Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1913-11-01
WRIT GRANTED IN
/ ''PRU" APPRAISAL
Case Will Be Heard in Supreme
Court OF Wednes-
day.

A writ of certiorari to review the
appointment of appraisers by the
Court of Chancery in the Pru mutu-
alization proceedings was granted to
John r. Hardin, representing the
stockholders. by Chief Justice Will
tam G. Gummere in the Supreme
Court today. The writ is returnable
before the Supreme Court next
Wednesday.
In granting the writ the chief
Justice cited three points raised by
the applicants attacking the consti-
tutionality of the act providing for
the Transforming of the Prudential
from stock company to mutual
one. These points were all arguable,
the Justice held. and gave sufficient
ground for the signing of the writ.
The three matters were provisions
OF the mutualizat'an act of the Leg
islature, which court thought
were of doubtfl ,gality The first
was that provision which made il
possible for the policyholders to Sc.
lect as directors persons who were
neither stockholders nor policyhold-
ers.
the alleged infringement by the Leg
islature upon the contract between the
company and the stockholders by de-
mands that certain things should bt
done.
Can a Legislature say to a board
of directors, selected by the stock
holders for the purpose of carrying
out business of the corporation II
their interests, You shall betray your
1--WE ont fnf.f
holders?' l don't say it can do it
but in this case apparently the di-
rectors are required to turn theil
backs on the stockholders whom they
represent and see to the affairs of the
policyhoiders," commented the CHIEF
Justice, in reviewing this phase of the
case. The third point that was ar
guable was. in the chief Justices
opinion, the right of the policyholderi
to the surplus fund of the insurance
company, which the act provide:
shall be used to buy stock for them.
Mr.. Hardin and Robert II. Nc
Carter, representing other stock
holders. expressed opinions that
under the law this surplus fund be-
longed to the stockholders, and the
Legislature was without power tc
take that money from them, counse
contended.
On this provision alone the act was
unconstitutional, Mr.. McCarter said
after terming the whole thing as
revolutionary.
The chief justice, touching on this
part of the argument, said the scheme
of the act is not, apparently. to turr
over to present policyholders who
might have some claim to the sur.
plus fund, but to future policyholders
who would have never paid any
money into this fund.
Edward d. Duffleld, SOLICITOR gen
eral of the Prudential Insurance
Company, pleaded that If writ were
to be granted it be made returnable
as soon as possible, to prevent delay
The mater was of vast importance tc
The 100000 policyholders of the
company in all parts of the country
he said.
Delay would also affect the liveli-
hood of 1000 solicitors of the COM
pany, he averred. the state of unrest
I'm regard to the naturalization scheme
hurting the SOLICITING of the EN-
ployees. -
~ Mr.. Hardin. in his argument for the
writ. commended that the statute was
bad in that It conferred upon the
Court of Chancery what was virtu-
ally a condemnation proceeding-tht
appointing of appraisers to value the
STOCK to be SOld TO the pOllcy noluei
This is a parallel to the condemna-
ton proceedings. and is a matter fol-
legal and not equity tribunals.
Mr.. Duffield took the opposite stand
to Mr.. Hardin and declared that the
act was simply a proposition to have
policy-holder purchase stock in the
company If it was adjudicated that
they had sufficient funds in the com
panys surplus. The stockholders did
not have to sell any stock unless the
price fixed by the appraisers was
agreeable.
In answering the contention that a
person who was neither a policy
holder nor a stakeholder could not
be elected director to administer the
business of the interested parties, the
Prudential quoted decisions of the
courts of Massachusetts, Iowa and
Ohio. in which it was held such a
procedure was perfectly regular.
The chief Justice said he disagreed
with the opinions of the learned
courts of those States and still
thought 1t hardly legal. Mr.. McCar-
ter bitterly attacked the proposed mu-
tuaiization scheme, calling it several
times a revolutionary act, on the
ground that. for one thing. 1t would
take none yfrom the treasury which
belongs to the stockholders, and
would turn it over to the trustees OF
directors to purchase stock for the
policy-holderS.