New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1910-04-18
BLAME FOR MUTUAL LIFE
Hotchkiss Criticises Settlement
of McCurdy Suits.
MORE PAID THAN RECEIVED
Committees Statement Called
Deceptive When Not Untrue
Evasion of Law,

Superintendent Hotchkiss of the State
Insurance Department severely criticises
several matters in the, affairs of the
Mutual Life Insurance Company in the
report to be filed to-day of his first ex-
tensive examination of any life insurance
company since taking office. and the first
examination accorded the Mutual since
the Armstrong code went into effect.
The examination was on the company's
statement of December 81. 1908, and it
deals with the Mutuars affairs for the
years 1906. 1907 and 1908
Close to a quarter of million dollars,
the report states. was paid out by the
Mutual over and above the amount re-
ceived in the final settlement of the Nc
Curdy suits. and in this echo of the life
insurance investigation tine present Su-
perintendent finds his chief criticism.
These suits. instituted for the purpose
of getting back some portion of the vast
sums of money which the Hughes inves-
tigation disclosed had been used for
lobbying at Albany, were put i'm the
hands of a distinguished committee of
trustees
Charles a. Pea body, president of the
company. said yesterday that the com
pany had maintained the spirit and letter
of the Armstrong law
Benjamin +. Tracy. Edwin s Marston.
H. Rieman Duval. Henry w Taft and
Frederick H Eaton composed that COM
mittee. and they had as counsel Joseph
II. Choate and James McKeen.
Reason for the Settlement
Tie committee reported that the ag-
gregate amount OF money claimed to
have been expended improperly. restitu-
tion o: which was asked. somewhat ex-
ceeded $4,000. .OOO." but because of de-
murrers and various dilatory tactics in
terposed by the defendants. and also be-
cause of numerous Implications and COM
plicatiOns in the details of the claims.
the committee, on the advice and with
the approval of its counsel recommended
that all the claims be settled upon pay
ment by the Mutual OF $75O,O0O
This payment was divided equally
among Charles H. Raymond & Co. lob
crt McCurdy and r A. McCurdy. The
Raymond & Co account was settled when
the company paid that firm the difference
between $S56,52. %, the amount of their
claims against the company, and the
S250.0O0 agreed upon as their share Of
the restitution fund, which subtracted
from the company's treasury the sum Of
S4O6. .527 81
The company settled the Robert Nc
Curdy account by paying him the diff
ference between $3.50, ,S21 50, the amount
Of his counter claims. and s25O,OOO. or
sS0.S21 50. which was a total disbursc-
ment.of s4S7.349 so which, with the ad-
ditional restitution OF $3.50 600 on the r.
A. McCurdy account, made the net sub
traction from the companys assets On
the matter of the claims $237.349 so.
Says Statement Is Untrue.
Continuing the Hotchkiss report says:
H. other words. the company actually paid
out more than it received in cash in the final
settlement Of these CldmS-the sum of s2S1,
80 80. Whether the settlement made by the
company was advantageous or not. the fact
is that the settlement was made upon a
statement of facts by the committee which
is untrue in at least two particulars and
deceptive in one more, namely:
First, the committee makes this state
ment after allowance for the various du-
plications and after limiting the amounts
claimed to the causes of action which had
accrued within the siX-year statute of linn
itatiOns. the faces of the claims somewhat
exceed $,O00.G50''
The fact is that the amount even accord
ing to the figures which the committee had.
was s. 1872. $40 50. and the settlement in addi-
tion involved several hundred thousand dol
La # afSGi and tfa
under the claimed ''Wasteful contracts"
Second. the committee stated that "as
net result of the settlement the company's
surplus has been increased above the
amount shown in the December sheet by
10000" As an actual fact, the surplus was
increased by only $43S, ,235 q, for the reason
commissions on the contracts above re-
ferred 10 Nas not charged liability.
Third tie statement that the aggregate
amount claimed in the complaints i'm the
actions at law exceeded 100000. these
claims being for unliquidated DANA ges, is
deceptive i'm that this implies at least that
approximatelv Sc O00 O9j Of claims were set
tied for $4,000 when actually. IL the COM
Eany had a cause of action on account of
the imprOvident contracts. IL certainly was
entitled To damages on account of further
pa5 5ment for which IL was liable under the
contracts as well as for amounts paid.
which would bring the amount involved in
the settlement to approximately 500 G0.
II seems to us that either the committee
did not know the facts or purposely misled
Superintendent Hotchkiss brings the
fat charge of deception even more di-
rectly in the second point of criticism
which he raises
Armstrong Law Evasion.
The companv's expenditures under the
head of supervision Of old business"
which amounted to S334I44O9 i'm 1908.
the report saws, really were paid out not
for supervising old business. but sub
stantially in the form Of bonuses to those
agents who were most successful i'm get
ting new business, thus defeating the
purpose of one section of the Armstrong
law. which limits the amounts To be paid
to agents. for new business
The report makes no charge Of error
or deception on the third point criti sed,
but the bald facts are disclosed in the
following manner:
The examiners also note that in 1896. dur
ing a campaign for the election Of directors
under the amended laws. the company in
creased its agents advances by more than
double the amount paid during any other
quarter al the year, and that during the
same period the managers expended S16S-
to cVpeud by the committee of the board
Of directors IN the follow ing year the
committee authorized ne writing of ,irtu-
ely ali of these adv 4nccs as uncollcctahle.
Charles A. Peal cdy. president of the