The Newark star and Newark advertiser. [volume] (Newark, N.J.) 1909-1909, 1909-08-12
Company Denies Charges of Mis-.
management and Illegally
Declared Dividends.
EXTRAYAGANCE CLAIMS
REPELLED BY FIGURES
History of Growth of Industrial
Insurance One of Unex-
pected AffInence.


ance Company to the suit brought in
the Court OF Chancery by Leon F.
Blanchard, stockholder, to compel an
accounting of the finances of the com
pany, and questioning the right of the
directors to declare voluntary dividends
to policy-holders. as we'll as criticising
the management for paying princely
salaries to executive officers. spending
money extravagantly for the interior
establishment of the home offices, and
for real estate purchases at exorbitant
sums for new buildings, has been filed.
While admitting some of the allega-
tions made in Mr.. Blanchard's bill. the
answer denies absolutely those of
more serious import, and gives figures
and recites the history of the com
pany to disprove them. The answer is
signed by President John F. Dryden
and attested by Secretary Edward
Gray. Appended are the signatures of
Edward ID. Duffield, solicitor for and
or counsel for the Prudential, and of
Richard V. Lindabury and former
United States Senator John c. Spooner,
or Wisconsin, as counsel The docu-
ment is accepted by J. Edward Ash
mead master In chancery.
| In speaking of the sums distributed
as dividends the answer says:
The proportion of the profits to
which policy holders. entitled to par
ticipate in profits, are entitled under
their policy contracts is such amounts
as shall be declared and paid to them
by the directors. In none such policies
is the proportion to which the policy
holders are entitled specified"
By-Iaws Modified.
Passing over the minor contentious
in the early parts of the bill of com
plant with brief comment, the answer
admits that the company's bylaws
We're modified in August, 1907, which
notifications were unanimously ap-
proved at duly advertised meeting of
majority of stockholders, although
Blanchard himself was not present or
represented by proxy. 1t is also ad-
mitted that the Prudential is a stock
company, but the claim is set up that
the situation is modified because of the
terms of its charter making its policy
holders members of the company
Regarding the charge that immense
sums have been carried in the unas-
signed surplus that belonged to the
stockholders the answer says:
They (the defendants) deny that the
Prudential company or it's directors
by continuing to carry in its unas-
signed surplus monews derived from
earnings on it's deferred dividend pol
icies failed to comply with the statutes
in said paragraph referred to. They
say that of the surplus of 1856, 1852
derived from the earnings on said poll
icies as, of December 81, 1907, 1t was
necessary, in the judgment of the direc-
tors, that $7,600,000 should be retained
by the company as a contingency sur
plus for the protection of its obliga-
tions and the security of it's business.
and that the said sum was, therefore,
retained as unassigned by the company
for that purpose; that by the statutes
referred to, the portion of the profits
assigned to the policyholders becomes
Immediately, upon such assignment, a
liability of the company and must be
pdiu NHe1l SuCl lldDlllly IldluItS IOt-
withstanding that a shrinkage in the
assets of the company or losses
through epidemics or other unusual
causes may operate to materially re-
duce the surplus of the company.
sit was the view of the directors,
and defendants submit that it is the
proper view, that portion of the earn
ings from deferred dividend policies
may properly be retained unassigned
as protection against such contin-
gencies. If such course We're not pur-
sued, a company doing only partici-
pating business might be thrown into
bankruptcy by the happening of any
one of the congencies above referred
to- IS
Defendants deny that the Prudential
Company is required to, or has appor-
toned Professionally ascertained, cal
culated and declared all amounts APP
portionable from the surplus to the par
ticipating policies. They also deny that
the amounts so set aside, apportioned
and assigned for the years 1907 and 1908
exceed the amount to which the partic
ipating policy holders will be ultimate
ly entitled and which viii be ultimate
ly paid to Them
The sDryden Domination.-
And further, they deny that the said
amount of S8,S00000 so held as part
of the unassigned surplus, does not ex-
ceed the amount to which the stock
holders of the Prudential Company are
equitably entitled from such participat-
ing business On the contrary, they
insist that the said participating pol
l.