Not a Millionaire from Old Oil Stock
Tony Marohn’s $5 Palmer Union Oil Company stock certificate did not make him a Coca-Cola millionaire. As with most obsolete securities, no ownership in the company or its successors remains.
For many like him, discovering an old stock certificate brings hopes of wealth. This seems especially true if the certificate is one of the thousands of petroleum companies incorporated since the first, the Pennsylvania Rock Oil Company of New York, organized in 1855.
Unfortunately, as the research posted in Is My Oil Oil Stock worth Anything? shows, the highly competitive, boom-and-bust world of oil and natural gas exploration leaves many casualties.
In 2008, Marohn purchased an old oil stock certificate at a garage sale in California. His $5 investment for a 1924 Palmer Union Oil Company certificate inspired research, news stories – and spawned litigation with the Coca-Cola Company.
Although Marohn died in 2010, lawyers for Marohn family heirs and Coca-Cola appeared before a skeptical Delaware Chancery Court in January 2012.
The family claimed entitlement to $130 million of Coca-Cola stock through a convoluted trail of mergers, acquisitions, and sales that delivered the old Palmer Union Oil stock certificate into their possession.
MSN Money reported that the antique stock certificate was signed by someone named John Wagner – but there was no name in the space assigning the certificate to someone, so Tony Marohn signed it himself. According to Business Insider, “Marohn wrote his name on it, and voila, the 1,625 shares of Palmer Union Oil are worth 1.8 million shares of Coke, they contend. Coke thinks it’s absolutely absurd.”
The company made this comment: “The claim of Mr. Marohn’s estate that it is entitled to millions of dollars in Coca-Cola stock – based on a canceled stock certificate for a long-defunct oil company purchased at an estate sale – is meritless and unfair to the Company’s millions of legitimate shareholders.”
In 1932, all of Palmer Union Oil Company’s assets (and liabilities) were sold to form the Palmer Stendel Oil Corporation and shareholders in the former company exchanged their shares for stock in the latter.
By 1940, The Robert D. Fisher Manual of Valuable and Worthless Securities reported that Palmer Stendel Oil had “only been able to meet payment of one-half of its bond interest for the past seven or eight years; and the stock is not listed on any Exchange, nor have we heard of any of same being traded in for several years.”
On June 3, 1955, Palmer Stendel Oil recapitalized in California as Petrocarbon Chemicals Incorporated and then reincorporated in Maryland on June 27, 1956. The company operated a petrochemical plant on a 50-acre site near Irving, Texas.
Oil, Bananas and Wine
In 1957, Petrocarbon Chemicals merged into Great Western Producers, which had been active in Texas and California oilfields as early as 1939.
The Securities and Exchange Commission later reported that Great Western Producers “conducts a banana import business” as well as owning the Pleasant Valley Wine Company of New York.
In 1961, Great Western Producers sold its Pleasant Valley Wine Division to Taylor Wine Company. Taylor Wine had been founded in 1880 and produced wine from hardy upstate New York grapes like the Concord.
When Great Western Producers liquidated in 1966, its shareholders received cash and shares of Taylor Wine Company stock. Taylor Wine Company merged into Coca-Cola Company on January 1, 1977, and outstanding shares of Taylor Wine were exchanged for Coca-Cola shares.
With his 1924 Palmer Union Oil Company stock certificate in hand, Marohn set out to claim his interests in the Coca-Cola Company.
“We get people who have blank stock certificates and they think they have hit the lotto,” says Bob Kerstein, founder of a “scripophily” trading company for certificate collectors.
Kerstein’s scripophily hobby business skyrocketed after Reuters News Service reported the lawsuit.
Regarding the 2012 litigation, MSN Money later reported the Marohn family had no claim. “And it probably has a good amount in attorney fees to pay. But there’s a small bright side: Palmer Union Oil certificates are selling for about $18 on eBay.”
The stories of many exploration companies trying to join petroleum booms (and avoid busts) can be found in an updated series of research in Is my Old Oil Stock worth Anything?
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