New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1903-02-19
WHAT JUSTICE VAN sYCKEL SAYS.

WHAT JUSTICE VAN SfCkEL SAio'
Justice Van SyckeI, in his opinion after recitlns
the steps taken by the directors preliminary u t
ratification by the stockholders OF the COZ
ON Nav ~ 1902 of the resolution to retire S-oo'5
of the preferred stock by means OF an issue %
bonds and their adoption also of the bankers CoH-
tract. says in part:
There is an entire absence in the case OF ia an oe
to snow tajnf Oh a5v fact which should have
influenced their action 5,.t,7 1-it!,
good faith without concealment ana via pt d,rpg
to both parties is f{ihcfa og nsed under the pro-
motion of a share owner. who did not attend ts
ers who we're present person or by proNy, CCLn
PTlSlng men OF ions of dollars in the CONVEX
sion plan. has questioned It's pIoPrl7'E recede
pressed desire, 50 far as appears -
The contract with the bankers was sqomttfd -t 10
in the resolutions of which copy 2ps1, va 70 become
or to- be operative until after approval thereof Py
the stockholders in special meeting MANNERS of
the syndicate who also directors OF tns CoI r
pany cannot be lawfully counted IN Of The resolu
ton to reduce the amount of preferIed stocA' ID
" TBe v S4yd po1 tho resotion directors
not ts dTca5y sf9eS hed by item
vaIIla bic privilege which attaches 70 the o~neESP
Of stock in corporation Is 1de As 10 that res-
outon considered by itself as stockhodeTs tsg
owed greater duty TO thelr c9stochnP fEa other
those t9ckhoders eyed r to IN be influenced by
what thew con sived to be for their own InterS:
and they cannot lawfuy De asl ibad bv the fact
that they occupied the position OF directors III 'N0
With respect to the bankers contract very
The rules that directors cannot lawfully enter lE
intI = contract in the benefit Of which even one
of their number participates without tns arits in;
and consent of the stocknolcers - 50 ~ lns, 10
trenched in jurisprudence that II Is not open u
It is a settled rule Of corpora ton law that me
personal interest OF directors renders q -
i-0i5a ba at the option Of the StOchhol1eEs anu loN
V'i" foTti6ri when the contract is entered into by
tba ltorlhoIders With the directors. or when the
sto,-boIdars expressly authorize the directors 70
enter INTO G2psT2cT TsT re te h areement vii
be unassaiIable in The a6SeGG 0l
In this case not only was the bankers contract
4Fothrs vote Of the shareholders. with Inowl-
edge that J. P. Morgan was one OF the directors o.
presumed have but also in The SircnaE
meeting to be held on May q. it was expressly
sta1 To frtbr the success of the plan there has
been formed syndicatss jne4d tPs ig ef ent com
which will receive 1nuI- "a ~ .,rtra-+ ~ith
S Gessrs J. P Morgan 60. mentioned in the
notice Of stockholders meeting
WITHOUT SUPPORT IN LAW
On the ground which has been discussed upon
the facts presented the complainant case IS WITH
o1t sfIDpOrt liz law. He made no inquiry dld not
attend The r es Of the a 2oE d% Who did attend
the May meeting OF the benefit OF Gontraet whl I
in the Berger case. the corporation had power 10
make. ,..r -. -.
n1ainsnt rests his claim to relief relate TO the
act of 1902 ,,z ;. -. -
case is a restraining act. and required due OBJ
servarcA of its provisions by the Steel Company
a condition precedent to the right 70 enter INTO
the conversion scheme -,
complainant is that dividends were not made in
oDforn,itv with the requirement Of the act OF 1907
when is a supplement to the General CORPORAL ton
act
After auotng the language of the General Cor
poration actregardng dividends preferred stock.
and describing the action of the Steel Corporations
directors as To sr-h dividends, the opinion CON
tinues.
The Vice-Chanceuor held. in constituting this
legislation. that if the dividend had been paid
annually there must have been two dividends
of oer cent ZACH. covering two previous
Years to make the payment continuous mat II the
jividends were paid half yearly there must have
been three payments OF go per cent each. GOVERNS
eighteen months. fin order to make the payment