The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1903-02-28
DEARTH CRlTICISES
HAIL AND CYCLONE
COMPANY
Questions Authority Of Off
GERS to Transact Business
on Account of Absence of
Legal Qualifications, and
Declares the Books Are
Improperly Kept.

Insurance Commissioner Dearth adj
viSes the officers of the Northwestern
Mutual Hail and Cyclone Insurance
company, of Winnebago City, that in
view of Irregularities, it becomes my
duty to advise that the company will
be given an opportunity to appear and
show cause why the affairs of the
company should not be wound up by
the appointment of a receiver.
One of the insurance department in
spectOrs has made an examination
of the affairs of the company covering
period from Dec. 81, 1901, to Dec. II.
1902, and on the facts as brought out
Commissioner Dearth, in letter to the
officers of the company, says:
The disclosures subject the COM
pany's original management to some
what severe criticism. In the first
place, it appears that none of the three
principal executive officers-namely,
president, secretary and treasurer
was eligible or qualified to exercise the
official functions which he assumed to
fill. The law relating to mutual hail
insurance companies provides that the
general management of the business of
such corporations shall be vested in
directors, each of which shall, during
his term of office, be policy holder in
such corporation. That there shall be
chosen from said directors a presi-
Officers Without Authority.
Records of this company indicate
that none Of the officers, president,
secretary or treasurer, possesses the
necessary qualifications, as their poll
cies were Cancelled Feb. 1, 1901, and no
payment, in any way, of assessment
has been made dby any one Of them
since 1900. There is, therefore, Sc
rious question as to the legality Of
the business transactions of the COM
pany during practically the past two
years."
The officers of the company are NJ.
L. HOuger, president; Benjamin G.
Reynolds, secretary, and Paul J. Nc
Guiggan, treasurer. All three reside at
WinnebagO City. The officers, with j.
G. Belts, of Truman, and D. McCorkle,
of Brainerd, make up the board of di-
rectors.. Continuing, the insurance
commissioner says:
'Of the other two directors. Belts
and McCOrkle, neither one has been
a member in good standing since 1900,
and it appears that the entire official
mana cement, the board of directors
as well as the executive officers, as
Sumed to have been elected from their
number, have been unqualified during
the past two years to hold their re-
spective positions. Just what posi-
company in, from a legal standpoint,
is question probably for the attorney
general of the state and the courts to
decide. -E
Bookkeeping Criticised. 1S-~of
"The lack of a systematic set OF
books and records, or, in other words,
the absence of an account of the bust
ness affairs and transactions, as dis
closed by this examination, cannot be
criticised in terms too severe, and there
can be no possible reason for not hav-
ing the company's accounts covering
its business transactions clearly and
accurately kept.
THE only source from which the ex-
act financial and business status of the
company can be ascertained is from
the bank account and checks drawn
against it.
Upon what basis the losses. were
figured is impossible of ascertainment
from the company's records, the
amounts received by the members
varying from 48 to 100 per cent of the
adjustments. For instance, in one case
a party having an adjusted claim ir>
the sum of $3.50, received in cash $3.50
plus the amount of his assessment, or
SIS, which equals but 48 per cent OF
the claim. Another party having a,
claim of $500 received 1915 in cash, ia
addition to $21 credited on account OF
an assessment, or "A per cent of the
amount due.
"Such a settlement Is a clear viola
ton Of the statutes, as well as the COM
panys bylaws, for which offense no
possible excuse can be offered unless
that Of ignorance, which certainly
would be a charitable way of treating
a very serious matter"