The sun., 1907-12-11
MUTUAL RESERVE UNDER FIRE
wM. HEPBURN RUSSELL SAYS 1T
IS IN BAD SHAPE.
Warns CD at the Meeting OG POlIcyhSlders
with an Injunction ca stop tho New
Assessment Plan by whlch. HRe says.
They Hope tO Make Good a Deficit.

called Tor yesterday by the management
90 make certain changes in the bylaws
of the company. was adjourned suddenly
after William Hepburn Russell. repre-
ssnting "A committee of pOhCyhOlders,
had served a court order on the officers
restraining them from voting any proxies
in support Of the proposed changes and
had declared that a plan was on foot to
ndslead the pOlicyhOlders and force
certain class of them to make up a def
ciency which the insurance examiners had
found in the condition of the company
Although Supt. Kelsey has refused to
give out the report OF the three examiners
on the ground that he has not accepted
II as yet MIR. Russell declared that tho
amount Of the deficiency between its assets
and liabilities. as found by the examiners.
was at least 81. 100000 and might reach
97,OOO,0OO.
From another source it was learned
that the examiners have reported that
some Of the liens against policies entered
on the books and reported to the insurance
department IA loans were entirely illegal
and must come of the assets. The COM
pany's surplus was only sIO4. 900 at the end
OF last year by it's own report. Besides
these liens or assessments on policies. Of
20 policyholders, there il "A dispute over the
real estate at 800 Broadway.
The law in the case of the Mutual Reserve
says that a change in the bylaws can be
made by majority of the policyholders
present at n meeting called for the purpose.
The number Of poicyholders that appeared
at these meetings. as compared with the
total number. ~, 900. has always been very
small. Yesterday only about forty showed
up in person. President Haynes with
John B. Stanchfeld had over 1900 proxies
and therefore easily had control.
The first word that most Of the policy
holders had of the meeting was when they
received circular few days ago describ-
inG the proposed changes in the levyinG Of
assessments in the case OF the assessment
poiicvhOlders. Of which there are a total
OF IS ,Ono These assessments would be
levied IN advance Of death claims and
would be based ON the mortality tables
IL was pointed out by President Haynes
that this would mean that payments would
bS,made more promptly and that it would
do away with the extra assessments that |
had to be levied to make up for those who |
failed to pay.
There was also in the proposed bylaws
one chat beginning with December Is "the |
actuary shall report the amount required !
to meet all death claims and the accrued |
liabilities of the company and the lawful |
reserve on unmatured policies or certih- |
Gates" Under the same bylaw the actu-
aTy is directed to make an appraisal of |
the assets OF the company. 'and il the |
report shall show deficit on the net value
Of the funds then the board of directors
shall assess the same together. with n mar
gin for shrinkage or loss not exceeding
l21a per cent
Mr.. Russell on Monday went before Judge
Hough in the United States Circuit Court
and got an Injunction restraining President
Haynes and the officers from voting their
proxies and from taking any action at the
meeting other than organizing and ad-
journing.
Persons who turned up for the meeti nE
at O'Clock yesterday at the cOmpany's !
doors prepared to challenge the right Of
any and all persons to enter unless they
showed their policies or proxies.
President Haynes opened the meeting |
and Mr.. StanChfeld stood behind his chair
As soon IA the meeting was opened Mr.. /
Russell, who had already served the COPY
Of the order moved that "A committee Of |
three of the policyholders be selected to
act In conjunction with the tellers for the
purpose Of canvassing the proxies at the
meeting or az any adjournment Of the meet
ing TO ascertain who was entitled TO vote.
Mr.. StanChfield insisted that nothing
could be- done but adjourn and announced
that he voted 1000 proxies against Mr. !
he did not believe that Mr.. Stanchfield |
held any proxies in his own name and that
he could not substitute himself
How do know thar you have any right
to be heard az a proNy?" said Mr.. Stanch. |
field. whereupon Mr. Russell waved a bunch !
OF papers in his hand and declared that |
he could show any one that they were real !
proxies. Fifteen or tweaty clerks of the |
company were present with proxies and |
they voted with MIR. Stanchfeld against |
Mr. RuRsell's motion.
Before a motion TO adjourn was carried |
Mr.. Russell said he believed that the object |
OF the meeting was to mislead the policy |
holders as TO the condition OF the company |
and that it had been found nsOvenJ by |
the examiners.
s"You want the assessment policyholders !
20 make good this deficiency and they
haven't had "A proper chance 10 be heard"
he insisted.
"I believe that the company can be saved"
replied president Haynes. The company
Is solvent and we can show it,"
President Haynes then declared that n
motion 70 adjourn had been carried al
though it was said that there was no formal
vote OF proxies taken on IL. The meeting
was adjourned until next Tuesday at
O'Clock. In the meantime the order OBJ
tanned by Mr. Russell il returnable on
Friday when the company will seek to have
it discontinued.
After the meeting ice-President FL
dredge said that IL was simply a plan 10
cnAnke kne time lOf cOlleCtlnR assessments.
He said that early next year proposition
would he made TO change all assessment
policies into straight life policies.
Mr.. Russell said that the amendments
proposed, il adopted, would charge as liens
on the policies OF those who held assessment
policies any deficiency that exists in the
Rssets of the company AZ compared with |
it's liabilities MY information" he said. |
-as drawn from the report Of the COM
pany OF December 81. 1909, is that there is |
a deficiency at this time of not less than a |
million and thTee-Guarters.
Their scheme, IA believe. and IA | charge
in the petition. and az I expect 20 prove ,
before | get through with il, il to get the |
policyhOlders TO consent 10 the passage Of |
these bylaws without understanding their !
-~-c-.ng ard then Immediately to move |
an assessment that will amount TO enough /
90 make good the enormous deficiency. !
this to be in addition 10 the obligation Of |
the pOlicyholders TO pay their regular as
sessments by way Of premiums for their !
insurance. |
-TheV have mised the policvhOlders |
by telling them that the only object and |
purpose Of these proposed amendments |
is to enable the company to get in better !
shape TO pay its losses and to provide for !
the legal reserve required by law, when the |
truth is that they are about to be found |
-. ~. q Ia