Repository: UIHistories Project: Board of Trustees Minutes - 1928 [PAGE 603]

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BOARD OF TRUSTEES

[May 23

A M E N D M E N T T O BY-LAWS Mr. Trees asked permission to distribute copies of a proposed amendment to the By-Laws of the Board. This permission was granted, and the Secretary distributed the copies. MATTERS PRESENTED BY PRESIDENT KINLEY The Board considered the following matters presented by the President of the University. CALL AND EXCHANGE OF SECURITIES OF THE ILLINOIS POWER A N D LIGHT CORPORATION OF McKINLEY E N D O W M E N T (1) At the meeting of the Board on March 13, 1028 (see Minutes, page 563), I presented notice of and proxy for a special meeting of the stockholders of the Illinois Power and Light Corporation to be held for the purpose of calling the seven per cent cumulative preferred stock of this corporation, and offering in exchange, under certain conditions, $6.00 cumulative preferred stock, or, of course, the option of taking the proceeds of the securities owned by the University intact. By advice of Counsel the Board did not send in a proxy. The Corporation, acting under the notice referred to, has taken action making the exchange which is described above. The question now arises what the Board will do in the premises. The Comptroller informs m e that he and the Legal Counsel have discussed the matter, with the conclusion that whatever is done must be done by the decision of the Board since the Board has an option in the matter. In other words, the Board may accept the new $6.00 stock or take cash and reinvest. The new $6.00 cumulative stock is not a kind of security permitted for investment by trustees under the law of Illinois. The Board was charged, in the deed of gift, to keep the income from the gift at $7,000 per annum, i f possible. This is probably impossible under the present conditions. The question for the Board to decide is whether it will accept this new stock or take the proceeds of its present securities in cash and reinvest. The deed of gift further requires that any securities purchased to replace those thus retired shall be redeposited in escrow for the remainder of the ten year period through which the original securities were to be kept in escrow. Since the Legal Counsel is of the opinion that the $6.00 stock offered by the Illinois Power and Light Corporation is not a legal investment for trust funds under the statute, I recommend that the corporation be advised that the Board does not wish to subscribe for any of the new stock being offered in exchange for the 7 per cent preferred stock. O n motion of M r . Trees, this recommendation w a s adopted. TAX ON MARCUS RUSSELL LOAN FUND (2) The following letter, addressed to Professor F. A. Russell, son of Marcus Russell, donor of the Marcus Russell Student Loan Fund, has been received from the Los Angeles First National Trust and Savings Bank, stating that the gift of Mr. Marcus Russell to the University is subject to tax. (See Minutes, April 14, 1926, page 558, and February 14, 1928, page 545) : April 25, 1928 Professor Fred A. Russell, 801 Indiana Avenue, Urbana, Illinois M y dear Professor: I thank you for Mr. Cunningham's letter of April 18, enclosing two certified copies of your Deed of Trust. Under the California law, this is taxable, as it is a trust created by a resident of Los Angeles, reserving to himself a life income with a remainder