New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-01-30
Court DiSmiSscs Action
Brought by Universal
Savings Corporation.
DOTHFORMED TOLEND
SUMS TO WORKERS
Newport News Concern Con,
tended II Originated Indus
trial Banking Scheme.

After long and determined fight
Judge John X. Hazel In the Federal
court yesterday dismissed the equity
injunction and accounting suit insti-
tuted by the Universal Savings Cor
poration against the Morris Plan Com
pany of New York
The issue decided wa. whether or
not the Morris Plan, by which indi-
gent men and women could borrow
small sums of money on tho strength
Of good name, was tho plan Of indus
trial banking originated by David Stein,
Of which the Universal Savings Cor
poration was the owner. ON the other
hand. the Morris Plan. originated By
Arthur J. Morris. was designed for the
same purpose, and branches had been
started in various cities throughout
the country.
David Stein, OF Newport News, Is the
president Of the Universal Savings
Corporation. Mr. Morris. who IL a
lawyer. of Norfolk. Va, was acquainted
with his plan as far back as 1904, ac-
cording TO Mr.. Stein. Three years be
fore that the Merchants Mechanics
Savings Association Of Newport News
began to use the Stein banking system.
in 1870" said Mr.. Stein, Morris
organized in Norfolk the Fidelity Saw
ings and Trust Company. the property
and assets Of which were taken over
by the Industrial Savings Corporation.
The Fidelity Corporation Of America
was then IN existence"
In support Of the contention that the
injunction and accounting suit was out
lawed the defendants asserted that
Stein, who said he invented the novel
Industrial banking scheme as far back
az 1898, had made no claim Of being
the originator Of the system when the
Fidelity Corporation Of America Was
formed They also point out that he
did not prosecute claim when the
Fidelity Savings and Trust Company
vas started.
Under the Stein plan money could
ne lent 20 borrowers on promlssory
notes N which TWO other persons SINH
larly situated financially had joined.
By requiring the amount advanced 10
be repaid in nfty-two wceSly install
ments and By requiring the borrower
20 buy investment stock OF the bank
ing association 20 She amount OF the
loan. thus creating "a fund al the END
" the nsta!ment period, the debt could
bee repaid.
The defendants, whose headquarters
are In the Kuhn. Loeb Building. con-
tended that the compliments system
was not the system under which they
operated. that there was no property
right ~ Stems plan or system; that
The conception co. IDEA, Or u constituted
a property right was vested IN stein =
trustee in bankruptcy. In his opinion
judge Hazel. among other things. said:
The principal question is whether
the respective plans % banking under
discussion are substantially similar. !
think they are fundamentally different.
There are. Of course, similar elements
embodied in each plan. but the feature
Of fixed capital subscribed by inde-
pendent investors present IN the Nor
ris plan bot not in the Stein plan IS
Of vital importance and makes the
former plan appeal more readily 20 in
vestors than the Stein plan. BY this
Plan the organizers subscribe for CAPT
tai stock payable in instruments, the
fund so obtained being loaned out. the
borrower al the time Of borrowing re-
ceiving investment stock convertible
into capital stock. Under the Morris
plan. on the contrary. the borrower
purchased certificates Of investment, or
obligations Of the company. which were
rot convertible into capital stock
The Morris Plan is under the general
direction Of the Industrial Finance Cor
poration, Of New York City. which was
organized three years ago 20 take a
minority interest in each Of the Morris
companies and IN general to cooperate
with them and help in directing their
affairs. There are about sixteen sub
sidiary companies. Clark Williams is
president of the Industrial Finance
Corporation. Arthur j. Morris is vice
president and counsel. Among the di-
rectors are Charles II. Sabin, Herbert
l. Satterlee. Raymond Dupuy, willard