Wm. E. Dodge's Speculation, over $400,000 sunk into Cryolite patents

WM. E. DODGE'S SPECULATION

MORE THAN $400,000 SUNK IN WORKING

CRYOLITE UNDER A PATENT.

Allegations that by his Representation, or

those of Two Others, the Confidence of a

Company was abused — The Trial Now

on in Pittsfield Judge Ames's Doubts.

PITTSFIELD, MASS., May 25. — The American Host Cast Porcelain Company was organized in Philadelphia about ten years ago, for the manufacture of ware from cryolite. They held all the Cheney patents and monopolized the material, taking by contract with the Natrona Salt Works Company — the sole importers — all not consumed by that concern, which was brought to this country. Difficulties were encountered in the treatment of the material, money was wanted, and Gen. C. C. Dodge, on of the principle stock holders of the company, persuaded his father, Wm. E. Dodge, to make some large cash advances to enable the pursuit of experiments, and the introduction of the new product. Still the enterprise was slow of success. In the meanwhile, the Lenox Plate Glass Company was formed on the basis of some real estate and a sand bed in Massachusetts, and a heavy load of debt contracted in obtaining machinery. It turned out good unpolished plate at first and soon after made good polished plate, but its affairs like those of the Porcelain Company languished, and Mr. Servin, treasurer of the Lenox Plate Glass Co., thought of combining the manufacture of cryolite with that of plate glass, their machinery being well adapted thereto. Negotiations were opened with the Porcelain Company. It was represented that the debts of the Lenox Plate Glass Co. were small, and that if Mr. William E. Dodge, who was simply a stockholder in the other corporation, would subscribe $50,000 in cash, his name would enable them to obtain other large amounts and the company could be reorganized on the consolidated interests of the two existing corporations, upon a large and profitable scale. Mr. William E. Dodge did put in the desired $50,000, and, to clear the way to an arrangement, agreed to assume debts of the Porcelain Company to the amount of $25,000 more.

There were on hand 1,000 tons of cryolite — worth then 10 cents per pound — and for that material, the patents, the contract with the Natrona Salt Works Company, and certain machinery, the Porcelain Company agreed to accept $150,000 in the stock of the new company, and $50,000 in long-running notes, some of them for ten years. The title of the new corporation was the Lenox Glass Company. The statements of officers of the old Lenox Plate Glass Company as to the amount of that company's debts were accepted, instead of examining their books, and it was not long after the formation of the new corporation before the discovery was made that these liabilities amounted to $336,000 instead of $50,000 or $60,000. Under that debt the new company staggered along for a year. Only $70,000 in addition to Mr. Dodge's $50,000 were subsribed — out of the $800,000 contemplated capital — and all of that was soon swallowed up. In theses negotiations Mr. Wm. F. Dodge was a consenting stockholder, not an officer, and as the allegation has been made that he and his son owned a controlling interest in the Porcelain Company, it is well to state that they held but 600 out of 10,000 shares of stock.

After the failure of the Lenox Glass Company, when the original stockholders of the Porcelain Company applied for a dissolution under the laws of Pennsylvania, some of their associate stock holders objected, and filed a bill in equity against them, which, after pending a couple of years, was discontinued by the objectors. The next appearance of these mixed interests before a court was in an action brought by the Lenox Plate Glass Company, now pending here, wherein it is alleged that by the false representations of either William E. Dodge, or gen. C. C. Dodge, or R. F. Mason (Vice-President of the Porcelain Company), the confidence of the Lenox Plate Glass Company was abused and they were done out of some $600,000. The trial of the suit was begun in the Supreme Court here, before Judge Ames and a jury, on Tuesday morning. An adjournment was had over Wednesday, and with the exception of that time, Mr. T. A. Servin, Treasurer and Director of the old Plate Glass Company, and also of the new corporation, has been upon the witness stand during two entire days. He set out by swearing to the complaint generally; declared that he met Mr. Dodge in New York at Mr. Roosevelt's office, and was urged by him to examine into the practicability of associating the manufacture of porcelain from cryolite with that of plate glass; that he went to Philadelphia and there saw Galusha A. Grow — then President of the American Hot Cast Porcelain Company — who told him all about cryolite, concerning which he has before been in happy ignorance — where is came from, what it was good for, and how much money could be made out of it; that he got a batch of the material and tested it finding that it produced a beautiful ware, but different to work, as liable to fracture in cooling, change of color, &c.; that R. F. Mason, in the presence of the Dodges, urged him to contract for a consolidation of the companies, assuring him that they would insure the Lenox Plate Glass Company against loss, and he insists that, in the use of the word "they," Mr. Mason meant the Dodges and not the Porcelain Company.

On the cross-examination Mr. Servin admitted that eighteen months before the arrangements by which the companies were practically consolidated. he had been working in the plaintiffs' furnaces and works at Lenox this article cryolite, and experimenting in the manufacture of certain wares therefrom; that he was already, at the time of these negotiations, under a five years' contract to supply the market with certain cryolite wares, which contract was only cancelled upon the formation of this new contract and consolidation; also, that the amount of the plaintiffs' debts, which were blindly assumed by the new company, was $336,000; that all the defects in cryolite and difficulties in its use, instead of having been concealed from him with fraudulent design by Mr. Dodge, were actually already discovered by and known to him; also, that this Lenox Glass Company, with which the porcelain business was consolidated was organized by the officers of this plaintiff corporation on a capital of $5,000, which, under the laws of the State, should have been paid in in money, but for which, in point of fact, nothing but checks were ever presented; that those checks were never cashed, and to this day remain unpaid, and that Treasurer Servin made oath to a return to the Commissioner of Corporations that the capital stock had been all paid in, while in point of fact, it had not. Also, that very shortly after such organization he proposed to increase this limited capital to $800,000; that he received toward that amount $50,000 from Mr. W. E. Dodge, and about $70,000 from other parties, which was all the cash capital that the company ever had, and that this was mainly consumed in the payment of the plaintiffs' debts assumed by the new company.

The plaintiff continued the introduction of testimony on Friday morning. Mr. Addison Hathaway, one of the directors of the Lenox Glass Company, testified that the corporation rolled only about forty sheets of plate cryolite, and in the processes broke as many more. Half of the objects turned out from their furnaces were of cryolite. George O. Peek, another director, testified that Mr. W. E. Dodge represented the cryolite business to him as highly successful, and as demanding large works to carry it on. Henry A. Tilden, manufacturing chemist, living in Lebanon, N. Y., bore witness to having bought and used a great many cryolite bottles, made at the Lenox Glass Company's works, and they did not turn out well, being too brittle. Out of 85,000 only 64,500 stood service. Samuel Tilden , son of the preceding witness, corroborated these representations of the doubtful value of cryolite. A. T. Servin, recalled, professed to give a detailed statement of the damage sustained by the Lenox Plate Glass Company from its cryolite venture. Five hundred tons of cryolite, bought for $50,000 nominally, being paid for in stock of the consolidated company and sold again for $9,000 in cash on the failure of the company, he set down as netting a loss of $41,000. The patents for the manufacture cost $100,000, and were worthless. Upon cross-examination, the witness admitted that no money was paid for the patents, but only shares of stock in the new company, which were, of course, valueless upon the failure of that corporation — still he considered it a loss of $100,000 any way, for the purposes of a suit. The building of a gas furnace for treating cryolite he set down as costing $22,000. The erection of a new iron building to cover a furnace, in place of the old wooden building, cost $22,000; but the building, serving as well as the one it replaced, may be considered worth $5,000 to $7,000. Then there were layers [sic] lehrs, and glory-hole furnaces, and annealing ovens, and such things, which cost $12,000. A machine-shop to make moulds, &c., cost $45,000 or $50,000, and has since the failure been an empty building. Moving the plate glass furnace, with the connected tables, trams, &c., from one end of the factory to the other, cost $6,000 to [$7,000]. In actually working the cryolite, they claimed to have lost $25,000 or $35,000. On cross-examination, the witness admitted that the only cash pad for the 1,000 tons of cryolite and the patents, valued together at $200,000 in the consolidation, was twenty-five cents for a revenue stamp on a stock certificate for $150,000 given in trust to Galusha A. Grow, President of the Porcelain Company. As to the $50,000, notes to run from five to ten years were given, and those were returned and destroyed upon the failure, one-half of the stock of cryolite being taken back in their stead.

The bill and answer in the suit instituted and abandoned by certain Pennsylvania stockholders in the Porcelain Glass Company were read at length, to demonstrate that the manufacture of cryolite had, in their opinion, been a failure, and that their corporation had lost money in it.

Mr. Barker opened for the defence [sic] defense. He called attention primarily to the inception of the glass business in Lenox, Mass., by the Lenox Iron Works Company, and, in 1865, their cutting it loose from their other business by the organization of a corporation for the introduction of the manufacture of plate glass, the funds for which — $39,000 — were furnished by W. Roosevelt of New York — half in his own name and half as a loan to Mr. Servin — and called a capital stock of $150,000. The Lenox Plate Glass Company, in its endeavor to introduce the new enterprise, lost much money, so that its officers were desirous of some new arrangement or organization to relieve it from its embarrassments. W. E. Dodge and Gen C. C. Dodge, both of New York, were small stockholders in the Lenox Plate Glass Company, and spoke with Mr. Servin about combining the cryolite processes with the other work there, but made no representations, nor authorized any to be made, concerning the business of the Porcelain Company. The arrangement for consolidation was made with Galusha A. Grow, President of the Porcelain Company. Though the Lenox Plate Glass Company failed to make a success of it, cryolite manufacture is carried on very successfully by other parties. In conclusion, Mr. Barker uncovered a great cryolite-topped table, laden with cryolite goods, a beautiful exhibit, satisfactorily settling the question of the elegance and usefulness of the material.

John M. Arthur, Jr., of Philadelphia, architect, the first witness offered by the defence [sic] defense, testified:

I was a stockholder in the American Hot Cast Porcelain Company, and know all about the Cheney patents for the use of cryolite. It is admirably adapted for all purposes of interior decoration and furniture where marble can be used, and is better than marble, as it is never damp, is easily kept clean, and is impervious to acids and oils, as much as glass. It is also good for table service and many articles of household use. I think that a great deal of money was lost in experiments, but was satisfied generally with the management of the Porcelain Company until Mr. Cheney went out and Mr. Mason came in. I was one of those who objected strenuously to the consolidation with the Lenox Glass Company, believing that company had much the best of the bargain. I joined in the suit already alluded to. Don't think Mr. W. E. Dodge made any money out of the consolidation any more than and officer stockholder. We all lost by it.

G. M. Prevost; M. D., of Camden, N.J., another original stockholder in the Porcelain Company, testified that cryolite manufacture of many articles was successfully carried on in their works in Philadelphia. In the winding up of the affairs of that company preparatory to consolidation, Mr. W. E. Dodge, by agreement with the officers of the company, took what material was on hand and assumed all the debts of the company, and he was the heaviest loser of all the stockholders.

Wm. Leighton, Jr., of Wheeling, W. Va., glass manufacturer, testified to having made cryolite ware under the Cheney patents since 1868 without any difficulty, and the result has been as entirely satisfactory as in the manufacture of any other glassware, is cheaper and handsomer than any other opaque glass. Would not think there should be any difficulty about making cryolite slabs that intelligent glass makers could not overcome. The Cheney patents are undoubtedly of great value. This firm works under them, and all others using it do so also.

Arad Burrows of Philadelphia, maker of enamelled [sic] enameled iron hollow ware, bore witness to the value of cryolite as a material for enamelling [sic] enameling the interior of iron hollow ware, saying that it turned his business from a losing to a profitable one. He also works under the Cheney patents.

Nelson J. Bottsford of New York, dealer in lamp trimmings, testified that he had sold more than $20,000 worth of cryolite goods, manufactured by the Porcelain Company, all of which had given entire satisfaction, and he knew of other parties who had sold even more.

David L. Dodge of New York, nephew of Wm. E. Dodge, formerly one of the officers of the American Hot Cast Porcelain Company, testified:

W. E. Dodge was not, at any time, an officer of the company, but simply a stockholder. He held 600 shares of the common stock, for which he paid $50,000 worth of the special stock at 83 1/2 percent when it was deemed necessary to get capital to operate with on a more extended scale and special stock was issued to that end. Mr. W. F. Dodge's original subscription to the Porcelain Company was reluctantly given to the amount of but $25,000, and then only on condition that upon inspection of the factory, processes and results he should approve of everything. He did so thoroughly approve that he voluntarily increased his subscription to $50,000. Subsequently, he pledged himself and son for $50,000 more, which was paid, for the special stock before spoken of. The company was always trammelled [sic] trameled by heavy rates of interest, the necessity for carrying an extremely heavy stock of cryolite, and other onerous burdens. Its great trouble was a chronic lack of capital. We sold a considerable amount of cryolite to other manufacturers at $200 per ton. Between March 1 and May 17, 1869, we furnished $1,500 worth of cryolite to the Lenox Plate Glass Company, including one mixed batch, for them to experiment with, and they had turned out some slabs with it. When Mr. Mason came to the Porcelain Company, he professed, had I believe had, some practical knowledge of glass-making, but of course had no knowledge of working cryolite. Mr. W. E. Dodge had nothing to do with his coming there, and Mr. Mason's management was not satisfactory.

After the adjournment of the court on Friday evening the main topic through the town was the great suit in progress, except at the American Hotel, the principle house of entertainment in Pittsfield, where Judge Ames, the lawyers on both sides, parties to the suit and witnesses, were all together. There, by common consent, the suit was a tabooed topic, and all met amicably, and even genially, on the neutral ground of brook trout, which constituted an important item in the bill of fare.

When the court reopened on Saturday morning, Judge Ames called the counsel on both sides into his private room for a consultation, which resulted in an adjournment until Tuesday morning next, at 9 o'clock. It is understood that in that consultation Judge Ames refused to permit the plaintiffs to amend their complaint, and hinted a doubt whether they had made out a case entitling them to any standing in court. It is quite within the bounds of possibility that a decision by him may end the matter very shortly after the reopening of he case on Tuesday morning. If not, the defendant has a lot of conclusive evidence to offer, showing that while the management of the American Hot Cast Porcelain Company, with which he had nothing to do, was ruinous, the manufacturer of cryolite wares was exceedingly profitable, and the Cheney patents, so far from being a worthless deception, were, in fact, of infinitely higher value than all of the Lenox Plate Glass Company had to offer, even if they had not been saddled with the gigantic debt. The plaintiffs' counsel, in the consultation with Judge Ames, this morning, signified willingness to withdraw their allegation of fraudulent intent. When they do this it is hard to see what their case has left to rest upon. Mr. Dodge's lawyers do not scruple to characterize the suit as a blackmailing operation. So far from having made anything in the business, Mr. W. E. Dodge is "out and injured" by his connection with both companies to an amount exeeding $480,000. His son, Gen. C. C. Dodge, has suffered in this manner to an amount very nearly, if not quite as great, and David L. Dodge, the nephew of Mr. W. E. Dodge, has also lost a very considerable sum. There is a possibility that eventually some of this may be recovered, bust as the matter now stands the mismanagement of cryolite enterprises, which have at no time been under their direct control, has cost the Didge family at least $400,000. There are several Philadelphians here. Most of the New Yorkers returned home this evening to recuperate for next week's labor.