Appellees Brief — Missouri-Kansas Pipe Line Co. v. United States

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supreme Court of the United

OctopEr TERM, 1940:

3 No. 269.

PANHANDLE EASTERN PIPE LINE COMPANY,

Appellant,

vs. *

THE UNITED STATES OF AMERICA, COLUMBIA GAS

& ELECTRIC CORPORATION, COLUMBIA OIL &

GASOLINE CORPORATION, GEORGE H. HOWARD,

PHILIP G. GOSSLER, CHARLES A. MUNROE,

THOMAS R. WEYMOUTH, THOMAS B. GREGORY,

EDWARD REYNOLDS, Jr., BURT R. BAY and JOHN

H. HILLMAN, Jr.,

| A ppellees.

ApprAL FROM THE District CourT OF THE Unrren Pmaaeee

FOR THE District or DELAWARE.

BRIEF OF APPELLEE, COLUMBIA OIL &

GASOLINE CORPORATION. °

Danreu O. Hastinas,

Wilmington, Délaware.

’

Wituram H. Burton,

¥ 27 Cedar Street,

New York, N. Y.

James B. AuLeEy, :

50 Broadway, i‘

New York, N. Y.

Of Counsel:

Wituiam H. Burton,

James B. ALLEY.

_ Pandick Press, Inc., 22 Thames St., New York, U. S. A..

: : & : )

| , , ; PAGE |

Decision cr THE Lower Covrt.....:...... et te

Quzs TIONS PRESENTED ..... : , 4

SearEMEnT oF THE Cask

Point I— Appellee, Columbia: Ow & Genctine Corpo- _

ration, by its motion to. dismiss the application to

intervene, with supporting affidavits, properly

raised the question of the authority of the attor-

neys prosecuting this appeal-to act on’ behalf of

- Panhandle Eastern Pipe Line Company in making ~ |

and prosecuting the intervention application.......... 13

Porrr II—The appeals should be dismissed on the: + °"~

ground that the order appealed from is net a final

. order and, therefore,.is not appealable to this or

any other court.under the provisions of the Expe-

diting Act governing appeals in eyuity suits under.

_ the Federal Anti-Trust Laws, wherein the United

- States is complainant 15

Por I1I—The Court below was correct in dismiss-

ing the intervention application in the name of

Panhandle Eastern Pipe Line Company because it

was not ‘authorized ‘by Panhandle Eastern Pipe

: Line Company, and the attorneys making said ap-

plication and prosecuting this appeal have not

béen authorized by Panhandle Eastern Pipe Line

Company to act in“its behalf ;

a stssdlld

s * ete

. +

BESBS

“9@t ”

Bay ONE OL EOE I ED

Cases Crrep..

The Pueblo of Santa Rosa v. Fall, 273 U. §. 315..........

United States v. aliforate Cooperative Canneries, :

Paden S. 553.: ~ ee 16, |: Sop

, a.

. iS, | | | Sraérures Crrep. :

yo igi ae : =>

Delaware Corporation Law......... Sadat - 11,24

Sec. 17 (See Appéndix D, p. 42) oan 24

See. 18 (See Appendix D, p. | ROR Saree 24

Sec. 31 (See Appendix D, p. 42). Ke. al

Expediting Act (U.S. C. A, Title 15, Sees. 28 and

ee I ONDE 5 NERO a 15, 16

. Rules of Civil Procedure......... Schaioenpeesitah: >} Ne

* Rule 8(c) ............ sila Madebe ai siurad alts — 44

Rule 8(d) ...... he 14

a Lf’ a : #

; i

° i

. e

hh Bic poavmeomeenmsere nea Jk saisiibads Shnedcagesaatiielcatinia

-foupreme Court. of the Ginited States

~ Ocroser Trem, 1940. ed 4

No. 269, > ame

PannanpLe Hastern Pipz Line Company,

Appellant,” .

ace ar , ah

Porn vs. i

THE Views f Grates or America, Conumeta.:

$@as & Exsorsic Corporation, CoLumsia

: Om & Gasotine Corporation, Gzorce H.

| Howarp, Pump G. Gosster, Cares A. |

; Mouwnnog,. ''Homas R. Weyrmovra, THOMAS

B. Gascony, Epwarp Reynows, Jz; Burr

R. Bas, and Joun H. HimiMavn, JR.,

4 eee a ae can pl

AppEAt FROM THE Drsrarcy Cours oF THE UNITED States

_ FOR THE Disrnicr oF DeLawane.

BRIEF. OF APPELLEE, COLUMBIA OL. &

GASOLINE | CORPORATION. |

Decision of the Lower Court: ° a

This byief is submitted by the appellee Columbia Oil &

| Gasoling Corporation (hereinafter referred, to a8. Columbia

on) in opposition to the purported appeal of the appel- —

lant, Panbandle Eastern Pipe Line Company -(hereinafter

referred to as Panhandle Eastern), from an order of the

District Court of the United States for the District of

Delaware, dated April 23, 1940 (R.* 565). ‘That: order:

onset Trae of Record on hows — will be referred tg

to dismiss an application (R. 412-424) made on March 23,

1940, in the name of Panhandle Eastern for leave to inter-

vene in the anti-trust: suit instituted by the Government

in the: District Court against’ the other appellees herein.

Prior to the entry of the order, the District Court handed

down an opinion which is printed at pages 520-526 of the

Record andi is reported in 32 Fed. Supp. 474. For the con-

_ venience of this Court that opinion is ‘printed at the end

of this brief as Appendix A.

The motions to dismiss the application in the court below

were made upon the limited grounds (R. 426, 515) that the ~

application was not authorized. by Panhandle Eastern and ;

that the attorneys who made the application were not

authorized by Panhandle Eastern to act in its behalf in

making or prosecuting such application or otherwise. The

court granted these motions Te on these limited grounds

(R. 520).

. This peculiar situation was brought about by the fact

that the attorneys who are allegedly acting for Panhandle

Eastern in this matter claim that they are acting for Pan-

handle Eastern under the authority of certain resolutions

allegedly adopted at a stockholders’ ‘meeting of Panhandle .

Eastern, held on March 11, 1940 (R. 423, 425). All the

preferred stock and a majority of the common: stock: of

Panhandle Eastern,’ however, were owned by Columbia Oil

(R. 150, 448), but due to the provisions of the Consent —

Decree herein (R. 146), the legal title to all this stock has

been‘vested in Mr. Gano Dunn (R. 150), with the power to

elect six. out of the nine directors of Panhandle Eastern

(R. 523), and to vote on other subjects as directed by Colum-

bia Oil (R. 147).- In short, Mr. Dunn had entire control of

that stockholders’ meeting (R. 428-480). .

| granted motions ‘(R. 426, 514-516) made. by the appellees i

Columbia Gas & Electric Corporation (hereinafter referred |

to as Columbia Gas)-and Columbia Oil.on March 29, 1940,

3 ;

‘Despite that fact and despite the adverse votes of Mr.

- Dunn, said attorneys claim that at the meeting the minority

"stock interests, namely, Missouri-Kansas Pipe Line Com-

pany ( hereinafter referred to as Mokan), not only had the

right to but did take control of this important corporation,

- amended its by-laws (R. 451, 460), elected-a Board of Direc-

tors (R. 458), appointed officers (R. ™_ and hired counsel

(R. 461-463);

It is evident that a situation of this sort ‘ei -have

caused some concern, not only to Mr. Dunn but to Columbia ~

- Oil, the beneficial owtier of. the majority stock of Panhandle ©

Eastern. Accordingly, when the attorneys for Mokan,

claiming to act for Panhandle Kastern, made the application

iw the name of Panhandle Eastern for leave to intervene

in the Government’s anti-trust suit pursuant to author?

‘ity which they claim was conferred upon them at this

strange stockholders’ meeting, Columbia Oil and Columbia

-Gas promptly moved in the District Court to dismiss:that ~°

application (R. 426, 514-516). After a full hearing, tnat

court decided that the actions of the minority interests at

‘the stockholders’ meeting of Panhandle Eastern were void’

and unjustifiable; that Mr. Dunn’ 8 votes in opposition to

such alleged actions were valid; and ‘that the attorneys

claiming to act for Panhandle’ Eastern had no authority to

’ do so (R. 520-526). In the meantime, the minority interests,

_ in other, words Mokan, realizing the weakness of their posi-

tion instituted a proceeding in the Chancery Court of the

‘State of Delaware-in an effort to validate what they hoped

they had accomplished at this peculiar stockholders’ meet-

ing (R. 510-514). ‘

_- After a full hearing in that proceeding, the Chancellor

of the State of Delaware confirmed the election of nine

_ - directors whose election had not been contested,. and held -

: that the five additional persons who had been nominated as

oy | 4

directors by the minority interests had not been elected,

and that all. attempts by the minority interests to amend

the by-laws, appoint officers and hire counsel were wholly

| void and ‘without effect (Appendices B and C). —

aoe It should be noted that under the General Corporation

‘Laws of the State of Delaware,* the ChanceUor i is vested

with the exclusive power over such internal corporate con-

- troversies. The Chancellor’s decree is, therefore, final and

conclusive’ on the invalidity of the aitempted.actions of

the minority interests at the stockholders’ meeting, as well

_ as on the lack of authority fof these atterneys who claim to

actions. No appeal hai een taken from the Chancellor’s

decree and, therefore, his decision is final in the matter.

a al

coe a represent Panhandle i a on the basis of. such invalid

~_—n

| Questions Presented.

The only questions presented or this appeal are

(a) Whether this Court has the jurisdiction to con-

_ sider this appeal,

(b) ° Whether the application for. leave to intérvene -

in the anti-trust suit in the District Court was author-

ized by Panhandle Kastern, and.‘ ¥

‘eation in the name of Panhandle Eastern were author-:

aS ee by Panhandle Eastern to act, on its behalf.

Statement of the Case.

The cause ssiiiie in the District Court in which the

application to intervene was sought to he filed is a.suit,

originally instituted by the United States Government on

* Section 31 of the General Corporation*Laws of the State of

" Delaware i is printed in full in eo D at the end of this brief.

| s

H March 6, 1938, by a bill in equity agains ne Columbia Gas, °

Columbia Oil and several individual defendants (R. 1), in

which the ‘defendants Were charged with dominating and

controlling the affairs ‘of Panhandle Eastern and restrain-

ing, monopolizing and attempting to monopolize interstate

trade and commerce ‘in natural gas in certain sections of

the United States, in alleges violation of the Federal Anti-

— Trifst Laws (R. 10-30). The defendants, including Colum-

bia Gas and’ Columbia. Oil, filed answers denying these

charges (R. 109-138).

‘The case was never tried. On January 29,, ,, 1936, a

Consent Decree (Ri*142-149) was entered upon” . ’ stipula-

tion signed by -all*the parties (R. 138-142), in which the -

defendants maintained the truth of their answers and con-

sente the entry of the decree provaded that such consent

; —_ of said decree should not constitute an admission

djudication that they had violated any laws of ‘me

_ United States (R. 139).

One of the provisions of the Consent Decree permitted

Columbia Cil to retain its stockholdings, and acouire addi-

tional stockholdings, in Panhandle Kastern (R. 145), but

required these. stockholdings-to be transferred to Mr. Gano

Dunn, as Trustee, who was to, hold the legal title to said -

stock and’ exercise all the rights and privileges incidental

to the absolute ownership thereof (B. 146), with ‘broad dis-

cretionary voting powers which will be discussed in more |

. detail in Point III hereof. - + : tcp

From shortl; after the enitty of the Conse Decree up

to the present time, Coiumbia Oil Kas béen the’ beneficial

owner of 100,000 shares of Class A and’ 10,000 shares of

(Class B preferred stock of Panhandée, Eastern , (being “ll

“the issued and outstanding shares of these classes), and .

404,326 shares of. its common stock (being a majority of

the issuéd and ovtstanding shares of common stock), and.

ieee 6

’ Mr. Dunn has held this stcck.and voted the same as Trustee _

pursuant to the terms of: the Consent Decree ‘(R. 150, 431,

516). This stock carries the right to elect six of the nine —

directors of Panhandle Eastern (R. 523).

On January 12, 1939, approximately three years after

the entry of the Consent Decree, the Government filed a

- supplemental complaint in the District Court seeking to

supplgnent the decree by a further order for the purpose

of accomplishing’ what it construed the p sposag of the

decree to be ‘(R. 274-283). The defendants, including

Columbia Oil and Columbia Gas, filed their answers to the

supplemental complaint (B. 313-314, 322-332), and this was

followed by further proceedings i in the anti-trust suit which

- are not pertinent to “She issues involved on this appeal

> except to the extent hereafter discussed. ~ This“Court will

_ find a more detailed statement thereof in the brief of this,

appellee‘ submitted in appeal No. 268 which is now pending

before this Court, the record on-which has been consoli-

_ dated with the record on this appeal,

, Mokan is a substantfal minority stockholder of Pan-

handle Eastern claiming ownership to 339,275 shares of

, its common stock (R. 538). The intervention application

involved on this appeal isthe third of a series of four

. intervention applications which have been ‘made by Mokan, .

or by its attorneys, for leave to intervene in the antj-trast

- proceedings pending i in the District: Court (R. 283-312, 362-

. 371, 412-424, 526-540). All these applications have been |

- denied or dismissed by the District Court (R. 321-322, 371,

565, 541- 542). Appeals were taken fron the orders deny-

ing the first. two applications to. the United States Cireuit

Court of Appeals for the Third Circuit, and were dismissed

_ by the Circuit Court on December 15, 1939 (R. 6). The

Circuit Court’s opinion is reported in 108 Fed. (2nd) 614.

A: petition for a writ of certiorari was denied by this Court

| . . site | 7 s ; : | ; ‘

on April 22, 1940 (309 U. S. 687). .This appeal No. 269 .

and appeal No. 268, both of which are now pending in this -

denying’ the third and fourth intervention a aaa

respectively

-In substance, the allegations in the present application

(third intervention‘ application) are identical with, those

sind te appeals from the two orders dismissing and

‘contained in the fourth application, and the prayers. for

relief in both applications are the. same. Likewise, the

allegations and prayers for relief in the present application

* are substantially the ‘same as those.in the first application

«, Which was made on February 6, 1939 (R. 284) ,°except that

the prayers in-the present application are slightly more

limited in scope. .. a

The present application i is unverified and is not signed -

-by any officer or. director of Panhandle Eastern, but is

~ signed by Arthur G. Logan and two other. attorneys

(R. 424) who concededly are counsel for Mokan (R. 429,

477, 505-508, 514,540, 550-551, 555-557). Counsel for Pan-

handle Eastern aré Messrs. E. M. Goodwin and Edwin D:

Steele, Jr. (R. 429), neither of whose names, it will be

noted, appear on the present application. It is claimed in

the application, however, that Mr. Logan and his associates .

were duly authorized to make that applieation by virttie

of resolutions adopted at the annual meeting of stock- _

holders of Panhandle Eastern held on March 11, 1940, and”

that Mr. Dunn, the Trustee under the Consent Decree,

sought to vote against such. resolutions- but that his vote

_ . Was improperly and illegally cast. (R. 423, 425).

—_—

eit

An examination of the minutes of the annual stock-

holdersyingeting of Panhandle Eastern held on March 11,

1940, which is part of the record on this appeal (R. 428-

487), discloses ‘thdt at the opening thereof, Mr. Greveling,

the President, took the chair, called the meeting to order

~ . ; 6

AR, 428-429) as provided by the by- Awa (R, 404), and an-

& nounced the presence ofa quorum ( 492). Immediately,

Mr. Logan. who held 10, shares of stock which were boing

‘veted by proxy (R. 448), moved that Mr. A. Faison Dixon,

Vice-President of Mokan, be made © ‘hairman of the meet

ing (R. 432). Mr. Creveling declared the motion out of

order in view of the provision’ of the by-laws that the

President shall preside at all meetings of the stockholders

CR. 494). Mr. Logan took an appeal from the ruling |

of the chair, declaring that Mr. Dunn (the majority stocl-

holder) could not vote Columbia Qil's stock without specific

instructions as to how he should vote the stock on that

particular motion, and that Mr. Dunn could not have any

such specific. instructions because it_could not have been

known by Columbia Oil that such:a motion would be made

(R. 482-433). A vote was taken and Mr, Dunn voted to

uphold the chair while Mr, Logan and five of his- associates

vited to thecontrary (R, 434). —

After Mr. Logan had again questioned Mr. Dunn's right

to vote (R. 484), atid vehemently insisted that Mr.. Crevel-

ing sheuld surrender the chair to Mr. Dixdmp Mr. Creveling

disallowed Mr. ‘Logan’s appeal to disqualify Mr. Dunn’s

vote, refused to relinquish the chair, and proceeded to the

next order of business (R. 485-436). Thereupon, Mr. Logan

denranded that whenever Mr. Dunn should vote on any

motion he should produce the specific instructions from

Columbia Oil showing that he was voting as instructed, and

that, in the absence of such showing, Mr. Logan challenged

his vete (R. 436). This same procedure continued through-

out the meeting. Whenever any ‘motion was made cf which |

Mr. Logan and his associates disapproved and which was —

carried by Mr. Dunn’s vote, Mr. Logan claimed that Mr.

Dunn’s vote was invalid because of his failure to produce

specifie instructions from Columbia Oil as to how he should .

Pal

vote, and likewise whenever Mr. Logan or his associates

proposed any motion’ or resolution which was defeated by

“Mr. Dunn's: opposing vote, Mr. Logan claimed that Mr.

Duun'’s vote was invalid for the same reason.

The following motions and resolutions, ( sometimes in

the form of appeals from: rulings of the chair refusing to

rule as requested), were mince or proposed by Mr. -

or his associates:

(a) Motion to amend the by-laws ‘to inoweané the

Board of Directors from nine to fourteen directors

(R. 451-452) ; - | | j

(b): Appeal from the ruling of the chair refusing

to declare five additional men, nominated by the repre-

sentatives of Mokan, elected as directors in addition

to the nine. directors whieh - were declared "elected

(R. 457-458);

to reject the judges’ report on the election -of two

directors elected by the Class B preferred stock (R.

458-459) 5

(dy Motion to amend the by-laws to provide for

officers to. be chosen by the-stockholders instead of: by

the directors and. to provide that all officers’ salaries

be fixed by the stockholders instead of by the directors

(R. 459-460).

(e) Motion.to elect Mesiva Maguire, Mente, Wat-.

kins and Tringham, the first and last named persons

being President and Secretary, respectively, of Mokan,

to the offices of President, Vice-President, Secretary .

and Treasurer, ss cea of Panhandle Eastern

(R. 460-461) ; | \

(f)- Resolutions tian € Rastere bring si

suits as requested in a letter from Mokam dated Janu-

ary 15, 1940 (one of which was to make.the instant ap--

plication), employ Mokan’s attorneys to re

- was lost.

ue : 10 _) re

‘such proceedings and pay reasonable fees to sucle attor-

-neys (RR. 461-463) ;

. (g) Resolutions that Pashesdle Kastern appeat

and ‘prosecute a certain injunction suit which had

already been instituted by Mokan and another, employ -

Mokan’'s aftorneys to undertake the matter and ,pay

reasonable compensation to such attorneys (R.’ 463-

464); and

(h), Resolution that Panhandle Eastern redeem ite

class A preferred stock (R. 464-466).

@ In-.each instance, Mr. Dunn voted Le majority of the

voting stock against the motion, resolution or appeal from

the ruling of the chair, and Mr. Logan and his asscciates

voted in favor thereof. In each instance the chair ruled

that the motion, resolution or appeal, as the case might be,

The resolutions, noted in : italies under subdivision (f)

'“~ above, are the resolutions on which the attorneys predicate

their authority to bre the instant application. Those

resolutions were defeated by the'vote of Mr. Dunn voting

the majority of the voting stock in opposition thereto (R.

462). Mr. Logan again objected to Mf. Dunn’s vote. an the

ground that he should exhibit specifié instructions from

Columbia Oil instructing him to vote in opposition to those

resolutions, and also on the further ground that he could

not vote even if he-did have such specific instructions, be-

cause the action contemplated by such resolutions was —

“against Columbia Oil, and, therefore, he would be disquali-

fied in.following any instructions from it on the matter.

The chairman-accepted Mr. Dunn’s vote and declared the .

resclatiens lost (R. 462).

' Finally, a motion was made to adjourn. Mr. Dunn voted

_ the majority stock in favor of adjournment and the chair-

man announced that the motion was cafried and the meet-

~~ jng-adjourved.(R. 480). Thereupon, Mr. Creveling, Mr.

+ - Dunn and another left the room and Mr. Logan and his

associates remained (R. 481). No quorum was present,

~ nevertheless, Mr. Dixon’ took the chair (R. 481), the

' motions, which had previously been defeated, were again

resubmitted and Mr. Logan and his associates voted in

. favor thereof (R. 481-487).

The specific provisions ‘of the Consent Decree pursuant

to which Mr. Dunn was empowered as Trustee to vote

Columbia, Oil’s stock, and the directions which he had

received from Columbia Oil before the meeting as to how

he should vote, such stock, will be discussed in more detail

in Point IIT hereof. |

Two days following the stockholders’ meeting of Pan-

handle Eastern, Mokan instituted an action, pursuant to

Section 31 of the Delaware Corporation Law® in the Court

of Chancery of the State of Delaware, to review the election

of directors and officers of Panhandle Eastern at the stock-

Noe

that the by-laws of Panhandle Eastern had been amended

to “~urteen members and that fourteen directors, including

'.the ...¢ additional directors nominated by the representa-

tives of Mokan, had been duly elected and had qualified

- amended at the meeting to provide for the election of offi-

Watkins and Tringham had been duly elected as President,

Vice-President, Secretary.and Treasurer, respectively, of

Panhandle Hastern (R. 511-512). The bill prayed that the

oe *

* @

holders’ meeting (R. 510-514). The bill of complaint alleged -

at the meeting to increase the Board of Directors from nine’

(BR. 511). The bill further alleged that the by-laws had been »

cers by stockholders, and that Messrs. Maguire, Neuner, —

‘Chancellor determine the validity of the election of the.

* Section 31 of the General Corporation Laws of the State, of |

Delaware is printed in full in Appendix D at the end of this brief. —

te re

‘tive additional directors nominated by the vepeeseitatives

of Mokan, and declare that said -persona were duly and

validly elected to the Board of Directors; and that the

Chancellor determine the validity of the election. of Menara,

~ Maguire, Newer, Watkins and Tringham to the offices of

President, Vico-President, Seeretary and Presenter, rompee-

tively (R. 513-614),

On June 19, 1940, after a full hearing hefore the Chan-

eeHor and during the pendeney of the instant appeal, the

Chancellor entered his final deeree® in that proceeding dis-

missing Mokan’s bill of complaint holding: (a) that none

of the additional five directors nominated by the represen-

3 tatives of Mokan were elected aa directors of Panhandle

Eastern, at the stockholders’ meeting, “(b) that Maguire,

Neuner, Watkins and Tringham had not been elected as

(officers of Panhandle EKastern at-the meeting, and (c) that

_ the action at the annual meeting of the representatives of °

Mokan purporting to amend the by-laws of PanhandJe

Rastern “was void and without effect and such by-laws -

were not modified in any respect whatsoever by any action —

taken at said meeting’’. ’

Instead of rendering a formal opinion the Chancellor

wrote an opinion lettert dated June 11, 1940/to counsel for

the interested parties setting forth his‘views on the matter.

It/necessarily follows from the Chagcellor’s decision that

Mr. Dunn's votes at the meeting in voting the majority

stock were valid and legal. No appeal has been taken from

- the Chancellor’s order. .

In the meantime, on March 23, \1940,-Mokan’s attorneys

made the intervention application in the name of Panhandle

* For the convenience of this Court, the final decree Of the

Chancellor is printed at the end of this brief as Appendix B.

+ For the convenience of this Court, a copy of this opinion let-

ter.is printed at the end of this brief as Appendix C.

‘Easterti which is the subject of this appeal a 412-422). In on

its opinion handed down on April 6, 1940 (RK, %20-526) on

which thé order of-dismissal (R. 565) was entered, the court

below held: (1) that the application was not authorized by

Panhandie Hastern, (2) that: the uttorneys whose names

appear on said application were not authorized by Pan

handle Kastern to act in its Mlialf,. and (3) that Mr. Dunn’

had duly voted the shares of stock of Columbia Oil in. Pan-

handle Kastern on all matters on which he had voted at the

annual stockholders’ meeting in hecordance with the provi- -

sions of the Consent Decree and pursuant to valid direc-

tions from Columbia Of (Kt. 5255526). Thus, the Court

_ granted the motions of Columbia Oil and: Columbia Gas to

‘dismiss the application on the specific grounds urged by

; Columbia Oil in its motion papers (R. 515). -

The inetgnt appeal i is from the order of the court hglow

dismissing the aforementioned intervention application!

bie: ee ere

e ! |

Appellee, Columbia Oil & Gasoline Corporation, |

by its motion to dismiss the application to intervene,

with supporting affidavits, properly raised the question

- of the authority of the attorneys prosecuting this appeal

to acten behalf of Panhandle Eastern Fipe Line

Company in making and Prosecuting . the intervention

application. ;

It is settled that a court may ‘in its discretion, at any

stage of a case, require an attorney to show his authority

to bring proceedings on behalf of a client, and that the

appropriate manner in which to raise this question is by

motion to dismiss such proceedings supported by affidavits.

This Court conclusively established this principle in the’

brs)

leading case of The Pueblo of Santa Rosa v. Fall, 273 U. S..

315, which has been consistenly followed by the courts in

later decisions, There, as here, a motion was made by the

defendaits, supported by affidavits, to dismiss the bill upon

the ground tliat the plaintiff had never authorized the suil .

and had never authorized the attorneys to bring or prose-

eute it on its behalf. This Court agreed with the con-

clusions of the District Gales in dismissing the bill, except

to the extent that that court had dismissed it upon the

merits, and, therefore, remanded the cause to the District

Court with directions to dismiss the bill on the ground that

the suit was brought by. counsel withodt authority, but

without ‘prejudice to the bringing of any other suit there:

after by. and with the authority of the plaintiff. This Court

said at page 319:

‘‘Whether, as, a matter of practice, the challenge

to the authority of counsel was seasonably inter-

posed, it is not important to decide, for in any event,

the trial court, or this court, has power, at any stage

of the case, to require an attorney, one of its officers,

to show his authority to appear. .

In its brief the appellant argues (p. 28) that since i

motions to dismiss set forth affirmative matters and at the

same time do not contain denials of the allegations in the

intervention application, they constitute affirmative de-

fenses under Rule 8(c) of the Rules of Civil Procedure

and must be deemed -to admit the truth of the allegations .

of the intervention application under Rule 8(d). But Rule

8(d) express!y declares that such a résult only applies to

averments in a pleading to which a responsive pleading is

required. .The motions to dismiss, however, are not re-

_sponsive pleadings. In fact, the application to intervene

requested in its prayers for relief (R. 423) that the court

enter an order allowing the applicant to file the applica-

tion and be made a party to the anti- trust suit. The court

entered an order merely setting the application down for

hearing and directing that the parties be given notice .

thereof (R, 425-426). At no time did the court enter any

. order granting the applicant leave to file its application

or directing the parties in the anti-trust ‘suit to answer

‘the same. . Under such circumstances the motions cannot

be responsive pleddings. : , ee

| The-tontention of the appellant is. particularly surpris-

ing in view of its next preceding: argument. to the effect

that the motions did not raise. any question concerning the

merits (Appellant’s Brief, p. 27), because it was made and

granted on the limited grounds of the lack of authority

of the attorneys to represent Panhandle Kastern in making

or prosecuting the application on its behalf. Since the

- motions admittedly did not raise any question on the

merits, how is it possible for the appellant to argue that

the merits of the allegations of its application were at issue

: before the court below?

. POINT II.

The appeals should be dismissed on the ground that

the order appealed from is not a final order and, there-

fore; is not appealable to this or any other court under

the provisions of the Expediting. Act governing appeals

in equity suits under the Federal Anti-Trust Laws,

wherein the United States is complainant.

The Expediting Act (U.S. ©. A., Title 15, Sections 28

and 29) consists-of two sections, the second section reading

as follows (U. S. C. A., Title 15, Section 29):

‘*Apprats To Supreme Court. In every suit in

- equity brought in any district court’ of the United

States under any of the laws mentioned in the pre-

ceding section, wherein the United States is com-.

“plainant, an appeal from the final decree of the

' .. district court will lie only to the Supreme Court and

must be taken within sixty days from the entry

_ thereof.’ (Feb. 11, 1903, c. 544, §2, 32 Stat.. 823; -

Mar. 3, 1911, ec. 231, §291, 36 Stat. 1167.)”’ .

The preceding section to which nilhenaiune is made deals

with suits in’ equity under the Federal Anti-Trust Laws,

wherein the United States is complainant. -

The suit. which is pending in the District Court; in |

_ waick the appellant sought to intervene, is a suit in.equity

under the Federal Anti- Trust Lawsj?wherein the United

States is complainant, and; therefore, it comes within the.

_ lass of cases to which the Expediting Act applies.

: Obviously, the order of the District Court, dismissing .

‘appellant’s application for leave.i to intervene (R. 565) on -

the limited ground that the attorneys were not authorized

. by the appellant to, bring or prosecute ‘the. application on

its behalf (R. 520), cannot be a final order on the merits.

In fact, the appellant argues at some leagth in its brief

(p. 27) that the order was not a Gotermination of the merits .

of that application. —

. Under these circumstances this order cannot hove the

‘necessary finality on which to base an appeal to this Court

or to any other court under the ‘provisions of the Expedit-

ing Act as construed by this Court in the case of United

States v. California Cooperative Canneries, 279 U. 8. 553,

where this Court+said at page 558:

‘ “Thus, Congress limited the right to. review’” (re-

ferring to the provisions of the Expediting Act) ‘‘to

an appeal from the decree which disposed of all

: a . .

. . ‘matters, see Collins v. Miller, 252 U. S. 364; and it

‘precluded the possibility of an appeal to either

court’’ (referring to the —_ Court of Appeals

and to this Court) ‘‘from ak interlocutory decree.’’

° POINT III.

The Court below was correct in dismissing the in-

tervention application in the name of Panhandle East-

ern Pipe Line Company because it was not authorized

‘by. Panhandle Eastern Pipe Line Company, and the

attorneys making said application.and prosecuting this

appeal have not been authorized by Panhandle Eastern

Pipe Lizxe Company to act in its behalf.

_ The mere statement of the facts in this case demon-

strates that the intervention application in the name. of

Panhandle Eastern was unauthorized and that the court

below was correct in dismissing it. The representatives

of Mokan, who are prosecuting this appeal, predicate their

authority to make this application on Panhandle EKastern’s

behalf on résolutions (R. 423, 425), which they claim were

adopted. over the opposing vote of Mr. Dunn, the majority -

stockholder, at the annual meeting of stockholders of Pan-

handle Hastern- held on March 11;°1940. hey say’ that

Mr. Dunn’s vote was improperly ‘and illegally cast because -

he did not exhibit at the meeting’.specific instructions from

Columbia Oil under the provisions of the Consent Decree

(R. 147), directing him to oppose such resolutions, and, in

addition, because the intervention application contemplated

by said resolutions ‘was directed against Columbia Oil, and,

therefore, even if he did, have specific directions from

Columbia Oil he was disqualified from voting upon such —

directions (R. 462). Similar tactics were employed through-

( \18-

out’ the meeting by the minority stockholders, led by Mr.

~ Logan and. his associates representing Mokan, in attempt-

_- ing to disqualify Mr, Dunn, the majority stockholder, from

voting in opposition to any motions. or resolutions which

the minority interests moved for adoption at the meeting

(R. 428-487). |

The proceedings at the meeting disclose a most dis-_

orderly attempt by minority stockholders to wrest control

of the meeting from Mr. Dunn, the majority stockholder,

who was appointed Trustee of Colimbia Oil’s stock under

the Consent Decree in the Government’s anti-trust suit

and who is the Government’s representative in supervis-

ing the operations of Panhandle Kastern. These minority |

stockholders claim that by their tactics they succeeded at

the meeting in amending the by-laws of Panhandle Kast.

ern‘to provide (a)Xor the increase of the Board of Directors

from nine to fourteen directors, (b) for officers to be chosen

by the stockholders instead of by the direc ors, and (e)

for all officers’ salaries to be fixed by thé stockholders

instead of. by the directors, despite the fact that the major: -

ity stockholder voted in opposition - to these ‘proposed

amendments (R. 451, 460), and despite: the further fact

that no notice of the amendments.was contained in the

notice of the meeting (R. 500-501) in violation of the. pro-

visions of the by-laws (R. 499). The minority interests —

further claim that there were duly elected, over the oppos-

_ing vote of thé majority stockholder (R. 458), five addi-

‘

tional directors, who were nominees of Mokan, in addition

to the nine directors who had been elected, of which three

were nominees of Mokan, thus, claiming that they had suc-

ceeded in seizing control of the Board of Directors. They

‘further claim that a president, vice-president, secretary

and treasurer of their own choosing were elected over the

opposing vote of thelma jority stockholder (R. 460).

The Chancellor of State of Delaware has already de-

creed that this attempted sleight- of-hand by the represen-—

tatives of Mokan was wholly void and of no effect, that

they had not succeeded in amending the by-laws at the

meeting, and that they had not succeeded in electing five

additional directors and new officers of their own choosin

_ (Appendix A). ee ; a

Mr. Creveling, who is-thus offiGially seasiond as the

‘President of Panhandle Eastern, has submitted an affidavit

(R. 427), in which he states that nefther the duly consti-

tuted directors nor the duly constituted officers of Pan-

handle Eastern authorized Mr. Logan and his associates, .

who are prosecuting the instant intervention application in

the name of Panhandle Eastern, to act on behalf of Pan-

handle Eastern in the matter. In faét, Mr. Logan and his

associates do not claim that their authority to prosecute

the application.emanates from the directors or the officers

-of Panhandle Eastern. They claim their alleged authority

solely by reason of the alleged adoption at the stockholders’

meeting over the opposing vote of Mr. Dunn, the majority

stockholder, of certain resolutions, providing, among other y,

~___things, for Panhandle Eastern to intervene in the Govern-

ment’s anti-trust suit (R. 462). Therefore, it is only nec-

‘essary to consider whether the vote of Mr. Dunn, as Trus-

ae was properly and legally cast under the previsions of |

the Consent Decree and pursvant to the directions —

from Columbia Oil, the beneficial owner of the stock held

by him as such Trustee. as ae fees

Enormous responsibilities and obligations are imposed

on Mr. Dunn, as Trustee of Columbia Oil’s stockholdings

in Panhandie Eastern under the Consent Decree. , P&n-

handle Bastern is an important corporation which enjoys

large earnings. Columbia Oil’s“stock in Panhandle Kast- ms

. .ern‘consists of a iii, issued and outstanding :

9. ae ‘@

Pe:

720 -

common stock -and all of the issued ‘and outstanding pre-

ferred: stocl (R. 429, 431), which, because of cumulative

voting .(R. 489), is entitled to elect six of the nine directors

of Panhandle Hastern (R. 523). In the appointment of.

Mr. Dunn, as Trustee under the Consent Decree, the Gov-

ernment realized the responsibilities placed upon his

shoulders. ‘The court below, in discussing this aspect of

the matter, remarked (R. 522) :.

' “The-selection of Gano Dunn as Trustee was made

‘by the Attorney General of the United States as the

person best qualified to serve in a very difficult and

exacting position -from.a group of names submitted

to him.’’

In order to enable him to discharge his exacting duties,

Mr. Dunn is vested with equally broad discretionary powers

under the Consent Decree. Pursuant to the provisions

thereof (R: 146), he holds as Trustee the legal title to all

Columbia Oil’s stock in Panhandle Eastern and is author-

ized to exercise ‘‘all the rights and privileges incidental to -

absolute ownership thereof”’ subject to certain conditions.

As such Trustee, he is given broad . discretionary voting

powers. He is authorized to vote Columbia Oil’s stock for

as mauy. directors of Panhandle Eastern as the number of |

shares thereof might be entitled to elect; he is to act as one

of the directors and the remainder to be elected by him ar6

to be selected from among persons recommended by Colum-

bia Oil, in conference with him and with his advice. He is .

also authorized to remove and replace such directors with

others of his own choosing (R. 146). He 'is also given broad

discretionary powers with respect to voting the stock upon

all other questions, in the following terms (R. 147) :

““(b, To vote said stock upon all other. questions

and matters in which ‘the stock is entiled to vote, as

+ t 8 :

directed by the beneficial owners thereof, except

when such directions are inconsistent with the pur- °

poses of this decree ;’’. \ ,

When Columibia Oil received notice of the annual meet-.

ing of the stockholders of¢Panhandle Eastern to be held on

March 11, 1940, which specified only twe jtems of business

to be acted upon at the meeting, namely, (a) the election of

_ directors for the ensuing year, and (b) the management’s

propused amendment to the certificate of incorporation to

provide for the payment of participating dividends during

any year when additional: common stock is issued (R, 500),

Columbia Oil in pursuance of the provisions of the decree |

promptly | recommended certain persons to Mr. Dunn, in

conference witu him and with his advice, from whom. Mr. ,

Dunn selected six, who would receive his vote on the elec-:

tion of directors at ‘said meeting (R. 504-505, 518-519).

Columbia Oil also gave appropriate instructions regarding

the manner in which Mr. Dunn should vote the stock on the |

management’s proposed al ameridment: to: the certificate of

incorporation (R. 503, 518), which instructions were sub-

sequently modified by later instructions (R. 506- 507, 519).

As to all other matters which might come befor@the meet-

ing, Columbia Oil gave Mr. Dunn the following instructions

on how he shouid.vote the stock (R. 503, 518) :

‘‘that as to all other matters except election of direc-

tors, which might come before said meeting, he

‘ should vote said shares as, in his discretion, seemed

_ best for the interest of Panhandle Eastern Pipe Lime |

Company and generally to support the management;

that, in case any matters were presented at the meet-

ing on which he had any doubt’as to how to vote, he

could adjourn the meeting for a sufficient time to

confer by telephone with the representatives of

denies Oil & Gasoline —— i

SG REAL ENA alsin He > ‘

2 “eS,

- Since Mr. Dunn was authorized be the Consent Decree

_ to vote the stock on all questions other than, the election of

_dire¢tors as directed by the beneficial owners thereof, except

when such directions were inconsistent with the purposes

_ of the decree, and since Columbia Oii’s directions.were to

vote the stock on such matters as in his discretion seemed

‘ best for the interest of Panhandle Eastern and generally ©

to support the management, Mr. Dunn was duly vested with

such broad discretionary powers that he could vote the

' stock on such matters at the meeting in such manner as his

judgment might dictate.

Thus, when Mr. Dunn attended the meeting, he had

received from Columbia. Oil all the instructions regarding .

the voting of the stock which it was humanly possible to

give him in respect to the contemplated items of business

to be transacted at the meeting as well as in respect to any

surprise matters which might come before the meeting. As

the court below said (R. 523) :

“From the foregoing, it appears that Gano Dunn

attended the annual meeting of March 11 girded with .

his own authority as Trustee, supplemented by all

the directions from Columbia Oil that could have

been anticipated ‘in the normal course of human .

events.’’

‘But the first objection which Mr. Logan and his associ-

’ ates made to Mr: Dunn’s vote, cast-in opposition to the reso-

lutions contemplating the making of the intervention appli-

cation, was that Mr. Dunn did not exhibit specific instructions

that he should vote in opposition to such resolutions. The

answer to this proposition is contained in the Consent

' Decree and Columbia Oil’s directions thereunder. The

Decree did not provide that Columbia Oil must give spe-,

cific directions and aamcemes Oil saw fit not to give specific

directions, leaving to Mr. Dunn’s discretion theemanner in

its directions. Columbia Oil’s Board of Directors subse- ..

which he should yote on all surprise motions. Obviously;

the provision requiring Mr. Dunn. to vote as directed by the

beneficial owner of thie stock was inserted in the Decree for |

- the protection of Columbia Oil. It was not placed is the

decree for the benefit of.any other party. Hence, Mokan, or -—

apy other minority stockholder of Panhandle Kastern, can-

‘ not coniplain about the instructions which Mr. Dunn re-

ceived from Columbia Oil as being too general. The dhly

one affected by the nianner in which Mr. Dunn carried out

its instructions is Columbia Oil, and Columbia Oil was sat-.

isfied with the. manner in which Mr. Dunn had carried out

quently approved the manner in whic Mr. Dunn voted (R.

509-510).

The conténtions of Mr. Logan and his associates merely

boil down to the surprising proposition that Mokan, as a -

minority. stockholder in Panhandle Eastern, is legally enti-

tiled at any time it sees fit to.overrule the vote of the major-

‘.

ity stockholder and to take over the control of Panhandle

Eastern, This must necessarily be the contention of’ Mr.

Logan and his associates, because it follows from his ‘objec-

tions at the meeting that, whenever the. representatives

of Mokan see fit to make a surprise motion or to submit

for adoption a surprise resolution, Mr. Dunn cannot vote

Columbia Oil’s stock because no one could have anticipated —

such a surprisé action and, therefore, Mr. Dunn could not

possibly have obtained specific instructions as to how to .

_vote thereon. This is indeed a strange contention when it |

is realized that Mr. Dunn is the Government’s represent-_

Key. =

ative under the Consent Decree. Are his votes of the ma-

jority stock in Panhandle Eastern to be thus easily chal-

lenged? EP ere oe SA.

™ >

e .

Hien oe eo 7

: .

The second objection which was made by the represent-

atives of- Mokan to Mr. Dunn’s vote, cast in opposition to

the resolutions in question, was that, since the intervention

application contemplated by the resolutions was directed

“against Columbia Oil and others, Mr. Dunn could not vote

according to the directions of Columbia Oil. There are two

answers to this proposition, the first being that Columbia

_QOil’s instructions to Mr, Dunn left it entirely to his judg-

ment as to how-to cast his vote; the second answer is that,

even in the complete absence of directions from Columbia

Oil, Mr. Dunn would still be able to exercise the same broad

-discretion in voting under the provisions of the Consent

Decree.

_. The vote of Mr. Dunn, as Trustee under ‘the Consent _

Decree and as the holder of record of all of Columbia Oil’s °

stock in Panhandle Fastern (R. 150, 448), was legal and

valid under the laws of Delaware (Sections 17 and 18 of

the Delaware Corporation Law*) and under the provisions —

of the by-laws of Panhandle Hastern (R. 489-490). Mr.

Dunn’s vote was legal and proper and he was acting within |

the powers vested in him by the Consent Decree and within

the directions received from Columbia Qil. So the court

below. found (R. 525) : .

“In construing the language of the consent de-

cree, I ‘ind that the votes cast by Gano Dunn were

authorized by the powers conferred upon him by

the consent decree and tbat his votes were well

- within’ the directions given to him by Columbia -

7 Oil. 9) ‘ .

' One other matter merits consideration. The general

scope of Columbia Oil’s directions, within which. Mr. Dunn

* Sections 17 and 18 of the General Cerperetion Laws of ‘the .

State of Delaware are peated in full in Appendix D at the end

of this brief.

was to, exercise his discretion in voting at the meeting, was

that he should vote the stock’ as, in his discretion, seemed

best for the interest of Panhandle Eastern and generally

‘to support the management. In voting the majority stock

against the resolution providing for Panhandle Eastern

to intervene in the Government’s anti-trust suit, Mr.

Dunn’s action was definitely within the scope of these

~~ directions. Mokan had already attempted to intervene in

_ the anti-trust suit on substantially the same state of facts

on two different occasions (R. 284-312, 362-271), the first

application (R. 308) having been made by Mokan both in

its own right and also as a derivative stockholder’s appli-

- gation on behalf of Panhandle Eastern. Both these appli-

cations had been denied (R. 321-322, 371). It definitely

appears, therefore, that Mr. Dunn was acting for the bene-

fit of Panhandle Eastern in voting-against resolutions which

might very well subject it to the payment of large counsel :

fees on a matter which probably would be unproductive of

results. KFurthermore, he-undoubtedly saw no reason for.

Panhandle Eastern employing the attorneys of the minority

stockholders for such a purpose. Panhandle Kastern had -

its own counsel who would have been well able to under-

take such a litigation, if it had appeared advisable to Pan-

handle Eastern to follow such a course. .

In the appellant’s brief (pp. 31-38), a number of cases ©

involving minority stockholders’ suits are referred to and -

_ cited, and the general principle is developed that a ma-

jority stockholder occupies a fiduciary position to the

minority stockholders. We cannot understand what appli-

cation these cases have to the case at bar. This is not a :

minority stockholders’ suit. This is a ‘suit brought in the

name of the corporation by attorneys of a minority stock-

holder claiming ‘that they have been employed by the cor-

poration ‘to bring and prosecute the :action under resoln- .

tions .of its stockholders, which were never adopted be-

cause the majority stockholder voted the majority stock

against the resolutiona,

Furthermore, Mr, Diinn is not an ordinary atockholder; |

he is acting as Trustee of the majority stock under the

provisions of a Consent Decree, He is already:a fiduciary.

His primary dyties in his capacity as such Trustee are to

a (the Government and to tke court of his appointment. His

vote at the stockholders’ meeting, whieh is. the only ques-

tion involved in this case, was neither fraudulent. or op-

pressive as to minority stockholders because, as we have

just shown, he voted in the interests of Panhandly Kastern

and well within the powers vested in him by the Consent

Decree, | \ <<.

It is well settled that a majority stockholder does not”

‘become a trustee for a minority in any. event, wnlegs the

action of the majority stockholder is fraudulent .and oppres-

sive, Therefore, the minority stockholders of Panhandle

Eastern could not, even maintain a minority stockholders’

suit predicated on the vote which Mr. Dunn cast in oppo-

‘ sition to the resolutions in question. But the instant suit,

' as we have shown, is not a minority stockholders’, suit. Tho

sole question involved is the aut ority of the attorneys to

make and prosecute the intervention application in the

name of the corporation; not the question of whether. a .

_ majority stockholder occupies a fiduciary relationship. to —

the minority stockholders. The later question assumes the

proposition that the minority stockholders’ suit has been

- properly brought. . |

Conclusion. :

It is our firm belief that no case could. be conceived of in

which the facts would show such an utter lack of authority

on the part of attorneys to represent a corporation in

bringing and prosecuting a proceeding on its behalf, Even

if we should assume, however, that such authority existed,

then the intervention application would be subject to the

same infirmities as Mokan’s fourth intervention appli

cation . These infirmities have been fully discussed in our

— brief on appeal No. 268, .

For the foregoing reagons, therefore, this appellee,

Columbia Oil & Gasoline ( forporation, respectfully requests

this Court to dismiss for lack of jurisdiction appellant's

appeal! from the order of the District Court dismissing its

~ intervention application, or, if this Court considers that

it has jurisdiction, to affirm the order of the District Court.

Respectf ully submitted,

Daniet O. Hasrines,

Continental American Building,

Wilmington, Delaware.

Wituiam H. Burton, —

27 Cedar Street,

New York, N. Y.

James B. Auuey,

50 Broadway, -.. °

New York, N. CY.

. Of Counsel: : ne

WiuusamM A. Burton, .

James B. ALeEy.

Appendix A.

_ Reported in 32 Federal Supplement, 474.

_ UnItEp eins v. CotumBia Gas & Exectric Corporation,

et al, |

No. 1099. |

Disterct Court, D. DeLawane. |

age 6, 1940.

In Equity. Anti-trust suit by the United States of

"America against the Columbia Gas & Electric Corporation «

and others, wherein a consent decree was .entered. On

‘motion to dismiss application by the Panhandle Eastern

Pipe Line Company to become a party for a limited purpose. -

Motion granted. |

Robert J. Bulkley, of Cleveland, Ohio, Russell Hardy,

of Washington, D. C., and Arthur G. Logan (of Logan &

Duffy), of Wilmington, Del., for petitioner. |

! William H. Button and J ames B. Alley (of. Auchincloss,

; , Alley & Duncan), both.of New York City, and Daniel O.

_ Hastings (of Hastings, Stockly & Layton), of Wilmington,

Del., for Colnmbia Oil & Gasoline Corporation.

& Wood), of New York City, and Clarence A. Southerland

- (of Southerland, Berl, Potter & Leahy), of Wilmington,

Del., for Columbia Gas & Electric:Corporation.. |

~ Thomas J. Lynch, Sp. Asst. to Atty. Gen. and Stewart

Lynch, U. S. amy: i Wilmington, Del., for the United

States.

Edward N.. Goodwin, of New York City, and Hugh M.

Morris. and Edwin D. Steel, Jr., both of Wilmington, Del., ;

_ for Panhandle Eastern Pipe Line Co. |

_- Nuevos, District Judge. .

‘ Motion to dismiss application to aemaed a party for a

limited = :

Douglas M. Moffat (of Cravath, _deGersdorff, Swaine |

tp the anti- trust suit of United States v. Columbia Gas

& Electric Corporation, Columbia Oil & Gasoline Corpora-

tion, and others, a consent decree was enteréd by this court

January 29, 1936. The closing paragraph of the decree

provides: “oe © © that Panhandle Eastern ‘(Panhandle

Bastern Pipe. Line Company), upon proper ‘application,

may become a party hereto for the limited purpose of

‘ enforcing the rights conferred by Section IV hereof.’’

The sole question raised by the motion to dismiss is

_ whether Panhandle Eastern has made a ‘‘proper applica-_

tion’’ to become a party to this suit. March 23, 1940, a

document in the form of dn unverified application to become

a party was filed. This document’ is signed ‘‘Panhandle

. Eastern Pipe Line Company By Arthur G. Logan’’. Imme-

diately below. this’ signature appear ‘Arthur G. Logan —

Logan & Duffy Attorneys for Petitioner, 303 Delaware

Trust Building, Wilming&, Delaware’’. Below and to the

left of these signatures the following names of counsel are

» typed: ‘‘Russell Hardy’’, ‘‘Robert J. Bulkley’’, ‘‘ Arthur

G. Logan”’. ,

The propriety of the eneiinsiion to become a party turns

upon the terms of the consent decree. By Section III of -

that decree Gano Dunn was appointed Trustee for the pur-

poses and with the powers and duties set forth in that

section. The decree further provides:

““That within 10 days after the entry of this decree

Columbia Oil shall transfer all of its stock now owned and ~

thereafter, ali stock subsequently acquired in Panhandle

Eastern, having present or potential voting rights, to said

trustee to hold the legal title to said stock and to exercise

all the rights and privileges incidentai to f®® absolute

ownership thereof upon the following terms and conditions:

‘*(a) To vote said stock for the election of as many

directors of Panhandle Eastern as the number of shares

thereof may be entitled to elect; Provided, that one of the

directors so elected shall be the trustee; and that the re-

mainder shall be selected from among persons recommended

by the beneficial owner of said stock, in conference and. ~

with the advice of the trustee, and that, as to the directors

sq selected, the trustee is empowered to remove and replace

such dirzctors with others of his own choosing upon his

own motion, if in his. judgment such action is necessary in

the interest of Panhandle Eastern or for the effectuation of

the purposes of this decree; subject, however, in this as

well as in the exercise of all-other powers to the authority

of this Court upon the motion and showing of any party

hereto, or upon its own motion, to restrain said trustee

from abuses of sound discretion, in. view of the purposes

of this decree and the law under which it is entered, or in

_ case said trustee does not ect in goodefaith hereunder;

‘‘(b) To vote.said Stock upon all other questions and

watters in which the stock is entitled to vote, as. directed

by the beneficial owners thereof, exeept when such direc-

* tions are inconsistent with the purposes of this decree.’’

The business of a corporation is conducted by its board

of directors and officeis. The control of Panhandle East-

ern was vested in the Trustee.- He was one of the direc-

tors. He shares with Columbia @il in the selection of the

others. He was empowered to remove any of the other:

directors ‘and replace such directors by others of his own ;

choosing upon his own motion. As the board of directors.

chose the officers, the Trustee was the final word in the

conduct of the business of Panhandle Hastern. This con-

trol should be borne in mind in construing PEATEs. (b).

of the decree.

The. selection of Gano Dunn as Trustee was made by

the Attorney General of the United States as the person

best qualified to serve in a very diffeult and exacting posi-

tion from a group of names submitted to him.

Notice of the regular annual stockholders’ meeting of

Panhandle Eastern to be held March 1i,. 1940, was duly

_ sent to stockholders. It notified them that the proposed

. business to be considered at the meeting would be the élec-

tion of directors for the ensuing year, an amendment of

the certificate. of:incorporation, and such othef business as

might properly) come before the meeting

Mindful of paragraph (b) of Section III of the decree,

Gano Dunn obtained from the executive head of Colum-

bia Oil, the beneficial. owner of the stock of cee

Eastern held by him, directions as to voting said stock’a

the annual meeting. March 5, 1940, Don M. Wilson, a vice

president of - Columbia Oil and acting president, directed |

Gano-Dunn to vote the shares of stock held by him in favor

of the amendment to the articles of incorporation pro-

posed by the Board, and as to other matters, excepting

the election of directors, to vote said shares ‘‘as,-in his

“ discretion, seemed best for the interest of Panhandle East-

ern Pipe Line Company and generally to support the man-

agement; that, in case any matters were presented at the

meeting on which he had any douht as to how to vote, he

could adjourn the meeting for a sufficient time to confer by

telephone with the representatives of Columbia Oil & Gas- ;

oline Corporation’’. March 8, 1940, the board of directors

of Columbia Oil adopted a resolution expressly approving

said directions and also approving a letter from- Wilson to

Dunu containing the followi ing directions :

‘Dear Mr. Dunn: | 2

After consultation with .you, as Thustéc holding the |

voting stock in Panhandle Eastern Pipe Line ‘Company,

which is owned by this’ Corporation, and with your advice,

we recommend the following individuals for your selection .

as Directors of Panhandle Eastern Pipe Line Company,

and request that you elect them as such by vote of the stock.

which you hold as Trustee: /

Joseph A. Bower 165 Sesntines New York wr

Joe D. Creveling 90 Broad Street New York City

Gano Dunn 80 Broad Street New York City .

* Walter G. Mortland - 37 Kast 64th St. New York City

.- Richard C. Patterson, Jr. 1270 Sixth Avenue New York City

Robert C. “Winmill .. a Wall Street N ew York Oty

. Very truly yours,

{signed ) D. M. Wnson. :

Vice President. Kd

“

Before determining upon fhe six directors named .in

the above letter, Columbia Oil in conference with Dunti

recommendedcertain persons as directors and from among

the number s6 recommended Dunn selected the six above

named as the six of the nine directors of Panhandle Kast-

ern which the stock beneficially owned by Columbia Oil was

entitled to elect.

From the foregoing, it appears that Gano Dunn at-

tended the annual meeting of March 11 girded with his

own authotity as Trustee, supplemented by all the direc-

tions from Columbia Oil that could have been anticipated

in the normal course of human events.

March 11, 1940, at the opening of the annual stock-

holders’ meeting, Creveling, President of Panhandle Kast-

ern, took the Chair and called the meeting to order as pro-

vided in the by-laws. The Chairman announced the pres-

ence of a quorum. Thereupon, Logan, who appeared as

a stockholder, moved that Dixon, as associate of Maguire, -

be made Chairman of the meeting ‘‘from .this time for-

ward.’’? Creveling declayed the nfotion out of order. There-

upon, Logan took an appeal from the ruling of the Chair-

man. A vote was taken. Gano Dunn voted to uphold the

Chair while Logan and his associates voted the contrary.

Creveling announced that his ring had been upheld.

Shortly thereafter, Logan moved that Article,II of the

- by-law® be amended to read: ‘‘The property and business

of this corporation shall be managed by its board of direc-

' tors, consisting of 14 persons. "

This drastic action of increasing the naneinn of dives:

tors from 9 to 14 was praposed without notice thereof, and

- evidently with the intent to a¢quire control] of a large and

Pre

~ valuable proper ty. The Chairman declared the mction out ,

of order in view of-Article 42 of the by-laws, providing

that the by-laws may be altered or. amended ‘‘if notice.

, of the proposed alteration or amendment be contained in

' the notice of the meetirfg’’. An appeal was harieh with the

game result as in preceding instances.

Motions were made that the Class B ‘iat be not

_allowed: to vote; that officers of the company be chosen by

ip Re phn

the stockholders; that their salaries be fixed'by the stock-

holders; that Maguire be made president and Tringham

treasurer of the company. These motions were disposed

of as the others had been, In each instance Dunn voted the

majority of the voting stock against the motions, and Logan

and his associates voted for the motions. |

Hand moved that Panhandie Hastern become a party to

the suit of Missouri-Kansas Pipe Line Company and

Dammann against the Columbia companies. This motion

was similarly disposed of. Hand further moved that the

Class A stock of Panhandle Eastern be redeemed. ‘This

motion met the same fate. 3 4

The following motion concisely states the position of

Logan and: his associates throughout the meeting: ‘‘Mr.

President, I now move that this corporation refuse to ac-

cept any vote of Mr. Gano Dunn on any question unless

he first establishes by competent proof that he has been

directed by Columbia Oil and. Gasoline Corporation to

cast his vote in accordance with the way he may cast it due .

to the fact that wre corporation is aware of the Haiitaton

upon his powers.’ |

Later, Hand moved that Panhandle Eastern be ‘esata

to bring six suits as suggested in a letter of January 15,

1940 from Missouri-Kansas Pipe Line Company to Pan-

‘handle Eastern. The fourth item of this letter was an

instruction that Panhandle Kastern intervene in. this: anti-

trust suit by the United States pending in this court. At

this meeting a resolution was offered by Hand that Pan-

handle Eastern be directed to make the present application.

Gano Dunn, holding a-mnajority of the voting stock of Pan-

handle Fastern, voted against the resolution and it was

accordingly defeated. - Zz

It. was further eiiendit ‘“‘That this corporation will

employ Robert J. Bulkley of Cleveland, Ohio, Russell

ton, Delaware, as its attorneys to take action provided for

herein,’’ and further, ‘‘that the officers of this corporation

_arrange and pay a reasonable- compensation to said atfor-

ways for such services.”’

. Thereafter, the meeting adjourned, although as to ad-

3 journment Logan objected that Gano Dunn was not quali-

fied to vote without producing before the meeting specific

instructions from Columbia Oil.

‘After adjournment Logan and his associates held a

meeting of their own. No quorum was present. Holders of

a minority of the stock-of Panhandle Eastern, either in-

person or by proxy, were the only persons present. The

motions of Logan and of his ‘associates, defeated at the

regular meeting, were resubmitted at the subsequent meet-

ing, and purported to be passed. __ .

March 20, 1940, a special meeting of the ‘Board of Direc-

tors of Columbia Oil was held. The Chairman stated that

he had received an official stenographic transcript of the

proceedings of the annual meeting of stockholders of Pan-

handle Eastern of March 11, 1940. Upon consideration of |

- those minutes and of the manner in which Gano Dunn, Trus-

tee, had voted the stock in Panhandle Eastern, it was re-

solved: ‘‘That all of the votes and all of the positions taken

by said Gano Dunn as Trustee or otherwise at said stock-

holders’ meeting be and the same hereby are in all respects

approved, ratified and-confirmed’’.

Mica: construing the language of the consent decree, I find

_ that the votes cast by Gano Dunn weré authorized by the

powers conferred upon him by the consent decree and that

his votes were well within the directions given to him by »

Columbia Oil. From this finding, it follows that the so-

called application filed in this proceeding was not author-

ized by Panhandle Eastern or ‘by any responsible body

having control of suid corporation.

The motion to dismiss the alleged application of Pan-

‘handle Eastern for leave to hecome a party hereto and for -

other weet must be granted for the follo ng, reasons:

1. Said application was not authorized by Panhandle Ps

_ Eastern.

—

2. The attorneys whose es appear oni said applica-

tion as attorneys for Panhapdle HKastern were not author-

ized by that company to act in its behalf in filing such |

application. : pie. «uence, :

3. Gano Dunn, Trustee, duly voted the shares of stock.

of Panhandle Eastern on all matters on which he voted at

the annual meeting of March 11, 1940, in accordance with

_ provisions«of said consent decree, and pursuant to valid

directions from Columbia Oil. —. 7

An oyder may be submitted.

- Missourt-Kansas Pipe Line Company, -

’ PanHANDLE Bastern Pree Line Com-

< 37 :

. Appendix B.

. IN THE

COURT OF CHANCERY OF THE STATE

OF DELAWARE ~

- IN AND For New Castie County

PS.

Complainant,

vs.

PANY, JOE D. -CREVELING, Louis *.

Sperry, JosePpH J. Bopexit, Davin

Boyp-Smitu, Husert E. Howarp,

Georrrey MELLor and Wi1aM C.

TRINGHAM,

‘ , Respondents.

FINAL DECREE

Awp now, To-wn, this 19th day of June, A. D. 1940, the

above stated cause having come on to be heard before the

Chancellor, upon: testimony of witnesses and exhibits, and

the said cause witha been | Sehy argued before the Chancel-

lor,

. Iris ORDERED, ADJ eee AND DECREED BY THE CHANCELLOR

_ as follows:

(4) That the Bill of Complaint filed in the above-

entitled cause shall be and the same is hereby dismissed.

(2) That at the annual meeting of stockholders of Pan- . °

handie Eastern Pipe Line Company held on March 11, 1940

each of the following’ persons was duly elected a director

of said corporation, to serve for one year from date of

said meeting, or until his successor should be ae wl

should eer _ :

Joe D. Creveling

. Joseph A. Bower

» William J. Bulkley

A. Faison Dixon

- Gano Dunn .

' William C. Maguire

Walter C. Mortland

Richard C. Paterson

Robert C. Winmill

(3) That none of the following persons; who were nom-

inated for directors of Panhandle Eastern Pipe Line Com-

pany at said meeting, were duly or properly elected di-

rectors thereat: .

Joseph J. Bodell

David Boyd-Smith

Hubert E. Howard

Geoffrey Mellor

William C. Tringham -

. a

(4) That at the date of the said annual meeting of stock-

holders, and on April 25, 1940, the date when the cause was

heard, the following persons were the officers of the corpo-

ration:

Jo oe D. Ceeediieien President

Gerard J. Neuner, Vice-President in Charge of -

_ -Qperations .

‘’. Robert D. Field, Vice-President :

Leith V. Watkins, Secretary and Controller

Louis F. Sperry, Treasurer.

.- (5): That although certain stockholders at said annual -

meeting of Panhandle Eastern Pipe Line Company pur-

ported. to elect the following persons as officers of the cor-"

ee E fae lo aut '

.. William G. Maguirg.... ib tae ae President

Gerard J. Neumer..->...<....;.......0.:--00- Vice-President |

Leith V. Watkins............j.c-ccec.cscae: Secretary

William C. Tringham.................... -Treasurer

none of such persons were duly or properly elected officers

by virtue of such action. -

(6) That the aetion of certain, stockholders at said an-

nual meeting purporting to amend the by-laws of Pan-

handle Eastern Pipe Line Company was void and without

effect and such by-laws were not modified in any respect

whatsoever by any action taken at said meeting.

'(7) That costs of the above-entitled cause shall be paid

by the Complainant, Missouri-Kansas Pipe Line Company,

within 30 hans from the date hereof, or attachment.

/3s/ Wu. Watson Haxamworon

Chanoettor,

ar beamed” ©

40 :

. | _ AppendixC.

_ COURT OF <a

| : a 9s eee

| WouaM Warsor HarRINGTON: Chancellor’s Chambers

‘Chancelfor = ~—-_—- Dover, Delaware |

June lith, 1940

e .

In re Missouri Kansas ; Pipe Line Co. vs.

Panhandle Eastern Pipe Iyine Co. et al.

Hon. Huon M. Morris, 33 . ‘ oe OO tte 5

How. Dantet O. Hasrincs,

ARTHUR T. Locdy, Esq.,

Curistopuzr L. Warp, Jr., Kea, ;

Attorneys-at-law, | Y

Wiimington, Delaware.

Application to review an election of directors

and officers under Section 31 of the Delaware

_ Corporation Laws.

’

e ‘

Gentlemen:

Aftet a tharough examination of the reco.d°Sf the pro-

ceedings of the stockholders’ meeting in question, my con-

clusion is that: the fair inference do be drawn therefrom is

that the votes taken at that meeting weré based on stock

, ownership, and not on the mere votes of the various, per-

- sons: present, regardiess of the number of shares owned

by them. It, therefore, necessarily follows that the corpo- ~

rate by-laws were not ehanged at that meeting, and that.

the Board

only consist of nine meméers, and not of

s contended by Mr. ‘Logan. . _ex

‘may be cases where the facts and circumstances

ch as to justify the conclusion that the right to a

1 and it on a a vote; Dat, as I view if, this is is not ~

a case of that ture : ‘

‘2 eo M4 m x we °

* ts

The provisions of the court order under which title to yo

‘a large block of stock ‘was vested in Mr.“Dunn, have an 4

important bearing on this conclusions and this is particu-

larly true as it is difficult to escape the conélusion that all -

of the provisions of this order were well known to the

Mokan group, who claim that th¢y ultimately controlled.the

_ meeting: From this aspect of the case, it is unnecessary

_for me to cons sider wnether the by-laws could have een

amended, without notice, or whether the fact that they were

originally adopted by ‘the incorporators, who were the

only stockholders at that time, is an answer to any such

contention.

. There is no dispute as to the validity of the eleetion of

nine members of the Board, but there is a dispute as to

the other five. persons who, -also, elaim to be members of

that Board. In view of the possible complic#tions grow

ing out of this contention, a speedy determination be thif

' case issessential to efficient’ corporate management; and,

because my conclusion is largely based on questions of

fact, cogsidered i in connection with the pertinent statutory,

charter and by-law provisions, it: seems- unnecessary to’

‘delay an annduncement until I shall have had an oppor- ° °

tunity to write an opinion. ~

Whatever foundation there may be for the charge that.

Mokan has-been unfairly treated in the past by the corpo-

ration holding the controlling stock interest in Panhandle

Kastern, I do not see: how that question can be considered

in this controversy. Nor am I impressed by the contention

that, even if Mr. Dunn’s votes be copsidered as’ stock

votes, they were ‘Void because he did not have the express

that came before the meeting.

Counsel for the respondents may present such an appro-

. priate order as will carry out these conclusions.

Yours sincerely,

x /s/ W. W. Harrtneton:

WYKEL.B

Appendix D.

oy Sections of t ‘General Corporation —_ of the State of

elaware Referred to in This Brief.

Section 17. naa OF ieccmaien ro VorE IN PERSON

or BY Proxy; Limitation or Péwer; Ciostnc or TRANSFER

Books or Frxtne Date rok DETERMINATION OF STOCKHOLDERS

or -Recorp For, Certain: Purposes; Cumunative Vortine:

Quorum :—Unlegs otherwise provided in the Certificate of »

Incorporation, each stockholder, shall a& every meeting of :

the stockholders be entitled to one vote if person or by —

proxy for each share of the capital stock held by such

stockholder, but no proxy shall be voted on after three |

-years from its date, unless said proxy provides for a longer

‘period, and, except where the transfer books of the cor-. .

poration shall have been closed or a date shall have been .

fixed as a record date for the determination of its ‘stoc

holders entitled to vote, as heremafter provided, no share.

of stock shall be voted on at any election for —

which shall have been transferred on the books of the

poration within twenty days. next Preceding such aod al

of directors. |

The board of directors shall have e spower- to’ shoei the

‘stock transfer books of the corporation for a period not ,:

exceeding. fifty days preceding the date of any meeting of.

stockholders or the date for payment’ of ar dividend or

the date for the allotment of rights or the date when any

change or conversion or exchange of capital stock shall go

into effect or for a period of not éxceeding fifty ‘days in

connection with obtaining the consent of stockholders for

any purpose; provided, however, that in lieu of closing the

stock transfer books as aforesaid, ‘the by-laws may- fix or

authorize the board of directors to fix in advance a date,

not exceeding fifty days preceding the date of any meeting

of stockholders, or the. date for the payment of any divi-

_dend, or the 7 for the allotment of rights, or the date

. as

< —_

: .

43 po ree

"when. any change’ or conversion or ‘hhenes of capital stock .

" shall go into effect, or a date in connection with obtaining

_ such consent, as a recordsdate for the detertnination of

the stockholders entitled ta notice of,.and to vote at, any

such meeting and any adjournment theréof, or entitled to

receive payment of any such dividend, or to ang sych allpt- °

ment of rights, or to_exercise the rights in respect of any iva

such ¢ nge, conversion or exchange of capital stock, or to -

give such consent, and in such.case such stockholders. and |

_ only such stoclholders as shall be stockholders of: record

‘on the date so fixed shall be entitled to such notice of, and

td vote at, such meeting and any adjournment thereof, or

_* to receive payment of such dividend, or.to receive such

| -_-allotment of rights, or to exercise such rights, or to give

such consent, as the case may be, notwithstanding any

transfer of any stock on the books of the corporation after’

any such record date fixed as aforesaid.

-____The-Certificate_of Incorporation—of. any corporation $___—

may provide that at all elections of directors of such cor-

poration, each stockholder shall be entitled to as many votes

as shall ‘equal the number of his shares of stock multiplied -

by the number of directors to be elected, and that he may

cast all of such votes for a single director or may distribute.

them among the number to be voted for, or any two or more

' ef them as he may see fit, which right, when exercised, shall .

be termed cumulative voting. th

The provisions of this Section shall not apply, however,

to corporations not for profit, fer which it-is desired to

have uo capital stock. Unless otherwise provided in the

Certificate of. Incorporation of a corporation which is to

have no capital stock, or in an amendment thereto, each

-member of* such corporation shall at every meeting of mem-

bers be entitled to: one vote in person or by proxy, but no

‘proxy shall be voted oft after three years from its date,

unless sajd proxy proy; des for a longer. period. -

Subject to the provisions of this Chapter in respect of*

the vote that, shall be required for a specified action, the —

Certificate of “Incorporation er si ‘laws of any corporation - “

= a a oe

may” specify the number of shares and/or the amount of

(or in the case of a corporation with no capital stock, the —

number of mem®ers thereof having voting power ‘who)

» shall be present.or represented by proxy at any meeting

in order to con stitute a quorum for, and the votes that shall

be necessary for, the transaction of atty business.

Szorton 18. Finuctary Stock HOLDERS; Vortne Power

. . oF; Vorinc Trusts:—Persons holding stock in a fiduciary

capacity shall’ be entitled to vote the shares so held, —

persons whose stg@k-is pledged shall be entitled to vo

unless in the transfer by the pledgor on the boo

corporation he shall have expressly empowered the pledgee . F

to vote thereon, in which case only the pledgee; gr his proxy .

may represent said stock and vote thereon. —_——

~One or more stockholders may by agreontent i in writing

: deposit capital stock of an original issue with or, transfer

capital-stock to any person or persons, or corporation or

corporations authorized to act as trustee, for the purpose

of vesting in said person or persons, corporation or cor-

, porations,who may be designated Voting Trustee or V oting

Trustees, the right to vote thereon for any period of time —=

ofletermined by such agreement; not. exceeding ten years,

oe oe upon the terms and conditions stated in such agreement.

_ Such agreement may contain any other lawful provisions — f

not inconsistent with said purpose. After the. filing of a

* copy of such agreement in the principal office of the cor-

poration in the State of Delaware, which copy shall be open

-to the inspection of any sto¢kholder of the corporation pr

any beneficiary of the trust under said agreement daily |

during businéss hours, certificates of stock shall be issued |

to the Voting Trustees to represent any stock of an. original

issue so deposited with them, and any certificates-of stock

so transferred to the Voting Trustees shall be surrendered §

» and "cancelled and new certificates thetefor shall be issued — ,

‘to the Voting. Trustees, and in the certificates so issued it

shall appear that they are issued pursuant to such agree-

3 , : 45 oe .

ment, and in, the entry of such Voting Trustees : as owners:

‘of such stock in the preper books of the issuing corporation -

that fact shall also be noted. Said Voting Trustees,.may

vote ‘upon the stock so issued or transferred during the

period in such agreement specified; stock-standing in the .

names of such Voting Trustees may be voted either in per-

‘son or by proxy, and in voting’ said see 3 such Voting

Trustees shall incur no responsibility as stockholder, trustee

or otherwise, except for their own individual malfeasance. .

In wny case where two or more persons are designated ‘as

Voting Trystees, and the right and method of voting any

stock standing in their names at any meeting of the cor-~

poration are not fixed by the agreement appointing said

Trustees, the _— to vote said stock and the manner of

ticular case, the vote of said. stock in’ cash | case shall be

divided equally among the Trustees.

At any time within one year prior to the time of ex-

piration of any such voting. trust agreement as originally

frxed or as extended as herein. provided, one or more bene-

ficiaries of the trust under such voting trist agreement.

may, by agreement in writing and with the written consent

of such Voting Trustees, extend the duration of such véting

trust agreement for an additional period not exceeding ten: ~~

- years. Said Voting Trustees shall, prior to the time of ex-

_piration of any such voting trust agreement, as originally

- fixed or as previously extended, as the case may be, fil: in

the principal office of the corporation:in the State of Dela-

‘ ware a copy of such extension agreement and of their con-

_ sent thereto, and thereupon the duration of such voting

- trust agreement shall be, extended for the period fixed in

such extension agreement; provided, however, that no such -

extension agreement shall‘ affect the rights or obligations

of canoe not parties thereto.

ts aes . : : i :

a ‘ -s +. “: N | a Rt,

see

| 2

Srotion 31. \ Mibadalas OF. Dein on Fatture To

- ELECT ON. RecuLar Day; JALECTION. ORDERED BY CHANCELLOR;

ConTEesteD Execrions;. Hearne Brrore @HANCELLOR;

Service:—If the’ election for directors of any corporation .

shall not be held on the day designated by the. by-laws, the

director’ shall cause the election to’be held as soon there-

after as conveniently may be; no failure fo, elect directors .

at the designated time shall work any forfeiture or disso-

‘lution of the corporation, but the Chancellor may summarily

order an election to be held upon the application of any -

stockholder, and at any such election the shares of stock —

represented at said nteeting, either in person or by proxy, o

.- Shall constitute a qaorum for the purpose of such meeting, »

notwithstavting ’ any provision of the by-laws of the cor-

poration to the contrary.

Upon the application . by .any stockholders, the Chan-

cellor shall have ‘power to,hear and determine the validity -

of any election of any director or officer of any corporation

- organized’ under this Chapter and the right of any person *

to hold such office, and in case any stich office is claimed by

thereto; and to-that end make such order or decree in an

whore than one person may determine the. person Gar.

such ¢ase as may be Sust and proper, with power to enforce

the production of any books, papers and reeords of the cor-

poration relating to the issue; and in case. it should be

determined that no valid election of. the corporation has

been held, the Chancellor .shall have power to-order an

election to be held in accordance with the provisions of the .

first paragraph of this Section. In any such application

service -of, copies of such petition upon the corporate resi-

dent agent of the corporation shall be deemed to be service

upon the corporation and upon the person whose title to

_ office is contested and upon the person, if any, ‘claiming

such office; and it shall be the duty of such residént agent

to forward immediately a. copy of said petition se deliyered

to him, or it, to the corporation and to the-person whose

title to office is contested arid to the person, if any, claiming

such office, in a post- -paid, sealed registered letter addressed

¢ *. = a 7 : s

- 2

ro *

ee AT

“to eich corporation or such 7 person at his or its at known

postoffice addrésg; and the Chancellor miay make ‘syck fur-

. ther or éther order respecting noticé of such application -

™,

.as he may deem proper under. the circumstances.

_ The Chancellor i in any proceeding instituted under this ‘

Section shall have power to determine the right and power —

of persons claiming to own stock, to vote at. any meeting of ~ °

. the oe authorized by or referred to in this Section.

. The Chancellor shall have power to appoint a Master

to hold any élection provided for ‘in this Section under such

orders and powers as he shall’deem proper; .and he shall

also have power to punish any officer ar director for con-

tempt, in case of disobedience of any order made by the.

Chancellor antl may, in case of disobedience by any sach -

corporation of any order made by the Chancellor, in his

discretion, enter a‘ decree against suchcorporation ‘for a

’ penalty in a sum not exceeding the sym of Five Thoysand .

dollars ($9, 009,90): = 9,

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.