, 1875-05-18
STATE INSURANCE COMPANY.
Judge Drummond Believes It's Officers
Were Engaged in Unfair
Combinations.
Mr.. George c. Smith Requested
to Pny Back That Money.
Resignation Of q. ". Biahop.

Resignation OF n. W. Biahop.
Judge Druuarnond decided yoatorday morning
tbs question NJ TO tbs allowance Of ctatma in
favor Of tho National Loan and Ttnet Company
against ths State Insurance Company to tho
amount Of s2Co 1870, aud also tho tute 10 COM
pol George G. Smith to pay R33l, ,2l3,52 which
besongcd to tho bankrupt Slate Insurance COM
pany, rcfustDg to ALLOW tho CLAIM, and also ro-
quifinR Smith 10 pay tho amount 1c had had to
Mr. II. ". Biahop. tho Assignee Of the Company.
Az this caso, which grew out Of the Chicago
t!rc Of 1871, has attracted great dcat Of alton
tton, and las, during isn progrets. unoa1shod An
imn,cnBo amount Of fraud,
\ SHORT A1s1onT
Of It is given. The Stats Insurance Company
WAS frat organized ID Frecport in April. 1861
md roorgnu!zed at Chicago on tho cooperative
plnn In 1908. Tho capital stock MAS not to OK
Good $40 00o. 900. Of which 20 per cent WAS to bo
paid In caah, and tbs finds we're to be
deposited daily with tho Trcnaurer. by
Jau. IL, 1870 stock to The amount Of
9228, $40 had beon placed, and thc funds Of tho
Company mere Deposited with the National Loan
and Trust Company (afscruari sha Dank Of Chi
cago). In November, 1910. it was found that
the Company Ind not been succoss, and that
its capital Wan impaired to the extont Ut
ESQ, 10, and an assessment of u a share wAs
layfcd to make it up. Great dissatisfaction was
caused among ths stockholders at this action Of
the " Smith ring" and ut tho annual moetiog OF
Jan. II. 1871, strong attempt MAS made to ovo<-
throw It, but the cifort MAS unsuccessful owing
Of stock were ishlet1 which thrcm the balance Of
power into tile Ilan1a Of tho ring.
AFTER THE P1IE
tho Stnse Insurance. Company hung out hum
bio sign OH Wcst Madison stsect, aud notified
iuqnisitiyo pollcy-hodors that tho Company
could only pay III cents on tho dollar. Those
who accepted this plttNnco assigned uoir poll
ctes A!thcr In blank or to ]. D. Smith. AZ this
time tie Company had eao0. 900 IN caul,. These
Policics wsro then taken by j. D. Smith to the
bank, F1e1o they wcro sold and dua-bttl eivea
for the full amount Of tho policy. The
National Loau and Trust Company It viii DO ro-
Enenbe1ed. was tile bank in which tho State In
s''rAnce Company deposited oil its funds, aud
ras controlled By George @. and q. N. Smith,
who were ut tho aarl,o time officers mud Directors
Of !le Insurance Company. Tho bank, after
buying mp the policies at IS cents on tic doltnr,
turned round and attempted to proye them tlp
aga,uas tho 1ns1rance Company at their face
value.
Up to this sin,s no ous seemed to DO aware Of
tho existence Of large bnIanco to tho COM
panya credit, but one Of tho pollcy-holders, Mr,
king. Of tho hrtn OF Gol.nan i King, got an
inkllnC Of fraud. and tho souretsry, Iii. Van
InTassn. Wss examined before tho RaKster. liz
told Of tie whereabouts Of tue CompAny'a books,
which woro III tho hnpda Of MIR. Pefkins, tho AS
aignec n that time, and they, on belng pro-
dnced, allowed aous rtartlinS rpyo!atious.
The result WAS that ruIo wns made on
George G. smith to n1ow cause who l,o should
not pay over a1A,2l3.5s recolrod by him, as
Treasurer, and tlo question Of tho allowance al
the claioa OF the bauk WIS nlko argued At tho
sane tfmo. Shortly after, d compromise was
lnsde Ly which tue bank "sa to pay s157,67s.l2
arrangement was, however. upset by Judge
Drummond. who held it could not bs sustained,
and the rule waa then reinstated to
eo decided on ita merits. Elaborate
5ss easpp. wore nj then prepared by oil
wont to hearing With The advantage Of such
extensive study. a1r. George G. Campbell, who
represented tile Assignee, spent the Whole OF hfB
ttme Tor six weeks III Preparing his elaborate
brief Of ncat'J go octave pages, assisted by Mr.
attorney for King; Mr. Van Arus1n, ropreaenting
other credsto5s; Mesars. AYer i Kalos, for
George Q. haslth aud Ms. ". 9. GoullY for tile
bank, also spent much tirue aud made careful
and exhaustive Arguments, which were had In
Juno. 1871, before judge Drummond, and by
him taken undor atlviscment. 1io gayo
Ills DEClsioH
yesterday ~ follows:
/ TN not rnjHk to teItypd an ordngo7 IN tha esss
It doea mol come 10 me ia regular furn But havo
no obIectiou e tell my concnsions aad what shall
certify 10 the District 9uugc. hold thu. heso rattica
VI oeonpy relation q tsst bease tha: there wa.
,t .a n,aue % tase ~ Unfair advantage Of
tnat ts c.s u uua.t nIu hs sopaa5 penoys
ia effect, purchas.I frun. Tho fnds 81 lis in.n,.neo
company itself. ii win follow a. matter Of uourso
hut Tits bauaina company Gun not provo up these
Tt4a aaan1s @ tne nnarapcs company and that sao
4, jill T ~ IT. Psy osee the Assignee
e1in. aa o at Use pad o ~ .ao p9rehnso Or
Iuua. oi so company In the ay Ia whiea t.ay III "a 'ne
III, ooupY ''A'S'1 '1A'' 0'''
objected TINT on tie nrIumeut OF tha mia
agaiugt tho bank the queation On tho ruio
against tho Treasurer, Geprve @. Smith. had mt
boeu arriled at aiI mil thntaforo tI.t ro or,lor
should 10 u,ado ~ to him. Cousidorable dlscrs.
Blon followed between lie attorueys stcssrn-
Eoonor aud Catur,bell, Who pakol the file insiat.
ng that both poipts had boon discussed and
submitted mud Messrs Ho,,ily and Svor fionu. r.
nE Il. 'A'o' >'''''-
Judge DFummonl said that thu proof atowed
hat tue money huI boon deposited w dIeorca n
sutb In the 6apk In tIo WV IN wi,tc{, anv NJ.
toa would doposIt mouoy in bank. ''A0
Nm. AYEM
replied that he did not supposo that Tho tanlt or