Tutt and Mr. Tutt Part 34

asked Mr. Beck dubiously "We don't want them trailing along with us."

"I propose," answered Mr. Elderberry brightly, in his capacity as chief conspirator for Scherer, Hunn, _et al._, "that we organize a new corporation to be called 'Lallapaloosa Limited' and capitalize it at a million dollars--one million shares at a dollar a share. Then we will execute a contract between Horse's Neck and Lallapaloosa by the terms of which the old bankrupt corporation will sell to the new corporation all its a.s.sets for one hundred and twenty-five thousand dollars. We underwrite the stock of Lallapaloosa at fifty cents a share, thus supplying the new corporation with the funds with which to purchase the properties of the old. In a word we shall get Horse's Neck for a hundred and twenty-five thousand and have three hundred and seventy-five thousand left out of what we subscribe to underwrite the stock to put it on its feet."

"That's all right," debated Hunn. "But how about the other stockholders in Horse's Neck that Beck referred to? Where do they come in?"

"I've thought of that," returned Elderberry. "Of course you can't just squeeze 'em out entirely. That wouldn't be legal. They must be given the chance to subscribe at par to the stock of the new corporation on the basis of one share in the new for every ten they hold in the old; or, as Horse's Neck is a Delaware corporation, to have their old stock appraised under the laws of Delaware. In point of fact, they've all written off their holdings in Horse's Neck as a total loss years ago and you couldn't drag 'em into putting in any new money. They'll simply let it go--forfeit their stock in Horse's Neck and be wiped out because they were not willing to go in and reorganize the property with us."

"They would if they knew about Amphalula," remarked Beck.

"Well, they don't!" snapped Greenbaum, "and we're under no obligations to tell 'em. They can infer what they like from the fact that Horse's Neck has been selling for ten cents a share for the last three years."

"Is that right, Chippingham?" inquired Beck of the attorney who was in attendance. "I mean--is it legal?"

"Perfectly legal," replied Mr. Chippingham conclusively. "A corporation has a perfect right to dispose of its entire a.s.sets for a proper consideration and if any minority stockholder feels aggrieved he can take the matter to the Delaware courts and get his equity a.s.sessed.

Besides, everybody is treated alike--all the stockholders in Horse's Neck can subscribe pro rata for Lallapaloosa."

"Only they won't," grinned Scherer.

"And so, as they are wiped out--the new corporation--that is us--in fact gets their equity, just as much as if they had deeded it to us."

"That is, we get for nothing about one-half the value of the property,"

agreed Elderberry. "Now, I've been over the list and I don't think you'll hear a peep from any of them."

"He's got 'em on the list--he's got 'em on the list; And they'll none of 'em be missed--they'll none of 'em be missed!"

hummed Mr. Beck. "It looks good to me! I'll take a hundred thousand."

"Mr. Chippingham has the papers drawn already," continued Elderberry.

"Of course you've got to give the old stockholders notice, but we can rush the thing through and before anybody wakes up the thing will be done. Then they can holler all they want."

"Well, I'll come in," announced Hunn complacently.

"So will I," echoed Scherer. "And the firm can underwrite the last hundred thousand, and that will clean it up."

"Is it all right for us to underwrite the stock ourselves at half price?" inquired Mr. Beck. "I mean--is it legal?"

"Sure!" reiterated Mr. Chippingham. "Somebody's got to underwrite it; why not us?"

"Move we adjourn," said Mr. Greenbaum. "Elderberry--the usual."

Mr. Elderberry removed from his change pocket five glittering gold pieces and slid one across the gla.s.s sheet to each director.

"Second motion. Carried! All up--seventh inning!" smiled Mr. Scherer; and the directors, pocketing their gold pieces, arose.

If, as it has been defined, ethics consists of a "system of principles and rules concerning moral obligations and regard for the rights of others," it may be interesting to speculate as to whether or not these gentlemen had any or not, and, if so, what it may have been. But in considering this somewhat nice question it should be borne in mind that Messrs. Scherer, Hunn, Greenbaum & Beck were bankers of standing, and were advised by a firm of attorneys of the highest reputation. On its face, and as it was about to be represented to the stockholders of Horse's Neck, the proposition appeared fair enough.

The circular, shortly after sent out to all the names upon the list, stated succinctly that financial and labor conditions had been such that it had been found impossible to operate the mine profitably for several years, that it had depreciated greatly in value owing to the water which had acc.u.mulated in its lower levels, that it had exhausted its surplus, that a heavy indebtedness had acc.u.mulated, that the corporation's outstanding notes had been protested and that the property would be sold under foreclosure unless money was immediately raised to pay them, the interest due and taxes; that half a million dollars was needed to put the property in operation and that there was no way to secure it, as n.o.body was willing to loan money to a bankrupt mining concern. That under these circ.u.mstances no practical method had been proposed except to organize a new corporation capitalized at one million instead of ten, to the stock of which each shareholder in Horse's Neck might subscribe in proportion to his holdings, at par, and to which the a.s.sets of the old corporation should be transferred practically for its debts. That this, in a word, was the only way to save the situation and possibly make a go of a bad business, and that it was a gamble in which the old stockholders had a right, up to a certain date, to partic.i.p.ate if they saw fit. Those that did not would find their stock in Horse's Neck entirely valueless as it would have no a.s.sets left which had not been transferred to Lallapaloosa. Stockholders who were dissatisfied could protest against the enabling resolution to be offered at the annual meeting of the stockholders of Horse's Neck to be held the following week at Wilmington, Delaware, and could avail themselves of the right to have their equity a.s.sessed under the laws of Delaware, but as the liabilities practically equaled the present value of the property that equity would naturally be highly problematical.

Now, as a matter of morals or of law the only thing that made the proposed reorganization unethical or inequitable was the single trifling fact that those responsible for it were the only ones who knew of the existence and proximity of the Amphalula vein. When a mining company, a railroad, an oil well or any other enterprise is down and out it is only fair that the majority stockholders, who are obliged to protect their investment, should have the right to call upon the rest to come forward and do their share or else drop out. A minority stockholder cannot appeal to any canon of fair play whereby he should be ent.i.tled to sit back and let the majority take all the risks and then claim his share of the profits.

The imponderable element of injustice in the situation consisted in the suppression of a fact which the directors concealed but concerning which, however, they made no representation, false or otherwise. They were going to risk half a million dollars of their own money and they wanted the whole gamble for themselves. They sincerely felt that n.o.body else was ent.i.tled to take that risk with them. Once they had floated Horse's Neck they had come to look upon it as their own private affair.

The minority had no rights which they, the majority, were bound to respect. The minority were nothing but a lot of piking gamblers, anyway, who bought or sold for a rise or fall of a few cents. They knew nothing of the property and cared less for its real value. They were merely traders and if they lost they forgot it or tried to. On the other hand Scherer, Hunn, Greenbaum & Beck were promoters, who contributed something to the economic advancement of the nation.

"Regarding my hat, which you suggested this morning should be pressed at a cost of fifty cents," remarked Mr. Tutt to Miss Wiggin when he returned to the office upon the adjournment of court in the afternoon and replaced that ancient object in its accustomed resting-place --"regarding that precious hat of mine"--he eyed it affectionately --"I can only say that I would as soon send myself to a dry-cleaning establishment as to permit its profanation by the iron of a haberdasher."

Miss Wiggin laughed lightly.

"That doesn't explain your cryptic statement that it would probably cost you a hundred thousand dollars," she replied. "Still--"

Mr. Tutt turned suddenly upon his heel and held her with an upraised hand, the bony wrist of which was encircled, after an intervening s.p.a.ce of some five inches, by a frayed cuff confined with a black onyx b.u.t.ton the size of a quarter.

"Behold," he cried in the deep resonant voice that he used in addressing juries at the climax of a peroration, "the integuments of my personality--the ancient habiliments of an honorable profession--the panoply of the legal warrior. Here, my corslet"--he touched his dingy waistcoat with his left hand; "my greaves"--he brushed the baggy legs of his pantaloons; "my halberd"--he raised his old mahogany cane with its knot of yellow ivory; "my casque"--he indicated his ruffled stove-pipe "Arrayed in these I am Mr. Ephraim Tutt, attorney and counselor at law--the senior partner in Tutt & Tutt--a respected member of the bar duly accredited and authorized to practise before the Supreme Court of the State of New York, the Court of Appeals, the District Court of the United States, the Circuit Court of Appeals, the Supreme Court of the United States, the Court of Claims--"

"--the Police Court and the Coroner's Court," concluded Miss Wiggin, making him a mock curtsy.

"Without these indicia of my profession and my individuality I should be like David without his sling or Samson without his hair. I should be merely Tutt, a criminal lawyer--one of a mult.i.tude--regarded perhaps as a shyster. But in these robes of my high office I am a high priest of the law; just as you, my dear girl, are one of its many devoted and worthy priestesses. Can you imagine me going to court in a bowler hat or arguing to the jury in a cutaway coat or bobtail business suit? Can you picture Ephraim Tutt with his hair cut short or in an Ascot tie, any more than you can envisage him in riding breeches or wearing lilacs? No!

There is but one Mr. Tutt, and these are his only garments. He who steals my hat may steal trash, but without it I should be like a disembodied spirit unable to return to my earthly dwelling-place.

"A paltry hundred thousand?

"Nay, without my hat--my helmet!--I should be valueless to myself and everybody else; so estimate my worth and you can a.s.say the value of my hat. What am I worth in your opinion?"

And then Miss Wiggin, having glanced cautiously if quickly round, made a most astonis.h.i.+ng declaration.

"Just about a million times more than anybody else in the whole world, you old dear!" she whispered and rising upon her toes she kissed his wrinkled cheek.

"Dear me! You really mustn't do that!" gasped Mr. Tutt.

"Well," she retorted, "you can discharge me if you like. But first sit down, light a cigar and let me tell you something."

Mr. Tutt did as he was bid, chuckling.

"Well," said Miss Wiggin, "there is such a thing as Horse's Neck Extension after all!"

"Um--you don't say?" he answered, struggling to make his stogy draw.

"And it has an office with about a hundred other corporations of various kinds--most of them with names that sound like the zoo--Yellow Wildcat, Jumping Leapfrog, and that sort of thing. It seems Horse's Neck is played out and they are going to reorganize it--"

"Who are?" demanded her employer, suddenly sitting erect.

"Scherer, Hunn, Greenbaum & Beck."

"The d.i.c.kens they are!" he e.j.a.c.u.l.a.t.ed. "That bunch of pirates? Not if I know it!"

"Why not?"

"Reorganize! Reorganize? Reorganization is my middle name!" cried Mr.