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"This agreement shall be binding upon and enforceable by the successors and assigns of the parties hereto respectively.

“In witness whereof hereunto in duplicate the said parties have set their seals, and the signatures of their presidents, respectively the day and year first above written, “[Seal.]

Latrobe Steel Company,

"By Marriott C. Smyth, President. "Attest. Chas. C. Warren, Secretary. "[Seal.]

Railway Steel Spring Company,

"By J. E. French, President."

On November 18, 1905, at a special meeting of the board of directors of the Steel Company, the following resolution was passed:

"Resolved, that we unanimously do approve the sale of our property to the Railway Steel Spring Company as embodied in form of contract or agreement which has been prepared, and that we do authorize the execution by the president under seal of the company of said sale and contract.”

The contract or agreement thus referred to is the same agreement just set forth in full, and was spread at length upon the minutes of the meeting. On November 22, 1905, the Steel Company, by a circular letter signed by its president, notified its stockholders that the agreement of November 16, 1905, with the Spring Company had been executed. The letter is as follows:

"Philadelphia, November 22, 1905. “Dear Sir: I beg to advise you that your board have sold the plant of the Latrobe Steel Co. for $4,300,000 cash. Agreement has been signed and $500,000 paid. When deeds, etc., are delivered, an additional sum of $500,000 will be paid, and $825,000 monthly thereafter until the purchase price has been paid in full.

"Our company retains all its assets, such as cash on hand, bills and accounts receivable, material (which latter will be sold for cash), and the stock of the Latrobe Steel & Coupler Co.

"By the time the Latrobe Steel Co. is liquidated, you will have received your proportion of the stock of the Latrobe Steel & Coupler Co., in addition to your proportion of the cash received for the plant of the Latrobe Steel Co. as above.

“The sale is a very advantageous one, and I trust to receive all the papers enclosed, properly signed and returned to me promptly.

"Just how much the stockholders of the Latrobe Steel Co. will receive per share for their stock is still uncertain, but the sale will net them a very handsome and substantial profit on their investment. “Yours very truly,

Marriott C. Smyth, President." At the annual meeting of the stockholders of the Steel Company, held December 18, 1905, the president reported inter alia as follows:

"As you have already been notified by circular and letter, the works of the Latrobe Steel Company have been sold to the Railway Steel Spring Company for $4,300,000, your company retaining all of its assets, such as cash, bills and accounts receivable, and the stock of the Latrobe Steel & Coupler Company.

“When all moneys due us are collected, we anticipate the stockholders will receive not less than $400 per share for their stock.

“Your board deemed this sale a very wise one, and the acquiescence to the sale by a large majority of the stockholders has confirmed their action.

“In this, the last report of the board of the Latrobe Steel Company to its stockholders, it is proper to congratulate them on the remarkable success of the company from its inception. Starting as it did with but $600,000 capital, which was subsequently increased to $1,500,000, it has paid the stockholders in dividends $2,381,700, and will receive for the works, with the cash assets retained, in round numbers, about $7,000,000, being a total return for the investment of over $9,000,000, exclusive of the stock of the Latrobe Steel & Coupler Company.

"After the distribution of cash received from the sale of the works and the liquidation of the company is completed, the stock of the Latrobe Steel & Coupler Company will be divided pro rata among the stockholders of the Latrobe Steel Company, and, although it is improbable that any such dividends will be made on the Coupler Company stock as has been on the Steel Company's stock, we look forward to the Coupler Company's doing a good business and making fair returns. "Respectfully submitted on behalf of the board.

Marriott C. Smyth, President." This report was accepted by the stockholders' meeting, and directed to be entered at length upon the minutes.

On December 26, 1905, at a special meeting of the stockholders of the Steel Company, called for that purpose, the following action was taken, as appears from the minutes :

"The chairman stated that the first business before the meeting, in accordance with advertisement, was the confirmation of the sale of the property of the Latrobe Steel Company to the Railway Steel Spring Company on the terms approved by the board of directors as embodied in the following agreement: [Being the agreement of November 16, 1905, which is set forth in full in the minutes of the special meeting.)

“On motion, duly made and seconded, it was

“Resolved, that we do approve of the sale of the property of the company as made by the board."

Out of a total issue of 15,000 shares, 14,399 shares voted in favor of the resolution, but complainant did not vote the 500 shares of which he and his wife were then the owners upon the adoption thereof.

On or about January 9, 1906, the Steel Company executed and delivered to the Spring Company a deed and bill of sale conveying to the Spring Company the properties and rights agreed to be granted and conveyed by the agreement of November 16, 1905, and on or about January 9th delivered possession to the purchaser of the properties so conveyed. The full purchase price named in the agreement has been paid to the Steel Company by the Spring Company.

At a special meeting of the board of directors of the Steel Company, held January 13, 1906, the following resolutions were passed :

Resolved, that the sum of $100 per share be distributed to the stockholders of this company, as they appear of record upon its books, upon production of the certificate therefor to Drexel & Co., in order that the amount of said payment may be indorsed thereon.

"Resolved, that all such payments be made by check marked as 'On account of liquidation of this company.'

"Resolved, that Drexel & Co. be requested, upon presentation of the certificates for that purpose, to stamp upon each certificate an indorsement showing the amount paid per share and date of such payment.

"Resolved, that the president and treasurer of this company be authorized, upon receipt of the remaining payment stipulated for in the agreement with the Railway Steel Spring Company, and of the other amounts due this company, to make from time to time further distributions to the stockholders of this company in liquidation of its assets in the same manner as provided in the foregoing resolutions.

“Resolved, that we approve of the sending to the stockholders the letter prepared by the president announcing the liquidation together with the form of letter to Drexel & Co. and of the receipt by them for the certificates, as follows:

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“ 'Philadelphia, January 16th, 1906. “ 'Dear Sir: The property of this company has in pursuance with the authority given at the stockholders' meeting held December 26th, 1905, been sold to the Railway Steel Spring Co. for $4,300,000 cash. Part of this amount has already been paid, and the balance is secured by bonds deposited with Drexel & Co. as trustee.

" "The board of directors has resolved that out of this sum there shall be distributed to the stockholders of record on the company's books, in liquidation of the company's affairs, as first payment, the sum of $100 per share on presentation of the certificates of stock to Drexel & Co., Philadelphia, Pa. In order that the amounts now and hereafter to be paid may be noted thereon as made, please forward immediately your certificate of stock, with power of attorney properly signed and witnessed, to Drexel & Co., Philadelphia.

“ 'Further distributions will be made from time to time as the balance of the purchase price is paid. These distributions will also have to be noted on the certificate. We therefore advise you that you authorize Drexel & Co. to retain your certificate for this purpose, and inclose a form of letter to be filled up and signed by you to that effect. On receipt of certificate of stock and letter, they will give you a proper receipt. “'Yours truly,

Latrobe Steel Co., Marriott C. Smyth, Prt.' "(Form of Letter.)

'January - 1906. “ 'Messrs. Drexel & Co., Philadelphia-Gentlemen: In accordance with the instructions of the company in its circular letter of the 16th inst., I herewith inclose certificates Nos.

for

shares of the capital stock of the Latrobe Steel Company, the property of the undersigned, in order that payment of $100 per share, in liquidation, now authorized may be noted thereon. You may retain the same in order that subsequent payments, in liquidation, may be noted on them as made.

“ 'Please acknowledge and forward receipt for the inclosed certificate, as mentioned in the company's letter. “ 'Yours very truly.'

“ '(Form of Receipt.) “ 'Received January

1906, from

certificates Nos. for

shares of the capital stock of the Latrobe Steel Company, standing in the name of

to be retained on deposit by the undersigned in order that payments in distribution made on account of the liquidation of the affairs of that company may be noted thereon, in accordance with the terms of the circular letter from the company to its stockholders under date of January 16th, 1906, and of the letter addressed to the undersigned by you, dated

“ ‘Drexel & Company.'"

Payments of cash aggregating $6,000,000, or $400 on each share of stock, have been made to the stockholders of the Steel Company in liquidation of its assets. These payments were made in four sums of $1,500,000 each, at the dates presently to be mentioned; and, as the stockholders received the payments, they were required to present their stock certificates for the following indorsements thereon:

“There has been paid in liquidation of the assets of the Latrobe Steel Company, upon the shares included in this certificate, the sums hereunder noted, to wit: January 17, 1906.....

.$100 per share. January 29, 1906..

.$100 per share. February 5, 1906.

.$100 per share. February 13, 1906...

$100 per share." At the time the fourth payment in liquidation was made by the Steel Company, the stockholders were notified as follows:

“Philadelphia, February 7th, 1906. "Dear Sir: The 4th payment of $100 per share in liquidation of the Latrobe Steel Company will be payable on Feby. 13th, 1906. Please forward to Messrs. Drexel & Company, Philadelphia, in the inclosed envelope, the receipt they issued to you for the stock deposited with them, so that the payment may be 'indorsed thereon. “The receipt will be returned to you properly stamped, with check for $ "Yours very truly,

Latrobe Steel Company,

"Marriott C. Smyth, President." “The next dividend which will be paid to the stockholders in liquidation of the Latrobe Steel Company will be the final dividend. It will not be paid until all the moneys due the company have been collected. Due notice will be given when the time for such payment arrives.”

Since January 9, 1906, the Steel Company has not carried on, but has wholly ceased to transact, any of the business for which it was chartered; neither has it exercised since that date any corporate function whatsoever, except for the purpose of liquidating and distributing its assets, and except for the further purpose complained of in the pending bill. By reason of the sale and delivery of its manufacturing plant and other property, of its good will and the exclusive right to use its name in carrying on its former business, and by reason also of the nearly complete liquidation and distribution of its assets, the Steel Company, in its present condition, is incapable of resuming or further carrying the business on for which it was incorporated.

This brings us to the matter in dispute. On May 21, 1906, the Steel Company by order of its board of directors sent the following letter to its stockholders, together with a notice calling them together in a special meeting on June 11, 1906 :

Philadelphia, May 21st, 1906. “Dear Sir: The stockholders of the Latrobe Steel Company are probably aware that all of the stock of the Latrobe Steel & Coupler Company, amounting to $300,000, is owned by the Latrobe Steel Company, and that the Steel Company has heretofore furnished the Coupler Company with the necessary funds to conduct its business. In order to continue the coupler business the capital must be increased to $1,000,000.

"It is proposed to accomplish this by purchasing 7,000 shares of the Latrobe Steel & Coupler Company stock at par, using for the purpose $700,000 of the funds of the Latrobe Steel Company now in hand secured in the liquidation of that company.

"If this plan meets the approval of the shareholders, a distribution of this Coupler Company stock will be made among them which will amount to 6623 per cent. of their present holdings of the stock of the Latrobe Steel Company. In addition to this, they will receive a further sum of about $35 per share in cash in final liquidation of the Latrobe Steel Company.

"Your board recommends this plan for your approval, and believes that the Latrobe Steel & Coupler Company will thus be established on a substantial basis and that it should make good returns to its shareholders.

“Board of Directors,

"Marriott C. Smyth, President." On June 11, 1906, the special meeting of the stockholders was held, and the following resolution was passed:

"Resolved, that the officers of the Latrobe Steel Company be and they are hereby authorized to purchase at par for cash seven thousand (7,000) shares of the stock of the Latrobe Steel & Coupler Company at the par value of $100 per share, and to take such steps as may be necessary to carry out the final liquidation of the company in accordance with the terms of the circular letter of May 21, 1906."

In pursuance of this action of the board and of the stockholders, there is no doubt, and I find as a fact, that (if the present bill had not been filed on June 21, 1906) the Steel Company was about to employ $700,000 of the money acquired by it in liquidation of its assets, in order to buy 7,000 shares of the capital stock of the Coupler Company, and that it intended to distribute afterwards these 7,000 shares among its stockholders in place of the cash used in such purchase. These shares of the Coupler Company were not to be converted into cash, but were to be distributed in specie among the stockholders of the Steel Company. In consequence of the filing of this bill, however, the Steel Company has not yet subscribed or paid any money in pursuance of the resolution passed on June 11th, and none is expected to be subscribed or paid until the end of this litigation.

The complainant did not agree to this resolution, but voted in opposition the 500 shares that were held or controlled by him on June 11th—300 shares being in his own name, and 200 shares being in the name of his wife. He and his wife also protested against the proposed action, as will appear by the following extract from the minutes of the meeting:

"Mr. C. H. Ferry and Mr. Frank R. Lawrence, attorney for Mrs. Emily Mansfield Ferry, offered the following joint protest against the proposed ac tion of the Latrobe Steel Company in the purchases of the Latrobe Steel & Coupler Company's stock:

“ 'June 11, 1906. “ 'To the Latrobe Steel Company and to the Directors, Officers and Stock

holders Thereof: ""The undersigned stockholders of said company demand that the liquidation and distribution of the assets thereof be completed without unnecessary delay, and that they be respectively paid their proportionate shares thereof.

“ 'The undersigned protest against the making of any subscription by or on behalf of said company to the stock of the Latrobe Steel & Coupler Company, and give notice that in case any of the funds or assets of said Latrobe Steel Company are used or applied in payment of any such subscription such use or payment will be an unlawful diversion of such funds or assets for which said Latrobe Steel Company, and all persons taking part therein will be liable to the undersigned who will take such measures with respect thereto as they may be advised.

" Charles H. Ferry,

“ 'Emily Mansfield Ferry, “ 'By Frank R. Lawrence, Her Proxy and Attorney.' The following additional facts have more or less relevancy in certain aspects of the case: The Coupler Company is now solvent, and has been solvent for some time before the beginning of this action. In or about the year 1902 the Coupler Company owed the Steel Company $750,000 for money previously loaned for the erection of a new and extensive plant, and for advances necessary to carry on its large and increasing business; but this indebtedness was reduced before November 14, 1905, from the earnings of the Coupler Company's business, to the sum of $275,000, and in this amount the Coupler Company is still indebted to the Steel Company. On August 31, 1906, the Coupler Company owned assets sufficient to pay all its liabilities in full, including its debt to the Steel Company; to pay its capital stock of $300,000 in full; and, after so doing, to leave a surplus exceeding $600,000. The valuations placed upon the assets of the Coupler Company in a

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