The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1900-02-28
State VIII Not Recognize SO
Called Redemption Companies.
Nebraska Concern Not Allowed
to Operate in Kansas.
HOW 1T is WORKED.
Policy Holders Pay Stipulated
Sum Per Month.
Attorney General Says Institu-
ton Is Not Legitimate.

The state charter board has turned
down the application of the Bankers
Investment company of York, Neb., for
permission to do business in Kansas.
The action of the board is based on
the opinion of the attorney general that
this organization is not legitimate in
stitution and is conducted along lines
of similar organizations which have
proven to be fraudulent in many re-
spects.
The action of the officers Of the com
pany first called attention to possible
circumstances of irregularity. The state
law provides that a certain per cent of
the capital stock of companies coming
Into Kansas be deposited with the treas
urer
The announcements and literature of
this particular company proclaim that
1t has capital of $4,000. Under the
Kansas law the company would first be
required to deposit $4,000 before any
action could be taken towards a consid-
Grafton of the application for permits
sion to do business in Kansas.
When this fact was presented to the
officers of the company President n.
V Harlan wrote to the attorney gen
eral saying:
The papers of our organization carry
on the face of them a statement indi-
eating capital of $4,000. In the ar
ucle6 of Incorporation the organization
INDY nave pAOyUUU capital that IacC
there is no paid up stock. We simply
pay in enough for the running expenses
and provide necessary office, literature
etc. 1t is simply an investment. The
holders of contracts are not stockhold-
| ers- They simply pay in on the con-
| tracts and draw out under the condi-
| tons stated in the papers
we find upon inv litigation that
! companies organized similarly are safe
and reliable. Under the laws of this
| state such companies are permitted to
| do business. We have consulted our at
| torrey general auditor and other Off
GERS and we are informed by them that
there is no violation of the laws of this
state.
we would be pleased to do business
in your state but desire to ascertain
what the construction of your law is
We do not wish to violate the spirit of
| your law or to be involved in any con-
troversy."
The attention of the state charter
board was thus called to this class of
companies. There are many organized
on similar lines doing business in the
| state and it is the intention of the at
torney general to institute an investi-
! cation for the purpose of finding out if
| there is any possibility of crookedness
| IN the management of those organiza-
lions now in the state. Shdnld he dis
! cover any such tendencies there is to
! be some trouble for them. The attor-
ney general will invoke the aid Of the
| state to drive them out
This Nebraska concern collects So in
| advance after which the PAYMENTS by
| contract holders are 1.30 per month.
OF this sum $105 is applied to the re-
demption fund; Is cents goes to the Of
ficers and the SIS advance payment goes
to the managers.
1t IS one of those organizati lions, the
members Of the state charter board
hold, that promises to give a contract
holder something for nothing. The prin-
clple of the business does not offer any
| assurance of redemption" The certif-
| 1cate says when the redemption fund
| IS sufficient certificates will be re-
| deemed. A contract holder in such an
organization is not promised when the
time shall come. The fund might never
| be sufficient to redeem the certificate so
the plan goes on forever.
The attorney general in discussing
the matter with the state charter board
pointed out the principal provisions of
the contract and asked the associate
members of the board to see if they
| could discover anything in the way of
assurances to investors which mean
anything. The other members did so
and agreed that the plan is not a good
one to give state saction to. The pro-
visions to which the attorney general
directed their attention are as follows:
| 4. Whenever there is in the redemp-
| ton fund an amount sufficient to re-
deem certificate in its order of issue,
derived from monthly payments and ac-
! cumulation of lapseS. fines and forfeit
| lures accruing thereto, such amount
| shall be used for redemption of said
certificate in cash 1t is further agreed
that, if a certificate should be reached
in the order of redemption before the
| full number of 80 monthly payments
/ necessary for its maturity have been
| paid, the holder hereof shall pay the
unpaid installments in order to mature
1 said certificate. 1t is further agreed
that upon the completion of 80 month
/ ~ payments, and the certificate has not
been reached in the regular order of re-
] dominion "a f,rIl4
paid and no further payments shall be
required
| 3 Certificates shall be paid in regu-
lar numerical order, commencing with
the oldest outstanding unpaid and IN
cancelled certificate, and payment con-
tinue in like manner until all certifi-
Gates are paid. But in case a member
!, holding a certificate (after seven con-
secutivet payments) the certificate be-
comes due and payable Immediately (for
: a funeral beneft,) upon the proof of
death of the member, at the home office
, of the company. The unpaid certificates
mi Farar