Evening journal., 1918-03-20


poses. was In relation TO the purchase
of the 20I0o shares from T. Coleman
dupont for the purpose Of distributing
70 amOng employees at cost. II T. Cole
man dupont had never made the offer,
or II the ofier had been finally rejected,
Pierre s. dupont would have had the
right 20 purchase all OF Coleman's
shares Of stock or those Of any other
slockholder in whatever amount and at
whatever price he saw flt. and the COM
pany could not have claimed the right
90 take the stock from him. or 10 make
him accountable FOR profits upon IL.
The offer OF Coleman dupont and the
negotiations committed 10 Pierre s. du-
Pont had no purpose OF profit Go The
company through increase IN value and
no other purpose excepting obtaining
The stock for distribution among Tue .
more important employees Of the COM
pany The company had never had /
under consideration the purchase OF /
more than the 10000 shares nor q /
price per share in excess Of si6O
II Pierre S. dupont and his assocl- I
ales had taken for themselves, while
acting as officers and directors Of the
company. a contract with a foreign
government FOR the manufacture and
sale OF large quantity Of explosives
that contract. being OF the same char
acter and with the same parties es the
contracts carried on In the ordinary
business OF the company without any
necessity for action by the board OF
directors or the stockholders, would
probably have been held In equity, an
asset OF the company, ana a minority
stockholder would have been entitled
10 a decree for the transfer OF the
, contract TO the company, or, IN case
the contract had been carried out, ior
an accounting OF the profits FOR the
. benefit Of the company. Unless special
circumstances existed, such as the IN
7 ability Of the company to carry out
such q contract. because OF inadequate
{ caplsal inadequacy Of plant, or some
G such reason, no question Of business
3 policy would have required a vote or
e the board OF directors OF stockholders,
}, and no vote Of directors interested In
q preventing the company obtaining ths
G contract. and no vote Of the major
Il ltv stockholders would have been p3r-
8 mitted 10 interfere with the right or
he minority IN that asset OF the COM
= pany.
> The acquisition Of this large block o.
n stock. without any definite purpose a.
e 10 rs disposition. would have been an
q innovation in the business policy Of the
e company. and other questions are iu-
r volved than that Of the immediate en-
.r richment OF the corporations treasury
Ia and the probable immediate increase IN
N Tho value Of the holdings OF the indi-
II vidual stockholders. An individual
b. stockholder, whose only interest was
le the ultimate value Of his stock as 2
ss dividend-paying investment, might wei
M have paused TO consider at the time the
purchase was made In March, 1913
IN whether Il would be a wise policy fol
pr the company In the circums' ances tha
sv then existed TO invest It's funds In suct
II. J a large number Of its own shares, with
a. out any definite purpose as TO thel
no future disposition, and In August 1871
- when &c had appeared that the compan
a. could acquire the stock without payin
ed anyemoney out Of rs treasury, he Nigh
mi reasonably consider various phases
i'm that same question. Ne might as a ma
le- .er Of policy reasonably desire that 90
M control in The management under while
ma he had during the continuance oi U
ifs war seen an immense growth IN q
Ibe business Of the company and lari
- profits I'm the shape OF dividends paid
H.Hr.
N, permitting the stock 10 remain IN q
hands Of the defendants. The cou
a. cannot say that 'he business success
- the corporation Is merely a result
- ment Of the company's affairs by u
~. war conditions and that the manag
- individual defendants in their ofici
~ capacity is a foriutous circumstan'
~. .-.-.sc.-.-1 with the causes OF N
- company's success. The atockhoidt
iso may well have considered that tt
"a management contributed TO or cause
"a the company's success.
a. The stockholders might reasonab
a. consider questions OF business policy r
"a lating 10 the disposition Of The stoc
~ which would arise after the acquisitio
BE- Should IL be held for a rise in value an
t,s sold al a profit2 should il be distribute
- al cost 20 heads Of departments and en-
in ployees under the bonus plan2 Shou
b,, 10 be hold IN The treasury and The div
M dends earned distributed 20 the renal
nor ing stockholders? or should 10 be =
md tired. reducing the outstanding capt.
of- Of the company The increase or q
~ crease OF ihc capital stock of c0rpor
-es tions Is the subject OF statutory recui
aqo ton under tho laws of most OF q
ted states. and, under the laws OF Delawa
40 and OF New Jersey. is dependent up
OK the decision OF ilc stockholders at
TO meeting duly called for the purpo
after favorable action by the board
Ime drccior. 70 is essentially question
urt corporain business policy And q
the power io purchase ii- ovn stock h. co
uds forrci upon lle board of directors
the The charters 0f both ifc q. ]. DUPONT
nan Company and the D. T. dupont powc
no Compan, As The question OF acCui
ury tion NJ tao Stock iulolycs 0thc" coas
tho erations than iak.nr o. together w
lire the profits without mo payment OF O.
ca money out ~ the treasury 0f the co
lurt pany, which raise questions ~ husin.
de- policy. ] see no reason io depart lri
de- the CONCLUSIONS upon which ile int
cial locutory decree was based
ule Passing to the compliments socC
10 proposition. The first question prose
rec. cd is To what extent the injv.d
tue defendants were affected in their ril
10 vote by their interest In retain
ocA- the stock, and, assuming, as Hc mi
rom the truth Of the allegations in the ca
10y plainants petition for the purpose Of
nle iermining whether the defenda
.lle should be required To answer, what
se s feet has the domination and control
IL ~ the individual defendants over the {
islS poration and its officers and employ
,,';ii ,ii and the alleged improper use Of