New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1896-02-14
CLAIMING RESERVE FUNDS.
DEATH CLAIMANTS AGAINST INSURANCE
POLICY-HOLDERS.
RESULTS OF THE DISSOLUTION OF THE MUTUAL
BENEFIT LIFE ASSOCIATION OF AMERICA

u
BENEFIT LIFE ASSOCIATION OF AMERICA
RECEIVER AND TRUST COMPANY AT ODDS.
Justice Smvth completed the hearing OF testimony
Yesterday in an important insurance case WHICH mas
been en- trial before him for seVerai oas'
main question TO be determined IN the suit 10 90 "
the disposition to be made OF two so-caieu ie'e'
funds" Of the Mutual Benefit Lie Assocauo' -
America. which, upon the dissolution OF that cur
poration In October. 1884, were In the hahus Vi INC
FARMERS Loan and Trust Company. one Oh t"ese
reserve funds amounts to about sioo'' an" -
other TO over 100000. The first Is mAue up "a p
tons of premiums Of policy holders depos'eu WIN
the trust company under an agreement u
ruary 1854; the second OF similar deposits uhaer d"
ooreement between the trust company and the IN
surance company of December. 1885, that was SUI
stituted for the former agreement.
MANY INTERESTING POINTS INVOLVED.
The case Is said to involve the largest NUMBER OF
interesting questions that has arisen IN any II"
surance action in many years The insurance "'
citation was found to be insolvent by the ota'c A"
surance Department In the summer OF l''f' anu an
action was begun by the Attorney-"e"e'a' i'' ~
dissolution Final Judgment was entered IN &c
tober 1894 dlssoving the corporation ana appoiN"e
Samuel W. Milbank It's permanent receiver opon
nuafyng the receiver found few or no assets d.
the companys Offices Nos. III AMI Ivy D'oso"~ ~
all the cash In bank having been eXhaus'eu W
officers and all the tangible assets AZ TIC Yin
pany's offices having been sold out by the oherh
under an execution upon a judgment for the insur-
ance upon the life Of the wife OF j. Iruhou'
Smith. the president Of the company
The only considerable assets that the receiver
finally discovered the proceeds OF an as'ee
,nent of reinsurance with the National Lie lhsur
ance Company Of Hartford and the reserve fuhds
alroodv mentioned In the hands of the trust com
many The directors of the corporation mad ma"e
several futile efforts get control OF the reserve
fund for the pay ment OF death losses prior 10 ''e
dissolution of the company. but the trust coi"P"''
had steadily refused TO turn over the lu"us' ca
cent under A Judgment OF proper court on the
ground that the company was already ihsoi'e"t'
and that to do as the directors wished might resui,
in the dissipation OF trust funds or diversion VI
them from the for which they were iesaiiy III
tended. The trust company also decliheu ~ 'u'',
over these funds to the receiver until the court a
passed upon the questions first. as TO VINO was the
marty to distribute the moneys ana. second aS "
tho nersons who were entitled to receive them upon
distribution This led to the bringing OF the SUIT
the trial Of which ended yesterday lot ,"e
purpose of determining all these and the minor
questions involved The number OF parties 70 the
suit exceeded 1900. representing all the different
shades Of interest
A LARGE ARRAY OF COUNSEL.
The number Of cot nsel who appeared was larger
than in any other recent case. David Mcclure rep
resented the trust company iici'' ~
counsel for the receiver. the death claimants were
represented by Raphael J. Mores. Arthur > ~uria'
4 " Gleason. Gherarii Davis ex-Judse nan. Nai-
ter Hughes & Dwight. and others; Tor the "''rs
policy-holders the chief counsel were Henry -
rr,,.hkiss Adrian r Herman. Hector NJ Hitchihgs,
Elandv Mooney & Shipman. VI. T. OCoHior a'''
The cher controversies arose over the enect 70 oe
,,von 10 certain clauses In the TWO aSreenne'its,
That Of iSsl prOyling that in case 81 dlssouon ,i
reserve fund saould be dstrDuted ailos ras y
ing policy holders while the substitute asreeine .h
OF S5 provided that in case OF ds Sos nrsi be
PAID As the fund under the hrst agree,eHe
m"Te Than 5000. the contest centred on the sec,
and contract, the circumstances Of It's execution
and the legal effect to the given 10 It's pro''7'o"'
4 QUESTION OF AUTHORITY:
Tn. counsel FOR the trust company seemed taken
bv surprise to have It developed upon the trial that
there was nothing in the records OF the insoVen'
association showing any authority to the oll'cefs
from the Board OF Directors FOR the execution Vi
tho agreement o.. 1855. Mr. Mcclure endeavorea 20
by the testimony OF former olGet t5at did not
annoar upon the minutes. but only succeeded IN
res.nS M" HStrhkiss on behalf OF living policy
holders took full advantage or these clrcuissatoe3
to sTsnS;ne o9 wss Illegal and void The
son Of Mr.. Sackett 40 counsel ior ,hs @ we, The
trus; company merely the depository ., tg b s
surance company FUNDS ana ne yrcesver TO be
distributed By him to those entitled thereto. .h
ono If n amusing features or the tldi
frequency with which connse upon tne IN wouH
the case and representing similar interests 49, ~
oppose eSch omi' by zach Other There appeared
be no concerted action on the part o. ether 80. ~
claimants living policy holders ana ,ne 'a,s 49,; 90
opposing objections and exceptions seen'eu a. ,tI
ridiculous This the hrst important eur ulai
AT which Justice Smyth mas pre:'I.1 nlsnr th1r
he made most favorable impressio upon az ~ a..
the courtroom by the courtesy ana diSmy .. W
bearing. his equabe temper anu INC ''''" ''
and fairness OF his rulings
THE AMENDMENT OF THE BYLAWS
Aside from the effect to he put upon the two
agreements with the trust company. the princpaI
controversy was over the legal result OF an amend
ment Of the bylaws OF the company In March 1874
The bylaws OF the association. AS they orlsl"a's
stood forbade the direetons drawnS rne 81 5esth
losses or for any other purpose. men the Nosn-
pany began run down hill, ana is ur4atn 49, 49,
greatly 10 exceed its income many 49, f,,I ~
used by the officers TO obtain ths reserve luiu "a
apply upon death losses. These enorts VII n,
I'm the adoption. At the annua meeNIns u ~, - ~
bers In the spring Of 1924 OF an aihf''ilri.' ~
bylaws. hy which tae direStors we srve f1T into
= mortuary fund for III. desired end. But the truS,
company. already stated refused 10 TO IhUhns
win the demands OF the directors III IN. aps''lve
~ - decree of the court Then the INSURANCE a.
rectors attempted to obtain the releases OF al POI,
lev holders interested in the reserve iunu r.,t'
mis- vas only partly successful, and ended IN holn-
ing as it understood that none Of me re ;S
were to be used unless all the policy sisvu
RON The directors then passed a sweeping resoIu,
lion directing the transfer OF all the reserve lunu
to the mortuary fund. and when me ttust coI,py,
refused to comply action was brought 10 compei
1T to do SO as a spefitS haa scarcey begun
when the Insurance Department. stsppeeu a. au
took steps that ended in the companys dissoiu-
Justice Smyth gave all counsel thirty days IN
which file briefs The expense OF prltss eop, h
rected to be paid out OF the iunds III 'he "a'uS u
the trust company