Evening journal., 1916-07-26

lnt dAuOunt OF any QlNiueuu. All 9NiA0
as working capital or other
wise, may be applied from time to
time to the acquisition or purchase
Of its bonds or other obligations or
shares Of its own capital stock"
Can't Buy For Investment.
Under the resume of the law which
I have given TO the court, and un-
der this provision Of the charter I
claim that no stock can be
bought nor could be bought by /
this corporation as an invest B
ment. not for the purpose Of re-
tirement or in connection with some /
contract-no stock purchased by the !
company for an investment can be
made that impairs its capital; and
when ! come to consider another part
Of this case, / will point, Your Honor, I
to the strenuous effort made by Mr..
Johnson in an argument that is most
misleading to endeavor to show the
court that there was a working cap
ital in this case that under that sec
ton could have been applied 10 the
purchase of its own stock. I ad-
NIT that a corporation may out Of
its surplus, buy. under this charter,
its own stock; and, under the law
Of New Jersey; but. if the purchase
Of that stock involves impairment OF
capital, then the fundamental princi-
pie of the association is destroyed,
and it cannot legally be done
In that connection, Mr.. johnson
took up and discussed the power to
invest its capital its working capital
in stock. He says, Therefore, you
have vested in this corporation in
unequivocal language, a power to in
vest its working capital. and net
/ funds in its hands, with no limita-
tions upon borrowing Of money, If it
| is necessary to borrow 1t temporar-
] lily. TO acquire, power to acquire its
own shares Of stock" and so forth;
J and If, therefore, it became to the
advantage Of the corporation to ac-
quire its shores, where the power
was unlimited. and the duty on the
part of the officials who were 10 eN-
ercise that power, was binding u
l exercise il with an eye single TO the
purpose of the company, and not with
an eye single to the purpose Of pro-
noting their own purposes. Then
follows a heightened argument to
show that a mere accidental use of
the term working capital in a certain
sheet Of paper constituted the setting
apart of working capital in the sol
emn manner required by that char
ter.
II is in evidence before the court
from two witnesses, one particularly
describing i, chat when these ex-
perts on the other side, called for the
purpose Of getting a statement, the
bookkeeper who furnished the state
ment took up a blank form which had
the words working capital" on il
making up for the executive COM
mittee a statement, a business state
ment of the consolidated companies
in other words, Il was a consolidated
statement for the information OF the
executive committee Those forms
were used with the term "workins
capital on it, showing that it wa:
not working capital. such as is re.
ferred to in the charter. because the
b charter provides that that shall b
J set apart out of surplus in excess o.
l the paid-in capital Of the corporation
- When Your Honor takes one of these
, statements and looks at it, Youl
Honor must at once see that workinl
capital there cannot be confoundeC
with working capital, as named in tn,
e charter. for the working capita
mentioned in the statements dover.
all kinds of current assets, and thos,
do not pretend TO be fund set apar
IN excess Of the paid-in capital: fol
l venture to say, in every instance, T.
: you were to take and deduct the items
under the head of working capital
= or to state it in another way, if vol
were to take and deduct the liabilitie
81 and then allow for the capital stock
the working capital would disap
] pear; It would not exist except to
q very small amount. I endeavored t,
J elucidate that in the examination o
d Mr.. Pierre S. DUPONT. when / too
S this sheet, Exhibit No 80. said tn
e working capital on this paper in Feb
u ruary for instance, was seventies
million and nine hundred and thirty
three thousand four hundred an
h ninety dollars and sixty-two cents
d What was the surplus? The surplu
g was hve million four hundred an
d seventy thousand two hundred an
Il twelve dollars and eighteen cents. S
I that you can readily see that if tn
+ seventeen million dollbrs we're de
J. Quoted, the capital would be impair
ir ed There can be no other mathC
" matical result. l am not going I
IT follow long the line of quotation
It which are made here about capiti
& and working capital, but I wish {
3 call Your Honor's attention simply {
how this was mis-used-I do not sa
4 Intentionally. but say emphaticall
ID mis-used. am going to read frol
in Mr.. Johnson's argument and the
h refer to the Exhibit and show You
N Honor how the Exhibit rontradicr
rs what he said about this working cal
N ital. How was it on the 26th
r February, 1915? Then the net worl
TO ing capital had risen from Decen
sk Der 81, twenty-four million dollar
1T TO February 2S. forty million dollars
lg Can anything be much more signi
of cant Of the conditions of this corpo
a alton as to the shares these peop
II dealt in to the disadvantage of tn
n, corporation itself. than that at
OF time when Alfred l. dupont thong
of the price of one hundred and six
T." dollars a share was high. from th
OF time there had been nearly a dou
nd ling of the working capital of th
if corporation and IL stood at for
ot million dollars. and at that time the
n were other assets of fifty-four m
nd 1fnn do1larc dodurffno current fa D