The Brattleboro reformer. (Brattleboro, Vt.) 1907-1912, 1909-08-06

SPeCidl mdStcI tppoluteu AdSI dll NY
Judge Martin Makes Interesting
Statement Regarding Management of
Combine of Which Smith Co. is
Branch.
Another chapter has been added to the
affairs of the Hardware and Woodware
| Manufacturing company OF which the
). A. Smith company of Brattleboro is a
branch Last fall petition was filed for
a co-receiver to act with the receiver,
Nicholas II. Colwel, and A. +. Cudworth
of South Londonderry was appointed to
make an investigation. His report, which
has been filed with the clerk of the
United States circuit court for the south
ern district of New York, is an exhaustive
document and goes into details as to the
actions of Mr. Colwell in administering
the receivership. 1t is understood that it
is largely upon the showing of the special
masters report that Mr.. Colwell has ten
dered his resignation to the court as re-
cever. just what action will be taken
upon Mr.. Colwelfs resignation depends
largely upon what action the creditors
may take. Until the creditors make a
move in the matter the court will take
no action. The rendering of his reslgna
tion gives Mr.. Colwell an opportunity to
relnquish the receivership voluntarily
rather than be deposed by order of the
court The local branch of the company
has been for many years one OF the lead
ing industries of Brattleboro. Nine OF the
l5 factories operated by the company are
located in New England,
Mr. Cudworth was appointed special
master by Judge j. l.. Martin Feb. II,
1909, in the case in equity of Orvllle K.
Noble and Ralph b. Cooley against the
Hardware and Wodenware company, Act
ing under the authority of the court, Mr..
Cudworth began Feb "a an investigation
into the physical condition of the several
branch factories of the defendant COM
pany, the management of which Is under
the direction of the receiver, and in a
general way, into the value of the real
estate at these branch factories, their
equipment, production and stock on hand.
In the prosecution of this investigation
of the company in New York city and II
of the 10 factory plants operated by the
company.
Early in his report the special master
states that upon the appointment of the
receiver Nicholas Fl. Colwell of New
York city, the various plants then in
operation were closed for time and in
yentories taken at each of them and at
the main office, and that an examination
of the accounts and books was made by
firm OF chartered accountants, and
a circular letter or statement issued TO
the interested parties. This. circular letter
professed to give a general statement OF
the liabilities of the company and its as
sets at their ''book value" subsequently,
in the summer of 1908, an appraisal OF
the real estate and factory equipment was
made under the receivers direction by an
appraisal company and second circular
statement was issued based on TINS ap-
praisal and upon an inventory taken Dec
II 1908. The master reports that the
valuation given to the assets in each of
these statements was exaggerated and
considerably above the true value for the
purpose of paying debts and meeting obi
cations on the closing out by sale for liqui,,
dation The fixed assets were appraised
in excess of the real value. ami, says the
report, according to all evidence, In
some cases grossly so, while the inven-
tanned items that would have little or no
value upon closing the affairs of the de-
fendant company by forced sale,
The report further states that the re-
ceiver is the same person who, as presl-
dent and manager of the company las
well as of the National Novelty company
to which it succeeded and whose business
and property as well as Indebtedness, 1t
took over) directed the affairs of these
corporations from 1903 to the date of the
receivership. This fact, says the special
master has some bearing upon the ques-
tions as to the management OF the busl-
ness since it came under the hand of the
court. especially in reference to the state
of trade sentiment which he refers to
later in the report, and whether the al
fairs of the corporation have been wisely
and economically managed or otherwise
under the receivership. He states that
ba full ,,,an Ot the blSIOpSS
the main office and branch factories has
been all the time practically controlled
and dominated by Mr.. Colwell. He men
tons that many of the records and sys-
tens of reports were kept at the main
Office in such a way as to be OF little
practical use in conducting the business.
Further in the report he says that the
methods of the management and the ma
ture of their correspondence with the
main office and the receiver have caused
a considerable degree of dissatisfaction
upon the part of many customers: Some
amount of trade has been lost for this
reason. He reports that Mr.. Colwell
created two new positions after his APP
pointment as receiver which carried with
them annual salaries to the amount OF
over $4,000 a wear, and from the evidence
the master finds. he considers that this
action on the part of the receiver was
neither necessary economical nor wise.
Ii is in the report of the master on the
factory at kenton Ohio, that he seems
to have come upon one OF the most pc
culiar moves of the receiver. The plant
there has been shut down completely and
the master found that the roofs were
leaking badly. in one place the water was
running directly on the engine. The
reasons given bv the receiver to the mas
ter as to why the plant had not been IN
operation were that the products manutac-
ti,red there were made at other branch
plants and that business was insufficient
for>operating this plant Evidence which
the master gathered from other sources
conyinces him that the main reason for
shutting down the plant was due to the
fact that the Kenton banks and Others
approacbed bv the receiver declined TO
invest in the receivers certificates. He
understands that the receiver in sub
stance announced to these parties that
they must arrange to take some of these
certificates or ne would shut down the
factory and it would remain idle. For
two wears or more last preceding the ap
nointment of the receiver this kenton
plant had been one Of the most profitable
of an those belonging to the company
and there was nothing to indicate that
this relative position would not remain
the same.
Efforts have been made at different
times since the appointment of the re
oeiver To formulate some plan for hquida-
tion in which the creditors or the eredi-
tor and stockholders together might
agree hut no plan has been devised. The
creditors committee and the receiver
seemed to have agreed upon a plan which