Evening journal., 1916-07-12

company, and it could be legally done.
and they had all voted in favor Of
it, am convinced that would
have turned over those shares.
@. I want TO get what your inten-
tion was Was it your intention. if
the Board of Directors voted in favor
Of taking these shares and reimbur-
sing your expenses and releasing you
from liability. to turn over to the
company the shares of stock? A.
No, 1 cannot say il was.
@. What was your intention? A.
II all depended on the reasons why
the Board OF Directors wished to
make the purchase. II the directors
had wished TO make the purchase,
and counsel declared the purchase il
legal, I would not have turned over
the shares because I considered that
the directors would have been person
ally liable for the transaction.
Q. You thought they wero stack
ing the pack? A. No.
@. You obtained an opinion that
it was Illegal beforehand, didn't
you? A. 1 know Mr. Laheys opin-
ion was that this purchase was not
legal That was not stacking the
pack.
O. What was your state of mind
on the subject Of the legality when
you met with the Board of Direc-
tors on the 6th of March? A. It
was a grave question as to the legal
ity, in my opinion.
Q. When did you solve il? A.
Mr.. Laffey expressed to me before
the meeting of the board. and
also expressed II to the whole
Board his opinion. which was read.
as I believed from the law on the
subject but ! was convinced that the
transaction was not legal. I knew it
was possible that others would think
otherwise therefore IL was my duty,
I believed. to lay the matter before
the Board Of Directors. which 1 did.
o. Together with the opinion Of
Mr. Laffey. but you did not know
whether it was right or wrong. Did
YOU tell them that you had any
doubts about the soundness Of his
opinion? A. No, I had no doubts
in my own mind
Q. When you met the Board of Di-
rectors on that day. did you tell them
that you had previously obtained Mr.
Laffey's opinion? A. I do not re-
member stating that I had his opin-
ion before. but the opinion that he
expressed in the meeting was identi-
cal with what he told me.
O. who suggested his being called
down to enlighten them on the law?
A. made that suggestion, I believe.
@ He told them that there was no
way that they could acquire those
shares except out of surplus, did he?
A. Yes
q. IN your answer you admit that
they could be acquired out of work
ing capital. do you not? A. No.
o. Did anybody else say anything
about the question of the legality of
1 that? A. would like to qualify
my last answer, so that you will know
what I mean. ! understand that the
company was authorized under its by
laws TO set aside out of surplus any
sum IL chooses for working capital
That means that the directors may
take that sum so set aside and invest
IL In anything they please. on the
other hand. IL has, been the custom OF
the company TO call its working assets
current assets, its working cap
ital You will find in a great
many Of the statements that
term, working capital but that term,
working capital, is not the same as
is referred TO in the bylaws as the
amount set aside out Of surplus. No
such amount has ever been set aside
| by the company at any time.
Q. Your company has carried upon
| its books almost since its creation an
item which they call working capital
| A. That is right
q That item amounted in Febru-
ary 1915. TO sixty million dollars
didn't II? A. I have not the figures
in mind but I believe about thai
amount, yes.
Q. What were its accounts anc
bills. A. Accounts. about four mil
lion dollars. yes, that would be cor
rect.
O. So that at the time this wa
spoken Of in this way by Mr. Laffe!
and the directors acted. there wa
upon the books Of the company az
item which was successor to prio
/ lleiust anu summary llaulcf oL WoIh
ing capital Of about sixty millioi
dollars; and which you ought TO know
! about. that sixty million dollars? A
Yes, but that term working capital
is not the amount set aside out o
surplus. That was part Of the orig
inal capital Of The company
5 Q. You never made any other offe
, Of these shares to the company di'
/ you2 A. No.
r Q. Was that because you were sat
d isfied that it was illegal or becaus
{ you did not want to turn them owe
to the company? A. The compan
, had refused to make an offer to pur
S chase them. and I was under no obi
Z cation TO suggest that they buy then
q after that.