Nothing Wrongful

In the late 1920s Founder Arthur J. Morris of the Morris Plan banks and four other members of a syndicate bought 14,550 shares of Industrial Finance Corp. stock from the late Pennsylvania Coalman John Markle. The price was $95 a share. It happened that Industrial Finance Corp., parent of Morris Plan banks, was under obligation to repurchase that stock at $105. Eventually the syndicate including Arthur Morris and four other directors of Industrial, sold the shares to the corporation, at a profit of $145,500.

The deal was ancient financial history in 1936 when stockholders sued, claiming that the profit rightfully belonged to the company, not the directors in the syndicate. The members of the syndicate replied that the corporation neither wanted the stock nor was in a position to buy it and that the syndicate bought it to protect the corporation from Mr. Markle. Nonetheless, bushy-haired Justice Ferdinand Pecora returned a thumping judgment against Morris & friends for $443,202, including interest. Last week, Justice Pecora's judgment having been reversed on the first appeal, New York's Court of Appeals (last resort) polished it off for good. In an unanimous decision six of its judges set aside Justice Pecora's judgment, found nothing wrongful or improper in the deal.

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