Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1911-02-28
PoliCyhOlders and Share
holders Each Win
Contention.
CONTEST FOR PART
OF SURPLUS FUND
Vice. Chancellor UphOIds Action
Of Directors in Voting S16,-
100000 to Stockholders.

That s2.5oo,0o0 OF the 100000 sur
plus of the Prudential Insurance Com
pany, over which there has been long
legal fight, should be distributed among
the stockholders. was the decision Of
Vice Chancellor Howell in chancery
chambers today.
At the same time 1t was held that
the resolution OF June IA, 1909, under
which the board of directors decided
that the $16.000,0O0 should be distrib-
uted among the policy-holders, was
valid; so both sides in the important
case may be said to have won victories
In court. ;
It is likely. however, that an appeal
will be taken to the upper courts by
the distinguished lawyers interested.
Suit by Stockholders.
Leon F. Blanchard and other small.
dissatisfied stockholders Of the "Pru''
brought the suit. and early last April
the taking OF the vast amount of tes-
timony was begun. John r. Hardin
and former Attorney General Robert
H. McCarter appeared for the COM
plainants and Richard ". Lindabury,
former United States Senator John c.
Spooner. of Wisconsin. and Edward D..
Dufiield for tho "Pru."
Final argument took place last April.
and because Of the intense interest in
the outcome of the suit 1t attracted
attention throughout the country.
vice-Chancellor Howell in the COURSE
Of reading his opinion said that the two
| points involved were the validity Of tht
resolution Of June ID. 1909, which ht
| said he concluded to be valid and must
be carried into effect, and the question
whether the company can be compelled
to declare a dividend, and on that
point he held with the complainants.
During the life of the company, he
said. 1t had given Increased benefit not
called for by the terms OF the contract,
consisting in eniarging the amount of
the policies.
II have no hesitation In declaring"
the court said in reference to the reso-
luton, that SO far as that resolution
affects new business. business written
after July 6, 1907. It is entirely valid.
because 1t amounts to a reduction Of
the premiums on new business"
In its decision the court says in part.
after brief review of the much-re-
Viewed case: y
"In November. 1896, at meeting of
the executive committee the president
of the company explained and outlined
scheme for granting concessions. as
they were called, to the holders of in
dustrial policies by giving them post
mortem dividend after five years, a
cash dividend after fifteen years and
establishing a surrender value for the
policies after twenty years; whereupon
a resolution was passed directing the
officers to perfect and modify the plan
In their discretion; and they were au-
thorized TO extend IT to old policies as
SO. This action then put nearly all the
policies of the company on a partici-
pating basis, and they remained SO for
a period OF ten years"
Details Concessions.
Concessions, as they have been
called. were made In 1880, 1885. 1891, 1897.
1888, 1906 ana 1907 The Ulcers of the
company declare that the giving OF such
concessions or benefits Is now and al
ways has been the policy of the COM
pany; that when the company started
business 1t waa without accurate life
tables as to Industrial lives; that 1t
fixed upon a table of rates which event
ually turned out to be too high and
that inasmuch as the policyholders'
money had created a fund that was
larger than was deemed necessary to
protect the company's obligations, they
should be entitled to the benefit thereof
by an increase In the face value OF their
policies.
with this series of acts in mind
The board of directors on June IA, 1909
passed a resolution the result of which
was another concessi or benefit to
the Industrial policy holders, beginning
with all Industrial policies issued on
or after July 8, 1909, not by reducing
the premiums, but by adding about u
per cent. to the amount of insurance
tnat the same premium would there
after purchase This particular CON
cession, or benefit, was likewise ex-
tended to all Industrial policies which
wer, issued after the beginning of the
year 1907 which should be In force on
July I, 1909.
Tie complainants urge that the
action of the company in comforting
the benefit proposed by the resolution
of 1909 is who'll void, for the reason
that 1t contravenes the legislation
of 1907, der whose authority the
company elected to do only a nom
participating business, and that the
granting of the benefit proposed is In
effect permitting the future policy
holders to participate in the profits,
contrary to statute.
II have no hesitation In saying that
1t is entirely competent for the COM
pany. acting through its board of di-
rectors. at any time to reduce its rates
of premium for future business, and
lContinued oa Third Pase.l