Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-01-29
Georgetown Company Would
Get Control of $3.50 Shares.
ENTERED IN EQUITY COURT
Washington Gas Light Company Is
the Principal Defendant. i,
OWNERSHIP RIGHT DISPUTED
Plaintiff Declares Defendant Has No
Authority Under Its Charter to
Make Such Purchase.

The Georgetown Gas Light Company
today began proceedings on the equity
side or the Supreme Court OF the District
OF Columbia against the Washington Gas
Light Company and the American Se-
curity and Trust Company. the latter
being trustee under a mortgage given by
the Washington company to secure 4
bond issue The object of the suit il tof
secure the cancellation OF a certificate for
3,Sio shares OF the capital stock OF the
Georgetown company. to which the Wash
lngton company claims ownership The
stock involved constitutes a majority or
the total Issue Of 6Oo shares, and s.
said to have a market value of $4,000.
The suit aims to present squarely to ths
court the question of the ownership OF tn,
stock. which was called into controversy
by Thomas L. Hume in a suit brought by
him against the Washington company
some three weeks ago. The court is re-
quested to decide that the Washington
company never had authority under its
charter to purchase the stock and that
the certificate issued by the Georgetown
company to the Washington company
was null and void and never vested I'm the
W ashington company any interest In the
stock OF the Georgetown corporation. The
court Is asked to require the certificate to
be surrendered for cancellation
instructions are also requested from the
court as to the disposition to be made OF
the balance of the undistributed dividend.
payment of which was withheld last June
when the directors of the Georgetown
company refused further to recognize the
right OF the Washington company to vote
the stock or to receive the dividend
awarded. The court Is also solicited to
outline the disposition to be made of the
stock itself, which is claimed by the
washington company. General relief in
the premises is also prayed in the bin.
The court is advised that certain
shareholders have demanded of the
Georgetown company that il distribute
pro rata among the shareholders Of the
Georgetown company other than TO the
shares claimed by the Washington COM
pany the balance of the undistributed
dividend. and also that II cancel on its
stock books the B $50 shares of its capital
stock claimed by the Washington
company. Since. however. the Washing
ton company insists on its right TO the
dividend and stock. the Georgetown COM
pany hakes its appeal to the court to direct
and assist the Georgetown company in
the administration of its trust as trustee
for the valid shareholders os the George
town company.
Defense by Washington Company.
Refutation is attempted of the claim set
up by the Washington company in its
answer filed last week to the Hume suit
that Congress knew Of its ownership OF
the shares Of the Georgetown company.
and not only acquesced therein. but
tacitly authorized such holding. The
Georgetown company not only denies that
the Washington company had the consent
OF Congress to acquire and hold the
oh. Of e,$D
AYERS the fact to be that such authority
was expressly refused by Congress. Tho
court is advised that the Washington
company made three fruitless efforts to
secure action by Congress looking to the
authorization Ito contract for. purchase.
own and hold the whole or any part OF the
capital stock of the Georgetown Gas
Light Company" Three bills Offered TO
the Fifty-sixth and Fffty-seventh con-
crosses are appended as exhibits TO the
suits filed today. Attention of the court
is,directed to the fact that none OF these
bills was enacted into law.
The charge is made that although the
Washington company was always in
capable at law of discharging any OF
the obligations and duties Of a share
holder in the Georgetown company. it
has. through its agents in control of the
Georgetown company. declared dividends
and distributed them to itself directly
indirectly through the holders of
shares who held i'm secret trust for II for
many years. The total of these divi-
dends is placed at sl500o.
The point is made by Attorney William
G.. Johnson. representing the plaiutiff,
that the charter OF the Georgetown COM
pany in specific terms provides that each
OF It's stockholders shall be liable in his
or her individual capacity for all the
debts and liabilities Of the company. how
ever contracted or incurred. This proyi
sion is claimed 10 be an essential ami
inseparabIe incident of the shares of tbs
capital stock
Washington Company Not Liable.
Mr. Johnson claims that the Washing
ton company is utterly incapable in law
of assuming or being made liable for anY
debts or liabilities of the Georgetown
company. For this reason. the plaintiff
says the entire burden OF the company
liabilities have been thrown on the MI
nority stockholders. and that the George
town company had no authority to issue
privileged shares of stock, freed from
liability. imposed by the charter. and to
shift the burden on the remaining share
holders.
An interesting detailed account OF how
the Washington company came into pos
session Of the stock in controversy il
told to the court in the bill OF complaint
filed today.
The charge is made that before 1855 the
Washington company conceived the idea
OF obtaining control Of the Georgetown
company and secretly directed certain
persons its agents to buy In the open
market such shares as were offered for
sale. This design was so prosecuted, IL ia
alleged. that in 1887, nearly half the to-
tai capital stock was registered in the
names of individuals ''in secret trust" for
the Washington company. and In that
wear with the aid OF other shareholders
friendly to them. they secured control of
the Georgetown company by electing d.
rectors desired by them. In 1893, a ma
jority of the stock having been acquired,
the plaintiff states. the holdings were
from various individuals to
the name Of John r. Mclean. who In 1895
284 shares more.
With this majority holding, II Is charg-
ed, the Washington company proceeded.
OF the shares OF stock. to dominate alb
solutely and control the Georgetown
company In the exercise Of its corporate
rights, privileges. activities and opera
tions'' During all this time, il is alleged,
the real and actual relation of the Wash-
ington company to the stock was con.
cealed from the Georgetown company.
Says Charter Was Disregarded.
Disregard Of the charter requirements
as to the number OF directors who were
residents OF Georgetown, and of the ne
cessity. according to the charter. that tla
president Of the company must also resids
west OF Rock creek. are alleged during