Airing of the struggle for the control of the Dixie Fire Insurance Co. of Greensboro, scheduled for last Saturday in Federal Court in Greensboro, has been postponed until April 24 upon order of Federal Judge Boyd. Judge Boyd also continues the order restraining the majority stockholders from proceeding with a meeting or in any way interfering with the recent sale of the Dixie to the Hartford Insurance Co. of Connecticut. The temporary effect of this postponement is to give the Hartford another 30 days in which to enjoy undisturbed all the privileges recently conveyed to it by the officers of the Dixie against the protest of the majority stockholders.
C.O. Robinson, L.C. Blades and Dr. L.S. Blades of Elizabeth City W.B. Blades and J. Vernon Blades of New Bern; and Alex Hanes of Winston-Salem are the defendants in the court action, they controlling the majority stock of the Dixie. The action alleges that these defendants have conspired thru an illegal voting pool to cause the Dixie to “breach and abandon a highly profitable contract with the Hartford Fire Insurance Co.” When the defendants go into Court they propose to show that if any conspiracy exists, the conspirators are the officers of the company who have made a ruinous contract with the Hartford.
The contract made with the Hartford by the Dixie explicitly sets forth that “The Dixie Company hereby sells, assigns and transfers to the Hartford Company all its good will and interest of every kind in the insurance business hereby reinsured. The said Dixie Company also assigns and transfers to the Hartford Company all its books of records and also all of its supplies of every description, both in the hands of agents and at the office such as are customarily used and known as office supplies.” The contents of the contract are no longer secret, the contract now being a matter of court record. The Dixie Company is required by the contract to continue its corporate identity for a period of five years or longer and maintain its present capital stock of $500,000 without diminution. The Dixie pays the Hartford something like $400,000 for taking over its business and agrees to pay back to the Hartford something like $500,000 if it should desire to buy back its good will at the end of the five year period. Majority stockholders of the Dixie think the contract was either a mistake or a swindle. It is pointed out that the contract itself stipulates that the contract shall be interpreted as “an honorable engagement and not merely as a legal obligation.”
The men who made the contract with the Hartford, namely H.R. Bush, A.L. Brooks, and J.E. Latham, were salaried officers of the Dixie who control only 1,500 shares of the 10,000 outstanding shares of the company. But H.R. Bush, president of the company, gets a five-year contract with the Hartford which is believed may ultimately be worth $25,000 to $50,000 a year to Mr. Bush, with probable handsome increased to the others. Objections of the Robinson and Blades interests to any such contract with the Hartford is the cause of all the subsequent row. To forestall such a contract and save the Dixie for North Carolinians, C.O. Robinson and his associates recently acquired up to 51 per cent of the stock. It is to keep the majority stockholders from controlling the affairs of the company that the Greensboro crowd has gone to the Federal Court. C.O. Robinson of Elizabeth City, who says he is advised by his attorneys to make no statements for publication, does say that he is confident that the court action will determine the right of the stockholders of a company to save that company from dissolution and disaster.
It is believed that the contract with the Hartford was made by the Greensboro men in the fear of losing their jobs. James R. Young, former Insurance Commissioner of North Carolina, has been mentioned for the Dixie’s president. But under the contract with the Hartford, the Dixie stockholders have no voice in the election of their officers.
H.R. Bush, for many years president of the Dixie, is a highly rated man, but his rating does not appear so high when one compares the earnings of the Dixie with the earnings of similar companies. An analysis of the Dixie’s affairs indicates that the company has made money in spite of its management, and not because of any managerial ability. The fact is that the stockholders have got their dividends from the company’s investments and not on insurance written. Believing the affairs of the company should be better managed, some of the larger stockholders had in mind getting rid of Mr. Bush. But Mr. Bush dipped upon them by selling them out lock, stock and barrel to the Hartford and cinching his job for five years, before the plans of the stockholders matured.
From the front page of The Independent, Elizabeth City, N.C., March 30, 1923
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