The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1903-02-05

Continued from First Page.)
hour and a half was required toNread it,.
Judge Hook decided at a special session
of the United States circuit court
! Wednesday afternoon that the attempt
+ ed reorganization OF the Kansas Mutual
/ Life Insurance company under the name
/ of the Kansas Union Life Insurance
company is invalid and Illegal
He granted an injunction to prohibit
4 the Kansas Union from taking posses
! sion of the Kansas Mutual assets. and
stated that he would appoint two re-
| ceivers to take charge of the company
/ pending a reorganization of the COM
pany as a mutual concern.
The court indicated that he would like
/ to appoint E. n. Morrill, of Hiawatha
and P. 1. Bonebrake of Topeka as re-
/ ceivers. provided they were satisfactory
to the attorneys and litigants ". n.
RossingtOn, attorney for the complain
ant, D. E. Duggan. objects to P. 1. Bone
brake, and he viii probably not be one
of the men appointed.
Mr.. Morrill, is one of the organizers
/ of the Kansas Mutual company, which
was originally a HiaWatha concern. He
is still q director in the company r l.
+ Bonebr rake is one of the new directors
/ chosen by the Kansas Union Life IN
/ suranee company.
1T is not my desire" said Judge Hook
in closing his long opinion in the case,
that the affairs of this company should
be wound up and the assets distributed.
Rather is it to conserve the interests of
these 1000 policy holders; to make 1t
/ less severe on the policy holder who
may now be too old to secure new in
surance For that reason I believe it
advisable TO appoint two receivers who
shall hold this property until the owners
can resume it's operation on q safe ana
/ proper basis.
An these legal obstacles which have
] hampered the company must be cleared
away. The company must be estab lish-
/ ed on a good footing. so that it may no
longer be harassed by Philips suits, or
( McQuigg suits or any other suits whieh
have caused it so much trouble in re-
cent years.
In his opinion Judge Hook reviewed
carefully the organization of the Kan
( sas Mutual company and traced its
various transformations from the time
of its establishment as mutual assess
ment company in Hiawatha down to the
/ present time. He also reviewed the or
ganization of the Kansas Union Life IN
I surance company, and in speaking of
/ the effect on the Kansas Mutual of this
/ scheme said:
There was absolutely nothing left Of
/ the Kansas Mutual company, under this
plan except contract by which the
/ Kansas Union assumed the risks. This,
! il has been pointed out. might bOssibly
( constitute a chose in action But it
would ill subserve the purpose of active
organization if the only evidence of its
! existence We're its own burial certif-
ieate It is not for the court to deter
mine whether or not it is necessary for
an insurance company of this kind in
this state to have a capital stock"
Judge Hook then reviewed the history
of the litigation through which the
Kansas Mutual has passed, and showed
what are the vulnerable parts Of the or
1 ganization. and what parts are subject
to more or less constant danger of at
tack He cited the Adam Bremen case.
the suit against Hill. and then COM
pared the two cases to show that the
/ company acted improperly in using the
reserve fund in lieu Of a capital stock.
He then discussed the Phillips case
which was only recently dismissed at
| the plaintiffs request, without prejudice
to future action. This case IS often cfteo
| as furnishing the basis for the recent
I attempted reorganization of the Kansas
4 Mutual.
REGULATES ANY ADVICE.
It has been claimed by some, and in
timated by the attorneys for the Kan
sas Mutual company, that the stipula~
ton filed in the Phillips case gave to the
Kansas Mutual sort of semi-oE3cial
indication of what the court thought il
advisable for the company to do, IN
I order to place itself on a better finan-
cial footing. Acting upon this tip it
/ is claimed that the scheme to organize
the Kansas Union and then transfer to
it the Kansas Mutual was evolved. This
would give the Kansas Union a capital
stock Of 100000, as required by law.
Speaking of this stipulation, Judge
Hook said:
Il want to call especial attention to
the fact that the language of this stip-
ulation is the language of the attorneys
and not of the court The court did
not write the stipulation, and does not
take responsibility for the way in which
it is worded. The method by which the
end suggested should be secured was
not thought of by the court The spirit
of the stipulation simply was that the
mutual association be held intact, and
the interests of the policy holders safe
guarded"
Judge Hook reviewed the financial
standing of the company, and showed
from the reports that while the COM
pany has SIP. 900 in assets. its liablli-
ties amount to only about $500 600. thus
placing 1t apparently on a sound hnan-
cial footing
The question of the method which
the Kansas Mutual officers pursued to
attain the transforms ton was severe
" criticised by Judge Hook. He said
in part.
AIIsLEAD POLICY HOLDERS.
'sThe treatment of the policy holders
by the company in this matter is of
doubtful propriety- They were trans
ferred without their consent from an
insurance company owned by the
stockholders to a company in which
they hads no voice. In this new COM
pany If is fact that President Davis
and his family at this time own ana
control 131 out of 200 shares Of the
stock I know that it is claimed that
this stock is being held only temporari-
" until it can be placed with other
buyers. But we can not but take the
facts as we find them.
Tt is claimed that since the change
WIS made a large majority of the
policy holders have given their assent
to it, This may be true, but it must
be remembered that the policy holders
are scattered far apart. and have had
no opportunity to consult about the
matter. Many of them obtained all
their information concerning this
transa ction from the letters sent out
by the company announcing the
change. 1t is much easier to obtain
consent TO an accomplished transaction
than to q proposed move. I further be-
lieve that the policy holders would OBJ
tain from these announcements sent