The Providence news. (Providence [R.I.]) 1891-1906, 1903-08-04
CHARGE BUTLER WITH FRAUD
President Of Universal Tobacco Co. Accused
Of Being In Plot to Wreck II.

New York. Aug. i.-The initial hearing
on the rule TO show the cause why a re-
ceiver should not be appointed TO take
charge OF the affairs Of the Universal To-
bacco company and why an injunction
should not be granted to restrain n pro-
posed bond issue of 81. 900 900, was held yes
terday before Vice Chancellor Pitney in
| chancery chambers, Jersey City.
! Edwin A. NoAlpin and other stockhold-
ers charge that the president, William
II. Butler. has been party TO plan 10
wreck the company and has misapplied
the company's funds. In their afridavlts
! the petitioners say that President Butler
declared his intention OF making the stock
of the company worthless.
The lawyers In court included Gilbert
Collins, formerly OF the New Jersey su-
| preme court who Is the New Jersey rep
resentative Of the complainants; Julian
L. Davies. Herbert Barry and =. y. Nc
Apin who was associated with Mr.. Col
Inns: Attorney General Robert II. McCar-
ter, counsel for the Tobacco comapny, and
other defendants and his associa ties. Whee-
ler Fl. Peckham and Messrs. Osborne and
Hess
The complainants in the proceedings
eph Herman, Jackson w. Rhodes. Ed
ward Babcock and Charles NJ. Allaire
of this city and William ID. Judkins of
Pelham Manor. N. Y:
nc allegations against the business meth
DDS of the company, TO which reply was
made in the answering read by Attorney
davit in the answer was filed by President
Butler of the Universal Tobacco company
who said he had been engaged in the
manufacture OF cigarettes and Tobacco for
over rs years and had successfully been
secretary treasurer and general manager
OF the Kinney Tobacco company. First
vice OF the American Tobacco company
known as the Tobacco Trust, and presi-
dent OF the Union Tobacco company.
Since the formation OF the Tobacco
Trust he said and my subsequent sew
ering of my connections with II. 1t has
been the purpose OF the Tobacco Trust
TO injure me. / was forced TO sell out my
interest in the Union Tobacco company.
verify believe that the charges now
made against the present management OF
the Universal Tobacco company are with
out foundation, and are made maliciously
with the sole purpose of injurins the de-
fendant company and myself. All the
complainants in this action are dummies
with the exception Of McAlpin.
Is VERY PROSPEROUS.
The complainant, Edwin A. McAlpin.
was at one time n director of our COM
pany. He, with others of his family. in
herited from his father a business which
made large profits, and which was in
fiuenttal in the trade. believed that
Mr.. McApin's business in association
with ours could be restored 10 its former
prestige, and so the directors OF the COM
pany made Mr. McAlpin one OF their num-
Der for the express purpose of procuring
the McAlptn business for us. He was
aware of this. After he became. and
while he Continued director OF our COM
pany, and while we were negotiating with
him for the purchase Of the McAipin
business we discovered that he had, In
fact, sold that business TO the Tobacco
Trust. He used his position as a director
with us for the purpose OF selling out to
them. claiming to them that we were ne
gotiatsng for its purchase and that its
purchase by them while he was one OF
our directors would be harmful to our
interests"
Mr.. Butler said that the Universal To-
bacco company was never in such n pros
porous condition, Is meeting Its obliga-
ttons promptly. and for six weeks at least
has been running its factories day and
night. He denied all allegations that he
ever claimed or even contemplated doing
any harm or misusing hrs position as
president and also the charge that tho
company bought an unnecessary amount
of machinery from the United States
Standard Machine company at an exorbl-
tant price
He said that the plan 90 raise money
by issuing bonds to be secured by n mort
gage was acquiesced in by all the mem
bers ofthe board. and under the advice
OF counsel a mortgage was made and
che DondS prepared.
The vice chancellor said that ne would
hear the argument OF counsel in Jersey
city on Tuesday OF next week. He intl-
mated that the case would be concluded
In n day or two and an early decision
reached.
The Universal Tobacco company IL capt.
taiized at $40. ooo 900. The company's books
on March q last showed assets Of sl.1S5,-
900 and liabilities OF sSs2. 7i5.
While ex-Justice Collins was comment
ing on tho increase OF the companys capt
tai stock 10 sl0,Oo0.oo0 Vice Chancellor
Pitney interrupted him:
'T want 10 register my official disgust
Of such proceedings" he said: nearly
every day the Court Of Chancery is called
upon % straighten out financial tangles
OF overcapitnlized companies There r.
no honesty in a stock Issue OF $1,000. 600 on
n g or 30 per cent basis and forcing out
the common stockholders 20 the prefer
ment Of those holding preferred stock"