New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1903-08-13
CALLS THE ISSUE ILLEGAL
PTTNEY,S CRITICISMS.
Fraudulent to Put out Tobacco
Stock BeJo5c Par, He Says.

In the argument before Vice-chancellor Pitney
at Newark over the petition Of stockholders OF the
Universal Tobacco Company for a receiver At
torney General McCarter opened for the detence
yesterday afternoon. He protested against the
criticisms r1ade by the court on the value OF the
company's stock and bond issues in forciole IAN
guage. Ii would be demonstrated he said, that
Butler did not form the company. but that men
named Tilford and Wilson, Wall Street operators
organized the concern. They suggested that
Turko- Russian tobacco company De pGrchaseu' ne
declared, and TO Butler. syndicate vas
formed, with Tiiford and Wilson as managers. MT
Nearer continued and on February q agree
ment was made that the rights OF the common
stock were to be vested in a voting trust To-
this they received as commission 10000 shares.
Butler Mr.. McCarter asserted, would not go INTO
the scheme which might involve a sale 10 the
Tobacco Trust unless there was voting trust
his intention being to put in men whom ne coaIo
rely on. and to become rival to the trust Inc
Attorney General vigorously attacked the theory
of compliments counsel that the voting trust
plan was illegal, because it would be necessary In
a two-thrds vote on a bond issue or mortgage
execution t. obtain the Of the voting trus
tees who held seven-tenths OF the capitalization.
COURT CALLS IT ILLEGAL.
In the afternoon Vice hancellor Pitney declared
that the sale of treasury stock below par was IL
legal and fraudulent The declaration was brought
when Mr.. McCarter attempted to show that
the S70000o0 treasury stock of the Universal Com
pauy had only nominal value and that the charge
made by the complanants that to George P. Butler
was offered limited number of shares at s. 90 was
act within the province of the directors and in
accordance with the general custom of corpora
tons.
Wheeler H. Peckham Of counsel for the defend
ants declared there was no intimation made that
the stock not properly issued. Mr. McCarter
read from the afidavits of OF the compliments
to that the deponent declared specifically all
the stock Of the defendant corporation was fully
paid
THE MORNING SESSION.
At the morning session the vice-ChanceTor tried
to effect a settlement. but the lawyers appeared
unable to come 10 any agreement.
Julien T Davies, of counsel for the complain
ants. resumed his argument. He said the app1ca-
ton for a receiver had been made to protect the
preferred stock holders, who were the real owners
OF the company. If any loss was to be suffered
it would come out of their pockets and not from the
Buffers, who were secured creditors. Inc acuoh
had been taken to restore confidence. He SAID the
company was not insolvent. but said it must be
taken out of the hands of the present management
if any OF the money invested was to be saved
"a voting trust" declared Gilbert Collins also
sueaking for the compliments, must consist OF
definite plan 10 be legal. and must be fully set
forth in the d nof pgese1 1 amy plan
Whatever. but the contrary, reserved 10 the VoI
ing 5gg5tseS t9f t tie and in defiance
of them if they so desired.
REFERS TO HODGE SUIT.
The decision Of the Court of Errors and Appeals
in the Hodge suit against the United States steel
Corporation was quoted in illustration o. the right
OF directors TO vote as stockholders, and Mr. Nc
Carter, who was counsel for Mr.. Hodge. said that
the opinion of that court was unanimous that di-
rectors of corporation who were themselves ma
jority stock owners had the right to vote to pro-
tect their own interests without consideration OF
the minority ~. --,.,
lor Pitney. IF it does then think it is an out
rage. No court ought to hold up its head thet de,
cides that directors are not bound to vote N the
interest of all the stockholders. the minority as
well as TIE majority. I don't agree with that de-
cision, and I say so right here.
''If your honor's rule Of morals were general,
remarked ". Bourke COCHRAN; there would be no
enact accord with those held by us
Mr. McCarter will continue in the morning ana
will be followed by Mr.. Cochran and Wheeler H.
Peckhanl.