The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1907-09-17
]. P. Transue and Ferd K.
Rule Involved in
the Scandal
SUITS TO BE BEGUN
Sensation Promised When
Light Is Turned on Los
Angeles Concerns

Papers were prepared yester-
day by Attorney General U. S.
Webb for two sensational suits
to be directed against building
and loan associations In Los An
geles. The attorney general, act
ing in the name of the people of
California, will ask the courts to
throw the Union Mutual and the
Protective building and loan asso-
Citations into the hands of re-
ceivers. Men prominent in the
financial and political affairs of
the state will be involved, and
while criminal prosecutions are
not planned at present a thorough
investigation into the affairs of
the two corporations will be
made.
in the application TO be made by the
attorney general for an Injunction 70
prevent the present directors from con-
tinuing~fo transact business for the
oorporations, the methods employed by
the officers Of the associations will be
called into question. Among the di-
rectors who have been accused are
Fred X. Rule. former president OF the
league OF republican clubss Assembly
man J. P. Transue, who is serving as
a building and loan commissioner; D.
". Field. former building and loan
commissioner. and r. Carlton Knight.
The Union Mutual and the Protective
building and loan association are close
ly affiliated and practically are under
the same management. The concerns
are comparatively new IN the Los An
geles field. They were prosperous at
drst but OF late their affairs have be-
come seriously involved. Last month
charges were brought by the minority
stock holders against the management
in which Rule, Transue, Field and
knight were vigorously assailed. II
was charged that Rule and Field had
manipulated the affairs Of the company
TO their own advantage and that Knight
was an ex-convict-
The matter was taken up by Build
ing and Loan Commissioner Lindley
and Attorney General Webb. An in
vestigztion showed that the two con-
Germs were in bad tangle. Differ
ences among the stock holders had
driven business away and the financial
standing OF both associations was
seriously impaired. Webb decided to
take steps TO throw the entire matter
into the courts. and accordingly suits
viii be instituted today. These suits
VIII ask for an injunction to restrain
the present boards of directors from
carrying on the business OF the cor
porstions with an alternative request
for the appointment Of a receiver
For some time the minority stock
holders have been seeking to GUST the
present ofBcers. Rule is president of
both companies apd has come In for
large share of the denunciation Other
ofhcers OF the concerns have also been
accused Of nisnnanagement and incom-
petence. It is charged that fraud has
been practiced by some Of the officers
Of the associations, that the corpora
tions are practically insolvent. that the
real financial condition Of the COM
panies has been concealed and that
there has been wanton waste of
funds.
The cases viii be taken up tomorrow
in the civil courts of Los Angeles. A
representative of the attorney generals
Office will take charge.
Ifndiey and Transue, when asked
last night in regard to the action to
be taken against the two companies,
declined 10 discuss the matter.