Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-09-20
EQUITABLE PAID LOANS
President Morton Throws
Light on Transactions.
WERE NOT AUTHORIZED
SOME MORE PECULIAR FINAN-
CIERING BARE.
National Bank Examiner Objected to
Collateral After He Had
Examined It.

Examined It.
A dispatch from New York last night
says: That the Equitable Life Assurance
Society paid $21S.2J4 to the Mercantile
Trust Company in connection with certain
loans known as 1.-The Turner ioans,'' and
that these payments were without author
ity so far as the records of the society dis
close. became known today when Paul Nor
ton, president Of the society, made public
a report the subject submitted by him
to the society's directors.
These transactions occurred In what Mr..
Morton refers to as "the Turner loan"
This loan. Mr. Morton's report sets forth,
was carried In 1884 by the Western Ma
tional Bank, which was controlled by the
Equitable Life Assurance Society. The COL
lateral for the loans was objected to by
bank examiner and Henry B. Hyde then
agreed to transfer the loan and collateral
to the Mercantile Trust Company. At that
time. apparently. the loans amounted to
1851 ,491.
George v. Turner. in whose name the
loan STOOD, was secretary to Louis Fitzger-
aid. then president of the Mercantile Trust
Company, and close business associate OF
Henry B. Hyde. The loan was guaranteed
by Marcellus Hartley, John E. Searles.
Louis Fitzgerald, w. N. Coler, jr. and H.
B. Hyde. On March ii. 1895. the same
guarantors renewed their guaranty, the
loan having grown to $1,276, 47S, the in
crease being due to attempts to develop the
property on which the collateral for the
loan was made. Part of this collateral was
given by John w. Young and consisted OF
Salt Lake and Eastern Railway stock and
other Salt Lake stocks. This collateral
proved to be of little value. Other collat>
n 20 mi aofS nf
Mineral and Timber Company and the
Amity Land and Irrigation Company OF
Colorado.
Attempts were made to develop the Ken
lucky and the Colorado properties, and
large sums were expended for that purpose
and by July 1, 1905, the cost Of the Ken
lucky property stood at $619,067 and that
of the Colorado property at 81, sO9,633 The
Equitable Life Assurance Society paid the
Mercantile Trust Company $21s,2 54 on these
loans on January %, 1900, and $500, 900 on
February 4, 1904.
No Authority for Payments.
The records of the society, said Mr. Nor
ton. disclose no authority whatever for
these payments. and the cash entries in re-
spect to them were very obscure"
Mr.. Morton also sets forth that on Feb
ruary IA, 1900, the executive committee Of
the Equitable Life Assurance Society passed
a resolution authorizing the president to
convey to the individual guarantors of the
turner loans the assurances of the society
for their protection. On February IA, 1900,
the president of the society," Mr. Alexander
made a statement that those loans were
made In the interest of the society," and
promised the guarantors that the society
would see that the amounts their companies
loaned would be repaid with interest.
Mr.. Morton referred the matter to special
counsel. who lave advised him that the
Equitable Life Assurance Society is not re-
sponsible for the loans Mr.. Morton also
has notified the Mercantile Trust Company
that he will expect 1t to repay the S71S.234
paid to 1t by the Equitable Life Assurance
Society.
Mr.. Morton found that 1865 600 was pad
by the Equitable Life Assurance Society to
the Mercantile Trust Company on the $685.
been explained. Counsel have been In
structed to begin proceedings for the re-
turn of this sum. The loan was carried on
an account known as the u. w. A. No
account"
Mr.. Morton also reported to the directors
that 1t would be necessary to charge Off
xs6. 4sS unpaid balance OF a loan to John
E. Searles. who has gone through bank
ruptcy. The collateral against this $685.
4ss. Mr.. Morton declares. is without value.
At the conclusion of his report Mr.. Nor
ton stated:
In case any other transactions of this
character are developed you will be duly
advised"
History Of Turner Loans.
Mr.. Morton found that the Turner loans
were made by the Western National Bank
before the Equitable Life Assurance So
ciety became interested In the bank The
loans originally were as follows:
To John w. Young. $113.O55 on collateral
consisting of Salt Lake and Fort Douglas
Railroad Company bonds and stock, Salt
Lake and Eastern Railway Company stock
Salt Lake Dock Company stock and Dem
ing. Sierra Madre and Pacific railway stock,
To the Kentucky Mineral and Timber
Company. s25S. 1874. the collateral being con
tracts for the purchase of certain lands in
southeastern Kentucky
To the Amity Land and Irrigation Com
pany, 500. 500, the collateral representing a
controlling interest In certain irrigation
bitches In Prowers county. Col. To the
total OF $636.04s was added interest of SOS
AZ, making the aggregate 1861. 491
the Western National Bank to the Mercan-
tile Trust Company, when the bank ex-
amtner objected to the collateral is thus
described by Mr.. Morton:
Henry 3. Hyde, who was president of
the society at the time, and also director
In the bank. arranged to transfer the col
lateral to the Mercantile Trust Company in
the following manner: The collateral was
first assigned by the bank to George "
Turner, secretary to Louis Fitzgerald, then
president OF the Mercantile Trust Company.
Contemporaneously with the assignment.
Turner. on the security of the collateral,
obtained from the trust company loan
of 1851. 491 the exact amount that the COL
lateral stood at on the books of the bank).
evidenced by this note dated November
Is, 1894. and this amount was turned over
to the bank in payment for the collateral
which it had assigned to Turner. Upon
Turner'S note there was Endorsed a guar
antee of payment by Marcellus Hartley,
John E. Searles. Louis Fitzgerald, w. N.
Coler. jr, and H. B. Hyde. and upon all
renewals of the note the same guarantee
was Endorsed. These gentlemen were all
directors OF the Western National Bank,
and held considerable amounts of its stock.
Mr.. Hyde was also president Of this society.
as stated; Mr.. Fitzgerald was president of
the Mercantile Trust Company and a d.
rector of this society and chairman of its
finance committee; Mr.. Hartley was also a
director of this society and member of
its finance committee"
Declared Collateral Worthless.
1t developed soon after the Mercantile
Trust Company assumed the loans, Mr..
Morton reports, that the collateral for the
loan to w. Young was worthless and then
1t was that enormous sums were spent in
aE effort to develop the Kentucky and Colo
RADIO Dr0Dertfes On July l. 1898 the cost