Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1912-05-08
REPORT OF HOUSE COMMITTEES
ON AFFAIRS OF CORPORATION
EXPECTED JUNE 1.
CONTROVERSY OF ROCKEFELLER
AND MERRIr1s TO BE AIRED
Or. Gates, A'moner Of Rockefeller,
Working Hard to Give Superior
Clean Bill Of HeaIth-Merritt Case
interesting Sidelight on Operations
Of Rockefeller and Steel Corporation.
Especial Correspondence

it's inve stigation of the affairs of the
United States Steel Corporation is ey-
pccted about June /. 1t is now being
prepared and promise is given that
when it is made it will shed interest
ing and needed light on the manner of
conduct Of one OF the greatest of the
combinations Of this country or of the
world.
One Of the things that will doubtless
be touched on and Illuminated is the
famous controversy relative to valuable
Lake Superior ore properties between
John u. Rockefeller and the Merritts
about which so much has been writ
ten. In this controversy, John d. Rock
efeller has been made tc appear as
person engaged in the business of sell
ing certain properties by fraudulen;
representations. That interesting lndl-
vidual, Rev. DR.. Gates, alnOner OF
Rockefeller, has been working hard TO
give his superior clean bill of health
1t so falls out that statements In be
half of Mr.. Rockefeller in this matter
are now being widely circulated and
much *; made Of the fact that Mr.
Rockefeller was given an generation
by the Merritts.
To Deal With Court Record.
1t is expected the report of the COM
mittee will deal with the court pro-
ceedings in this case. 1t is an interesting
fact that while Mr.. Rockefeller was
given d certificate of exoneration by
the Merritts when they arrived at
settlement with him. the court pro-
ceedings still stand and will continue
to stand in a fashion that is to the
discredit Of Rockefeller
The decision of the circuit court of
appeals of the Eighth circuit in 1896 in
the case Of John D. Rockefeller plain
tiff in error, vs.. Alfred Merritt and
others is one of the interesting docu-
ments that will no doubt be referred
to in the report of the committee, as
will also the proceedings in the circuit
court, when the Merritts sued Rookie
Teller. In the circuit court. jury
found Rockefeller had INDUCED in
fraudulent Misrepresentation with
reference to the property which he
dealt in and gave judgment for $780,
900 against Rockefeller. The ground
was the fraudulent Misrepresentation
Of the financial standing of two min
Merritt, the defendant in error, to
make and perform a contract to ex-
change certain stocks in several COR
porations for stock in single cor
poration.
The Merritt Case.
This contract was made in 1898. The
parties to it were Alfred Merritt. ten
others of the same name some Of
y, l. 49,
first part, and John D. Rockefeller,
party Of the second part, and the Lake
Superior Consolidated Iron Mines, par
ty of the third part. Alfred Merritt,
and in this his brothers and other
Merritts were joined with him. claimed
he was the owner of certain shares OF
stock in certain mining corporations
and railway corporation which were
of the reasonable and agreed value of
s1,533,00O. Rockefeller owned certain
stocks and bonds of the Penokee cor
poration and the Spanish company. 1t
was alleged by Merritt that Rockefeller
falsely and fraudulently represented to
him that these two corporations were
solvent and prosperous and owed little
above their funded Indebtedness. and
induced him to contract to convey his
stocks for certain prices specified to
the Consolidated Mines. a new cor
poration. and take in payment stock in
that at 80 per cent par value. The new.
corporation. appeared, was to take
stock, bonds and notes of the Penokee
Corporation and Spanish Company and
pay Rockefeller in bonds 80 per cent
par value secured by a MORTGAGE on
all its property.
Merritt got 30,660 shares Of Con-
solidated Mines. par s3,0e6.O00, in ex-
change for his stocks worth 81 ,533, 600
But IT was alleged that these were
worth not more than 10 per cent par or
s"06.600. Therefore. Merritt claimed
damages OF $1.226.4OO.
Jury Finds For Merritt.
AS already mentioned, jury in the
court below found for Merritt in the
sum of $4,000 on the ground of
fraudulent Misrepresentation. The
court Of appeals refused to uphold this
and ordered a new trial on the law
questions involved. 1t came far, how
ever, from giving Rockefeller a clean
bin Of health as to the misrepresenta-
tions. Judge Sanborn wrote the de-
cision. 1t was agreed by the court Of
appeals that tho plaintiff. Alfred Mer-
rift, was damaged. but that the lower
court erred as to the measure of dam
ages and that Rockefeller could be al
lowed to prove the actual market
value OF the stocks which it was-con-
sidered In the lower cour: were worth
but 10. per cent par value. The fol-
folwing lines from the court Of appeals
decision are Illuminating:
The defendant was bound to make
good to the plaintiff the actual loss
which the latter had sustained by rea-
son of his Misrepresentation but he
was not required to pay him his esti-
mated or expected prices for his stocks
IL these prices were higher than the
actual value Of the property"
Rockefeller 9ottles.
Later, the Merits settled with
Rockefeller and signed up document
that made a disclaimer Of fraud. This
disclaimer has been widely paraded for
the purpose of embarrassing Rookie
Teller In the transaction. The court
record, however, stt::!!!! stands ned pre-
! sumably the Stanley committee will
have something to say about it when
| il makes Its report.