Post-Mortem Victory

Only two days after his suicide, the New York Central's Board Chairman Robert R. Young won a belated victory last week. After a bitter, 2 1/2-year battle between Young and Randolph Phillips, a former associate, the U.S. Supreme Court cleared the way for one of Young's pet projects: a plan to wipe out $18 million in dividend arrears to preferred stockholders of Young's Alleghany Corp., which has working control of the Central with 973,500 shares of stock. Under the plan, each share of Alleghany's 5 1/2% preferred stock would be exchanged for ten shares of new 6% preferred, convertible to common stock in 15 years.

Young hoped to use the stock as collateral for new acquisitions, but Phillips froze it. He got a New York district court ruling that Alleghany fell under the jurisdiction of the Securities and Exchange Commission rather than the Interstate Commerce Commission, which approved the issue. When the Supreme Court reversed this ruling, the lower court held that Alleghany had illegally acquired control of the New York Central in 1954 because it did not get ICC approval. The court ruled that ICC would have to settle that matter before it could properly approve the new issue. The Supreme Court last week decided that the question of Central's acquisition was irrelevant, ordered the lower court to rule on the stock issue alone. Since the district court never questioned ICC's power to approve the new issue ultimately, it seemed to have little choice but to release the stock--though Phillips might delay the release by further appeals to the Supreme Court.

As Alleghany got the good news, directors voted in Allan P. Kirby, 65, Alleghany president and silent financial backer of Young for the last 20 years to succeed Young as Alleghany chairman. Five-and-Ten-Store Heir Kirby, largest single stockholder in both Alleghany (516,500 common shares) and Central (300,100 shares), will continue as president, also become chairman of the executive committee.

Kirby has always stayed in the background, is expected to leave active operation of Alleghany to younger men. Among them: Vice President and Secretary David W. Wallace, 34, Vice President and Director Thomas J. Deegan, 47, Young's right-hand man, and Kirby's son, Fred M., 38. Still to be decided on: a chairman for the New York Central to succeed Bob Young, who left his wife his entire personal estate, valued last week at more than $6,000,000, plus substantial real-estate holdings.

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