The sun. [volume] (New York [N.Y.]) 1833-1916, 1905-08-26
EQUITABLE BACKS UP MAYER.
JOINS WITH HIM IN SUIT AGAINST
THE OLD DIRECTORS.
Morton Files Answer 70 the Attorney.
Generals Suit Admits WrongdSing
OF Former Board-Says He Doesn't
Yet Know Purpose u o0sS 900 Loan.

him against Its former directors for an ac-
counting and restitution OF their illegal
profits.
The Attorney General asked that the
directors be ordered to account for their
management OF the funds committed
to their charge and that they be compelled
to repay to the society @any money and the
value Of any property which they or any
| Of them have acquired to themselves or
| transferred to others or lost or wasted by
violation Of their duties"
The Attorney-General also asked tina t
any Of the defendants who are now directors
or officers, upon proof Of misconduct,
| be removed and 1that the net surplus Of
the defendant society after deducting a
| sufficient amount to cover all outstanding
| risks and other obligations be paid to, or
credited to, or applied for the benefit OF
the present polioyholders in equitable
proportion in accordance with the charter
and with law"
To all this the society in the answer
which is drawn up by Wallace Maofarane
and Austen G. Fox, and sworn to by Paul
Morton, as president, replies by admitting
the charges Of misconduct on the part
OF it's directors and asks that 1t be Joined
in the prayer Of the plaintiff for relief
The answer further recites that the society
shortly before the commencement of the
action was taken from the control and man.
though some Of said defendants remained
directors Of said society"
Its admission Of the wrongdoing Of the
old board Is summarized In this paragraph
from the answer:
@In respect to many Of the matters and
things set forth In the complaint this de-
PENDANT is imperfectly informed, though
believing that many Of the material allega-
tons In said complaint are substantially
true, and that by the negligent conduct and
improper and unlawful acts of some OF the
defendants in the exercise Of their official
duties, especially OF some among those
who formerly were officers Of this society
and active members Of this important
committee, both in respect to the matters
specified in the complaint and in other
respects, this defendant has been greatly
damaged. This defendant is now actively
engaged in making a thorough investiga-
ton Of all said charges Of waste and misoon-
duct. with q view to enforcing the rights OF
the society against any and all persons
liable to account to it by reason thereof"
The answer begins by admitting the
allegations contained In paragraphs /, .
8, S, 9, 7, 8 and Of the complaint. Para
graphs to Q Of the complaint. exclusive
Of paragraph 4, deal with the history and
bylaws Of the society and the duties Of the
directors and financial committees. Para
graph 8 tells Of Supt. Hendrickss exam
nation. Paragraph Q recites the facts
conce rnins the Frick investigation.
The answer next admits the allegations
in paragraph I Of the complaint. restrict
ing the admission however, in respect to
the alleged misconduct OF the individual
defendants to those who directly par
ticipated in or had actual official knowl-
edge Of the transactions set forth in the
complaint. This paragraph Of the COM
plant is the one which names forty-nine
directors and makes them defendants in
the action charging them with having
-negligently, improperly and improvidently
performed their duties and caused a great
loss and damage to the society" 1t also
ACCUSES directors OF Withholding money
which belonged to the society and trans
ferring it to themselves.
The third section Of the answer deals
with paragraph 10 OF the complaint, In
WQlCQ LILO I6eAoc W Vic Va 4u6IVCIb
in it's Broadway building to the Mercantile
Safe Deposit Company is recited, and
which says that the total inadequaoy Of
the rental charged caused severe loss to
the Equitable. This allegation the answer
admits on information and belief, except
the allegation that the directors concerned
in making the lease were stockholders and
directors in the Mercantile Safe Deposit
Company at the time 1t was made.
On this point the defendant company, the
Equitable, merely declares that 1t has
no knowledge or information sufficient to
form q belief 1t adds that they had no
authority to execute the lease except the
general powers which the bylaws con-
ferred upon directors and officers TO exc
cute contracts.
The fourth clause OF the answer deals
with the charge that the defendant directors,
officers and members Of committees
wastefully and In violation Of their duty
caused the Equitable to acquire the capital
stock Of the Missouri Safe Deposit Company
at $3.50 share, the par value being 500.
It recites further that at the time Of the
purchase James H. Hyde owned lao
shares Of the total of 1000 shares issued.
and that the remaining shares were already
owned by other directors OF the Equitable.
The paragraph also alleges that at the
time Of the purchase the Missouri Safe
Deposit Company had no assets save the
good will Of the Equitable and the business
given 1t by that society.
The answer admits that these allegations
are true in respect to certain Of the defend
ants who were officers Of the defendant
society, and In respect to these defendants
who at the time Of said transaction were
members Of its executive and finance COM
mittees and had knowledge OF the purchase
Of the stock. But the answer alleges that
it has no knowledge or information sufficient
to form belief that such transaction was
ever known in detail 30 the board Of direc-
tors Is q whole, or that the individual de-
PENDANTS, other than those who we're mem
bers Of the committees, had any knowledge
OF or connection with the transaction.
The fifth paragraph Of the answer deals
With the ADVANCES naede to agents set w forth
reservation Is to whether the advances
were actually wasteful, improvident or