Omaha daily bee., 1899-04-04

for the neglect and extortion which the evil
dence d~iscloses to have been the practice.
lie failed TO exercise that careful super
vision over his appointees demanded by the
Interests of those insured in this state. The
examinations made were largely superficial
and the results obtained no more than could
have been reached by a careful examina-
ton Of the sworn and printed reports Of the
companies. In each case the vast majority
Of the assets of insurance companies were
not examined or inspected by the examiner,
hence in most cases 1t was impossible for
the examiner to ascertain the solvency or
insolvency of those corporations, which
should be the main purpose of any examina-
tion. We also find that Auditor Cornell,
after arrangements had been made to form
a combination Of several western states for
the purpose Of an investigation into the
affairs of several large insurance companies
Of the United States stopped further pro-
ceedlngs so far as the state of Nebraska
was concerned by refusing to allow his
deputy, Samuel Lichty, to proceed with the
arrangements which had been partially com
pleted. Rules had been adopted by Kan
sas, South Dakota and Nebraska, which pro-
vided that one set of examiners should value
assets alone including lands, mortgages and
other securities in various parts OF the
country. Examiners were to be allowed
$40 per day and expenses.
Makes an Unwise Change.
Your committee thinks, In view of the
fact that the large insurance companies
can only be successfully examined by a com
bination of several states, this being the
accepted rule of practice, that the action
on the part of the auditor was unwise and
~ NJ.
Cornell soon thereafter sent Examiner Olut
w. Palm east to examine alone and allowed
him to charge any amount he could get and
even charge companies which were not eX-
amined. No record OF the charges of said
examiners is required by law, nor has any
such record been kept by any auditor except
the present incumbent of that Office and
then only for the year 1897. At the in.
stance of Samuel Lichty, insurance deputy
this record was kept during said year and
the auditor agreed TO the wisdom of such
a course. In 1898 the record was abandoned
and Mr.. Cornell has not required 1t to be
kept after such abandonment. During the
year 1897 all communications between the
Insurance department and the insurance ex'
aminers passed through Mr.. Lichty. Since
that time the letters from such examiner:
and especially those of Examiner Palm came
directed to the auditor personally or were
sent to his private residence in the city Of
Lincoln at 1904 Washington street. During
the year 1897 it appears that a record wa:
regularly filled out by examiners and the
charges found therein were limited to s.
per day for fraternal societies and $40 pei
day for old line insurance companies. Thi!
rule was but a verbal one, and its existence
seems to have been uncertain in view of tn,
fact that Iota In 1907 Samuel Jicbty urOt.
a letter to George w. Cornell, which wa:
introduced into evidence as Exhibit 80
stating that he thought Mr.. Cornell would
fix the examination charges for Palm ant
Gillian, who were at that time contemplat'
ing a trip east to make examinations, a
$40 per day and expenses. This would in
dictate that there was no fixed rule FOL
charges and the evidence discloses that Mr.
Cornell did not know what his examiner!
were charging insurance companies. Thu
auditor approved but few bills of exam
liners and then only because some compan!
had refused to pay the examiner until thu
auditor made the requisition which is pro
vided by law and should have been made il
every case. Your committee finds in rela
ton to charges made by Palm and othe
insurance examiners, as follows:
Pay, but No Work.
"(a) Companies that were not examines
were charged, and o. w. Palm, who was 81
paid by the New York Mutual Life, coulC
not remember the amount paid him, but ad
mitted that it might have been $3.50. Al
attempt was made to collect by threats
bill of over $500 from the National Insur
ance company of Montpelier, Vt, when n
examination was made, and the expenses in
Cured by said examiners, about $3.50. TIL
auditor knew of this attempt and of thes
threats and still retained Mr.. Palm as al
examiner. Such proceedings were shame
full and reflect discredit upon the auditor
office and the great state of Nebraska.
"(b) The average charges paid Palm an
Gillen were $40 each per day and expenses
each day consisting of four hours work
! $40 per day for eight hours work woul
have been ample consideration.
3 "(c) The testimony shows that Mr.. Pair
e invariably presented bills for larger amount
than were received in settlement. and fror
< the testimony OF Gillen, Palm made all tn
. charges and gave bargain examinations
/ each company paying for what it got an
l according to the time consumed in the ex
{ animation. Palm substantiates this findin
1 by testifying that several Of the companie
{ examine by him could not be given
thorough examination in the time consumed
! I'D Mr.. Gillen had no previous ex
perience as an examine and acted simpl
c as an assistant, performing clerical wor
D under the direction OF Palm and using n
judgment Of his own and making no report
to the auditor. We think therefore that s
: per day would have been ample considera
} ton for such clerical services.
: "(e) Mr.. Palm had no experience as a
: Insurance examine before his appointmer
by Auditor Cornell and the largest salar
he had received previous to his entering tn
insurance business, which was about fv
years ago. was s75 a month. His appoint
ment was made for political reasons and NJ
actuated by a consideration of the state
interest in the selection Of a man OF til
most approved integrity and ability:
40 j. A. Simpson, while acting as in
surance examiner, charged old line insul
ance companies OF other states from s25
. S35 per day, charging fraternal societies s
q per day besides his travelling expenses
each case. Each day consisted of frol
four to five hours work. The auditor hi
testified that $40 a day was a ~suficlet
charge for any f~raternsl organization to pa,
and that an examiner making a hight
charge should be compelled to refund all
excess of said amount. The auditor hi
not required j. A. Simpson to make sue
S restitution; he still has an opportunity. TT
following exhibit is made a mart NJ IN