Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1913-12-06

1918, Public Service Railway Com.
pany asked approval of the issue OF
North Hudson County Railway bonds
in the amount of $620,0CO. said bonds
are part of the 5 per cent, conson-
dated mortgage bonds of the com
pany last named. The proceeds or
said bonds were to be used in re-
firing 100000 of per cent. iirst
mortgage bonds of the North Hud-
son County Railway maturing
January 1, 1914. The intention ex-
pressed by petitioner was 10 sell the
bonds to the Fidelity Trust Company
of Newark, N. j., at 81 per cent. or
their par value.
"On Friday. November Il, 1913, at
Chancery chambers, Jersey City, a
hearing was had on such petition,
and the matter went to conference.
on November %, 1918, ]. S. Rippel.
of Newark, N. J., sent letter to
the board, protesting that he had
been denied an opportunity to bid
for this issue, and alleging faVor1tism
In their sale and allotment.
while the board has no interest IN
what particular purchaser may Sc
cure the bonds, tho board feels
charged under the statute TO see that
the price to be brought by security
issues involves no infringement OF
the rights of shareholders of the
company or its patrons Accordingly
on November "a, 1913 at the boards
offices. in Newark, the petitioner
was asked to appear, and did appear
nv counsel, L. ID. I'll. Gilmour, at
which time and place J. S. Rippel
reiterated the objections he raised to
the proposed sale. Friday, November
2s, 1918, was set as the time and the
-. 20 tho nIana
for a hearing upon the objections
raised to the sale as proposed. At
this hearing petitioner was repre-
sented by L. D. II. Gllmour, as coun-
sell The objector appeared In person.
Evidence was introduced by both, and
briefs have subsequently been filed
by both parties.
RippeI n Former Purchaser.
From the evidence it appears that
]. s. Rippel In the past has been ac-
corded opportunity to bid on various
bond sales made by Public Service
Railway Company; that he has upon
occasion bought large blocks of such
securities offered: that in the summer
of this year he made inquiry of the
treasurer of the company as to the
companys intentions with regard to
the sale of bonds to refund the issue
maturing January 1. 1914; that on
this occasion the treasurer told j. 5.
Rippel that no definite plan had been
arranged, but that there was no rea-
son why he o. S. RippeD should not
bid on such bonds il he q. S, RippeD
wanted them; that on a subsequent
occasion upon J. S. Rippefs inquiring
of the treasurer in regard to the sale
of refunding bonds, j. S. Rippel was
informed that said bonds would be
sold to the Fidelity, and that COM
petitive bids would not be asked, and
that this action was due In part TO
an obligation which the petitioner
herein felt by reason of the Fidelity's
financing earlier security Issues of
petitioner.
that the financial officers of the pc
titioner felt that n price of ~ fiat,
with accrued interest, was n fair
price for the entire block. and that
the Fidelity had earlier suggested a
price of 95, 1t also appears that in
this sale the Fidelity acted with
Clark Dodge & Co, and with w. e.
r. Smith & Co, both of New York,
each party assuming one-third of the
undertaking. A letter dated October
81, 1918, from the second vice-presi-
dent of the Fidelity (said letter being
confirmation of the purchase of the
entire block for itself and associates
Another letter introduced in evidence,
dated November 10, 1918, and signed
by Clark, Dodge & Co., shows that
the entire amount of bonds had been
resold by purchasers. From the evil
dence it appears also that they had
been sold at profit. The sales We're,
of course made subject to the boards
subsequent approval
Question Company's Limits.
1.-THE question which arises is. there
fore this: Was the petitioners deci-
sion to sell the entire block at 81
and accrued interest to the Fidelity
and its two associates, excluding
competitive bids and emitting to
sound other possible purchasers, one
of whom had indicated desire to be
accorded the privilege of bidding, a
matter fairly within the elastic limits
of the company's discretion, or did
such financing In the concrete cir
cumstances constitute a departure
from O sound and safe rule of action
whereby the company would obtain
less than the utmost possible or prob
able by the sale of its securities?
1.-THE board is of opinion that II a
novel and unseasoned security were