New-York tribune., 1910-04-23
Charges Of Speculation.

The examination, also brought out the
fact that the president Of the two COM
panies carried IN special accounts. various
sums OF money paid By the new company
to the old for commissions on a reinsurance
contract" says the report, t. 'and further
that such officer IN 1905 and 1909 speculated
actively on the credit OF certain securities
which had been turned over to the local
attorney above mentioned In payment OF
the San Francisco claims acquired by him."
1t continues:
II also developed that other funds chiefly
commission payments. had been similarly
concealed by the company IN his personal
aIniIlers of the department. apparently
treated as his own. Other irregularities
evidencing an intention on the part of the
officers of the old company and certain
of its directors to sequester assets, 10 the
end that the true condition of the old COM
pany might not be known, We're brought
out at oral examinations by representatives.
of the Insurance department.
Further Inquiries resulted In the dscov-
cry OF deception practised upon the insur-
arce department by the president and other
officers of the new company late in 1895,
These evidences consist in the cutting out
OF the minute book OF the executive COM
mittee ot a page purporting to give the
proceedings OF a meeting of that committee
company testified that the examiners of
the department having called for such
minute book. which showed an agreement
that. If carried into effect would have i'm
paired the new company from the start
and made II impossible for II to secure its
certificate OF authority. President Vail cut
out such leaf. the vice president interlned
the same with lead pencil and gave the
same TO the secretary with orders TO de-
stroy il. This the secretary did not do. but.
in response to questions, testified to the
facts and produced the leaf cut out Ii
appears by comparison OF this leaf with the
page in the new minute book then started
ha fzf
ecutive committee were modified st that
time, so that the department was deceived
into believing that. liability of upward
of SO000 which would have been shown
by the leaf cut out, did not exist
President Vail when confronted with
the cut-out leaf" says Mr. Hotchlxiss,
denied knowledge of the transaction and
asserted that the resolution there shown
was never adopted. Examination of the
files OF the company developed the fact
that these minutes shown on tho cut-out
sheet had been copied BY the secretary
from the original In the handwriting OF
President Vail. who. when confronted
with such original, admitted the fact"
Continuing, the report says:
The examiners, in a preliminary report
furnished tho Superintendent, also cali at
tention to the conduct on the part OF Presj-
dent Vail At the time the San Francisco
Superintendent KELSEY a statement that
certain representations which were being
made in San Francisco by the adiusters OF
this company were MISREPRESENTATION and
apparently fraudulent ones" the Superin-
tendent adding. TT is difficult to under
stand how business men dealing honestly
can allow themselves TO impose on the de-
partn1ent in such a manner"
The superintendent of Insurance at a
meeting OF the directors OF the two COM
panies held tonight. directed that the
trustees OF tho old company AZ once pI3re
the liquidation OF its assets I'm the hands
OF committee appointed or approved by
him. 10 that end President Vail being re-
fees. and also that President Vail and the
10 such trustees all property held bV them
apparently IN trust for the stockholders OF
such company.
The Superintendent also directed the new,
company 10 carry out with the old COM
pany the reinsurance contract on tho ha gis
of % per cent evidenced by the proceedings
Of the executive committee of the new COM
pany on the leaf cut out of the minute
book and that IL ask aud accept the resig-
nation of L. II. Vail as president and di-
recsor OF such company.
The officers OF the Dutchess Fire InSur-
ance Company are: Lewis IT. Vail. presi-
dent: Milton \. Fowler. vice-president and
Jesse J. Graham. secretary. The officers Of
the old company were the same with
Frank NJ Lown as attorney. Allison Butts
is attorney for the present company