New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1910-05-02
HOTCHK|SS STOPS
MARYLAND CONCERN
Refuses to Reissue a License to
United Surety Company.
of Baltimore.
HEALlEGES IRREGULARITIES
Criticises Control Formerly IN
Hands of Two Knabe Brothers
Saloon Men Own
Stock.


Superintendent William IL Hotchkiss
Of tho Insurance Department has de-
clined to reissue tho license OF the
United Surety Company of Baltimore. a
Maryland corporation which has been
doing business in this state. and has di-
rected that company TO cease writing
business in this state.
This action was taken as the result Of
An examination Of Ernest ]. and William
Knaho. who had been until recently the
controlling interest. and by their testi-
mony and that OF, Beverly Chew, second
ce-president of the Metropolitan Trust
Company. il was disclosed that the
Enabe brothers had borrowed from the
trust company. on the Endorsement Of
the surety company. $4,000 in August
Of last year.
Air. Chew's testimony. taken before
The Superintendent Of Insurance in
hearing on the affairs Of the United
fsIrety Company, showed that on the
S11ao00 loan 10 The Knabe brothers,
made on August ?, 1909, the Netropoli-
,an Trust Company, in addition 70 the
regular 6 per cent discount on the six
months prcrnisscry note which the trust
company received, had been credited to
the extent Of S.. so. as commission.
On this point Ernest J. Knabe testi-
led that he and his brother made the
note for Sl15g00 20 the United Surety
Company. which concern Endorsed 1t
over to the Metropolitan Trust COMPANY
The check for Sill. ass 33 was made by
the Metropolitan Trust Company to the
order of the United Surety Company
and Endorsed by the latter to the order Of
Ernest J and William Knabe, the
SAL s. difference being the regular
discount.
Bonus TO Metropolitan Trust
Ernest J. Knabe testified that during
1905 and 1909 on every loan made by
himself and his brother with the Metro
rolitan Trust Company they paid q COM
mission over and above the discount 20
either Henry S Strauss or Walter A
Mason. Mason and Strauss, he said,
were loan brokers, and arranged the
loans. and at the time of the S11aep0
loan. which Mason arranged with Bey-
eriv Chew. Mason was an employe Of
Knabe said. he understood that all the
borus went to the metropolitan Trust
Company.
In every ono of these loans were you
given to understand that at least 3, por-
ZION Of the commissions vas TO go to the
trust com pany?' Superintendent HotCh-
kiss asked him.
yes" -epIied Mr. Knabe
j., Tunc, 1905. he said. he and his
brother had 100000 in loans with the
Metropolitan Trust Company, and had
beams with other trust companies to q
total extent of about 100000.
Writer A. Mason WAS called IL Mr.
Hotchkfss and testified that when the
S115Goo io6n had been arranged N1r
Rnaoc drew 4 check for $4,000 Ia his
Afason's1 order
Whit did Won do with that check ~
ho was asked
-'Caxhed il and gave the currency back
10 rhe institution IL came from. the
Metropolitan Trust Company. I got it
from the teller, of course. and l put il
in an envelope and laid it on the desk, -
replied Mason.
Whose desk
Beverly Chew's"
Was the amount in that envelope
$1,000"
Mason said he couldn't remember Just
the amount; there was some adjustment
Of interest. he explained.
Mr. Chew has testified that the
amount was $3.50, as shown on the
books OF his company Does that refresh
your recollection" he was asked.
But Mason said that it did not refresh
his recollection. and the matter of tho
81 $50 which strayed out Of the enve1-
ope was dropped.
Compsny's Capital Impaired.
In the statement by the Insurance De
,,artment il is said that the disclosures
regarding this loan, and the records Of
the United Surety Company's books IN
connection with other loans to the
Knabe brothers secured by the bond of
the surety company, showed that the
can1pany'e capital had been impaired TO
the extent of about $4,000, and because
of that and various irregularities dis
covered in the company's books the
MARYLAND company was shut out OF this
state.
The departments comments upon these
practices OF the United Surety Com
pany was summed up in the following
words:
Among the criticised transactions OF
the former controlling ownership, which
vas vested IN Ernest ]. Knabe, ir.. OF
Baltimore. and William Knabe of New
York were the retention on deposit in
financial institutions T casI- largely in
excess Of the needs Of the company and