Evening journal., 1912-06-15
BANKERS co.
LITIGATION
Special Master Recommends
That Insurance Business Of
American Co. be Restrained
SAYS CONCERN
is NOT INSOLVENT

Christopher l.. Ward, master in the
American Bankers Association case,
filed his final report in the Court OF
Chancery today. The report covers
about 100 pages and goes into
great detail concerning the company's
business. The master discusses the
charges in the bill filed under five
heads and finds as follows.
First. That the company is not in
solvent
Second, That the company was
practically from its inception and at
the time of the fling OF the bill frau
dulently conducted.
Third. That the compaLy's assets
are not sufficient for carrying on the
business
Fourth, That the condition of the
company is such as to render its fur
ther proceedings hazardous to its
policy holders and the public.
Fifth. That the particular acts in
which II is alleged not to have COM
piled with the statute provisions of
the act under which operates do
not support this charge.
Mr. Ward recommends that the in
surance business Of the respondent
corporation be closed by the perpet-
ual injunction of the court enjoining
and restraining it from carrying on
or undertaking the business of in
surance of any and every character
that the receiver pendente lite be
discharged and the company assets
restored to the corporation.
In discussing the bill under the
grounds Of insolvency the master
finds the assets Of the company
nominally are in the hands of lnsur-
ance Commissioner, being S175,O0C
bonds; $4,000 certificates of deposit
and cash $4,000. In the hands OF the
State Treasurer of Idaho is SIS ,0OC
and in the hands OF J. O. Wolcott, re.
ceiver pendente lite, cash amounting tC
$4,000; notes and certificates of de
posit. bonds and Dover real estate
sufficient to make nominal assets OF
S3S3.214.5J.
In addition there are other assets
which Mr. Ward disregards. Aftei
nj king deductions which the masiei
co lsiders proper TO reduce the asset.
10 real value, he finds them estimate,
as follows.
Cash, $4,000. bonds, S65 600: certi
fics tea. $50 000 notes, $1,000
he alleged liabilities are S272. 1913.
Co. which are reduced to ac.ua
liabilities of Sal, ,59527 leaving an eN
cess Of $4,000. Therefore the com
pany is solvent, Mr.. Ward holds
The master finds distinction be
tween such fraudulent conduct of Of
ficers as would result in crimina
prosecution and fraudulent conduct o
the comp9ny as contemplated by law
and concludes that fraudulent cOnduc
is the acts of the company toward
policy holders and the public Thes
acts are to be Investigated and upol
conviction the company punished
Transactions of the company witt
the Federal Trust Company, Planters
Bank and Federal Union Sureyt Com
pany are considered by Mr.. Ward VIII
finds that the Federal Trust Co. be
came purchaser of 35OOO0 of bonds O
\ the Missouri Farm Colonies Thes
n bonds we're purchased under an orde
Of sale of the u S. Circuit Court fror
the receiver for S65, 900 in cash whicl
was considered full and fair value
E The Missouri Farm Colonies owne
10000 acres of land against which tn
bonds were mortgages and $500 90
capital stock outstanding. The con
nection Of the Federal Company an
the Farm Colonies were intimate a
the same people were officers in tn
companies, Mr. Ward says. After tn
purchase of the bonds by the Fedora
Trust Company, the bond issue wa
retired and the mortgage satisfied /
September, 1910 and an issue of $500
900 secured by first mortgage wa
made to the Federal Trust Compan
ana on the next day sold to the Amei
ican Bankers Association for $4,000
cash and bills receivable and $500
shares of capital stock OF the Amer
can Bankers Association valued :
4 S112,O12 The Master finds this trans
action improper and placed the con
pany in such a condition that furthe
proceeding would be hazardous to Il
policy holders and to the public.