Evening journal., 1917-11-20
CONPLAIhANTS FILE
DUPONT SUIT REPLY
Allege Recent Meeting Was
Controlled Through Influ-
ence of Defendants
VOTING OF BONUS
STOCK ATTACKED

powder stock formerly owned by Gen
eral T. Coleman dupont and bought
from him by Pierre S dupont and his
associates comprising the DUPONT Sc
curities Company, yesterday filed a re-
ply TO the petition Of the defendants
asking that the suit he dismissed be-
cause a great majority Of the shares
owned by stockholders Of the dupont
Company had been voted against the
company buying the former r.. C. du-
Pont stock.
The reply Of the complsinants al
leges that the majority Of votes cast
against the company acquiring The for
mer r. c. dupont stock was made up
Of votes on stock held by the defend
ants themselves and their near rela-
tlves, and Of company employees who
held unpaid stock under what was
known as The bonus plan. which orr
ginally had no vote and to which the
right TO vote was attached through the
procurement Of the defendants, and 10
Is also averred that the votes on the
stock were because Of the domination
by defendants of employees through tho
provisions Of the bonus plan. really
the votes Of the defendants. The answer
Of the complainants sets forth:
We admit that this honorable
court nled an opinion under date Of
April 10, 1911 a portion Of which Is
set forth in the FIRST paragraph Of the
petition upon the files Of this honorable
court.
We aver that az the time OF the
Ming Of the said opinion, the question
then presented by the record was
whether the company should take
over the contract for the purchase Of
the stock Of r. Coleman dupont and
assume the liabilities incurred BY de
PENDANTS, and 10 had not yet appeared
that the defendants had been repaid IN
cash out Of the companv's treasury
more than the purchase price Of said
stock, and had also realized in addi-
ton thereto as profits thereon. bonds
and cash In excess OF the purchase. and
In addition thereto the 633ii shares Of
the stock Of the 2. /. dupont Powder
Company and the i26,62s shares OF the
p. I. dupont de Nemours and Company
received as dividends thereon. for all Of
which they were trustees ex mslencio
2. We admit that among the numar-
Gus conclusions Of fact and law an
swered by this honorable court in CON
nection with the said opinion Of April
10, 1917. there was included the request
for finding Of law set out in the second
paragraph OF the petition, and that this
was affirmed by the court, IN connec-
tion with the whole Of the said opinion,
and with the answers to all OF the re-
quests for findings presented to the
court
3. We admit that a supplemental
opinion was fled by this honorable
court on July "a, 1911, which contained
the paragraphs set out in the third
paragraph Of the petition, but we ask
that these paragraphs may be read I'm
connection with the whole Of said
opinion appearing on tho files Of this
court. We aver that at the time this
opinion was fled 81 hads not yet ap-
peared Of record or been shown to this
honorable court that the defendants IN
the bill fled had already realized such
profits from the purchase Of the Cole
man dupont stock that they had been
more than repaid IN cash the entire
purchase price, and that the company
was entitled TO receive the additional
profits received by defendants as trus-
tees ex malefcio without the necessity
Of making any payment whatever ont
Of It's treasury or assuming any obliga-
tons, and we call attention 10 the fol
lowing paragraph Of this supplemental
opinion not quoted by the petitioners
TO wit:
"But the argument Of counsel for the
plaintiffs that no necessity arose for any
preliminary action by the stockholders
was also based upon their conclusion
that an accounting would shoW no
necessity for the payment Of any funds
out Of the treasury Of the corporation
This conclusion was based upon thu
statements filed Of record by the de
PENDANTS, showing n balance Of value
received In excess Of cost. and the CLAIM
that the company is entitled TO be re
paid In cash for whatever the defend
ants received I'm dividends. whether
those dividends were in the form o.
cash, stock or bonds. This position is
in my opinion, untenable. II the com
pany IS entitled 10 the benefit Of thu
entire transaction, then what It Is en-
titled TO receive Is what the defendant
have held or now hold under the con
structive trust which has arisen II
favor Of the company. ! am unable 4
distinguish between the rights Of tn
company TO the stock Of the Z. 7. du
Pont de Nemours and Company re
oeived as a dividend upon the commOl
stock Of the powder company and IL
rights TO the Atlas Powder Compan,
stock and the Anglo-French bonds ais
received as dividends. AS was yer,
forcibly pointed out by the counsel 70
the defendants at the argument, divi
dends peid by the corporations 4
stock or bonds cannot be regarded a
cash payments in an accounting IL IN
stock and bonds remain in the hands o
control Of the defendants unconverto.
There has been. no assertion by tn
plaintiffs Of a right to demand the cas-
value Of the t26,62s shares Of stock O
=. 7. dupont de Nemours and Compan,
and tho only ground upon which the
rested their claim at the argument this
the value Of the Anglo-French bond
and the Atlas Company stock at IN
time Of the declaration az the dividend
should be paid in cash 10 the compsn
was that the defendants, having n
right as trustees TO receive and hol
the dividends, must account for theI
at tho value at which they receive
them. The answer TO that contentio