The Mount Holly news. [volume] (Mount Holly, Burlington Co., N.J.) 1891-1942, 1911-03-07
Concession to Policyholders Stands.


That the stockholders are entitled to 8
distribution OF fund of 81, 500. 900, as
signed to them as shareholders but with.
held and labeled contingency surplus, ,
but that, on the other hand, the proposed
division of $50, 600, 900 surplus among
deferred dividend policy-holdeTs is entirely
valid as against the stockholders, was the
decision, on Tuesday, of Vice. Chancellor
Howell in the Blanchard suit against the
Prudential Insurance Company.
Relative to so much of the surplus as
was assigned by the directorate at differ.
ent eriods to stockholders, but withheld
as contingency surplus" the vice-chan-
cellor says in his written opinion:
81 do not see why the surplus cannot be
divided among the stockholders to the ex-
tent of 81, SOC, 000 A distribution of this
amount would not, In my opinion, In
juriously affect the company's actual assets
or its credit as sound financial institution,
nor its current business"
On the subject of the $20, O0O. 900 to be
distributed to policy-holders In the form
of increased benefits, as per resolutions
passed by the board of directors, June Ia,
1909, the vice-chaucellor says:
Il have no hesitation In saying that II Is
entirely competent for the company, act
ing through its board of directors, at any
time to reduce Its rates of premium for
future business, and that It's discretion
therein is uncontrolled, except that it
would not be permitted to reduce the rates
so low as to endanger the whole enterprise
If, after long experience, the company
finds that its rates are excessive 1t Is not
only its right but its duty to reduce them
to reasonable basis. And this may be
done either by an actual reduction of the
whole table of rates of premium or by In
creasing the amount of insurance which
the old rates will thereafter purchase.
A synopsis of the facts developed in this
case are as follows:
Prudential Insurance Company OF
America, incorporated April 8, 1878, az
stock company. Original capital stock,
$25, 900 Subsequently increased to S..
900, 900, at which 1t now stands.
Dividends In cash and new stock paid
to shareholders In varying amounts up to
1882
From 1888 to the present, yearly diyi.
dends of ten per cent. paid to stock owners.
In 1907 company's directors, under in
surance reform laws, elected thereafter to
do participating business. Policy
holders of participating companies
companies profits.
BY resolution Of board, February 10,
1908, there was set aside out of total I'M
divided profits of $15, 616, 1862 the sum
of 81 800, 600 as contingency surplus. y
to remain unassigned. The balance,
amounting TO 5000, 1852, was appor.
toned between deferred dividend policy
holders, respectively, in the proportions of
ninety per cent, or 81, 215, 044.87, to the
former. and ten per cent, amounting to
1901, 671 65, to the latter
The resolution further provided that the
1901, 671 90 assigned to stockholders '.be
added to the contingency surplus of the
company and be not paid out to the stock
holders, except by the future action of the
board"
Each succeeding year since like ap.
portionment of ninety and ten per cent of
part of the surplus mas been made
Bill of complaint filed June %, 1909, by
Leon Blanchard, son of Noah F. Blanchard,
one of the founders of the company.
Public announcement of voluntary con
ccssions to deferred dividend policy hol-
ders in the form of additional benefits
aggregating $40, 1000 900 made June "a.
Bill of complaint asked that such proposed
payments to policy holders be restrained,
pending litigation.
Motion for preliminary Injunction
argued before Vice-C Chancellor Howell
June 30, 1909.
Motion denied June 80.
Prudential answer to bill of complaint
filed August IL, 1909.
Final argument July, 1910, and sub
mission Of briefs September, 1910.
Decision February %, 1911.