The sun. [volume] (New York [N.Y.]) 1833-1916, 1905-06-13
The Three Trustees.

The 1hrce trustees.
Those who take the trouble to read
again with care the text Of Justice MAD
Dox's opinion as to the rights OF the
minority stockholders in the Equitable
are not likely to be disturbed in mind
as to the effect of that decision, even
II it is affirmed on final appeal, upon the
plan adopted in the interests OF the
policyholders by Mr.. RYAN and his
associates.
1t is stated in a general way that the
naturalization now proposed is the same
naturalization previously devised as a
compromise between the Hyde and
Alexander factions, and approved by
the State Superintendent of Insurance,
but enjoined by Justice MADDOX for
the legal reasons so clearly presented IN
bis opinion of May rs. There is identity
in one respect Both the enjoined plan
and the present proposal contemplate
the selection by the policyholders them
selves of twenty-eght of the ffty-two
directors, majority of the board. The
method, however, by which the twenty
eight policyholder directors are to reach
their offices is by no means the same in
the two cases.
BY the plan OF naturalization tempo
rarily enjoined by Justice MADDOX it
was proposed to amend the charter so
as to take away from the stockholders
the right to vote on their stock so far as
twenty-eight of the fifty-two directors
were concerned, and to transfer this
power, by the same process OF charter
amendment, without even obtaining
the assent of the minority stockholders
to persons who were not members Of the
stock corporation. Justice MADDOX, in
unfolding the property rights of the
stockholders, after discussing the con-
stitutional obstacles to any such amend
ment of the Equitable's charter, re-
marked
"The right OF q Stocsholdcr TO participate In the
selection OF those who are to be vested with the
exercise OF tle corporate powers, the board OF d.
rectors Is an attribute 10 his shares OF stock which
has been defined as right which It's owner has
IN the management, profits and ultimate assets
OF the corporation
=" To deprive an owner Of property OF any one OF
It's essential attributes is deprlving him OF his
property and the contemplated change of charter
would deprive the stockholder Of hi, property
None of the objections raised by the
Court to the former plan Of mutuaIiza-
ton seems to apply to the method now
proposed. The Court doubted the con-
stitutionality of any such amendment Of
the Equitable's charter. No charter
amendment is necessary in order to vest
the majority stock interest with the alb
solute and uncontrolled voting power
thereon, in the discretion of Mr.. CLEvE-
LAND, Justice O'BRlEN and Mr.. WEST
1NGHoUSE, as trustees. No stakeholder,
majority or minority, is deprived OF his
right to vote for every one of the fifty
two directors. The majority interest
votes through it's trustees. The minority
stock votes as formerly, and as formerly
fails to elect its candidates, if it has any,
against the will Of the prevailing inter-
est. The change does not affect any
property right of any member of the
corporation.
Yet, while avoiding the legal obsta cles
suggested by Justice MADDox's decision.
the new plan effects naturalization far
more effective and comprehensive than
any previously contemplated. volun-
tarily, the owners OF majority of the
stock put the; voting power in, the hands
OF three trustees representing no inter-
est save that of the policyholders. The
policyholders choose their own cand-
dates for twenty-cight places in the
board; the stock voted by the trustees
elects these twenty-eight directors. The
same stock likewise elects the other twen-
ty-four directors, selected not BY the
owners of the stock but by the indie
pendent judgment of the trustees.
Absolute mastery over the destinics of
the Equitable, therefore, is conferred
upon the three trustees, acting seven
thirteenths as the agents of the policv-
holders and six-thirteenths as the repre-
eentatives of a stock interest which has
committed unreservedly to them the
welfare of the policyholders and the
society. Under this system every one
of the fifty-two directors should be a
policyholder' director. The labors of
the trustees in matters of routine and
detail may not prove exacting, but their
power is practically unlimited and their
responsibility great indeed. If they are
men fit for such trust, the Equitable
and its policyholders are safe.
Will There Be Scandina Wan Fed.