The sun. [volume] (New York [N.Y.]) 1833-1916, 1905-05-27
COURT UPHOLDS HYDE'S RIGHT
DECISION IN LORD StIT SAYS
STOCK CONTROLS EQUITABLE.
Al naturalization Plans Blocked and
Even Legislature Cannot Interfere,
Declares Justice MaddoX--Alexander
Lawyers to Appeal Immediately.

Justice Nj ddox in the Supreme Court
in Brooklyn yesterday handed down
decision granting tie motion made on
tehelf OF Franklin B. Lord, owner Of Thirty
fix shares Of tie capital stock Of tie Eauit-
bic Life Assurance Society, to restrain
Il o dir ector. OF the institution from carry
ing into effect the proposed tuaiizltion
rlan.
Justice Maddoxs decision is regarded
generally as "A sweeping victory for the
took interests in the society, although
President James W. Alexarder's lawyers
announced last night that they intended
to appeal the case without delay.
Justice Maddox not only sustains the con-
tentions Of Mr.. Lords lawyers and Of coun-
sci for James FL. Hyde as an interviewer
in the suit that the proposed naturalization
plan on the 2s-24 directors basis violates
the State and Federal constitutions, but
he holds further that the clause in the char
ter OF the society reserving the right to the
board OF directors to permit the holders
OF policies of S. coo and over to vote for the
directors Of the society is legally inopera-
tive.
The effect Of the decision. as admitted
even by Alexander lawyers. is to render
impossible, at least for the time being
any action by the directors or stockholders
even, unless every stockhol der consents
or by the Legislature itself which would
effect the present right of the stock to
control the society. The decision appar-
emily leaves Mr.. Hyde morn firmly en-
trenched in his control of the society than
ever before.
The decision has demoraized the plans
Of the Frick investigating committee to
recommend to the board Of directors at
the nesting next Wednesday plan for the
reorganization Of the society which would
contemplate the wiping out of the stock
control and the establishment as the ruling
hody in the society of board of trustees
who would be individually responsible to
the poicyhoders.
Mr.. Hyde, it IL known now. will listen
to no proposition that has IA one Of its
features the surrender by him Of his stock
ownership. The negot lat ions bet ween
I he fact ions for harmony program based
on such a plan were practically called off
vest erday as soon as The decision became
known. What recommended ions for re-
organization the Frick committee will
make now cannot be conject urcd.
The decision also has had not less
demoralizing effect on the Crimmins policy
holders committee. None of The memters
of that committee would venture last night
to say what steps it would take, if any.
Members Of the committee bad talked be-
fore the decision was rendered Of appeal
ing 10 GOV. Higgins to bring the matter
before the Legislature at the coming special
session, in the event of Justice Maddox
granting the injunction, but in riew of he
radical character Of the decision hat ave-
niue also is regarded As closed for the pres
ent.
As the decision stands now, the only
way, 1t was said last night in which partia
naturalization can he effected would be
placing the majority Of the stock In the
hal ds Of trustees with power to vote for
some of the directors as might be desig-
mated by the policyholders, or a proxy
committee to be appointed by them and for
the remainder of the directors whom he
might indicate.
Mr.. Hyde is on record as having already
made an offer to this effect, and it was said
Yesterday that he would undoubtedly
stand by it, In his amended petition in
the Lord suit he stated that if the court
should determine that the right to vote for
directors cannot he transferred to the
policyho!ders in the manner proposed by
the new charter he was willing that The
ajority Of the stock should be transferred
for term of years to trustees, with power
to vote for twenty-eieht directors as de-
termined by the policyho,ders. and for the
remaining twenty-four directors as desie-
mated by himself, subject to the arrange
rnent of details and conditions
Nobody representing Mr.. HYDE would
say Yesterday what these details and
conditions were, hut it was suggested
by one man familiar with the sjtliatjon
that one condition would be the retirement
of Alexander and Tarbell from the mana ee-
nent OF the society. 1t was said Yesterday
Mr.! Hyde appreciates as well as any one
else that 1t is necessary for the reba bilita-
ton OF the society and its future prosperity
that the po!icyholders participate in the
management of the society,
The LORD SUI was begun a bout the middle
Samuel Cntermyer, his chief counsel, inter-
vened to contest the assertions made by
counsel for the Equita bic that the proposed
amended charter had been adopted by
the Equitable society solely through the
elton Of the. board Of directors Mr.. HYDE
contended that the action Of the board
without his, consent az a ajority stock
holder would have been futile. He dis
claimed any intention Of uphodine the
plaintiff in his suit for an injunction. assert
ing on the contrary that he desired to see
the naturalization plan put into effect.
There were about ten other interveners in
the suit. including Charles W. Morse, who
supported the plaintiff
Justice Maddox holds that the m,It,,aliza-
ton plan is contrary to the State and Federal
constitutions on two independent grounds
first, that it violates the obligations i'm
posed by contract between the atockholder
end the company at the time the stock
was issued in that it deprives hin, of MS
right to vote for al! the ffty-two directors,
and, second, that tho right Of the stock to
control the corporation to the exclusion of
every other interest is vested right of
property and that to lessen or interfere
with that right would violate the pro vision
of the Constitution that life liberty and
property shall not lie taken without due
process of law
"The stockholders of the defendant COM
rany, says Justice Maddox, ARE mem
bers of the corporation, Are the eo,,ita BILE
owners OF the corporate property. and the
right of stakeholder to vote upon hi,
holdings Of stock is property right, one
of the essential rights of ownership; hence
the, right Of n stakeholder to participate
In the selection Of those who are to be vested
Will, the exercise of the corporate powers
the bcnrd of directors. is an attribute m
his shares Of stock, which has been defined
as right which its owner has in the manage
ment profits and ultimate assets of the
corporation"
Justice Maddox says that It ia proposed
uhoar the new charter that tho stock