Ottumwa tri-weekly courier. [volume] (Ottumwa, Iowa) 1903-1916, 1904-06-11

share of stock held by him. When
series A matured the money of the as
ISOLATION was all invested in it's loans
and IN order to pay the investment
stockholders the association borrowed
an additional $4,000, thus increasing
it's borrowed money to $4,000. From
that time until it's failure its borrowed
money was never reduced as low as
$4,000 and after 1892 it was always
in excess of $65,000, sometim es running
as high as $4,000.
After the maturity of series A in
1883 one series of stock was matured
each year and new series was issued
in each year. In all nineteen series
were issued. Fourteen of them were
matured.
In 1898 and two or three years fol-
lowing this association suffered from
the stringency in the money market
and was obliged to foreclose on num-
Der of it's leans and acquire the proper
ty. The real estate thus acquired be-
came source of considerable loss to
the association by reason of repairs,
taxes and insurance necessarily paid
while it owned the property. A large
part of this consisted of cheap resi-
dence property which it was unable
to sell for number Of years and some
of which was not sold until after a
receiver was appointed.
After 1892 the business of the associ-
alton decreased from year to year I'M
til 1896. In 1896 the law regulating
building and loan associations was ma
terially changed and all associations
were required to comply with it. At
| the annual meeting in March, 1896, the
stockholders of this association adopt
ed resolution which provided that
they would not amend the article of
incorporation to comply with the new
law and that after July 4, of that year
no new stock should be issued but that
the association should simply carry
out its contracts then in force and wind
up it's business. The last series was
issued between March and July, 1896.
In December, 1901, application was
made i'll district court for a receiver
and 9. E. Boude was appointed as such
/ receiver. In the spring of 1902 Mr..
Boude was succeeded by w. H. H. AS
bury.
The consensus of opinion of those
who have followed this case most close
ly is that the failure was brought about
by the overpayment to the stockholders
on maturity of their stock, (that is
that the stock was not in fact worth
the amount paid at maturity by the
use Of the large amount of borrowed
money on which profits were paid with
out taking into consideration the fact
that it was borrowed money and by
the losses on real estate which were
acquired by the association. 1t is
claimed that none of the stock which
was matured and paid at its par value
/ had in fact earned profits enough to
justify such payments and that each
maturity OF stock resulted in de-
I ficiency which eventually increased
from year to year until finally the as
| ISOLATION became insolvent.
A good many stockholders withdrew
their stock before maturity and until
1896 they were allowed a profit in such
withdrawal and it is now claimed that
in many cases they were paid more
profits than they We're entitled to.
The receiver brought a suit against
all persons who had been stockholders
to settle the affairs of the association
| and 20 recover from them the excessive
payments alleged TO have been made.
About 900 persons are defendants in
the suit, the trial of which has occu-
pied the attention of the district court
presided ever by Judge Sloan since
April 49, One of the difficulties in a
trial of this case was the absence of
all of the books of the association
from 1888 to 1900, which We're burned
some time in 1900 by fire which took
place in the office of the association.
The managing officers of the Ottum-
wa Loan and Building association in
corporated in 1883 another association
known as the Wapello county associa-
ton which did business in the same
office and under the same plan as the
older association. 1t too failed and re-
ceiver was appointed in December
1901.
The Ottumwa Loan and Building
association. and the Wapello Loan
and Building association We're
what is known as local associa-
tons and to meet the demand
for loans from persons outside
of Wapello county and enlarge the
scope of the business, the Fidelity Loan