Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1916-07-24
COURT HOLDS THREE
JUDGE WHEELER DECIDES FAM
Gus IOWA SECURITIES
CASE
THREE DIRECTORS
MUST PAY LARGE SUMS
Judgment Against President Anterior
for $4,000 and Three Directors
Amounts Agsreeating S2.712-HeId
Liable in Sales Of Stock in Auxiliary
Concern.

Council Bluffs, July 24.-Clarence NJ.
Atherton, president of the defuncr
Western Mutual Life Insurance Com
pany Of Council Bluffs ard general
manager and secretary of the Iowa Sc
curity Company, organized to handle
the agency business of the Insurance
company and as holding company for
the stock sold TO finance the insurance
company, and DR.. Grant Augustine, D.
Taylor Martin and Charles and l.. H.
Flood, administrators of the estate of
Thomas Flood are held liable TO stock
holders of the bankrupt security COM
pany for sums totaling S30,299.l5, in =
decree handed down Saturday morning
by Judge O. D. Wheeler in district
court.
DR.. s. F. Devore, Of Missouri Valley,
and Peter LANCER, Sr., of Pottawat-
tamie county, are held for costs only,
and ten other defendants, directors OF
the security company, are released
from obligation FOR the alleged wreck
ing of the company. None OF the jUdg
ments are large except that against
Anterior.
Freeman L. Reed, receiver Of the
company and also intervenor as trustee
in bankruptcy, sued Atherton, DR.,
Augustine, Dr. Devore, Peter LANCER
Fred J. Bo!e, G. VI. LasOurd, c. H.
kehrberg, D. T. Martin, Charles and L.
H Flood, administrators Of the estate
Of Thomas Flood, deceased; Mrs. Har-
riet Wild. administrators Of the estate
of George Wild, deceased; w. NJ. Fred
eriCk, \. F. Mammen, George Bueh-
Ter, P. C. Engle, John Giltner and NJ. O..
Miller, officers and directors of the Sc
curity company, for an accounting of
more than s125006 which the plaintiff
claimed was wrongfuuy and extrava-
gantly misappropriated and misman-
aged by the defendants.
Judge Wheelers decree, which is eX
tremely lengthy, says plainly that If il
were sought to charge mismanagement
and transportation and eXtrava-
gance against Atherton alone, the case
would be relieved Of much OF its en-
barrassment"
Reviews History Of Company.
The decree reviews the existence Of
the security company from its organt-
cation in 1906 as a holding company
for the agency business of the Western
Mutual Life Insurance Company, with
which the security company had a con-
tract for all agency business, on which
the holding company was to be paid
a commission on business written and
on all renewals.
The court finds that at organization
the security company had no assets ex-
cept its capital stock, its franchise. and
its contract for the agency business
above mentioned.
The decree declares that the security
company purchased the charter mem
Der list of policies in the life Insurance.
company. paying therefor the sum Of
$4,000, and thereby gaining control of
all business written by the company,
"or rather of all renewals on business
held by the company
The security company was capital
. lied originally al 100000 in shares OF
the par value of 800, but on Jan. g.,
1916. this capitalization was increased
to 100000 in 1000 shares.
Price Kept Going Up.
The only means Of raising funds
with which to seek business" the court
finds. was by sale Of stock 1t IS
shown that the stock was sold at first
to members of the board Of directors
for a price less than par, but that the
price gradually rose to 1925, $50 and
finally, 5000 a share, at which price
much was disposed of to people in the
southwestern portion of the state.
The court finds that the company,
In order TO make a showing of pros
perity paid dividends on the stock,
where no dividends had been earned,
out vi he rantai stock. and in other
ways made it 10 appear that the COM
pany was in prosperous condition.
The court plainly charges that all or
the greater part Of the extravaganza
charged against the company is
chargeable to Atherton, who was man
ager Of the concern, and into whose
hands, the decree states, the books OF
the company trace much Of the money
which is claimed to have been misap-