Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-16
SMITH SECURITY
HOLDERS JOIN FIGHT.
Third Group Appears, Asking
New York Supreme Court
to Protect Company.
a stan Correspondent Of The star.

BY a stan Correspondent OF The Star.
NEW YORK, January 16. - The
financial affairs of the F. H. Smith Co.,
several Of whose officers are under In
dictments in Washington on charges
of using the mails to defraud, will be
brought out here today when a bitter
internal fight among holders OF the
company's stocks and bonds Is aired
in the State Supreme Court.
} This is the first time dissension has
broken out in the ranks OF the lnol-
yiduals owning Smith company securi-
aies The situation which will be pre-
scented today is that of one group oil
security holders banding together to
'protect themselves against the COM
pany," while the other group is or
ranizing to protect the company
against the first group.
Last week two committees were
formed. one was to protect the in
terests of the preferred stockholders
and the other to safeguard the inter-
ests of the bondholders. Both COM
mittees have advertised over the coun-
try for bondholders and stockholders
70 cast in their lots with them.
Third Group Appears.
Yesterday, however, another group OF
security holders appeared on the scene
and filed a petition for an lnJunctlon
To restrain the first two commlttees
from doing anything whatsoever WniSn
might react to the detriment OF the
AF0llmPnIG
netition will be heard today.
In the meantime, the Smith Co. has
II was learned Yesterday that it has
cent out a letter to every person hololng
any of its stock or bonds asking each
holder the direct question wnetner ne
wants a receiver appointed lor The
company.
Would Be Powerful Weapon.
II substantial majority OF the
securIty holders answer that they 90
not want A. receiver, this will be a
nowerful weapon in the hands OF the
company when it goes into court 10
contest the several receiVersnlp pe!.
IF on the other hand, however, the
hulk of the holders indicate they 90
want a receiver, and II the petitloners
can nroye such to be the case, II Is De-
lieyed likely the courts will give their
wishes serious consideration.
Another development yesterday was
the turning over by the company 10 Inc
Department of Justice OF q trunk nlieo
with Cancelled checks. These checks,
Il is believed, may prove to constitute
= substantial part of the records OF the
company which Nugent Dodds. SpeclaI
assistant to the Attorney General, mas
labored so industriously for the past
several weeks to obtain. Mr.. Dodos
and his assistants ere going over these
checks. Working with him are FRANK
Powell. accountant and special assist
ioebl and Aaron w. Jacobsen, speciai
agents. and Charles Malone, special
accountant.
Col. Landes Is Served.
Col: Lewis Landes, who. with Sena-
tor HastinR of Delaware, represents
the bondhoIders' committee, was served
with formal notice of the injunction
petition when he returned to New York
from wasningtoH yesterday. Senator
Hastings win nots be present Mt the
hearing today. but will be in New York
tomorrow to attend q meeting OF the
bondholders committee.
Landes announced yesterday that
the names Of Herbert Davis and Rep
resentatiye Goldsborough Of Maryland
had been added to the committee.
The plaintiffs in the injunction pc
tition brought yesterday are Walter ].
Pichert and Raymond M. Markley, both
of New York City. Their attorney,
Emanuel Morganlander, says several
other securities holders will join with
them today.
Defendants. Are Named.
Their petition names as defendants
Lewis Landes, Charles E. Newton,
Arthur L. Malcolm, Eric Fisher Wood,
Peter Miller and Edward A. Marshall"
PSchert states that he holds $4,000 OF
Smith Co. bonds; that those which
have matalred have been paid and that
interest payments have always been
met when due. .
Marley says he owns 10 shares OF
Smith company preferred stock with q
par value of 500 a share and $4,000
In bonds. He also states that all inter-
est payments have been met promptly
by the company.
Three Rulings Are Sought.
The court is requested to instruct the
defendants to do three things:
Il. To show cause why they should
not be restrained from organizing COM
mittees of bondholders or stockholders
of the Smith company and from solicit
ing in any manner or otherwise induc-
ing bond and stockholders to join and
act in concert with the defendants to
the detriment of the Smith company
and its stock and bondholders.
-. Why they should not be restrained
from publishing or causing to be pub
lished in the newspapers false and mis-
leading information concerning the
Smith company, or any injunction CT
other decree issued against it, or from
advertising for security holders to join
in q concerted action against the Smith
company, or from doing anything which
may be calculated to unjustly destroy
the reputation of the Smith company.
or to unjustly undermine the confidence
of the public in the company.
IS. Why such other relief as the court
sees proper should not be granted"