New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1905-12-05
MUTUAL RESERVE PR0BED
Continued from first page.

saw he wanted to borrow it, and / never asked
it back"
Mr. Brockway quite certain that ne nao
not demurred at the request. His feeIlng was
that "Mr. Burnham was good fellow In giving
the salary" and he sought to show equally good
fellowship At this time he had received SZ'4Oo
from the Mutual Reserve. but he promptly
found Sc 600 and turned it over in currency TO
Rurnhan He made no secret of the fact that
he felt sure he would get it back through his
salary This happened, and after ne mao also
received $500 additional he resigned, feehng tnaI
his service was not worth the salary HIS resls-
nation was accepted. Mr.. Brockway was sure
that he owed Mr. Burnham money He knew
nothing about the purpose for which the money
was used and presently left the stand.
With evident determination to trace the
,oonav Mr. Hughes then recalled Vice-Presldenl
F,ldridge and laid the puzzle before him. Mr.
Eldridge recalled that Mr.. Burnham had ex-
plained to him in 1904 that this money had
been Maid to the late Hilary A. Bell, dramauc
critic who also edited insurance paper 1or
the Mutual Reserve. Mr.. Eldridge admltteo
that Mr.. Burnham before his admission naoe
in Paris in 1904 had several times denied the
Sc 600 payment, in the face of SPECIFIC charses
The money was used, he explained by MI Ben
in much the same fashion as similar fuhas were
used by Dollar Line Smith OF the Nlu'uai
life through a publicity bureau Favor f''ie
,,a,rsnaner mention of the Mutual Reserve was
obtained by the payment of portions VI ms
money. Mr. Burnham, according to MT hio-
ui5aa charged that the proposition was origl-
ro1Iv made by Bell who asked for $5,ooo LOT
this purpose Where the money came from Mr.
Fldridge declared he had never known ull'i
the Paris interview.
PAYMENT TO EDITOR.
rrhis exclamation made it clear that Mr.. Burn
hon, wanted 10 get the $4,000 from some source
that would enable him to keep it on the pooNs
~ the company. and this device answered the
requirements From this transaction which M
dicated that the small as well as the dlso III
surance companies employed 'yello" uos
funds " Mr. Hughes turned to another payment
Of a significant character, that to j. l. Fatersoli'
formerly Editor of THE Insurance Councllior'
who has been corresponding secretary and later
an agent of the Mutual Reserve Mr.. Eldrluse
recounted the details of this incident His story
indicated that charges against the Mutual Re-
serve had been printed by Paterson in his paper
and that as result he and Durham brought
an action for criminal libel against Paterson
while Paterson brought a counter suit for 1alse
arrest Civil suits also brought lndls-
criminatelv. The case against Paterson was
dismissed by magistrate, but later he was IN
dicted by the grand jury
While the various suits ana counter ShitS anu
trials were imminent the counsel of the Mutual
Reserve Colonel James, died and after some
delav the whole dispute was patched up and all
cases abandoned The basis of the settlement
was the payment to Paterson of $4,000. In ex-
planation of this settlement, Mr.. Eldridge said:
1--WE were anxious to settle the matter and 1t
was agreed that there was to be no further agt-
tation of the matter good deal of damage
had been done the company and glad
to bring it to an end. Mr.. Paterson had left
the insurance paper by this time, anyway"
Did Mr. Paterson retract his charges?"
queried Mr. Hughes.
NO we did not think it sufficiently i'm
portant to ask for" was the calm reply. The
full statement of this incident. told by Mr..
Paterson, is printed in another column.
The significant increase in the size of the
legal expenses of the Mutual Reserve the
next point touched by Mr.. Hughes He
read from the statement of the company the
following figures showing the stupendous
growth of this item in the last few years:
1894 .......... $500 OF 1891. .s22 500 %
1886 1892 81 1899. SITS IS
# will be recalled that it in 1898 that
the alleged payment of Lou" Payn, then In
surance Commissioner, charged to have
been made. AS i'll each the figures were
for the preceding year. the increase of $4,000
in this year makes it certain that this will be
carefully probed day. and may possibly re-
suit in calling Mr. Payn whose comment: Il
don't care damn for the committee" has been
widely published
EXPLANATION OF INCREASE.
Mr.. Eldridge explained these rapid increases
as due to change in the system of bookkeeping
in small part and to increase in litigation
resulting from the increase in assessments in
large part. 1t was in connection with this that
the california payments to Brother Tom" men
toned above were shown. These were as fol-
lows
ises .......... $50 1901. 1000
1900 ........... 1900 1902. 1000
Brother Tom" was identified as the late Cen
eraI Thomas j. Clunie. brother of Andrew J.
C,lunie for many years State Superintendent of
Insurance in California. Apparently the pro-
cedure was for the State Superintendent to
make demands upon the Mutual Reserve. against
which his brother appeared before him in pro-
test For the last two years that Andrew ].
C|Iunie was in office the license of the Mutual
Reserve was held lin suspension, and it
subsequently withdrawn.
Inst as the session was ending Mr.. Hughes
began to look into the portion of the legal ex-
penses that were incurred in New York State.
His first discovery that the money paid TO
the regular counsel of the company. $4,000, did
not appear in the legal expense item. Next
he brought out the interesting fact that James
F Pierce who investigated the Mutual Reserve
as Insurance Superintendent in 1895 was re-
tanned after he left office, and that in sub
seouent examinations and particularly in 1898,
when charges were filed against the company.
Edward IIauterbach appeared as its special
counsel This year apparently of many
troubles An attempt made by application
10 the Attorney General under Section Sc of the
Insurance law to sue the company. and charges
1rere fled with the Superintendent of Insurance
The report in 1899, Mr.. Eldridge admitted was
Unsatisfactory although it somewhat mod
ted from it's first lines The dates of the large