The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1912-10-30
A BUSINESS RECORD
OF OURD|N SHOWN
C. H. Martin Reads State Re-
port Showing Interesting
Acts of Durbin.

INDIANAPOLIS, Oct. 30.-Before
an enthusiastic Progressive audience
at the Lawrence theater in Lawrence
last night Clarence r. Martin flayed
the Indiana bipartisan machine and
riddled the Democratic and Republi-
can nominees for governor by COM
parsons with Senator Beverage. He
analysed Governor Durbin's campaign
argument for business administra-
ton and declared that, gagged by
Durbin's past performances, the "busi-
ness" referred to is Big Business and
political trickery.
1.-The kind of business administra-
ton that Mr. Durbin desires to give
this state" declared Mr.. Martin, "can
best be prophesied by the kind of
business administration he has been
giving to the surety company of which
until recently he was president A
mere opinion from me concerning his
acts as president of that company
might be regarded as unfair by some
in this audience who may be his sup
porters For that reason l will read
you the records and let you judge for
yourselves"
Reads From Report.
Mr.. Martin read from the report of
Leon S. Senior and John E. Watson,
examiners for the New York insur-
ance department, and Herman F.
Kleibacker, examiner for the Michi-
gan insurance department, which was
made Jan. 26.1912, to William H.
Hotchkiss, superintendent of insur-
ance, state of New York; Calvin A.
Palmer, commissioner of insurance,
made Jan. 26. 1912. to William Fl.
O'Brien, auditor and ex-officio COM
missioner of insurance of the state OF
Indiana. This report, he announced,
in on file in the state auditors office.
Quoting from the report, Mr.. Mar
tin read:
"As indicated in this report. the fl
nancial statements rendered to the
state and Federal authorities yearly
and quarterly did not in the last three
years reflect the true condition of the
company. Not only has the company
underestimated it's liabilities for
losses incurred and computed it's un-
earned premiums on wrong method,
but in addition there to it has carried
out certain transactions at the end OF
each period when it was required to
submit sworn statements to supervis.
ing authorities"
Contribution to Surplus.
According to entries made on the
company's books the stockholders
contributed the sum of $4,000 to the
surplus of the corporation on March
81, 1911, the date of the quarterly re
port to the United States Treasury
department. Such book entries also
show that the contribution was re
turned on May 20, 1911. On March
81, 1911, thirteen directors of the
company, including Winfield T. Dur
bin, issued promisory notes in the
total sum of $4,000 made payable tt
the Federal Union Surety company
and were Endorsed by the surety com
pany and discounted by the Indiana
National bank.
THE bank on March 81, 1911, issu
ed certificate of deposit to the Fed
eral Union Surety company for the
proceeds of the said notes. This Ger
tificate was credited by the compan,
on it's books as a contribution to tn,
surplus and the amount of such con
tribution, included in the sworn re
port to the United States Treasur.
department. On May IS, the note
were surrendered and taken up an,
the company paid the sum of $1666
interest to the Indiana National BAN
for the loan.
Declares States Losers.
mot only were these frauds pei
petrated on the United States Treas
ury department but upon the insul
ance departments of the variou
states in which the company did bus
ness.
"Durbin, as his record shows, mers
ed his surety company with an auto
mobile insurance company and issue
to the new stockholders stock wort
only three-fifths as much as their oil
stock. The courts held this merge
illegal and void and compelled him t
pay back.
"Durbin, as his record shows, allow
ed his company to write fictitiou
bonds just before the times for hi
reports and compute the reserve
thereon at so per cent thereby crea
ing a fictitious increase in the SUI
plus of his company. The examiI
ers say this fictitious surplus was u,
ed for the purpose of quarterly r.
ports to the United States Treasur
department.. In August. 1911, tn
United States Treasury departmer
caused an examination to be made c
the affairs of the Federal Union SUI
ETY. company and as a result of sue
examination revoked the company
license as surety on governmen
bonds
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