The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1902-01-18
ANUUAO Ill UUIu
Kansas Mutual Insurance Com
pany Scores a Victory.
Suit of E. T. Phillips Thrown
Out of Court.
BILL is DEFECTIVE.
Judge Hook Holds That the
Papers Are Faulty.
A Sudden End of What Prom
ised to Be Sensational Suit.

In the decision handed down today by
Judge William G. Hook of the United
States circuit court the Kansas Mutual
Life Insurance company wins the first
scrimmage in the legal battle in the
case brought by d. r. Hite, of the firm
of Keeler, IIite & Sherman. for E. t.
Phillips, of Kansas City, Mo.
The order entered is that the demurrer
filed by the defendant company, the
Kansas Mutual Life Insurance COM
pany, be sustained and that the bill of
complaint filed by the complainant, L.
T. Phillips be dismissed without preiu-
dice to future action.
Judge Hook dismissed the suit because
he holds that the bill of complaint is
defective because it is formed as a
stockholders bill, and does not show
compliance with equity rule No. 81,
which provides that when a StOckhOlder
of a corporation attempts to bring a suit
which the corporation itself might have
brought, he must show by his bill that
he has exhausted all reasonable efforts
to get the board of directors of the cor
poration to act. Otherwise where the
corporation and its officers that are sued
are citizens of the same state, the fed
eral court has no jurisdiction.
The bill of complaint filed by the COM
plainant charges J. p. Davis, John E.
Moon and w. NJ. Welcome with misap-
preparation of corporate funds and with
holders of the company as security for
the issuance of old line policies to a new
class of policy holders
The bill also charges a conspiracy
between said j. r. Davis, John E. Moon
and w. M. Welcome, who form a ma
jority of the board of directors, to di-
vert to themselves by means of renewal
commissions certain sums over and
above their respective salaries.
Judge Hooks decision follows: ''Tne
bill of complaint does not contain aver
mentS sufficient to show compliance
with the requirements of the 94th equity
rule The fact that the defendant COM
pany has filed an answer in opposition
to the demands of the complainant can
not properly be imported into the bill so
as to make up compliance with the rule.
The adverse attitude of the company
may under certain circumstances be re-
garded and made use of as evidence.
But the responsibility for such attitude
may in point of Fact rest upon the presi-
dent OF the company and not upon the
board of directors as an entirety
1t was suggested on the hearing
that the suit might be regarded as one
brought by the complainant as a credi-
tor of the defendant company whose
contractural rights were being injuri-
ously and irreparably affected by the
alleged illegal and fraudulent acts of
the defendants and that the suit can
therefore be maintained upon that the
ory without regard to equity rule "a.
1t is apparent however that many of
Tic I1ldLl6TS complained OIL IN Ine Dill
pertain to and affect the complainant
as a StOckholder and are not such as
mere creditor can complain of and that
the avermentS with reference to the two
aspects in which the character of the
complainant may be regarded are so
interviewer that the exclusion of those
pertaining to the bill as brought by a
stockholder would require complete
reformation of the bill. The bill was
doubtless prepared upon the theory that
it was rendered by a stockholder and it
should be so regarded In that view
of the case the bill is defective The
demurrer will be sustained and the bill
dismissed without prejudice to any
future action or proceeding. 1t is un-
necessary to pass upon the other ques-
tiOnS presented by the demurrer for the
such questions may not again arise.
''WM. c. HOOK, Judge"
The news of the dismissal of the suit
was carried to Mr.. Hite by a reporter
of the State Journal. In answer to a
question as to what action would be
pursued by him for his client he said:
1.-THE case will be continued. In what
manner / am not now able to state. The
question of jurisdiction, on which Judge
Hooks decision is based, came up when
the case was argued at Leavenworth.
''An entirely new bill of complaint
may be submitted as an amendment to
the bill offered originally or an appeal
may be taken to the court of appeals
that we have a good case and intend
fighting it to the last court If neces-
sary.'
The dismissal of the case carries with
it the cross-bill filed by the firm of
Rossington, Smith &r Histed. for A. NJ.
Bitterman. The reinstatement of the
case will however bring the cross-bii
into existence again.
The case presents a peculiar phase.
The contention made by the attorneys
for E. T. Phillips, the author of the
original bill of complaint is that the
money now forming the reserve fund
of the Kansas Mutual Life Insurance
the original policy holders of the COM
pany termed "after death assessment
policy holders" and that the same
should be distributed among them. The
contention is made that the officers of
the company illegally made this fund
a fund known as reserve fund to Sc
cure new policy holders, when the form
of the "after death assessment PLAN
to the old line policy plan.
The cross bill filed by RoSSingtOn,
Smith and Histed represents the class
of policy holders who were written in
the Kansas Mutual company under the
was security of their policies
an announced by the insurance COM
pany.
Consequently when the case comes to
trial a fight will ensue between the
lawyers for E. T. Phillips and those for
A. NJ Bitterman's bill, over the possess
sion of the money now known as the
for their respective classes of policy
holders.
Weather Indications