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Business & Finance: Suits

4 minute read

Again, Gillette. Once again last week the affairs of Gillette Safety Razor Co. were dragged into the open. Ever since the merger with AutoStrop Safety Razor Co. was announced (TiME, Dec. 1) a small group of Gillette shareholders has complained vociferously about the financial ramifications of the deal. Last week 18 attorneys were present as the first hearings were begun on a suit by which the minority hopes to have certain directors return $21,000.000 to the company. Directors who must defend their directing include King Camp Gillette, formerly of Boston, now listed as “of Hollywood”; Banker John Edward Aldred of Aldred & Co.; Frank J. Fahey, former general manager of Gillette; Banker Philip Stockton of Boston.

The court is asked to try each defendant, fix his liability. Of the $21,000,000 damages sought, $13,000,000 is for impairment of surplus. At the end of 1929 Gillette had a surplus of $18,000,000. When it sold a bond issue last year a revised balance sheet was issued showing a surplus of only $5,000,000 (TiME, Oct. 27). The balance of the damages is for the loss claimed to have been caused when the directors ordered the company to buy 214,000 shares of its own stock at an allegedly excessive price. Some of this stock was bought from a pool operated by the directors. Since then each director, with the exception of King Camp Gillette who is said to have made $1,000,000 in the deal, has returned his profits to the company.

While the directors are defending themselves, the company is also having its troubles. A $10,000,000 damage suit has been filed against United Cigar Stores which in turn has filed a $7,000,000 countersuit. Last week the company planned to shut down its big Boston plant to facilitate the removal to Boston of AutoStrop’s Brooklyn equipment.

Uncle Remus. “All I did was to write out and put in print the stories I had heard all my life.’1 Because of this statement, ascribed to the late Joel (“Uncle Remus”) Chandler Harris by his daughter-in-law last week, Coca-Cola Bottling Co. contended that Brer Fox, Brer Rabbit and their friends were products of “the indigenous folklore of Southern negroes for many generations back.” The contention was important, for $10,000,000 hangs upon the Court’s decision as to whether or not. recent Coca-Cola advertisements featuring Brer Fox et al. have infringed upon the copyrights of Author Chandler’s books. Plaintiff in the $10,000,000 infringement suit is Mrs. Esther La Rose Harris, widow of the author, owner of the copyrights.

Sonora. Not only Gillette’s directors were defending their direction last week. A group of eight onetime directors of Sonora Products Corp. of America found themselves being sued for “a corrupt and unlawful agreement and conspiracy.” No small matter was the suit; $1,500,000 is at stake. And plaintiff in the case is Irving Trust Co., now Sonora’s receiver.

Most prominent of the defensive directors is Anthony Joseph Drexel (“Tony”) Biddle Jr., fun-loving socialite-sportsman, more distinguished for social than commercial maneuvers. Divorced last March by Mrs. Mary L. Duke Biddle, who was left more than $50,000,000 by her father, the late Benjamin Newton Duke, brother of the late great Tobacco-Tycoon James Buchanan (“Buck”) Duke, Mr. Biddle three months later married Mrs. Margaret A. Schulze, daughter of the late Mining-Tycoon William Boyce Thompson whose estate was valued at $85,000,000. Most prominent of Mr. Biddle’s business ventures has been the development of Manhattan’s Central Park Casino. He has also backed the St. Regis Roof, smart dance-floor atop the Duke-controlled Hotel St. Regis, Manhattan.

The charges made last week were that Sonora Products Corp. (then Acoustic Products Co.) arranged to buy 200,000 shares of De Forest Radio Co. stock at 50¢ a share, but that the defendants took the stock themselves, sold it at big profits without telling shareholders or other directors. On an investment of $25,000 Mr. Biddle is supposed to have made a profit of $100,000. Irving Trust also claims that general mismanagement cost Sonora Products Corp. $3,000,000 in two years, that now creditors can get but 25¢ on the dollar.

*And the Tar-Baby. “His fis’ stuck, en he can’t pull loose. De tar hilt ‘im. But Tar-Baby, she stay still, en Brer Fox, he lay low.

” ‘Ef you don’t lemme loose, I’ll knock you agin,’ sez Brer Rabbit, sezee, en wid dat he fotch ‘er a wipe wid de udder han, en dat stuck. Tar-Baby, she ain’t sayin’ nothin’, en Brer Fox, he lay low. . . .

“En den he butted, en his head got stuck. Den Brer Fox he sautered fort’, lookin’ des ez innercent ez one er go’ mammy’s mockin’ birds.

” ‘Howdy, Brer Rabbit,’ sez Brer Fox, sezee. ‘You look sorter stuck up dis mawnin’, sezee, en den he rolled on de groun’, en laughed en laughed twel he couldn’t laugh no mo’.”

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