Omaha daily bee., 1902-02-22
STAMPS TONTINE AS FRAUD
Special Master in 0hsnoery Submits Report
in Grand Island Case.
BUSINESS CONTRARY TO PUBLIC POLICY
Holds that Toptine Companies Have
NO standing as Legal
lions and Cannot Be Ad.
judged Bankrupts.

r. r. Horth, special master in -chancery
In the case Of the involuntary bankruptcy
Of the Security Tontine Investment com
pany Of Grand Island, has hled q report In
the United States district court, which, IL
sustained by Judge Munger, will have an
important bearing upon these concerns and
the people who put their money into them,
as It virtually denies the right Of the con-
tract holders to maintain action under the
bankruptcy laws to secure q settlement OF
the affairs of the companies. At the same
time he states that the operation Of such
companies is entirely without the law, con-
sidering them as another form Of a conf
dence game. He holds that the company
cannot be brought ~involuntarily into the
bankruptcy court, as 1t is not engaged IN
any business specified under that Law.
Substance of the Report.
The report. In brief. is as follows:
The testimony discloses that the Secur.
lily Tontine Investment company is one OF
tSHss o5a"p aontins cSS%O%pa%nSynlY w xRown S 81 2
ness y Of Go ? d .Dlsw a.e:'i.nesls 81, fsaT sio
By each contract holder the corporation
ccnfessedly retains $3.50 for 'ts services,
s s6sS6s 81. ,i1-S s,n becomes re rt the pro Es5d ,s q tas
and later, by Inducing the contract holder
to accept $50 In cash In lieu OF the dia-
p%ofation secures another 80. Thus
Il will be seen that OF each Sli0 paid in by
30 S0n retain n 80 a. compeDsstion for nursing
snty weeks return to each contract holder
cash; prov ns Il Is In the treasury Of the
corporation. Here. as Is the case with tne
ordinary oonhdsncs man and his ccnfsd.
bearing low numbers and these, as a re-
ward Tor using. them as an advertising
penss * their misguided friends and neigh
bors.
Owned only one Diamond.
The testimony discloses that Of the. ma.
tured contracts the corporation paid OF
one diamond, and this to the holder Of con-
tract No. l. The only apparent reason for
reference to the diamond was IN an en-
aeavor to relieve the CONTRACT OF its otner;
svssion add to the vic~iousness Of the con:
tract without accomplishing the desired
result. The business in which the cor
policy, it's CONTRACT is so unconsoi6naplt
that no court would enforce Its provisions,
saS II iSseI 1Sat + L e s issllHT have sss' s y sss %s'
unable 70 conceive how the trsnssesiOns o.
mercantile pursuit.
Tfnd as matters Of fact that ths
holders, holding fully paid up but unsetig
fed contracts, between $4,000 and {zb.yO
and the corporation has no money in III
treasury with which 20 meet these maturec
the petitioners were Induced TO enter int
the contract with the corporation by fraud
or deception on it's part, the parties TO the
contract are. therefore,, In part delicto
I further find as conclusions Of law tina
the Security Tontine Investment company
having never been engaged principally IN
either manufacturing, trading, printing
publishing or mercantile pursuits, IL Is mo-
such a corporation as can be adtudged II
involuntary bankruptcy under the provi
sions OF the bankrupt act.