St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1891-08-01
AN OUTRAGEOUS FRAUD.
The Fidelity Mutual Aid to APP
pear Before the Insurance Com
missioner.

The Fidelity Mutual Aid to APP
pear Before the Insurance Com
missioner.
The insurance laws of Minnesota are
not to be trifed with. and any company
that enters upon illegal business is
likely to feel the firm hand of justice,
REPRESENTED by the insurance commits
sioner, and to feel it pretty heavily.
The Fidelity Mutual Aid Association of
St. Paul is the last company to be made
an example of. 1t is cited to appear be-
fore the insurance commission Monday
and show cause why its certificate of
authority should not be revoked. Mr..
Dearth sUigmatiZeS it as an courageous
fraud" and makes the following re-
port:
STATE OF MINNESOTA, DEPARTMENT OF IN
sURANCE. ST. PAUL, July 30, 1S91.-Hon. c. II.
Smith, Insurance COmmiSsiOper-Slr Owing
10 various letters Of inquiry filed with this
department and III pursuance to the pro-
visions Of the laws of this state, l, Elmer II.
Dearth, deputy insurance commissioner Of
the state of Minnesota, have made an exam
inatiOn of the condition and affairs of the
Fidelity Mutual Aid Association of st. Paul,
Mimi, ard also fully investigated as to its
plans and methods Of transactng business.
Paid on account of expenses. .......... s. 13
Balance on hand .S14 81
The said association only received Its GER
tifcate of authority to transact business on
June 30, 1891, which of course accounts for
the small amount of receipts and eXpendi-
lures.
By referring to its policy register and OBJ
serving the number OF the last policy or GER
tifcate issued, which was beyond 800, i was
impressed with the enormous business writ
ten within q period of less than four weeks,
and at the same time wondered at the meager
amount of money the association had re-
ceiyed to represent it-Only SIS; but upon
turning back to first page of certificate or
policy register the mystery os how this asso-
citation had secured such Large" number
of members in less than month was fully
explained. 1t was done in this way, viz. ::
The first policy or certificate issued by the as
ISOLATION bore the number of ''500l;'' the per-
son receiving this certificate gave three notes,
one of 81 payable upon receipt of certificate;
one OF So, payable in two months from date
of issuing certificate, and enc of s.. payable
in seven months from said date, and the Sec
ond and third Of these notes are given con-
secutive policy or certificate" number. For
example, the first certificate issued was num-
bered 5001; note No. :. 5002; note No. 5, SOB.
Thus the person receiving the second eertifi-
cate issued by the association would have
No. 1904, and his two notes would increase
the policy number to $685. and member No. =
holds certificate No. 5007; member No. t. No
50l0 ald so on. 1t is thus seen that while
the ASSOCIATION has less than 80 certificates
issued, by this system Of numbering the pub
lie would be led to believe that the associa-
ton had over :. 400 members.
This plan and method followed By the
management is alone sufficient TO brand the
said association as an outrageous fraud. and
a scheme to deceive and rob the public, and
should not be allowed to proceed farther
under Sucb npfariOUS methods
Independent however, of the foregoing
facts as set forth, | find that all the business
transacted by the Fidelity Mutual Aid Asso-
citation of st. Paulis irregular and illegal. in
asmuch as the conditions contained
in the certificates issued make it obli-
gatorv upon the members to comply with all
the requirements of the bylaws" and in
the failure so 10 do they would be unable TO
recover any indemnify. find that's the said
association has never adopted any such by
laws" thereby rendering all certificates is
sued illegal and void
Willard P. Smith, the secretary, who also
holds the Office of treasurer. produced a
partially prepared code of 'sbv-laWs = which
had they been legally adopted. would have
afforded no protection whatever to the mem
bers. They contained no provision what
ever as to the disposition of the funds re-
eelyed; the whole could be used for ex-
penseS, as FAR as any restrictions contained
IN the proposed bylaws were concerned. On
the other hand. there was provision that in
case of sickness if a member failed to file
proof of CLAIM on or before twenty DAYS from
1irst day OF sickness the association would
| be relieved from all liability for the payment
OF any claim that might accrue on account of
such sickness. 1t is usually custom
airy to give members thirty DAYS
| from date of recovery 10 file no.
uce OF claim, or rather from ex-
! plrauon OF the date that member would be
! entitled to idemnity OH account of sickness
or accident. 1t is thus seen how it is pro-
posed to relieve the ASSOCIATION from every
possible liability-while the members have no
| assurance whatever of being afforded nro.
lection, being solely dependent upon the
tender mercies and generosity of the officials
in charge. The books and records of the as
ISOLATION show great ignorance on the part
of the management and also great lack of
| knowledge as regards good practical business
principles.
Upon the facts as above set forth. it be-
comes your duty as insurance commissioner
| of this state to serve notice upon the Fidelity
Mutual Aid Association Of ST. Paul to ap-