No Decision

After building up to a hair-raising climax, the long-awaited showdown in the fight for control of Fairbanks, Morse & Co. left everyone still in suspense. In Chicago last week, the company's annual meeting was held as scheduled, but it produced no winner. Led by President Robert H. Morse Jr., F-M's management hurled a lawsuit against Financier Leopold Silberstein and his Penn-Texas Corp., alleged that Silberstein acquired thousands of F-M shares and voting rights "illegally" through Swiss banks and other mysterious sources (TIME, March 25), is not entitled to vote them. Hearing the preliminary arguments, a U.S. District Court halted further proxy solicitation by either side, and impounded all proxies until the suit is fought up through the courts.

Though President Morse was still firmly in control of the company. Silberstein confidently claimed eventual victory. He announced that an unofficial count of the ballots gave him 696,686 shares (50.77% of those outstanding), enough to seat six of his seven candidates for the eleven-man board. "There is no mystery about how we got our stock," said Silberstein. "It was for sale and we bought it. The Morses could have bought it just as we did." Countered President Morse: Silberstein's claim of control "is as phony as a $3 bill." The courts, insisted Morse, will prove him out.

Another ally that F-M's management is counting on is time. Claiming that Penn-Texas now owes more than $22 million for F-M stock, the Morsemen say that Silberstein has nothing to show for it so far except the prospect of a long legal battle. Moreover, the fight has done Penn-Texas no good financially. While 1956 net income totaled $7,074,000, some $4,846,000 was from nonrecurring items such as the sale of plants (later leased back) to raise cash for F-M stock purchases. The company's true net income (not counting nonrecurring items) was $2,228,000 in 1956, a drop of $689,544 from 1955's comparable figure. On Penn-Texas stockholders, who gather for their annual meeting in May, the suspicion may grow that Financier Silberstein's "victory" is too breathtaking to bear.

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