The Montgomery advertiser., 1905-12-16
COmmOtiOu in Insurance
 Circles. MATTER LAID BEFORE
 ATTORNEY GENERAL Sensational Disclosures Tn Re-
 port of Shorter. liabilities of Southern Mutual Aid As- scciation Exceed Assets and I'm surance Commissioners Re-
 commends Restraint from
 Further Business.

A commotion was produced in insur- ance circles of Alabama yesterday when Insurance Commissioner E. R. McDavid announced that he would today lay be- fore Attorney General Massey Wilson a report on the condition of the Southern Mutual Aid Association of Birmingham for him to act as he sees fit, giving as his opinion that the company should be restrained from doing further busi- ness in the State.
 The attitude of Commissioner McDa- vid is due to the disclosures of spe- cial examination which he recently or -- dered into the affairs of the Southern Mutual Aid Association. The disclos- ures are of sensational order ana were yesterday made public for the first time. The report of the examina- tion which was made by Col. H. R. Shorter Deputy Insurance Commission er recommended that the charter of the company should be forfeited on ac- count of the excess of liabilities over assets. :.. ~-..
 The exact method of the States pro- cedure against the company will not be known until the Attorney General is in receipt of the Insurance Commission CTS recommendations. The outcome Of the proposed action of Commissioner McDayid will be awaited with intense interest as there are hundreds Of pol icy holders in the Southern Mutual Aid Association scattered throughout Ala bama. -
 The examination of the company's af- fairs was determined upon by Commls- sioner McDavid after receiving nunner- ous protests from policy holders against the negligence of the Association to meet the claims maturing against 1t. In the report transmitted by, Deputy Commissioner Shorter, it is pointed out that about thirty ten-year policies in Alabama are due and remain to thls day unpaid. He estimates that this fact fixes the liability within itself of some $1,600 less the benefits paid. It is this ten-year policy having tonttne or en- dowment feature as part of the con- tract that seems to have brought woe upon the company as well as the policy holders.
 Liabilities About &23,OOO.
 The total outstanding liability on Tontine, or the tenyear policies of the Southern Mutual Aid is placed by the Deputy Commissioner at about $23.OO0.
 ',An things considered" concludes the report of Deputy Commissioner Short CT, 1t is my judgment that the institu- tion should liquidate. The equity of the various policy holders demand 1t.
 While it is true that the Association does not admit liability on account of the ten-year policies, yet the Associa- tion is daily openly and notoriously re- ceiving the dues from these policy holders and the money so received is being used in the ordinary course of business. If the ten-year contracts are ultra wires and no liability exists against the company, then the charter of the Association should be forfeited, so in either event liquidation IS aoso- lutely necessary.
 The conclusions of the Deputy Com missioner represent conditions In a mutual aid organization that are cha otic beyond precedent in Alanama: 1he disclosures are so unreserved and the arraisnment so severe, that President C. p. Orr. of the Association, acquaint- ed with the contents of the report sent a lengthy reply to the Insurance Com missioner. In this MT. Orr attempts to explain some of the gross irregularities alleged to be practiced by the company and criticizes the spirit in which the investigation was conducted He chars- ed that Deputy Shorter and C. " Huffman. the expert accountant whose services were secured by the State De- partment, were prejudiced by newspa- per articles which appeared prior to the suspicion cast upon the Assoclatioh
 "Mr Shorter's idea of fixing a ha- bflitv for certain policies" said MT. Orr, in his letter, ''as they stood at that date and ignoring the inherent features of the policy and the right of assessment which IS the basis of our Association. impressed me with the fact that the visitation was more to lay tbe foundation of action to put the As sociation in the hands of receiver than to make the required auditing.
 During the visit of Deputy Commits sioner Shorter to Birmingham, in the course of the investigation, he ordered 8 stop on the payment or the checSs ol tba comnany in that city. According to President Orr, the attempt was suc- cessfuI for only a brief time, as the Roard of Directors of the company soon started the flow of money again Colonel Shorter said this action was deemed expedient on account Of the critical condition Of the Associattoh treasury.
 In one of the criticisms of the assets of the Association. MT. shorter said