National Republican. (Washington City (D.C.)) 1872-1888, 1879-04-12
THE MUTUAL COMPANY.
Their Troubles Brought Before the
Equity Court.
The Old Board File an Answer TO the Bill
Praying for an Iniun elton, and Make an
Emphatic Denial of the Charges
Against Them-A Protest OF
PoliCy-Holders-A Conn
promise Suggested.


The case OLA. c. Richards, George b. Clark,
George }. johnson, and John Jay Edison against
the Mutual Fire Insurance Company of this
District, came up before Justice Macarthur
yesterday in the Equity Court There was a
large audience and more of the old and prom
inent citizens of the District present in the
chamber than has ever been seen before at any
one time Tho controversy has created con.
siderable interest in the community outside Of
the party litigants and policy holders, which
may account for the large audience in attend
auce.
Mossrs MerriclS aud Morris filed the bill of
complaint for the solicitors. The object Of it
Is, among other things, TO prohibit the old
board from managing the company's affairs 20
install the new board into Office, to prevent
the new election advertised for the 1ith of
this month, TO compel the members OF the
old board 20 account for and pay back
TO the company the money that is al
legged to have been made by them in
specializing with the company's funds, to re.
turn the salaries and compensation alleged to
have been received by them without authority
of law, to cancel the purchase of tho Marble
Building or compel Mr. McKelden TO return to
the company the 81 400 bonus paid him for
transferring his interest as the purchaser to
the company, and that he make good the loss
of 81 1000 over its revenues and the differ
ence in the sum paid for it by the company
and its true value, and also to pay over the
funds of the company now in his hands as
treasurer amounting to some $4,000 and, If
the recent election be declared invalid on
account of the neglect Of the old board to give
the proper notice. to have a new election held
under the direction of the court.
This bill was filed last Saturday aud rule
retumablo yesterday, issued to show cause
why an injunction should not issue rs prayed.
THE ANSWER or THE OLD BOARD,
Mcssrs. w. ID. Davidgc, 4. A. Lambert, and
William \. Cook represented the old board Of
managers and defendants, and filed their
answer yesterday. In it they deny that great
irregularities have been committed, or that
the trust has not been faithfully performed, or
that the affairs and funds of the company have
been mismanaged.
In answering the specific allegations they
say that IT is untrue, that no proper books or
accounts Of the company have been kept
since 1865 While it IS true that balance sheets,
properly sO-callel, have not been made out IL
/ is equally true that the purpose of such sheets
! have been as well accomplished by means Of
monthly and annual statements exhibiting the
condition of the company's finances and affairs.
/ 1t is wholly untrue that no examination has
ever been made of the secretary's books and
accounts since 1865; but, on the contrary.
monthly reports have been made by the secrc-
| tary and treasurer and acted upon by the
board of managers, and the books of the com
pauy have been annually subjected to u thor
ough examination.
1t is denied that any account of the financial
condition of the company has been published
which was not carefully prepared aud given to
the public in good faith aud with the full con-
viction that it was correct. They assert that
the statement published January 10, 1879, ex-
hibted the condition of the company at the
end of the policy year, the last Monday in De-
cember. They utterly deny that when it was
prepared that they were ignorant of the finan-
cial condition Of the company.
1t was true that the moneys belonging TO the
company have been loaned by the managers to
members Of the board and other parties, but
never at rate of interest less than 9 per cent
per AMMAN, and in no instance save one, has
the security proved to be insufficient, and in
this instance they believe the personal respon.
sibilty of the borrower is sufficient to secure
its repayment The uniform terms upon which
loans were made were that the notes given
should run for six months only, and after that
time the money loaned should be subject to the
: call of the boarl on sixty days notice. They
deny as untrue that the refusals to loan were
dictated by the desire of the managers 20 divide
out the funds Of the company among them
selves by way of loans and for speculation fol
their individual profit.
They deny that the salaries paid to tho Off
GERS are large or unreasonable, or are without
the consent Of the policy holders. They ad
nit that j. C. McKelden, when treasurer, pur
chased the Marble Building for $is,600, ant
the managers bought it for the company TO
} $4,000; they further say that when the pur
! chase was made it was fully worth the money
paid for it. But since then, like other proper
ty its value has deprecated They say that
at the time of the purchase the cash capital o
G the company had largely accumulated, and TIN
main object influencing the board in making
!. the purchase was to avoid violation of thu
charter restricting the cash capital to 100000
4 by making an investment of $4,000.
: TO the lst of July, 1875, not less than ~ pc
= cent. upon the amount thus invested was real
= lied therefrom. At that date lease was made
4 with Russell & Leonard but the failure of thes'
/. parties occasiOned considerable loss to the com
y pany. IL was false that the purchase was no
made in good faith or that McKeldon bough
u with the intention of selling to the company.
/. The defendants say In respect to all money
which pass into the hands Of the treasurer tina
they are abundantly secured by 100000
4 bond. They aver that at the election Febru
airy "a, 1879 the secretary attended with al
h official list of the members and the risks Il
4 which they were severally entitled. 1t wa
= true thm NJ the continuation of the election
on March o, 1879, he was instructed not To al
o tend, but the course was pursued by the advic
"a of counsel, that the election would be null an
Il void. They further say that the complain MT
50 far from objcctng to the management, too
10 ! out new policies when the old ones expired.
: They charge that specifications arc simply
). pretext rcsorted to for the purpose of nducin
y interference by the court with the operation
Of the company, thereby aiding the pretende
h claim of j. 5. Edwards, George II, Derring et a
Il That they constitute the board Ofmanagers
g the company. They say that the success of th
4 management is without parallel in the histor
of insurance companies, whether mutual {
h stock. For period Of twenty-iour years tl
only losses sustained By the company, othC
than losses under risks has been 81 ,js3 IN 1856
? supposed to have been stolen from thosafc
The policies Of the company now exceed 81
B" OOO,G 900 the expenses are less than those of an
D. other company, aud the cost Of insurance
1t per cent, less than in other companies The
1t aver that the refusal TO aCCede to the dGman
d of J. b. Cagett and his friends for payment {
n drawback led to u combination to defeat I'll
reelection Of the old managers at the annu
meeting, January 20 last, ana continued
Il February II and March g. They declare TN
" this election was conducted in partial maj
e, nCr, with but one object, TO crush the presGl
W board. The whole number Of risks and vot
$ in the company is 100, held by about est
persons, of which votes the com pluinants ha'
a? aud The defendants in said bill 2j1,
At tho first election 1887 votes were cas-
ID and at the second, LIES. The defendants a
:, nit that the parties thus said to have be-
elected went through the form Of organization
demanded the books, moneys, &c Of the con
pany, and were refused, the managers decl
Is lug TO recognize the legality of the cleCliO
A. While willing to rcliuquish the manapcmcl
property, moneys and effects OF the compal
to any who may be chosen their successors, d
defendants are not prepared, in duty to q