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Recapitalization of United States Radium Corporation?
The question herein presented for opinion is:-
"Can the Corporation,with legal safety to itself and to its
Directors, recapitalize its financial structure by distributing a
portion of its surplus funds to Preferred Stockholders?"
The question presented presupposes the business desirability
of such a program. It is also based on the assumption that a sub-
stantial majority of the stockholders, both Preferred and Common, will
favor such a plan.
The Corporation was organized in 1917 under the laws of the
State of Delaware. The present capital structure is as follows:
$7.00 Cumulative First Preferred Stock: Authorized - 4,000
shares of $50.00 each.
Issued - 5,850 shares. Reserved for exchange of $7.00 Cumulative
Preference Stock - 150 shares.
$7.00 Cumulative Preference Stock: Authorized - 5,000 shares
of $50.00 each. Outstanding - 150 shares.
Common - Class A Stock: Authorised - 16,000 shares of no par
value.
Issued - 14,850 shares, including 1,029 shares of Radium Lumi-
nous Material Corporation Stock not exchanged.
There are certain provisions which specify that in case divi-
dends are not paid on the Preferred Stock, exclusive voting privileges
reside in the Preferred Shareholders.
No dividends have been paid on the $7.00 Cumulative First
Preferred Stock since January 1st, 1931, and none have been paid on the
2
$7.00 Cumulative Preference Stock (150 shares outstanding) since
September, 1922.
Since 1924 or 1925 the Corporation has been in constant
litigation as defendant in a series of personal injury suits brought
by former employees. Most of these suits have been disposed of through
settlements, in amounts varying from $1000. up to $10,000. each.
Five suits were settled in 1928, which carried a provision
obligating the Corporation to pay reasonable medical expenses, so
long as the plaintiff lives, plus a pension of $600. per year.
Two of the original five girls are still living and may continue
to do so for a number of years. Under normal conditions, this determined
and contingent expense should not be any great burden on the finances
of the Corporation.
The only actual trial of a case was in the matter of LaPorte
vs. U.S. Radium Corporation, which came before Judge Forman in the
U.S. District Court for the District of New Jersey. The issue was
raised through a Bill in Equity to enjoin the Corporation from pleading
the Statute of Limitations as a bar to recovery at Law.
(Judge Fake, in the Law side of the same Court, had ruled in
early 1934 that the Statute is a bar to recovery at Law, but that in
case of fraud, actual or equitable, on the part of the Corporation, it
might be denied the use of the Statute as a defense.)
On December 17, 1935, Judge Forman dismissed the Bill in Equity
on the grounds that there was no fraud, actual or equitable, shown on
the part of the Corporation.
This decision was rendered after able presentation by attorneys
3
and twenty-two days of expert testimony before the Court; after a
study of the complete transcript of the testimony, supported by well
over a hundred scientific articles and exhibits; and after appropriate
briefs and argument.
In the opinion of Judge Forman, and in the opinion of our own
attorneys, as well as that of Mr. Emmerglick, who represented the Plain-
tiff, the decision is sufficiently strong to practically put an end to
all such type suits against the Corporation.
There will be no appeal from the decision, and since the
decree, four suits have been discontinued, in three of which Mr. Em-
merglick represented the Plaintiffs.
At this writing there are three suits pending against the Cor-
poration. These we expect will be discontinued in due time. There
are also six claims which have been called to our attention by pre-
are
vious attorneys. Most of these claims/of several years' standing,
and no doubt will continue to remain dormant.
In our suit against the four Insurance Companies to test the
question of coverage, the New Jersey Court of Errors end Appeals, on
January 31st of this year, confirmed Judge Ackerson's opinion that there
was no coverage under the policies. Since 1926 "Radium Poisoning" comes
under the provisions of the Workman's Compensation Act in both the States
of New Jersey and New York. Therefore, any case against the Corporation,
claiming injury previous to the placing of such injury under the provisions
of the Workman's Compensation Act, must be defended or settled by the
Corporation, without any financial or legal aid from the Insurance
Companies.
In the opinion of those versed in the dangers of radium dial
4
painting, etc., our present operations are conducted in a safe manner.
Should there be injury to an employee, we are covered under the pro-
visions of the Workman's Compensation Act.
A complete file of the cases already settled; of those now
pending; and of the legal opinions and decrees rendered, is available.
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"ocrText": "Recapitalization of United States Radium Corporation?\nThe question herein presented for opinion is:-\n\"Can the Corporation,with legal safety to itself and to its\nDirectors, recapitalize its financial structure by distributing a\nportion of its surplus funds to Preferred Stockholders?\"\nThe question presented presupposes the business desirability\nof such a program. It is also based on the assumption that a sub-\nstantial majority of the stockholders, both Preferred and Common, will\nfavor such a plan.\nThe Corporation was organized in 1917 under the laws of the\nState of Delaware. The present capital structure is as follows:\n$7.00 Cumulative First Preferred Stock: Authorized - 4,000\nshares of $50.00 each.\nIssued - 5,850 shares. Reserved for exchange of $7.00 Cumulative\nPreference Stock - 150 shares.\n$7.00 Cumulative Preference Stock: Authorized - 5,000 shares\nof $50.00 each. Outstanding - 150 shares.\nCommon - Class A Stock: Authorised - 16,000 shares of no par\nvalue.\nIssued - 14,850 shares, including 1,029 shares of Radium Lumi-\nnous Material Corporation Stock not exchanged.\nThere are certain provisions which specify that in case divi-\ndends are not paid on the Preferred Stock, exclusive voting privileges\nreside in the Preferred Shareholders.\nNo dividends have been paid on the $7.00 Cumulative First\nPreferred Stock since January 1st, 1931, and none have been paid on the\n2\n$7.00 Cumulative Preference Stock (150 shares outstanding) since\nSeptember, 1922.\nSince 1924 or 1925 the Corporation has been in constant\nlitigation as defendant in a series of personal injury suits brought\nby former employees. Most of these suits have been disposed of through\nsettlements, in amounts varying from $1000. up to $10,000. each.\nFive suits were settled in 1928, which carried a provision\nobligating the Corporation to pay reasonable medical expenses, so\nlong as the plaintiff lives, plus a pension of $600. per year.\nTwo of the original five girls are still living and may continue\nto do so for a number of years. Under normal conditions, this determined\nand contingent expense should not be any great burden on the finances\nof the Corporation.\nThe only actual trial of a case was in the matter of LaPorte\nvs. U.S. Radium Corporation, which came before Judge Forman in the\nU.S. District Court for the District of New Jersey. The issue was\nraised through a Bill in Equity to enjoin the Corporation from pleading\nthe Statute of Limitations as a bar to recovery at Law.\n(Judge Fake, in the Law side of the same Court, had ruled in\nearly 1934 that the Statute is a bar to recovery at Law, but that in\ncase of fraud, actual or equitable, on the part of the Corporation, it\nmight be denied the use of the Statute as a defense.)\nOn December 17, 1935, Judge Forman dismissed the Bill in Equity\non the grounds that there was no fraud, actual or equitable, shown on\nthe part of the Corporation.\nThis decision was rendered after able presentation by attorneys\n3\nand twenty-two days of expert testimony before the Court; after a\nstudy of the complete transcript of the testimony, supported by well\nover a hundred scientific articles and exhibits; and after appropriate\nbriefs and argument.\nIn the opinion of Judge Forman, and in the opinion of our own\nattorneys, as well as that of Mr. Emmerglick, who represented the Plain-\ntiff, the decision is sufficiently strong to practically put an end to\nall such type suits against the Corporation.\nThere will be no appeal from the decision, and since the\ndecree, four suits have been discontinued, in three of which Mr. Em-\nmerglick represented the Plaintiffs.\nAt this writing there are three suits pending against the Cor-\nporation. These we expect will be discontinued in due time. There\nare also six claims which have been called to our attention by pre-\nare\nvious attorneys. Most of these claims/of several years' standing,\nand no doubt will continue to remain dormant.\nIn our suit against the four Insurance Companies to test the\nquestion of coverage, the New Jersey Court of Errors end Appeals, on\nJanuary 31st of this year, confirmed Judge Ackerson's opinion that there\nwas no coverage under the policies. Since 1926 \"Radium Poisoning\" comes\nunder the provisions of the Workman's Compensation Act in both the States\nof New Jersey and New York. Therefore, any case against the Corporation,\nclaiming injury previous to the placing of such injury under the provisions\nof the Workman's Compensation Act, must be defended or settled by the\nCorporation, without any financial or legal aid from the Insurance\nCompanies.\nIn the opinion of those versed in the dangers of radium dial\n4\npainting, etc., our present operations are conducted in a safe manner.\nShould there be injury to an employee, we are covered under the pro-\nvisions of the Workman's Compensation Act.\nA complete file of the cases already settled; of those now\npending; and of the legal opinions and decrees rendered, is available."
}