Evening journal., 1917-04-13

A netting of the Finance Committee
was held ON March Sth, at which were
present Pierre, Alfred, William and
lrenec Upon motion TO recommend
that the Board of Directors make an Of
fer to purchase the stock from the syn
dictate in accordance with the terms stat
ed in Pierre's letter. Alfred and William
voted aye and lrence voted nay. Pierre
did not vote. ndcr the bylaws govern
ing the Finance Committee. the motion
therefore failed to pass. At the Direc-
tors meeting on March 10TH the report
Of the Finance Committee without recon-
menda alton upon the resolution referred
TO them at the meeting OF March 9th was
received and filed without any further
action. Rasllob offered a resolution that
the Company make an offer TO purchase
from the syndicate the stock referrtd to
in the letter from =. s. DUPONT dated
March 9TH upon the terms stated there
in. Upon being put TO a vote, the mo-
ton was lost. Alfred, William and Fran
els voting in the Affirmative Mr.. Gonna
BILE not voting the other members pres
ent, including Raskob, voting in the
negative. Nineteen directors were pres
ent at the meeting. The Board consisted
of twenty members in Office and the
bylaws provide:
"The affirmative vote of majority Of
all the Directors for the time being in
Office shall be necessary for the passage
of any resolution"
1t therefore would have required the
vote of eleven directors to pass the reso-
luton. OF those present and voting the
following had an interest in the stock
Pierre $. DUPONT, Irtnee DUPONT, Lam
mot DUPONT. A. Felix dupont, John
J. Raskob and X. Il. NJ. Carpenter, as
members of the syndicate who joined in
the purchase of the stock. Coyne, Has
llell and Brown had each received from
Pierre promise of 1900 shares of the
stock of the dupont Securities Company
After the vote had been taken, Laifey
was elected a director. Prior to thi;
meeting. he had been promised five hun
dred shares of stock in the Securitie:
Company.
The defeat of the resolution to ofTei
to purchase the stock is relied upon by
the defendants rs ratification OF The
purchase by the syndicate and as a re
lection by the Board of Directors of IN
opportunity TO make an offer. ALFRED
and Francis protested against the Iii
rectors who were interested in the Sc
curities Company voting upon the ac
QUESTION of the stock. At that time i
was not disclosed to the directors whit
were not interested that Haskell Brow
and Coyne had an interest at that tim
i'm the Securities Company. nor that Laf
fey. prior TO the meeting of March 10
had been promised an interest. Pierre
letter, in which NE made the proposition
to the Company, failed to disclose the ne
gotiations which he had had with Cole
man dupont during January, 1915, faile
to lay before the directors the CORES
pondence between himself and Coleman
and it failed to set out the terms O
Colemans offer of February l3 to stat
what was done in the negotiations afte
that time. While he evasively state
the fact that the company name ha
not been used in obtaining the loan,
did not state that the banks which too
the loan were repositories of the con
pany, having with one exception larp
balances of the Company's funds upC
depost I, nor did it state the names
the banks, although he knew them I
that time.
IL was at Pierres suggestion th'
Laffey was called into the Board q
March to give his opinion upon II
legality of the purchase of the stoc
which Pierre, on March 3, had obtaine
in advance. If Pierre and the other
rectors interested in the purchase of Il
stock had in good faith intended to oil
tain fair unbiased consideration of II
resolution offering to purchase fro
them. there should have been laid b.
fore the board full and unreserved di
closure of the whole truth in relation
the action of the Finance Committc
in relation to the information given 1
Pierre to Durham and Coleman of tia
action. in relation to the negotiation
conducted by Pierre with Coleman up
the time the purchase was consummat,
and i'm relation to all the details of q
loan of SS.5OO,OO0. Nine directors hf
an interest antagonistic to the cor
panv's acquisition of the stock. AlfTe
William and Francis, through the co
cealmcnt from them of the true sta
of facts, based their support of the re
olution upon the ground that Pierre al
his associates had acted in bad faith
using their official knowledge of the col
panys business and in using the cred
and financial standing of the compal
in obtaining the funds TO finance I
purchase. il was the duty of Pierre al
his associates to see that there w
made to them, together with Mr.. Co
nable, who did not vote, and the S
other directors who voted with the nj
interested directors. a full disclosure
all the facts and circumstances in co
nection with the whole transacti'
While the action of the board of dir,
tors therefore constituted formal ]
fusal to take advantage of the oppC
tunity to make an offer to Pierre a
his associates to take the stock for I
Company, that action was obtained
the votes of nine directors who, at III
time, were interested in preventing {
company from acquiring the stock, a
of six others who were kept in ign'
ance, through wilful misrepresentati
and suppression of facts they were {
titled to know. To uphold the acti
at the Board meetings of March a
10, under these circumstances, would
contrary to conscience and good NOR
ard TO the rule of equity forbidding
director, while representing the corpo
ton from acting in his own interest {
against the interest of the corpo
ton and requiring a full disclosure
a director as a fiduciary of everyth
which he himself lsnows bearing NJ
the matter in hand.
After the suit was brought on ia
airy Is, 1916, the Board of Directors
Z. /. DUPONT de Nemours Powder c,
pany and the E. !. DUPONT de Memo
and Company, the directors being
same in each company, sent circl
letter to the stockholders of the
companies reciting the fact that on
cember s, 1915, Philip +. dupont
brought the present suit. The names
the individuals accused of defraud
A. for hofr 4