The Birmingham age-herald., 1905-09-20
Morton Finds Some Ugly Un-
 authorized Loans
WILL RECOVER $710,264
MT. Morton Also Repudiates Mysteri- ous Transaction Known as the "J. w. A. No. Ac-
 count" Loan.

New York September 1s.-That the Equitable Life Assuraroe society paid out $21S. .264 to the Mercantile Trust com pany in connection with certain loans known as the Turner loans' and these payments were without authority so far as the records of the society disclose, be- came known today when Paul Morton, president of the society, made public a report on the subject submitted by him 10 the soelety's directors.
 These transactions occurred in what MT. Morton refers to as the Turner loans This loan, Mir. Mortons report sets forth, was carried in 1894 by the Western National bank which was con trolled by the Equitable Life Assurance society. The collateral for the loans was objected to by some bank examiner and Henry B. Hyde then agreed to trans fer the loan and collateral to the Mercan- tile Trust company. At that time. ap- parently. the loans amounted to s66i.4sl. George " Turner, in whose name the loan stood. was secretary to Louis Fitz- gerald, then president of the Mercantile Trust company and a close business as- sociate of Henry B. Hyde. The loan was guaranteed by Marcellus Hartly. John E. Searles, Louis Fitzgerald. W. N. Conner. Jr. and II. B. Hyde.
 Renewed Their Guaranty.
 On March 2l, 1895, the same guarantors renewed their guaranty, the loan hav- ing grown to sl,27647s. the increase be- ing due to attempts to develop the prop erty on which the collateral for the loan was made Part of this collateral A.- T.t.. V sisted of Salt Lake and Eastern railway stock and other Salt l,ake stocks. This collateral proved to be of little value. Other collateral consisted of contracts of the Kentucky Mineral and Timber Co.,, and the Amity Land and Immigration Co.,, of Colorado. Attempts were made to develop the Kentucky property and the Colorado property and large sums were expended for that purpose and by July 1. 1905, the cost of the Kentucky property stood at $619067 and the Colorado property at $2s90633. The Equitable Life Assurance society paid the Mercantile Trust company s21s.264 on these loans on January g. 1900 and s50OO00 on February {. 1904.
 "The records of the society,"" said MT. | Morton disclose no authority whatever for these payments and the cash entries in respect to them were very obscure"
 MT. Morton also sets forth February l. 1900. the executive committee of the | Equitable Life Assurance society had a request authorizing the president to con- vey to the individual guaranteers of the | Turner loans the assurances of the so- ciety for their protection. On February i4. 1900. the president of the society Mir | Alexander made a statement that those | loans were made in the interest of tho society and assured the guaranteers that the society would see the amounts their company loaned would be repaid with in- | terest.
 Mir. Morton referred the matter to spe- | oial counsel who have assured him that | the Equitable Life Assurance society is not responsible for the loans Mir. Nor ton has also notified the Mercantile Trust | Co.,. that he will expect 1t to repay tho ;7fs2s4 paid to It by the Equitable Life | Assurance society.
 $265,ooo Was Paid.
 1 Mir. Morton found that s2e5. 600 was paid by the Equitable Life Assurance society to the Mercantile Trust company | on the S635,0O0 loan, the nature of which loan has never been explained. Counsel have been instructed to begin proceed ings for the return of this sum. This loan was carried on an account known as the "J. w. A. No. account" MT. Nor 1 ton also reported to the directors that It would be necessary to charge or S6,4Ss unpaid balance of loan to John E. Searles, who has gone through bank ruptcy. The collateral against this $S6. .4SS, Mir. Morton declared, Is without value. At the conclusion of his report Mir. Morton stated: 'In case other transac- tions of this character are developed you wul be duly advised.
 | MT. 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, sl13.055, on collateral consisting of Salt Lake and Fort Douglass Railroad company bonds: Salt Lake Dock company stock; Madre and Pacific rail- way stock.
 To the Kentucky Mineral and Timber company. s25S394 the collateral being contracts for the purchase of certain lands in Southwestern Kentucky. To the Amity Land and Irrigation com pany, s264 .599, the collateral representing a controlling interest in certain irriga- ton dtches in Prowers county, Colorado.
 To the total of s6s6.O4s was added inter- est of $25,444. making the total $66l 49l. The manner of transferring the loan from the Western National bank to the Mer- cantie Trust company, when the bank examiner objected to the collateral is de- scribed by MT. Morton as follows:
 Hyde Arranged Transfer.
 Henry B. Hyde, who was president of l the society at the time and also direc- tor in the bank arranged to transfer the collateral to the Mercantile Trust com pany in the following manner:
 ''The collateral was first assigned by the bank to George V. Turner, secretary | to Louis Fitzgerald. then president of l the Mercantile Trust company. Contem- poraneously with the assignment. Tur- ner, on the security of the collateral ob- tained from the Trust company a loan of Se61 ,491 the exact amount that the collateral stood at on the books of the bank) evidenced by his note dated No- vember 15. 1894, and this account was turned over to the bank in payment for the collateral which it had assigned to Turner. Upon Turner's note there was endorsed guaranty of payment by Mar ceus Hartley John F. Seares, Louis | Fitzgerald. w. N. Conner, Jr., and H. B. | Hyde, and upon all renewals of the note the same guaranty also endorsed. These