These shares constituted a part of 7500 shares of TAAC that Thompson and Kane agreed to place in escrow with Maguire & Co. to protect TAAC from any claims arising from Kane later deposited the shares with Maguire & Co., leaving the shares to be deposited by Thompson, which were never delivered, as he died shortly thereafter. All outstanding claims were settled for 538 of these shares, the remaining 3862 shares being returned to Kane and Thompson’s estate. Upon approval of the stockholders and directors on July 19th of the July 18th contract, Powers, Kane and Gordon commenced the preparation of the papers for the double closing. However, difficulties arose on TAAC’s part which threatened to block the closing. Maguire removed these difficulties by depositing an additional $100,000 as security to indemnify Marine with respect thereto. Thus, the double closing with Marine and Guaranty was accomplished before midnight on July 21, 1939. The original plan to dissolve Auto was abandoned. TAAC became a holding company and Auto was retained as it’s operating subsidiary. Maguire became president of TAAC upon the resignation of Thompson. Thompson thereupon became chairman of the respective boards until his death a short time thereafter. TAAC in August, 1939 had bright hopes. It had reason to believe that the past June order of the government for guns would be repeated on a larger scale. Such, however, did not occur, as Federal appropriations for this type of weapon had been exhausted. Considerable time elapsed before additional orders were filed. The dark days of Dunkirk necessitated the accumulation of all types of weapon; thus, began the flow of a steady stream of orders for the gun from our government and from England. Production was stepped up to the extent that within a two year period delivery of over 300,000 guns brought into the treasury of TAAC gross receipts of approximately $100,000,000. Auto by this time was looked upon as one of the largest small arms manufacturers in America. The profits of the company were so enormous that TAAC built it’s own plant in which to produce the guns, and during the two year period beginning in August or September, 1939, TAAC paid to it’s stockholder $10.50 per share, or in excess of $2,600,000 cash dividends. The complainant’s shares during this period increased in value in the amount of approximately $500,000, not including about $130,000 declared and paid to her in dividends. E.D. POWERS NOTE: Based on this calculation, the shares of TAAC which Thompson received in exchange for his formerly worthless share of Auto would have a value of about $2,000,000, not including about $520,000 in cash dividends. Maguire was the guiding influence in both corporations from the time he was elected President of each (August, 1939). The success was due practically to his untiring efforts in the realms of finance, production and sales. In 1940 Kane instituted three suits in the Supreme Court of the State of New York. One suit was brought by Kane as executor of the estate of Col. Marcellus Thompson against TAAC to recover salary clue Thompson from March 3, 1939, until the date of his death. The second suit was a derivative stockholders’ suit brought by Kane in which he sought to have canceled the 116,400 shares of TAAC stock issued and delivered to Maguire & Co. in July, 1939. The third suit was against Maguire personally. The Thompson suit was settled for $7000. The derivative stockholders’ suit was discontinued. The Third against Maguire was settled. The foregoing seems to us to be a fair statement of the factual situation as indicated by the language employed by the Chancellor in the final decree as entered below. The complainant below advanced the following contentions:
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