The New York herald., 1877-02-13
The Continental "Recuperative Scheme"
Explained by an Agent.
SUITS IN THE COURTS.
Further Glimpses Of the True Inwardness Of
the New Jersey Mutual.
Superintendent keIseys Report to the
Legislature.

Referee William Allen Butler held another Sitting
yesterday at No % Nassau in reference thu
Affairs Of tho Continental Life Insurance Company
Tho principal witness was s. U. Hammond, whose
name has before appeared in tho HERALD with refer
encc to certain transactions the Pacific coas. His
evidence contains some very lucid explanations o
several little Irregularities 10 which the Continental
vas addicted
TESTIMONY OF s. o. HAMMOND.
After being sworn Mr. Hammond testified as fol
lows:--I am q member OF the firm OF Hammond 4
Grub, indianapolis; saw r. c. Frost last Wednesday
ON Broadway; last met l.. W. Frost in June; have
been employed purchasing policies for the Continental
Lie Insurance. Company; purchased policies Cali
fornia Nebraska, Iowa and the Southern States made
arrangements for reinsurance of some OF the Cont
mental risks IN the Southern Life Insurance Company
prico OF the contract $23. 400; l.. w. Frost
was with mo in California; l there nearly
five months; arrived there in September, 1876, and
Frost followed in October; tho amount Of reserves
purchased in California botwecn 500, 600 and
$500 1000; took with 10 tie Pacific descriptive list
OF policies to bo purchased exchanged; IN ad
dtion l found good many risks not IN
tho list which disposed Of; obtained the
list from L. w. Frost, with instructions as
10 using IL; the highest purchase limit given me
was hfty per cont OF the reserve; If exceeded 1t,
tered the policy holders in exchange new policies on
The Continental plan; Moore often purchased their
policies out and OUT when a ncw policy was given the
policy holder received SO mucn IN cash and much
premium; my own expenses came inside OF tho fifty
per cent limit the reserve
COMPREHENSIVE INVENTION
Ny impression Is that the Continental plan policies
arc on substantially the same prin ciple tue New
Jersey Mutual's decenniat term policies; these
tracts are loaded according to the argument OF Mr.
William Barnes 1873 per cent; The usual loading in or.
roa
per cent; purchased in Nebraska between $25, 600
aud $50 900 OF reserves; was there only few days
the risks held by the Continental in the Sou uthern
States amounted to between 81 900 and So 00O
had instructions TO buy them up altogether;
rcnsured In the Southern Life the contract Tor
that reinsurance was drawn up by William Z. Whit
nev; the price OF $23 900 was paid by sight draft
Tho Southern Life failed about mon tbs after tho
pontract was made; went to Cincinnati In June with
L. W. Frost and G. Hilton Scribner; that trip moth
ing special was said about u reinsurance in the New
Jersey Mutual; al first thought the profit upon tho
purchase of reserves went to the company some-
thing occurred aiterward to make think the profit
went 10 the onccrs; Frost told me one day that the
company had made much money, that the difference
between the full reserve and the amount paid to the
policy holders; asked Frost how many there in
the company, and he replied there were himself and
several others; sent the purchased policies TO the
Office here; release accompanied each one,
showing the terms Of cancellation; most OF
the releases were in my handwriting; Frost
,, never to my knewledgo got dollar dollar ~ Of
the Continental the first agreement, made in july
1874, WAS 81, 500 per year, and expenses paid by
later agreement got $40 600 year and expenses all
my contracts were made with L. W. Frost, excepting
the California one; that was made with the agent.
WHY THE POLICIES WERE PuRcnAsEp.
In tho spring OF 1875 was told there u reason
for bung in the reserves; the company was unable
10 keep certain agreements, and there was necessity
for such a course the ground ON which acted
based on tho inability Of the company to iuf its
tracs gave this same to the policy holders
1875 and 1876; believed u to be true, and the thing
dono openly; the company TO play
solvent here IN the East and insolvency
In the West ana South; suppose bought altogether
about 81 900 reserve the company had agent
here wno bought up polcics the West and South
In my hands; the Commissioner OF Insurance Of Cali
tofnia denounced the whole thing; the Continental
obliged to receze ou policy holders they neg
ected send out expiration notices, and many pohcies
thus allowed to lupse the Southern agents we're
preston my mind that the Continental would trans
Ter It's business to the New Jersey Mutual; Judge Gil
berts decision destroyed that intcntion my expert
ence In purchaslng policies showed that those good
health would sell their contracts more readily and
lower than the scky ones; some OF tho latter ah
Boiutely refused TO sell.
PECULIAR BUSINESS
The witness was asked what were the advantages o!
term policy on the Continental planY and replied
readily, Most people are as anxious TO know how 10
get out OF insurance contract how to get the
Continental plan was very good way for them TO get
out the California agent Mr. Blake did not at first ike
to aid III the purchasing schemes alter conversation
with Frost however he labored enthusiastically; my
pay for services in California was $4,000 per annum
and expenses paid and per cent upon the
purchased; the last commission paid TO me amounted
COOL AvowAL-
There Is not company In New York that did not
s po'y a - a,ied o .narano Mna
Towcr" the process Of buying IN policies Is tcchni-
rany termed .'wrecking;'' there are great many
modes OF wrcckng such as sweating, bu-dozing, in
&c. | am familiar with all Of them; have
been in tho life insurance business about fifteen
solved, We should havc gone on purchas.
ing policies here In January; should have
dbno SO whether reinsurance had been effected with
M In mr. moi nuE EinU n
ancc Of part OF tho southern business made PROPOSE
tons TO the st. Louis Life, the Piedmont and Ar'ng
my business was only that OF an agent Of the Contin
entail, and my instructions were to reinsurc those
Southern risks, provided could lnd any company
foolish enough to take them
This concluded the examination OF Mr. Hammond:
but he will be called agun within tho next fortnight,
hen no expected to present oi the documents
with his purchasing trips.
George W. Thompson, tho bookkecpcr was caod
and questioned with regard to certain entries in tho
BOOKS of commutcd commissions" and tho reference
then adjourned until this afternoon
Nh. KELsEY's REPORT TO THE LEGISLATURE ON
THE NEW JERSEY MUTUAL LIFE.
TRENTON, Feb. IL, 1877.
Secretary OF State Henry c. Kelsey, who, by virtue
Df his onice cro0cio Commissioner Of Insurance Of
he State submitted this evening to both houses OF the
Legislature report Of the examination which he has
madc into affairs OF tho New jersey Mutual Life In
'urancc Company Of the city OF Newark Most OF its
details and statistics published in the HERALD Of
he 3st ult After referring to the proceeding
II somo length Mr.. Kelsey says
The appointment of ExGovcrnor Parker as receiver Is
sufficient that tho OF the
will be faithfully for the benefit of those
Interested.
By Mr. Facklors final report will be observed that the
cserve outstanding policies Is actually $'.637plI,
vbich alone the companys deficit by $4,000
eyond the amount atcd In his report
to total OF $6ls 500 And this too the assump'on
hat the mort cages submitted and examined are worm
heir face, which from positive valuations made seriously
question.
agcs IN their possession, but did not produce them.
which there Is abundant believe fraudulent
md known 30 to be by the company's officers.
IiKNRY W. BALDwfNs CONNECTION.
As part of the little inform CLEANED from the COM
anys books II appeared that there entries OF call
frequent occasions and consde amount TO H.
n Baldwin. OF New YORK, secured by his business" |
he charter company expressly provides |