The Montgomery advertiser., 1905-12-16
ACTION TAKEN AGAINST
 BIRMINGHAM AID CONCERN

that it's officers swore to the absolute ownership of securities amounting lh all to s27,000. He added that the in- terest account should show a credit or interest-earning capacity of the bonds at the rate of per, cent On the con- trary, he found that the books show debit in the interest account. Tn other words" says the report or | Mir. Shorter it appears that the com pany is paying certain amount or money for the use of the bonds, ana IL necessarily follows that the Associa- | tion should receive the income thereon | If the company owns the bonds, then some one owes the Association the inr come. If anyone other than the com pany is entitled to the interest on the bonds, then the statement as filed with ' this department is palpably incorrect | and misleading"
 1 To this President Orr replied in part He declared that in 1904 it became nec- essary for the Association to make an aggregate deposit of about $15,O0O with the treasuries of Virginia ana l Florida. Mir. Orr said he "donated l at that time $16,000 of Pensacola city bonds to meet the requirements. The 1 understanding he had with the direc- 1 tors was that he was to be repaid the full amount in stock certificates of the Association, when there should be an | increase in the capitalization from $5. 900 to $5o,000. He added that the resolutions of the Board will show that | it was the intention of the Board to tn- crease the capital
 1 On Mr. Orr's consulting eminent counsel and finding that the serious doubt as to the power of the Associa- tion to increase the capital, he sought some sort of remuneration. The com pany seems to have agreed on giving | him per cent interest for the use of | the bonds when they were drawing only 6 per cent Although this is the argument of MT. Orr, his officers did not hesitate to include the securities | in the sworn statement of assets and 1 liabilities filed with Commissioner Mo David. For this the, department of ficials think the officers are reprehen- sible.
 l Courteous to orr.
 l Commissioner McDavid said yester- day he considered it a courtesy to allow MT Orr to demur to the report of Colo tneI Shorter before it was published. He denied emphatically that he was in- duced to begin the investigation of the I Mutual Aid concern by newspaper pub lications. He saw 1t his duty to so act on the protests or nolicyholders, 1 which preceded any newspaper corI- ment. The duty is derived from the ! law of the State regulating mutual aid 1 concerns. Colonel Shorter said that he did not see fit to rejoin anything to the statements of MT. Orr, saying they do not alter his recommendations and | opinions one iota.
 | The report of Deputy Commissioner l Shorter is as follows:
 Hon. F.. R. McDavid, Secretary of State | and Elk -Oficio Insurance Commis- | sioner, Montgomery, Alabama.
 Dear Sir:
 l In conformity with the law. and in obedience to your instructions I have | officially visited the Southern Mutual Aid Association of Birmingham. Ala bama, and herewith, hand you detailed statement of the conditions and affairs | of said Association, as made by MT. | Huffman, expert accountant. also hand you herewith, interrogatories
 propounded to Mir. c. B. Orr. President of the Association, together with his answers thereto, and an analysis of the
 Report of the Auditor, taken in con junction with the interrogatories and answers thereto. discloses the follow ing facts:
 The Association was first chartered on September 10th, 1890. One. W. L. Dodd. was the first president, and was
 succeeded by C. P. orr about July 27th. 1903 Mir Orr buying out the interest of W. l.. Dodd. A. L. Addy and J. A.
 Dodd, giving q consideration therefor.
 The present officers of the Associa-
 tion are as follows: c. P. Orr. Presi- dent; I. S. Sauls, of Norfolk, Vice-P
 ident and General Manager of the Vir-
 ginia Department; Leroy Smith, Secrc-
 tary and Treasurer: W. c. Olive, As-
 sistant Secretary and acts as cashier
 and book-keeper of the Virginia de
 partment.
 The Directors are Leroy Smith, J. Nj.
 Caldwell, and K. M. Morrison, all resi-
 dents of Birmingham. Alabama. and |.
 S. D. Sauls of Norfolk.
 The sworn statement of the Southern
 Mutual Aid Association of Birming
 ham. which is on file in this office, dis
 closes the fact af1rmatively that the
 Association owns absolutely $27.290
 (twenty seven thousand. two hundred
 dollars) in bonds, and it follows that
 the interest account should show a
 credit of the interest earning capacity
 of the bonds at the rate of six per l cent On the contrary, the books show
 the company is paying certain
 amount of money for the use of the
 bonds, and 1t necessarily follows that
 the Association should receive the in
 come thereof. If the company own
 the Bonds. then some one owes the
 Association the income. If any one
 other than the company, is entitled to
 the interest on the Bonds. then the
 statement as filed with this Depart
 ment is palpabiy incorrect and mis-
 leading.
 Of all the Bonds above mentioned,
 only $1 900 Gone thousand) consisting
 of one Alabama Bond is on deposit
 with this Department for the protec-
 tion of Alabama policy -holders.
 The fact is also disclosed that about
 thirty ten year policies, which have q
 tontine or endowment feature as a
 part of the contract. are due and un-
 paid, which fixes the liability within
 itself of about $1,600 lone thousand
 six hundred) less the benefits paid.
 These policies are falling due, daily
 increasing the liability of the Associa-
 tion at a remarkable rate. and assum-
 ing that these contracts are a liabili- ty. the Association is hopelessly insol-
 vent, even if all the bonds are worth