The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1902-03-21
T0lNTINE MUST QUIT
STATE WINS IT'S CASE AGAINST No.
ToRI0US "GET-RICH-QUICk"
% CONCERN
JUDGE MGEEs ARRANGEMENT
Calls 1t Immoral, Fraudulent and
vicious - Dissofves Association
and Appoints Receiyer-Sfu-
pendOus Money-Making.

bat. Judge MCGEE, Of The Hennepin
county district court, yesterday hied a
long decision which indorses Mr.. Dona-
hoWer's severe arraignment of the as
ISOLATION, and grants everything for
which the state contended. By the order
of the court the association is dissolved,
its charter and articles of Incorporation
declared forfeit, and it is ousted from
all the rights and privileges that its fran
chise conferred upon it under the law.
The opinion of the court is volunuinous
and complete, comprising some eighty
type written pages, in which is recited
history of the concern. Judge McGee
went into the matter very thoroughly and
completely, and for a month has given
most of his attention to it.
When Mr.. Donahower first served no
tice of his fight against the company,
the officers of the concern. were not great
ly alarmed, and expected to be able to
easily evade the charges of the state.
When the case was called the company
was surprised at the array of facts which
the states attorney had secured against
it. Mr.. Donahower's argument in he
case was one of the severest arraign-
ments ever heard in court room. Judge
MCGEE Endorses every word of that ar
raignment, and his decision is as strong
and scathing as was the argument. The
conclusions of the court are as 1ollo"S:
''IIlegaI, immoral and Vicious
First-That the diamond plan of the re-
spondent association and the manner in
which the same has been executed are
illegal, immoral, vicious and fraudulent;
that said plan cultivates, stimulates ana
tenaptS cupldity and fosters q spirit or IL
legitimate speculation and gambling, ana
amounts to and is an abuse and misuse
of the corporate powers and franchises
conferred the said association DY
the statute under which it is Incorporated;
that such misuse and abuse have WORKED
and threaten substantial INJURY 10 t1e
public and amount to violation OF tie
fundamental conditions of the contract
10y which the franchise to exist as
corporation was granted.
Second-The plaintiff is entitled to JudS-
sment as fglows:
First-Forfeiting the charter and articles
of incorporation and ousting the respond
ent from the right to exercise the iran
chises, powers and privileges heretofore
enjoyed by the Tontine Savings assocla-
ton.
Second-Dissolving said corporation.
Third-Awarding the plaintiff perina-
nent injunction, enjoining and restraining
the respondent, its officers and agents
from exercising any of the rights OF priv
ileges, from collecting or receiving any
of the moneys, debts or payments cue,
and from paying out, delivering or trans
ferring to any person any property, money
or effects of the corporation or 1nterIer-
ing with any. of the rights and privileges
of the corporation, until otherwise ofoeI-
ed by this court.
Fourth-Appointing George Z. tiannefy
receiver of the corporation; authorizing
George p F'lannery, upon ming DoHu'
of $4,000 to take charge of the property
and effects of the corporation; to collect,
sue and recover all. debts and demands,
including any money Illegally olEe.t 3
from the redemption or expense funds,
or any money illegally converted to iheif
own use by the officers and stockholders.
Fifth-Ofdering the respondent and It's
officers and agents to deliver to the re-
ceiver all moneys; effects, books, papers
and property of every kind In which the
corporation has any interest
Sixth-Ordering and directing the re-
ceiver to convert all of the property which
may come into his hands and to d1stflD-
ute into cash, and to distribute the same
under the direction and order OF the
court.
Big Profits for Officials.
The Tontine association after abandon
ing two previous tontine schemes began
IN AUG, 2. 1897. to issue their 200 mer
chandise investment contract" In brief
tha scheme was this: The holder paid So
for the contract at the start. He PAID
thereafter $1.25 per week for period Of
sixty weeks. He was then entitled to re-
ceive in the cancellation and payment OF
his contract, when the number of his con-
tract should be reached, tWo-carat
diamond worth $500, or in lieu thereof
S160 in cash. In nearly every instance
those who held contracts took the cash
in preference to the diamond. OF the
81 25 paid weekly by the contract holders
q cents was placed IN the expense fund
of the association and SLIGO into the re-
demptfon fufid to redeem the contract at
it's cancellation. Whenever the holder
took the $3.50 instead Of the diamond, the
association charged the redemption fund
<Nc+ dinY nd n
pocketed the extra $40 being the difference
between the value of the diamond and
the cash paid the holder. The amount so
transferred into the pockets of the Of
ficials was $4,000.
The greatest element of danger from the
company was the fact that those whose
contracts have been taken up and can
celed actually received twice what they
had paid in.
Giving Money Away.
On the face of things it was impossible
that an honest business could be conduct
ed when $3.50 in cash was given in ex-
change for only $50.
The company issued weekly statements
Of its business, and the court finds that
the statements in the pamphlets of the
company were false and misleading and
that the amount in each case stated as
having been disbursed on cancellation of
contracts was overstated 20 per cent, this
% per cent stated to have been disbursed
having been transferred in each case of
a cash payment to the expense fund, and
taken by the officers of the association
and distributed as a dividend to the
directors. The court finds that the
amount so illegitimately withdrawn and
overstated was $1S5, S2S. So
The court finds that PRIOR to Dec the
association had received from 1854 con-
tracts not then matured, $448, Goa. Is, and
that the amount needed to redeem 1895
matured contracts was $S45, 400 and that
there was then in the redemption fund
but $11350 and no more.
The court finds that all circulars issued
by the company Were calculated to mis-
lead and deceive.
The association in its advertising had
cut of the handsome New York Life
building on which had cleverIy been ir1.-
posed in place Of the name of the build
ing the '"TontiRes Savings association. I"
Underneath was printed the words Tine
Home of tIIeb Tcntine Savings associa-
ton While it was not expressly adYer-
tiSed that the company owned this mag
nificent building. which is worth about
a million dollars, the idea was conveyed
by suggestion, says the court il the
memorandum, and its advertising in thise
respect wasz4calculated to deceive the
public. In addition the association pub
lished a periodical known AS 1.-The Dial
mond Bulletin which purported to give
facts regarding the progress Of the bust
ness with reference to maturing of con-
tracts and other matters of interest TO
the investors This bulletin was fun
of misleading information and misrepre.
sensations.
Better Than Steel Trust.
To the PUBLIC the most interesting part
of the order IS to'be found in the memo
randun in which the court wakes very
sarcastic. He shows that when the pres
ent company was organized May 4, 1888,