The Montgomery advertiser., 1905-12-16

one hundred cents on the dollar. and were within the Jurisdiction of this Department.
 The fact Is also disclosed that there is an utter absence of system in book keeping and ofice methods, and the makes 1t impossible to reach an intel ligent conclusion in regard to the true condition of the institution.
 The company Is constantly being harassed by lawsuits in Florida and Alabama as result of the company failure to pay ten year tontine policies. which are due and unpaid. So far, six ty or seventy policies of the above class have lapsed this year for non- payment of dues, and other causes, the inability for which would amount to between four and five thousand dollars at maturity.
 The president of the association states that the Virginia Department Is practically speaking a separate instf : tuition. yet it appears that a system of kiting drafts with the Virginia depart ment presents itself. I refer you to five instances in which this is done. as shown by the Auditors report. which is made a part of my report.
 The system of kiting is unhealthy and suspicious, and suspicion is just ground for inquiry. I here stamp my positive disapproval. These drafts are drawn at sight on the Birmingham off, flee, at the same time the Virginia de-
 partment mails checks on Virginia
 banks to cover, but these checks are
 not deposited in the bank at Birming- ham until the date of maturity of draft.
 giving the bank in Virginia the use
 of the money for about ten days. These
 checks are not shown on cash book or
 ledger.
 I find also that the company Is neg
 1igent in making collections on those
 ten-year policies, and policies, of
 course. lapse out as a result. Out
 standing liability on Tontine policies
 is about $23,000.
 All things considered, 1t Is my judg- ment that the institution should liqui- date. The equities of various policy holders demand 1t.
 While 1t 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 viries and no liability exists against the company, then the charter of the association should be forfeited, SO in either event liquidation is abso- lutely necessary.
 Ali of which is respectfully sub mitted. H. R. Shorter, Deputy Insurance Commissioner. It is claimed that the Southern Mu- tual Aid Association cancelled 17s poli- cies in 1904 and 306 policies this year Accountant Huffman in his report said he could not tell from the records of the company whether these policies were ten-year policies when issued or
 whether they had been transferred to different class policy bearing the | original number.
 In the reply of Mir. Orr to certain criticisms of Colonel Shorter, there Is l an allusion to litigation in the Ala bama Supreme Court regarding the le- gal status of the tontine policies of | the company. When Mir. Orr and asso- ciates bought over the stock of the company in 1903 he instituted a friend ly suit in the Birmingham courts to | determine whether this class policy Is ultra wires, that is. If it is or is not g | full liability The result of this suit will no doubt settle the future of the
 Mutual Aid If the policies are counted I a liability an effort will be made by 1 Commissioner McDavid to have the company Iiquidate. Otherwise, the pro- | cedure will be prob1ematical
 The reply of MT. Orr. which reached | the department yesterday morning, Is l in part as follows: