The sun. [volume] (New York [N.Y.]) 1833-1916, 1903-07-16
SCANDAL IN Big TOBACCO co.
PRIEST BUTLER or THE UNIyER-
SAL ACCUSED OF FRAUD.
Il. A. McAlpin and Others Say He Holds
Company's Notes Dishonesty and viii
FRONT wrongfully by Bond lssue-Re.
ceaver Asked--BOnd Issue EnJOlned.

COmpany's Notes Dishonesty and Will
FRONT wrOngfully by Bond Issue-Re.
celver Asket--BOnd Issue EnJOIned.
TRENTON, July l5.-A bill filed in the
Court of Chancery to-day, asking for the
appointment of receiver for the Universal
Tobacco Company. charges William II.
Butler, the president, with being party
to plan to wreck the company and with
having misapplied its funds for his own
use. The application was made to Vice.
Chancellor Pitney by these stockholders;
Edwin A. McAlpin of Ossning, n. Y, Jo-
seph Herman, jackson w. Rhoades, Ed
ward C. Babcock and Charles M. Alaire OF
New York city, and William d. Judkins Of
Pelham Manor, N. Y.
An order signed by the Vice Chancellor
enjoins proposed bond issue Of 81 900 900
and requires the officers of the company to
show cause at Jersey City on Aug. why
the receiver should not be appointed.
The Universal Tobacco Company was
incorporated in April, 1901, with an au-
thorized capital stock Of 100000. which
was soon afterward increased to 81 600, 600.
The company's books on March 81 last
showed assets 81 1885 ,Ol0 and liabilities OF
$SS2 ,745.
The compliments assert that President
Butler and his brother, George +. Butler,
by securing the issue Of a large amount
OF demand notes TO themselves, have put
the corporation absolutely within their
power. These specific charges are made
against President Butler In the bill
He has evidenced q pronounced host hostility Gy
-. Ia IA sntnn tHn
has 30 stated, to render the holdings Of such
shareholders valueless, and by action hereto,
fore taken and other action contemplated
he proposes ana intends 10 s snS s sfuN
ton that the stock Of the company held oy
other persons than himself will be rendered
valueless to the other holders thereof;
Although under contract to serve the COM
pany as general manager and TO devote MS
time and efforts TO the promotion OF It's M
terests and not to engage IN the prosecutor
pany, he has devoted his time and efforts TO
a very large extent in promoting the interests
Of another corporation. the CommonWeait,n
brother, George p Butler, have large iinan-
cial interest about nine-tenths OF the stock
standing in the name OF George p. Butler.
He has mismana ged the Universal Tobacco
Company in purchasing large amounts Of
machinery from a corporation known as the
United Standard Machine Company. in
which he and his brother have large nm
a
chinery being useless and unnecessary ana
such machinery in large part remaining
unused. ..-,,.. .....
to waste and dispose OF the assets OF the
com any for his own personal gain and thai
of his brother, and in particular ne mas sougnt
held in the treasury for the company for the
nominal sum OF 50 per share 10 his brother
and has sought to create d fictitious market
for such stock in order to give color 10 such
He has been guilty OF mlsappllcation OF
the funds of the company In various partlcn-
nrs om the
himself and TO his brother, which Is In large
measuro composed OF alleged claims Tor
salary and evidenced 6y notes HhPlbTis ch Is
sub ect TO great reduction. IL not t0t4I can
collation., upon a proper accounting. ne mas
procured the authorization ana ere sa nnu OF
pany and purposes and intends to pay such
alleged Indebtedness with said bonds; recely-
ing bonds Of the par value OF 500 LOT each
as of indebtedness. or even a less proper;
ton Of indebtedness. and such bonds VIII
hereupon be subject TO pass into the nandS
of innocent holders for value
The bill charges that W. H. Butler has
50 ma nipulated the affairs OF the compa ny
that he completely dominates the board
of directors, in Some insta noes, at least
having dema nded that the resignation OF
a director be pR ced in his ha nds before
the directors election, so that the director
retirement would be Immediately procur-
able should he act in any way against the
wishes Of the. president:
For some time, the bill says. President
Butler had with him in the director tie men
of ability and fina ncisl responsibility, in
Guiding George r. Sheldon and Henry K
Wilson. ba mixers, Of New York; Fra nix Til.
ford of Pc rk h Tilford, end Edwin A. Meal
pin. The conduct of Mr.. Butler and his
attitude toward these directors, it is ste ted,
caused them to resign, while the president,
by the ma nipulation OF voting trust,
secured the election OF successors Of his
own selection.
The present directors are William Fl.
Butler, Edwin V. d. Paul, Daniel j. Camp
bell Henry b. Wesselman, George p. But
Ter, Richard W. Menzies. Alfred c. Farrell,
William D. Judkins and Richard F. FULLY.
The compliments attack the voting trust
as being contrary to the laws OF the State.
President Butler made the following
statement yesterday regarding the action
to njoin the further sale OF Universal
Tobacco Company bonds:
have not seen the bill Of complaint as
yet though our attorneys have made re-
nrated attempts to procure one from Messrs
Davies, Stone x Auerbach. who have repre-
sented the Hayana Commercial Company.
and later the Book Tobacco Syndicate, ~
was sold ont to the Tobacco Trust without
my knowledge, or consent This would
serve TO show that this attack was inspired.
AZ the Tobacco Trust has many wlllin servants
and the Universal Tobacco Company il an
obstacle to their progress
have seen in an afternoon paper n char &c
that l have Incorporated the funds Of
the company. II any such charge as this
il made by any one, shall prosecute them
to the full extent Of the law as the charge
il absolutely false
The facts are | have not received my
salary since the organization of the company.
and have loaned to the company. In addition.
large sums of money which is still owing
me, and have devoted my time and attention
llnremittlngly to its welfare. | understand
there are four affidayits in the bill OF COM
plant from former employees Of this COM
pany, the resignation OF some Of whom |
exacted for incompetency and other causes.
the company, with whom I compromised his
contract and saved the company from u
large expense.
Mr. MCAlpin. the complainant in this action.
was n former director OF the company, who
Joined our company and sold his business to
the Tobacco Trust while We We're negotiating
for its purchase.
shnll endeavor to make this trial medium
through which certain officials. United States
Senators and Congressman and members
Of Legislatures, may give evidence regarding
their connection with the Tobacco Trust OF
America and Cuba
The sole question in this proceeding is
has the company the right TO issue and sell
its bonds. " the Tobacco Trust or it's ennis
saries think that attacking these bonds Is a