St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1890-11-21
And the Educational EndoW-
ment Association Must
Come Into Court.
Certificate Holders Begin an
Action Through the At Is g
torney General, "
Charging the Association to-
Be Not Only Insolvent but X
a Gross Fraud.
The Motion for Injunction Ac-
companied by the Most !"
Serious Charges.

Serious Charges.
An action has been instituted i'm the
district court which has for its object
the winding up of the business of the
Educational Endowment Association of
Minneapolis. The complaint, volumi-
nous one, is in the name of the state of
Minnesota, at the relation OF Moses f..
Clapp, attorney general of the state.
The complaint charges gross misman-
agement of the association and makes
broad charges against the manager, j.
Merritt and officers of the concern.
1t will be remembered that the asso-
citation was formed with the object Of
paying to members Or policy holders a
stated sum after the lapse of period of
years, to be used in the education or for
the benefit of children. After the asso-
citation had been i'll operation for sew
eral years it was determined by
the officers to raise the assess
ment charges. The certificates issued
after certain dates were put into differ
ent classes, designated as class "a. y
classes subsequently formed were
larger. 1t became evident that those
joining the association i'll its early his
tory would not receive full payment
upon the maturity of their certificates
an event which will happen within
few months. They were also subjected
to special assessments. A protest
against the management was made by
number of members, and they, in
some instances, refused to pay the spa
cial assessments. The officers of the
association wanted the early members
to consent to
Go Into the New Classes
pay larger ACKNOWLEDGEMENT that
their certificates be extended for short
period longer, and be placed, as the
officers claimed, in position where
they would receive payment in full
upon their certificates at maturity. A
meeting was held, for the purpose Of
comforting with the members, at Mime
apOliS during the summer, and a suisse
quent meeting with like object was held
few days thereafter, in the chamuer'of
commerce building of this city. At
this latter meeting there was some
pretty plain talk'indulged III, and Mr..
Merritt, the general manager. was
hauled over the Goals in severe man.
ner, and finally asked to resign. This,
he refused to do unless, as he said, the.
association should pay him $4,000.
That phase of the compromise was not
acceded to, but was met with charges
of miSmanagementa and an absorption of
large amount of the annual receiptsl
to pay the salary and commissions OF,
the manager. 1t was alleged that the
books were in such shape that they did
not show the actual receipts adj expendi-
lures of the association. Some of the;
wiser heads in the association counseled-
moderation, anda effort was made to
carry on the business Oh asmodified
basis, while others advised the closing
up of business and Il division among the
members of effects on hand. No course.
was determined upon at that meetings.
but subsequent meeting was held at
the Ryan, in this city, when a per-
feet hurricane was leveled at the
heads of some of the officers. A COM
mittee was appointed to employ counsel
and ask advice as to the advisabiiity of
winding up the affairs of the concern.
The outcome of the matter was the suit
instituted as above indicated. The
complaint filed in the district court in
st. Paul, alleges, among other things,
as follows:
The Serious Charges.
The Educational Endowment Associa-
ton of Minneapolis has been corpora
ton under the laws of this state since
March 8, 1888. There are between 1,5OO
and 1000 shares issued. Only $50 shares
have been issued since 1887, and only 80
shares since Jan. l, 1890.
The officers and managers have each
year collected large sums of money
which belonged to the corporation.
These collections have amounted to
many thousands of dollars annually.
For the year 1889 the collections were
SAL, 1876.
Some time in 1885 the officers found
that the original plan of the corporation
was an absolute and complete failure
and would not be able to pay its matur-
ing certificates. 1t was insOlyent then
and has been so and is now unable to
pay. matured certificates. Knowing
these facts the ofncerS, and particularly
the manager, for the purpose of ro5bing
and cheating the association and the
certificate holders and of absorbing
and uSurplng to themselves, and par
tlcularly the manager, the MONEYS OF
the association, have by Illegal and
fraudulent practices, resolutions and
acts converted to their own use large
amounts Out of the treasury of the cor
poratlon in the way of payment to them
selves OF eXtortiOnate and exOrbitant
and illegal salaries. The amount paid
and appropriated to j. MERIT the COM
plainant is unable to state, for the rea-
son that the officers and manager re-
fused to allow the certificate holders
and members to make extracts from the
books OF the corporation. 1t is alleged
that
The Accounts and Resources
have been wrongfully, negIigentIy and
frauduiently kept. and do not show the
full amount paid to the officers and
managers. The books have been viii
fully kept in such a manner so rs not to
disclose the operations had and moneys
received by the officers and managers
They refuse to disclose or state the
amount received by them out of the
treasury of the corporation. 1t is,
charged that the officers and others,
have attempted to change the articles of
incorporation SO as to give the officers a
wider field for converting larger sums
of money to their own use. y
They levied special assessments. al
leging that the endowment fund had
been reduced to $4,000, whilst the artl-
Giles of incorporation only allow special.
assessments to be levied when the en-
dowment fund has been reduced as low
as 50, 000.
The corporation has exercised powers,
not conferred in their articles of ineor-,
porati0n. The funds were safely and
profitably invested IN the AIinnesotao
Loan and Trust company until March
10, 1887, when the managers and officers.
for the purpose of increasing their ex-
orbitant salaries, and without authority