Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-17
SMITH CO. RULING
TO Be NEXT WEEK
New York Judge to Decide on
Fight Going on Among
Security Holders.
BY stan Correspondent Of The Star.

BY 4 stan Correspondent OF Inc star.
NEW YORK. January 1.-THE ex-
tent to which the interests of F. H.
Smith Co. stock and bond holders have
been jeopardized by the several recent
legal attacks on the company will be
determined next week by Judge Abra-
ham j. Levy of the State Supreme
Court here, when he will decide
whether there is any justification for
the formation OF protective" commit
tees by holders of Smith Co. securities.
The question was brought to the
attention OF the court yesterday in a
petition by one group Of security hold
ers for an Injunction to restrain other
such groups from organizing and doing
certain things detrimental to the COM
pany."
Interior Motive Is Charged.
Afidavits. submitted by the plaintiffs
allege the protective committees were, in
fact, formed for an Interior purpose
namely, to secure the appointment OF
receiver and to share his profits.
Representatives of the protective
committees who were named as defend
ants countered with the charge that
"the petitioners action was brought in
bad faith"
They also charged that Raymond M.
Markley, one of the petitioners, Is an
emplOye OF the SmlCn 70.
The original petition and atiidavits
were fled by Markley and Walter j.
Pichert. They asked the court to re-
strain the stock and bond holders
committees from injuring the company
in any manner, pleading that they
were owners of Smith Co. stock and
bonds.
False" Ads Are Alleged.
Specific practices on the part of the
committees complained of were publish
ing alleged false and misleading ad-
vertisements concerning legal actions
brought against the company. causing
to be published news articles calculated
to undermine public confidence In the
Smith Co. and unjustly destroy its
reputation.
When the case came up in court
Yesterday. an additional affidavit from
william r. Baum, New York manager
of the Smith Co., was submitted by
plaintiffs.
Baum's afhdavit objected to any in
tination that the Smith Co. had ever
issued bonds Of its own. stating that
"it has never issued any bonds, put
merely sold the bonds which were is
sued by borrowing corporations and in
dividuals"
Baum also objected to the incorpora-
ton in the advertisements OF the state
ment that q receivership action had
been begun II Washington
Refused to Name Receiver.
In this action Judge Alfred A. Wheat
of the District Supreme Court refused,
in a strong opinion, to appoint q tenn
porary receiver. The application for
permanent receiver Is still pending
It was contended that If any refer
ence was to be made to the District re-
ownership application, all facts pertain
ing to 1t should have been given.
Baum also denied that the Smith Co.
had been temporarily enjOined from
selling its securities In New York State.
His afidavit, in referring to the In
dictment in washington Of Representa-
tive Frederick N Zihlman OF Maryland,
and Daniel r. CriSsinger, former con-
troller of the currency, states: IneSe
men were indicted early In OCTOBER ana
although they have made every EFFORT
to expedite the trial OF the charges
against them. they have been unable 10
bring the matter to head so tnat tney
n1iafit clear their names and that q
the smith Co." Although the amdavit
did not set forth the fact, 1t was point
ed out by the other side that both Zlhl-
man and Crissinger have flled pleas III
abatement to the indictment attacking
the validity of the grand jury on teen
nical grounds.
Thomas Submits AFFIDAVIT.
An additional afiidavit was submitted
nv Rosser Thomas. stating that he holds
smith Co. securities and that the COM
pany has always met the interest pay
ments promptly
PENDANTS states:
"Because of the condition Of the
affairs of the Smith Co., evidenced by
the fact that seven legal actions have
heen started against it, the holders OF
bonds sold by the Smith Co. have
caused to be organized bondholders'
protective committee for the purpose OF
acting in concert for their mutual pro-
lection.
TT is respectfully submitted that the
method of organizing such committee
Is customary. usual and based upon a
welI-founded right on the part OF In
vestors to protect their investments"
Prices Down, Landes Says.
Another afidavit by Lewis Landes.
one of the defendants, stated that bonds
and stock Of the Smith Co. have been
offered for sale by the holders at from
80 to so per cent less than their face
value.
A. M Frumberg Of New York, arguing
for the protective committee of bond
holders. told the court that the men,
bers Of the committee are acting In
good faith and that the character OF
its personnel is above question.
At meeting here tomorrow. which
will be attended by Senator Hastings
Of Delaware, the committee Of bond
holders will outline its plans fc- carry
ing Its purpose into effect.