Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-03-07
MR.DRAKE' SREJOINOER
Superindont Of Insurance
Replies to Charges.
POSITION EXPLAINED
SAYS CERTAIN ACCUSATIONS ARE
UNoUALTIEDLY FALSE.
Controversy With Royal Benefit So
ciety - Commissioners Undecided
Regarding Form Of Inquiry.

Superintendent Thomas E. Drake Of tho
District insurance department today sub
mitted to the District Commissioners de-
tailed answer to the charges fled with the
Commissioners against him by the Royal
Benefit Society. through it's president. D. +.
Pennington. Mr.. Drake makes specific de-
NAL of the charges rejecting upon any I'M
proper administration Of the Office of super
intendent of insurance; he declares he has
been actuated In his decisions with refer
ence to this society by no feelings of hos
tility or ill-wIli and explains several OF the
matters brought against him by the So
ciety
The Commissioners have not yet decided
upon the nature Of the inquiry to be made
into the charges preferred against Superin-
tendent Drake. but they will probably de-
eide this question within few days, after
considering all the documents now before
them.
"Wha tever real or supposed grievance
this Royal Benefit Society has against me-"
says Mr.. Drake, had and has its origin.
continuance and existence in the refusal of
the superintendent of insurance to issue to
that society. upon Its application therefor,
license to do business as a fraternal bene.
fetal association in this District. This re-
fusal was under the following circum-
stances:
Provisions Of the Code.
1.-THE District code. in section 749. pro-
vides for and defines this class of insurance
companies. They are fraternal beneficial
associations. having lodge system. rit-
ual and a representative form Of govern
ment Those are authorized to make insu-
rance of and for the benefit Of it's members
and their benef1ciaries, but no other. They
are not permitted to make insurance of any
kind of any person other than their own
members. This clearly and certainly refers,
and refers only. to an existing lodge, with
ritual and some form of initiation and
membership and a representative form Of
government for such lodge Being thus
constituted, such lodge may insure such
OF Its then existing members as 1t may
choose. But the all-important fact Is that
there is already such lolge, with members
who are already such, entirely independ-
ent of any insurance, and who may or
may not have ever been insured and when
they are it is mere incident growing out
of their pre-existing membership Such
lodges or associations are purely fraternal
and for fraternal purposes, and not COM
mercial or for profit.
1T will be readily seen that such lodge or
association Is not a general insurance COM
pany, which may go out to the whole pub
lie and solicit insurance and insure every
willing person who is eligible, irrespective
of membership, and whose membership is
only such as Is connected with his applica-
ton for insurance. By reason of this purely
fraternal character and the limited kind and
amount of insurance which they may make,
these lodges are. by the statute given many
privileges, immunities and exemptions
which would be of great value to COM
panies doing d general insurance business,
but which. upon obvious grounds of public
policy, are forbidden to such companies
The Name Adopted.
For this reason several of the smaller
insurance companies In order to obtain
these privileges, immunities and exemp-
tons call themselves fraternaI beneficial
associations and seek to be licensed as
such. although having few, and often none
of the characteristics of that class, and
with business and methods entirely differ
ent from, and which are forbidden to fra
ternai beneficial associations. This was
the case with the Royal Benefit Society.
When l came to examine it l found that
both as to the character of the society and
it's business and methods it clearly was not
a fraternal beneficial association under the
law. Substantially 1t had no lodge sys-
tenn, ritual initiation or form OF initiation,
nor membership, except such members as
became nominally such by their applica-
ton for insurance. In fact, instead of in
surfing its members it went out into the
world and insured all Of the general public
who were willing ard were considered desir-
able. These, l believe, thus became nomi-
nally members: either upon making appli-
cation or on being insured; much as all
who are insured in a mutual company, be-
com members of the company. This was
the result as officially reported to me upon
an examination made by the examiner of
this department in connection with
special examiner procured to assist in max
ing the examination of companies in this
District. The same result and conclusion
was officially reported to me by the de-
partment of insurance of the state of Ohio
upon an examination by that department
of this society seeking to do business there.
Under the circumstances L notified this
society, in substance, that / could not is
sue license to it to do business here as
fraternal beneficial association A hearing
upon the question was given the society
through it's auditor, Mr.. Jonas T. Unver-
zagt, who appeared and presented the
claims fully and at length but, without
inducing a change Of my opinion. Later,
Attorney Henry E. Davis appeared for the
society, and, with his known ability and
fairness, urged it's claims, contending
among other things, that the society was
a fraternal beneficial association, and that.
as such, it was entitled TO license as a
matter of course, and that its issuance was
mere ministerial act and, however. that
might be. the society was entitled to a
license upon the merits Of the case In
addition to his oral argument. Mr. Davis
submitted written brief, supporting his
contentious. Later, at his request, the
whole matter, with his brief. and one repre-
senting my views, was submitted to the
Davis appeared before Mr.. Duvall and
again submitted an oral argument and his
brief.
Views Of Department Sustained.
1.-THE matter was fully argued and heard,
and upon full consideration, an opinion was
rendered sustaining the views Of this de-
partment, and which was approved by the
full board OF Commissioners. It was only
after this that I refused a license: and It
Is submitted to the board, whether, after
this decision by the Commissioners. could
have done other than as did. The ques-
ton presented by Mr. Davis whether fra
ternal beneficial associations and local IN
surance companies chartered in this Dis
trict are. like others. required to have a
license to do business here, has been more
than once before this department and I'M
der the advice of the corporation counsel