Evening journal., 1917-06-12
URGE QUESTION OF PURCHASE
OFT. 6. DUPONT STOCK TO BE
SUBMITTED TO STOCKHOLDERS

treasury the stock purchased from +.
Coleman DUPONT and the dividends
which have accrued on it have nlod a
supplemental brief In TIE United
States District Court for the district
OF Delaware IN opposition TO tho form
Of decree sought by the plaintiffs.
Judge Thompson In HIS decision IA
the case ruled that the stockholders 4
OF the company should hold special /
meeting and be given an opportunity
TO decide whether they wanted 70 pur-
chase for the company the stock for I
morly owned by T. =. DUPONT. Coun- /
sci for the plaintiffs then asked the I
court 10 go a step further and 10 di- I
rect that Pierre s. duiont and his /
associates turn the money and the 1
former r. c. dupOG- stock INTO the
treasury without the formality OF
vote by the stockhclder
This proposed decree Is being
strongly opposed by the defendants.
They contend that tho cCurc should
stick to its original ruling and submit
the matter TO a stockholders vote.
The latest brief is an unusually in
tere5ting presentation Of tho case and
IS as follows:
his brief 3 filed in support OF
single proposition, namely, that the
question whether tho &C. /. DUPONT de
Nemours & Company should exercise
its judicially declared right TO ac-
quire for itself a large block OF It's
own stock is a quest on OF business
policy which must De decided by a
vote OF the stockholders and not by
the court.
1T Is submitted that the view ex'
pressed by the trial judge upon this
point Is clearly correct and that the
contention 20 the contrary in the brief
of the comp ainant Is supported
neither by reason nor by authority.
The findings Of fact and the con-
clusions of law announced by the
court are merely an application to
complicated situation of p principle III
itself familiar and simple. The court
holds that when Pierre dupont and
his associates contracted - buy Cole
man duPonts stock, their relation 70
tho T. 1. dupont de NemOurs q Com
many was such that, upon the iacls
as found. the corporation mad me
right 10 treat the contract as one naue
for its benefit
"Nobody will contend that tine con
tract. when made, bound the corporation
II Pierre and his associates had ialleu 10
rerform their engagement, Soleil-a,l
would have no right 20 tender the sOONA
20 the corporation and sue tor Jne pul-
chase Price. Before Coleman could hnSe
acquired such q right there must neeus
have been corporate action suoleo'uls
the company to liability for fierre en-
qagement. Nothing has IN TACT ever nspi
rened which could possibly be eohs.l usu
an election bv the corporation TO be
+bus hound. II Is true that there was a
stool,.vote in effect repudiating the bar
gain This however, has been treated oy
tbe court a a nullity, for the reason
eivon I'm the opinion. But there is
,ost difference between an inelec1ua
sttepint 10 declare Pierre entitled %
Toe, the stock and q corporate decision
thai be must hand II over.
..T4 ia clear. therefore, that the corpo
ration has never bought Coleman stocH
or agreed 70 hcy IT, a.. Al.
rrho indine by the court that tn'
corroration has right ~ compel ! ~ ~ieil
20 surrender his stock has created u'
.r.,orote rioht. II Is merely iudica
5ooiaration that such q right has eN
;s+od from, the outset The company mas
now no greater right than it had heior'
tbe suit was brought. No complichuoi
of facts OF elaboration Of argument car
relieve the complainants of their iunoa
mental dilRcultv-nnmely. that TO-DAY
oe heretofore. the corporation has noth
inc more than an equitable right 10 ON,
rs own stocl, cheap-f it wants 70.
"Tn favor OF exercising this equuabl.
riqht IS the large immediate hnancla
ga'n which would come II the company
resold the stock or retired Il. A'
apainsi the exercise of the right Is
nc consideration that the acquisitlof
would greatly increase the proper
tiona,e interest or the compla nant IT
the stock still outstanding. and cor
respondingly increa-e their chance
Of securing corporate control
chance which might Ne still furthe
Increased 4 the stock were exposed
for resale
"Suppose q stockholder 10 be en-
t'rely unconnecied with Pierre's pur
chase Of IFS fruits. Suppose. now
ever that he Is profoundly o'strus'
fui Of n business administration
fuenced or controlled by the com
piainant He has right TO vote o.
the question whether the increase
rick Of such control is not TOO mig
price to pay for the immediate re
turn 10 MIN in money which would re
suit II the company took the stoc
over ana either resOld Il or increase
the value Of the rest Of the share
by canceiling shares so purchased
n at such an election. a majority
the share7 (othef tnan the shares
controversy Jwore to vote with no
against tho purchase. that would b
the end Of the corporate righ; TO az
oulre the stock.
But the complainant seems
think that somehow the QuesuC
whether the corporation should hu
IFS own stock has been removed fro
the field Of corporate policy and mai
agdnent and has become In some wa
not specified a question which
single stakeholder can decide for u
whole group.
How can this be so? The que
tion upon the facts as the court h
interpreted them was a question
policy on March ?. 1915. IT, after n
and fair disclosure cf all facts, the
had been stockholders meeting
that date and a majority OF the shar
(oiher than the shares I'm contr
versy) had been voted against the CO
porate acquisit on. certainly IN
would have ended the complainant
case. The labor OF the complaina
70 escape from the results. Of I
meeting held later shows that this
true.
"lf. on March .. 1915. the corpoT
4. a