The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1895-06-21
NOT EXCEEDING $4,000
w. II. II. MILLER's IDEA OF RE-
CEIvER's ANNUAL COMPENSATION.
His Testimony I'm the Iron Hall Case
Before the Full Superior
Bench.

In superior Court, Room 1. Judges AIc.
Master. Bartholomew and Harvey are hear
ing the evidence and argument on the
petition of Receiver James h. Failey for an
allowance in the Iron Hall trust The re-
ceiver practically asks for $4,000 for serv-
ices performed. He is represented by A. c.
Harris, Hawkins & Smith and Harold Tay-
Tor. Attorney Daniel Howe is contesting
the claim. The auditors yesterday were
chiefly lawyers and others interested in
the winding up of the trust. John =. -Frenzel
was IN the room part OF the day. W. H. H.
Miller and Charles Martindale were the
only witnesses examined. Mr.. Miller was
called by attorney Howe out of the reg
ular order He desired TO leave the city
ahd the court consented TO hear lis testi-
mony.
Inc charges against Receiver Faley were
all embodied in the opening statement of
Attorney Howe. He commenced at IL
O'Clock yesterday and spoke until 3 O'Clock
IN the afternoon. He referred to the petit
ton or the receiver as IA graphic and
elaborate description of his work. set cut
by his own counsel. He did not think il
would be shown that the receiver did
much of the work for which he is now ask
Ing $4,000. Mr.. Failey he said, had been
asking for that amount as remuneration
for two years and ten months services,
which SUM just about equals the sum total
OF the salaries allowed by the fee and
salary law of the State to the Governor,
Lieutenant Governor, Secretary, Auditor
and Treasurer of State and the Attorney
general. The attorney admitted that the
Iron Hall receivership was a peculiar one.
There had never been another like it in
the State and ii would not do for the
court TO pass judgment upon the testimony
of any witness, however eminent whose
opinion is merely a guess. Yet it did not
follow that the case, being peculiar, there
was no intelligent standard by which the
value of the receivers services could be
arrived at. Complicated the case is the
attorney held that the rule for estimating
the value of the receivers service is very
simple. He looked at it i'm the light that
the petition for $97 500 was based upon an
exploded percentage theory which has pre-
|. vailed as applied to large amounts in Eng
land or in the federal court or any State
court in the United States. That rule was
applied only TO small amounts. In small
amounts Ii is limited by statute, as in New
York. where until recently the percentage
rule was applied. 1t was expressly stated
That the compensation of any receivers
should not exceed $4,000 a year.
In referring to specific acts of the re-
celver in the administration of the trust,
Attorney Howe said I'VE will show that at
this city that would at least have taken
part of the fund i'm the hands OF Receiver
Failey and paid interest OH il. There ought
10 be some way TO make him account for
this neglect. He has been using this fund
for his own profit and the interest that
should have been paid this money
hn in o1ln n ic
pensation. The golden rule of equity does
not allow any trustee to use the funds in
his possession for his own benefit and
personal gain. IL he uses the fund in his
business the law gives the beneficiary the
election TO charge either profit or interest.
If the profits of the business can't be as
certained then he should be charged with
interest. This rule can't be got around by
any subterfuge whatever and a court of
equity holds receiver responsible for the
abuse of the trust. In making these
charges the attorney explained that the
ceiver stakeholder in the Merchants
National Bank, where the Iron Hall fund
is kept. Whatever profits were. derived
from the deposit were enjoyed in part by
the receiver as stakeholder
MR.. HARRIsS STATEMENT.
Attorney A. c. Harris in his opening
statement covered much of the Iron Hall
litigation. He called the attention of the
court to the fact that in giving his bond
Mr.. Failey had not allowed 1t OF be an ex-
pense to the trust. Ordinarily such bond
would have cost $4,000 a year The attor-
ney took il that the court, or at least
Judge McMaster. familiar with the
process by which this Iron Hall money
had been scattered over the country. The
order was organized upon the basis that
four or five people would take out certif-
Gates on a certain day. They would pay in
all their assessments after a time. but be-
fore the end of seven years-the Initial
but one would lapse. So il would be held
out to everybody to the effect that they
in $500 and got $1,000, and. to make it
more attractive, Ii was provided that when
the assessment should be made by the SUI
preme sitting at Indianapolis (Which was
about eighteen times a year, not more than
two monthly and sent out through the
of the amount collected in each branch
should be RENTED TO indianapolis and
that 20 per cent. might be kept by the
branch IL was loaned out on good security
or deposited in the savings bank and that
money, with its accumulatons. was made
a reserve fund. So that at the time of the
appointment of the receiver there was
scattered through the country in these
branches 20 per cent. on each assessment.
Sometimes IL was loaned out. sometimes il
was deposited in a bank sometimes
cured by bond in the Bank of Philadel-
phia: SO that In good round numbers the
were 100000 or 100000, which was found
in the banks here The claim against the
insolvent bank Philadelphia is 100000
and there Is sl,250000 OF this reserve fund
throughout the country, nearly all of which
Mr.. Failey has gathered and brought here.
Before concluding his statement Mr.. Harris
read the petition filed by Receiver Failey.
w. II. III. Miller, of the law firm of Mil
ler Winter & Elan, was called by Attor-
ney Howe at o'clock yesterday afternoon.
Mr.. Miller had had considerable expert
ence in litigation where receivers were
in charge of certain funds. He had been
closely connected with the O. d vi. and
L., h. Il w. railroad receivershipS in the
United States Court. He was familiar with
the affairs of the Fletcher & Sharpe In
diana Banking Company and the Fletcher
trust receiverships In the Fletcher &
Sharpe case the Indebtedness was over
100000 The collections were large and
il required a great deal OF work TO wind
up the trust At one time he was familiar
with the allowances made to the receiver.
NOT OVER $4,000 A YEAR.
Attorney Howe-I want to put this ques-
ton TO YOU Suppose receiver is appoint
ed by mutual benefit order having 1,Ol2
branches sc. 900 members and real estate
requiring the skill OF the ordinary business
man to MANAGE 900 collected and sent
here without litigation and put into the
hands of the receiver. He gets 5000 more
on assessments made before his appoint
ment Receivers in other States have in
their hands S666 600 These funds are paid
after two years of litigation, and about
two million dollars comes into the hands
of the receiver. One million five hundred