Business & Finance: Gugle v. Eaton

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Then came Depression; dividends on Continental Shares ceased; Mr. Gugle spent more time at his law office. Finally he launched his attack in the name of minority stockholders. The meeting came to order last week in the Deshler Hotel, Columbus, with owners of about 10% of Continental's common and preferred shares casting their lot with Gugle. Said he, addressing the meeting on the situation in October, 1930: "The Chase National Bank of New York, the country's largest banking institution, had funds of Continental Shares totaling $38,701,555." He made the claim that $38,364,285 of this was disbursed by the bank on credit memorandums to the Cleveland banks, largely for Otis & Co. and for Foreign Utilities, Ltd., Mr. Eaton's family-owned investment trust.

"While the banks in the above transaction," said Mr. Gugle, "may be perfectly free from suspicion, if it should develop that Mr. Eaton was using the funds of Continental Shares for the payment of indebtedness of Otis & Co. and of Eaton . . . and that the banks did not have knowledge thereof, then it would seem as though your company could recover the sums as borrowed from the banks." Then the Gugle charges became personal, more serious. He continued: "As of December 31st, 1930 and on up to January 30th, 1931, Cyrus Eaton had $37,500,000 of the company's money, which was $2,500,000 more than the company had agreed to pay in cash for the securities sold the company by Foreign Utilities, Ltd.

"However, Mr. Eaton had failed to deliver $12,000,000 worth of the stocks sold because they were already hypothecated with banks for a $5,100,000 loan."

George Gugle was comfortably retired. He has three children, one grandchild, two saddle horses (Bill and Bess) and is proud of his flowers and shrubbery. But now his one ambition is to "pursue restitution for stockholders of Continental Shares from Eaton and his associates."

The next meeting of Continental's belligerent, dissatisfied stockholders will be at the Hotel Hollenden, Cleveland, Sept. 21.