Salt Lake Tribune | 1919-07-20 | Page 44 | Injunction Denied in Toledo Mines Case

INJUNCTION DENIED IN TCLEDOHS CASE Action of Directors Upheld in Disposing of 54,000 Shares of Stock. In a decision given yesterday by Judge Harold M. Stephens of the Third district court in the case of A. O. Ja-cobson Ja-cobson against A. L. Hurley, an injunction in-junction sought against Hurley to prevent pre-vent hiin from voting 54,000 shares of the capital stock of the West Toledo Mines company, issued and sold to him by order of the company's board of directors di-rectors May 29, 1919, was denied. The suit was filed June 2. the date set for the holcTing of a stockholders' meeting, and a temporary restraining order obtained, which ceased to be operative op-erative with denial of permanent induction. in-duction. The court found that the action of the board of directors is covered by a provision of tho company's articles of incorporation making 300,000 shares of unissued stock subject to the action of the board of directors with regard to the interests of the corporation. Since the acquisition of the stock by Mr. Hurley was regular in the light of such provision of the articles, the court held that he could not be enjoined from voting it. Under the law, new or additional stock might have- been issued and disposed dis-posed of only after existing stockholders stockhold-ers had been given opportunity to subscribe, sub-scribe, 'if the stock so issued was to carry voting right, the court explained. This, it was further explained, is designed de-signed to afford opportunity to preserve pre-serve the relative voting strength of the stockholders, but though the relative rela-tive voting strength of the stockholders stockhold-ers must be and is changed in the present pres-ent instance, the condition stands examination exam-ination under the law because of the provision of the articles for just such sale as was made. Providing for incorporation of the company at $50,000 and the issuance of 200,000 shares of stock, the articles of incorporation provide further in article IS that 300,000 shares of unissued stock ! should be "placed in the treasury of said company, to be used by the board i of directors for the purpose of acquiring ! properties or developing the same or , f or any of the general purposes for I which said corporation is organized, and said treasury stock may be sold or I otherwise disposed of by the board of directors of said company upon such : terms and conditions as in their judgment judg-ment is for the best interests of the said company. ' ' j On a point as to compliance with the , blue sky law, the company being with-' with-' out a license at the time of the sale, ; the court held that the situation was covered by the provision of the law making exception of isolated cases.