The morning call., 1892-06-21
a FOqTERING RUIN"
The DeathknelI of the Pacific En-.
dOWment League Rung.
A Receiver Appointed by Judge slack-Its
Scheme Held TO Be Not Only Very
Weak, but Rotten.

1Ius0 COMPANY receiver OF Tie 1dClLC Eli
dowment League. The petition was by
Hugh Smith and large number of men,
beTs, who asked for a dissolution of the
association on the grounds OF miSmanage-
ment, oppression and fraud on the part of
the officers, the impracticability of the
objects Of the concern and its general in
solvency.
Tine time consumed in the hearing Of the
application" says the Judge, far ex-
eeeded the expectations Of the court and
counsel Ii took nearly % days to try the
application, and vast amount Of oral and
documentary evidence was introduced The
labor involved in the consideration Of this
evidence, which includes no less than six
elaborate mathematical calculations and
estimates by experts and others. to say
notb,ng Of calculations made by counsel
has Teen enormous"
Tie opinion deals with the history and
objects of the organization dating from its
/ Incorporation on March %, 1888, and the
adoption OF the name y days previous.
AlusiOn is made incidentally to the vari-
ancG Of the code of laws in its provisions
concerning officers from the articles Of
organization. The scheme Of the league is
Their entered into at length, and the Judge
makes the following observations upon the
nature Of the league
''In the first place il Is not an insurance
organization. No liability to a member
arises upon death, sickness, accident or any
other contingent event. It's contract is not
of q form Issued by any insurance company,
but in the language Of one of the experts.
It is mere bond maturing at G certain
stated time In the next place the league
is net fTateTnal organization, but IS organ
lied, Notwithstanding any claim which Is
made 10 the contrary, for business purposes,
namely, TO provide for the payment Of en-
dOwment certificates.
THE INSURANCE COMMISSIONER.
In August, 1891, the Insurance Commls-
soner issued TO { a certificate, presumably
under the act Of March 10, 1891; but there
is no authority either in the act or else
where Tor the Issuance of any such certificate
to an unincOTpOTated association like the
Pacific Endowment League engaged in the
business carried on by il. Such an institu-
ton" saws the opinion, ''Is not within the
jurisdiction OF the Insurance Commissioner.
Even if it we're, his certificate as to its sol
yency and legal right to exist is not binding
upon this court"
In April, 1889, the league numbered 4453
certificates in good standing. and then fol-
lows an exhibit OF the leagues affairs, from
which il appears that of a total msmber-
ship OF 5179 on February l, 1892. 1851 or
more than half sad failed TO pay assess
ments for January and were consequently
delinquent. Men bership has steadily de-
CREASED and deliDQuents increased. Assess
ments per member for January varied from
81, Oh those who were members less than
one year, to SIS on those whose coupons
had matured during the month, or an aver
age contribution IN cash per member Of
from s. 30 to S2l5.
Up 10 January l. 1892 the total receipts
were S5G6 rs 80. Of which Ss44 252 90 had
been placed 10 the credit Of the endowment
fund and Sl2l, SEQ 90 10 the general fund
$685. % derived f5Om interest on moneys on
deposit. and there remained in the end0w-
ment fund S16S,7 . 70 and nothing. or prac-
tically nothing e the general, while SILL
| Soc 30 had been ,therefOre consumed in car
| Tying on the bus ness during an existence
of a little over ttree aud half years.
For nine mOsths. ending December 81,
1891, expenses averaged nearly $500 monthly,
| including $500 Ter month as salary of the
president. Up. 10 January ! 1892 526
and up TO the 18Th l32 had been purchased
by the officers for $1,000 So. According to
estimates 1850 coupons mature in 1892, repre-
sentiDg a liability OF $3.50 600, and if the
sum on hand, S16S, 152 20, is deducted there
viii remain SOIL, s45 80 10 be raised by the
assessments on 3179 members, should they
all continue members, or an average Of Sl92
exclusive of all sums previously paid by
them and exclusive o. dues for 1892.
THE LIABILITY.
The entire liability to 3l79 members on &C
! count Of one coupon is 81, $50, 800 and on ac-
| count of coupons held by members. aver
| aged at seven per member, S11, l26, 500.
The ability Of the league TO meet its obli-
! cations is next considered mechanically
! to prove cOnyiucingly that il cannot meet
| them, and that with tie fuctuaton OF
membership In a very short time there will
| be not only no money at all in the treasury,
! but heavy deficit In the accounts Of those
members whose assessments have been adj
vanced to meet the early maturing coupons.
| Estimates for the future indicate as clearly
/ that the affairs of the league will not be
| improved by time.
it was claimed that ''thls totterlng ruiz"
as Judge Slack called it. has for its sustain
| Ing features interest lapses. purchase OF
| coupons at a discount and increase Of men,
| bership. The interest matter was easily
/ disposed of, less than $1,000 having been
! derived from this source and the funds on
| hand fast disappearing. a regards men,
bership, its experts have admitted that there
! is no absolute profit from such source and
the Judge asks: What inducements to Join
| could the league offer for the future were 1t
permitted to exist with depleted treasury,
excessive assessments and general feeling
| of distrustY
That compromise with members or pur-
| chase Of coupons at less than what has
| been paid in upon them is source or can
| be made one of profit IS shown by figures TO
| be in keeping with the visionary notions
| which liz at the foundation of the scheme
| of the Institution. Further comment upon
| this matter Of compromise is unnecessary,
except to say that II there is any legitimate
| profit TO the league In lapse then the Off
! GERS have deprived It of that benefit b. pay
! ing back something to a dissatisfied men,
| Der who might otherwise have laose1."
Then il is observed that there has been
unjust and arbitrary discrimination. The
| profit from lapses is considered doubtful
| quantity in the present condition of affairs
| with an impaired endowment fund Ii there
| has been any substantial profit from lapses
| where Is II? The truth is the league has
gained but little or nothing from them, and
/ with this final sustaining feature or source
| of alleged profit dissipated there is no fOun-
| dation left upon which this crumbling insti-
| tuition can stand.
| THE MORALITY AND JUSTICE.
However this may be- what must be said
! of the morality and justice of a scheme
which has for the avOwed and practically
| sole basis Of its prosperity the obtaining Of
contributions Of money with the expecJa-
| ton and desire that those contributions will
| be relinquished and forfeited without the
| slightest benefit to the contributors
Continues the court: San institution in
| which one gains and II lose can hardly be
| considered as doing a successful business,
and IL il can be carried on only on the
| theory that the many must lose in order
that the few may gain it violates every
! principal Of equity OF justice. The scheme
| Of the league is abuHdantly proven TO be
| visionary and impractieable. The business
| of the league, II business it can be called,
is shown TO have been carried on in the past
at loss and to be incapable of being con-
| Quoted at anything but a greater loss in TIL
| future" One OF its experts said that tn Q
basis twas very weak" and Judge Slack
adds, "the basis is worse than weak; it is
rotten"
In the face Of "the miserable showing
made" it was claimed that the court had
no power to dissolve the concern, ETC., at
the instance of a portion of the members.
Justice would be a mOckery If this were
| true" is the answer vouchsafed. 1t was
maintained that it is not partnership. and
i In nr.-lls ht1al q