, both of New
ark, from the interchange of its stock
a scheme known as the merger. On that
occasion the Vice Chancellor submitted
to- the counsel engaged in the suit
memorandum as to points to be incorpor-
ated in the order to be entered, from
which an appeal will be made to the
Court of Errors and Appeals.
WHAT THEY MUSTN'T DO.
That order was drawn and signed this
morning, and in doing so the Vice Chan
cellor said:-
1T is not my intention to prohibit the
Prudential directors from doing any one
particular act, or, for instance four
successive acts, so long as they do not
attempt a fifth act which would affect
the scheme which is the bone of conten-
tion in this litigation. l believe it is
impossible to evade this order as it is
now drawn and am not going to alterit.
There cannot be any honest difference of
opinion that this order prohibits the
directors from carrying out the scheme
at issue. If counsel do not consent to
a general description of the scheme there
win have to be incorporated in the order
most minute definition of the whole
question"
ORDERS SATIENT FEATURES.
The salient features of the order as
recommended by the Court were as fol-
lows
'aThe Prudential Co. and its directors
should be enjoined from subscribing for
the new issue of Fidelity stock as a spec
fife act, which without references to its
connection with the scheme for exchange
of control, is Unauthorized BY the laws
which define the manner in which the
funds of the Prudential Co. are to be in
vested
"The Prudential directors should also
be enjoined from doing any act in the
exercise of their powers as directors with
intent or with the effect to carry out the
scheme of holding perpetual control of
lhS IWU colupduieS III tue directors Oi
either or both of the companies.
The injunction will not interfere with
the power of these directors to cause the
vote of the Prudential Co. upon its stock
in the Fidelity Co. to be cast in favor of
increasing the capital stock of the latter
company, either at the present time or
at any time hereafter when independent
ly of this scheme which the court has
condemned they may impartially ad-
judge such inchease to the beneficial to
the Prudential Co. as a stockholder of
the Fidelity Co., provided the effect of
such increase has a separate act
in connection with other acts, facts or
conditions will not result in or be the
means of creating the conditions under
which the above mentioned scheme may
go into effect.
s'In dealing with any and ali separate
lawful acts within their power and with
in the power of their corporation these
directors must see to it that they do not
by such acts as they may separately
consider advantageous to their scorpora-
tion, establish the condition of corporate
control which this court has found to be
injurious to the complainants and the
other stockholders of the Prudential
Company"