The Richmond Virginian. (Richmond, Va.) 1910-1920, 1914-03-18
COLONEL BUTTON
ANSWERS CHARGES
MAKES PunIIc CORRESPONDENCE
IN APPALACHIAN INsuR-
ANcE CASE.
COMPANY TROUBLESOME
COMMISSIONER OFF INSURANCE
ALSO STATES HE MAY ASK
FOR RECEIVER TO LIQUI-
DATE IT'S AFFAIRS.

In regard to the recent charge
brought against Commissioner OF In
surance Joseph E. Button, of neglect
of duty by Messrs. Robert Pluyme and
8. Sherman, OF Washington. In regard
to the Appalachian Insurance COM
pany and Southwestern Agency COM
pany, Commissioner Button has made
the following reply:
March IT. 1914.
State Corporation Commission,
Hon. r. r. Prentis, chairman,
Richmond, Va.
Dear Sir.-I have received your
communication of the 14th instant
transmitting copy OF the charges
which have been preferred against me
by Messrs- Robert Pluyne and S. Sher-
man, of Washington, ID. c. / shall
answer the charges in the order In
which they are preferred.
First The Appalachian Insurance
company was granted a charter by
your honorable body January %. 1903,
and was licensed by this department
on February Is. 1900. to transact ac-
eident and health insurance. Section
of chapter II of the insurance law
provides that the minimum capital
stock of every insurance company
hereafter Incorporated on the stock
plan shall not he less than one-tenth
OF its maximum capital stock, and in
no case shall minimum capital stock
he less than s25.oo This company
had the minimum amount as provided
by law, consisting of s1A.6oo.s5 in
banks and $4,000 city of Roanoke
bonds To the market value Of $40. 100
deposited with the treasurer of the
State, which aggregated $4,000 SIS.
They held. besides, a note for $4,000,
secured by lien on real estate In the
city of Roanoke. Having compiled
with the law, there was no way that
! could refuse to license this COM
pany.
second The refusal of the super
intendent 81 Insurance az the District
or Columbia To license this company,
cited In this paragraph. occurred in
the year 1917. after the company had
been in operation about three years
Third, fourth, NTH ana sixth, The
Appalachian Insurance GO mpany was
organized by the Southwestern agency
COMPANY who undertook Il sell the
stock of SAID Insurance company. the
practice being to take the STOCK at a
certain figure and to dispose of II
upon the lnstallment plan, and as soon
as the stock Was sold the agency COM
pany would turn over 10 the 3nSur-
ance company the amount of ;h@ cash
ana INitS INf tue DtANlEFu
payments and the purchaser If the
stock would deposit the stock as col
lateral far the payment ~ the 9otes.
IN the annual statement Of the te~Hr-
nnce company and Iva oar eNe NINA
tlds of the company, We woG snt
aiiaa as an asset the notes red
10y lis own etoek az co8iaIAr&1 The
Southwestern Agency coma PAM nad
executed It's own notes ~ n thts stock
as collateral. The Agency coinisAny
undertook II place its Indebtedness to
the insUran * company OF better
basis and borrowed the $4,000 mort
gage referred to, and upHa sonls DIS
agreement arising. 1t WAS returned TO
Tire owner. and the Indebtedness IF the
agency company to the insurance
company was restored To its FORMER
status This transaction had been
completed before my attention was
d3Tscted 10 IL. As soon Is my atsen-
ton was directed TO this mater. ! went
Ia Bristol With nay examiners and
made b complete examination " the
company. \ copy of said report viii
he handed yea. IL desired
Seventh, II is true that during the
year 1912 ] was a mcmber OF the
committee of the national convention
nf insurance commissioners known as
the committee on valuation OF securi-
ties. but the real work nf the COM
mittee was done in the office of the
superintendent Of insurance OF the
state OF New York the practice being
for each department to send them a
list Of all of the securities held by
the local companies for appraisal
Along in December of each year 1t
Is nv custom to request each of our
local companies 10 send a list of the
securities owned hy them and held
by them as collateral To the super
intendent of insurance of New York
state, who undertakes TO get at the
true market value. as of December
3ist OF each year The Appalachian
Insurance corupan'' to whom one OF
these requests was sent. promptly
complied. including In their list Of
securities the Montana Pulp and Pa
per Manufacturing conpany's bonds.
The chairman of the committee pn-
dertook to get at the value of these
bonds and upon the information he
received he valued them al par. I
undertook personally 10 find out
* something about them as soon as
heard that The company contemplated
purchasing some of these bonds I
wrote to former friend of mine in
Montana, who was the former insur-
ance commissioner. and who Is now
the vice president OF large life in
surance company there, and received
from him very favorable reply. The
correspondence il on file and will be
submitted To you. IL desired
Eighth The same method or OBJ
talning the value of the Southwest
arn Agency company stock was
= adopted -a,s--tif Ntw---AT depart
ment. As soon as ] saw in the VOL
nme the value of this stock as quoted.
Immediately communicated with the
superintendent of insurance OF New