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Show INEW YORK STATE , susjpif Attorney-General Mayer Brings Action in Name of the r People. . DEMANDS OLD DIRECTORS RETURN WASTED FUNDS Cites Many Ways in Which Money Was Squandered and Asks Accounting. " NEW YORK. July 31, An notion was m Instituted today by State Attornoy-Gen-eral Julius M. Mayor In tho Supreme . court of New York county, In tho namo of tho pcoplo of tho State of New York against the Equltablo Llfo Assurance no-clcty, no-clcty, Its officers, directors and members of tho cxecutlvo and flnanco committees, all of which are named In tho complaint. Who Are Defendants. Tho defendants are tho Equitable Llfo Afcsuranco Society of tho United States and James V Alexander, Louis FltzRer-iilo, FltzRer-iilo, Chauncey M- Depew, Henry C Dcm-r-K, Cornelius Is". Bliss, GcorRe II. Squire, Thomas J. Jordan, Charles S, Smith, Valentino P. Snyder, Alvln W. Krech, "William Alexander, John J. aicCook, James B. Forgnn, C. Ledyard Blair. Bray ton Ivea. Melville E Inealls, James H. Hyde. Alexander J. Cassatt, Jacob H. Schlft, James J. Hill, T. Jefferson Cool-edge, Cool-edge, Alfred M. Vanderbllt. John Jacob Astor. William C Aranhorne, Gapo E. Tarbell, Marvin Hughltt. Chnrles B. Alexander, Al-exander, Thomas Do Witt Cuyler. Mar-cellus Mar-cellus Hartley Dodge, Joso F. Dc Navarro, Nav-arro, Bradlsh Johnson, Joseph P. Lowe, John AS Stewart, Edward H. Harrlman, Levi P. Morton, August Bolmont. Darius IO. Mills. Robert T. Lincoln, Georce J. Gould, John Sloane. George T. Wilson. Thomas T. Eckert. William II Mclntyre, Henry "W. Alexander. Henry C. Frlck, Samuel M. Lawton, Honry C. Hnarstlck, David "H. Moffatt and Henry R. Wln-throp. Wln-throp. Harrlman Accepted Service. A week ago. before tho pnpers were completed. Edward H Harrlman, on tho eve of his departure for Japan, accoplcd service of the summons In tho proposed action, and today many of the other do-ffiidants, do-ffiidants, Including James H. Hyde, were served through their private counsel Tho di fondants are allowed twenty dayH from the tlmo of service to file their answers. Complaint Is Voluminous. The complaint contains twenty-one sections sec-tions and covera thlrty-threo pages of typewritten matter; refers to tho Frlck committee report and the Investigation made by State Superintendent of Insurance Insur-ance Hendricks; It Is based on lnforma-. lnforma-. lion and bollef, nnd Attorney-General 6 Mayer In his prayer to tho court sava that tho action was brought on behalf of the people of tho State of New York In the public Interests and pursuant to the provisions of law. He therefore asks. A Account for Official Conduct. First That the defendants, each of J them, other than the defendant, tho 6 Equitable Llfo Assurance society of tho United States, account for their official conduct In tho management and disposition disposi-tion of tho funds and property committed to their charge. Second That the Individual defendants nnd each of them be compelled to pay the defendant, the Equltablo Llfo Assurance Assur-ance society, any money and the valuo of.any property which they, or any of them, have acquired to themselves or transferred to others, or lost, or- wasted, by a violation of the duties. Want Offenders Eemoved. Third That any defendant or defendants defend-ants now director or directors or officer in -the defendant society, upon proof of misconduct, be removed, and that a new election bo held by tho board of the do-fpndant do-fpndant society, purely authorized to hold same; In order to supply tho vacancy or vacancies created by tho removal. Division of Surplus. Fourth That tho net surplus of de-- de-- fendant society, after deducting a suffl- dent amount to cover all outstanding rjsks nnd obligations, bo paid to or credited to, or applied for tho benefit of, tho present policy holders In equltablo proportion In accordance with tho charter , and with the law. Fifth That tho plaintiff have such , other further relief as may be Just v equitable nnd profitable Disragardcd Their Duties. . The complaint charges that tho indl-W indl-W vldual defendants, disregarding their duty fi to thw society of which thev were dl-'. dl-'. nctors, "negligently, Improperly and im-Ji im-Ji providently performed such duties and JJ have habitually and continuously done, '3 or suffered to be done, wrongful. Illegal fe und Improper acts, whereof the defendant .society has suffered great loss and damage." dam-age." The Individual defendants are further charged with having "acquired to them-selves, them-selves, or caused or permitted to be transferred to others, In violation of th.Hr duties, money, property and the value of property belonging to the defendant so- clcty." )i Cites Lease Matter. Section 10 of the complaint deals with . the lease of premises In New York to tho Mercantile Safe Deposit company, tho r. icntal of which Is declared to have been inadequate and the terms of the lease yrcally to the .disadvantage of the Eqult-, Eqult-, able society; furthermore, that James II. Hyde, James W. Alexander. Gage E Tarbell and other defendants were tllrec-j tllrec-j : tors In the Mercantile Safe Deposit enm- i .' pany and thereby derived a profit, In vio- lntlon of their duty to tho Equitable society. Stock Owned by Hyde. Referring to the purchase of the capital stock of the Missouri Safo Deposit company, com-pany, for which the Equitable paid $250 for each tlu) pnr value, tho eleventh section sec-tion of the complaint declares that tho Equitable received but a nominal rent for the premises occupied by tho eafo deposit company; that at the time of tho stock purchase 1110 shares out of a total of 0000 wero owned by Jnmcs H. Hydo and the remainder by others of the Individual defendants, de-fendants, aomo of whom wero ofllccrs In tho safe deposit company and In tho Equitable; furthermore, that at the time of the purchase tho snfe deposit company had no assets beyond tho leaso nnd good will of tho business by vlrtuo of the lease. Received Large Interest. The matter of loans to agents which were assigned to the Commercial Trust company of Philadelphia Is set forth, the charge being made that for the money advanced on such assignments 5 per cent Interest was paid, while tho trUBt company com-pany at the same time held lnrgo sums of the society's money for which It paid but 3 per cent interest-Merger interest-Merger Was Profitable. Referring to tho merger in 1S32 of the Western National bank of tho city of Now York, in which the Equitable society was the owner of 12.000 shares, with the National Bank of tho United States of Now York, tho complaint says the Bocle-ty Bocle-ty received $70 In cash and $110 In stock of tho consolidated bank In exchange for each $100 par alue of tho stock In tho Western National bank, making tho total amount received $210 for each sharo, the market value of which at the tlmu was from $000 to $C2G per share. A schedule of the salaries paid during tho Inst fow years to tho principal officers offi-cers of the society Is appended to the complaint, which declares such salaries to have been largely In excess of the value of tho services of tho persons named, and that the payment of such salaries resulted In substantial loss to tho society. It Is also charged that In addition to the salaries roferred to, tho Individual defendants, as officers, members mem-bers of committees, trustees or agents, "permitted tho defendant society to pav to many of the abovo named ofllcera anil directors and to others lnrgo and unwarranted unwar-ranted sums as expenses incurred by such persons in tho servlco of the society and said sums were paid without aufll-clent aufll-clent vouchare, without propor proof of their amounts and without It being properly prop-erly shown that the said defendant society so-ciety In any way benefited by such expenditures ex-penditures or was legnllv or properly chargeable thorewlth." Received Extra Pay. The complaint also charges- "That the defendants wrongfully caused tho defendant de-fendant society and a number of other societies and corporations, In which tho defendant society was largely a stockholder stock-holder and In which some of said Individual Indi-vidual defendants wero also stockholders, to pay largo sums of money to themselves them-selves or to oomo of thMr number and to other persons under the guise of snlarles nnd fees for attending to their duties as officers and directors and members of committees of defendant society, and of several olhor societies nnd corporations." Especial mention Is made of the receipts re-ceipts by Mr. Hyde of salaries aggregating aggregat-ing ?27.000 annually from the Euuitable. Mercantile and Commercial Trust companies. com-panies. In all of which the Equitable Llfo Is largely Interested. Pensions and Excessive Fees. Allegation Is also made of the payment of Illegal and excessive pensions to various vari-ous persons and of the payment of "excessive, "ex-cessive, Improper and unwarranted sums to various attorneys and counsellors-at-law, tho aggregate amount of which far exceeded and was entirely disproportionate disproportion-ate to the services rendered." Of the loan to the Depew Improvement company the complaint charges' "That the defendants Improperly, lm-provldcntly lm-provldcntly and wastefully procured and permitted the defendant society to loan the sum of $250,000 to tho Dcpow Improvement Improve-ment company, a corporation doing business busi-ness In the State of New York, In which company tho defendant. Chauncey M. Depew, .md others of the Individual defendants de-fendants were stockholders, which loan of $250,000 was made upon grossly inadequate inade-quate security, and which property securing se-curing said loan was appraised hi 1001 by the insurance department of tho State of New York at the sum of $150,000. Bidden in at $50,000. "That said Depew Improvement company com-pany subsequently become Insolvent and the property which secured said loan was bid in at foreclosure sale for about $50,000. thereby resulting in a great wasto and loss of the property of the defendant society. so-ciety. "That tho reforee's deed for said property prop-erty was not rocorded by said defendant society until about January 12, 1903, and that in the meantime proceedings were taken to collect the Judgment for tho deficiency de-ficiency thereon, and the same has ever since remained due and unpaid. "That said Depew and others of tho Individual In-dividual defendants agreed with tho do-fondant do-fondant society that they would snve said defendant society harmless from' loss bv reason of said loan If said society would refrain from recording snld deed and from enforcing said deficiency judgment That said society did so refrain, but said defendants have neglected and refused to pay the amount of said losses said society so-ciety had so suffered." Manipulation of Deposits. It Is further charged that "the defendants defend-ants wastefully. improperly and Improvl--dently permitted the defendant society for a number of years past to keep during dur-ing almost the whole of each vcar excessive, ex-cessive, unnecessary and unwarranted sums of money on deposit with the National Na-tional Bank of Commerce, New York1 the Mercantile Trust company. Now York; Hie Equitable Trust compaijv, New York' Commercial Trust companv, Philadelphia, Philadel-phia, and at least nineteen "other banks and trust companies, in some or nil of which the Individual defendants, or somo of them, were stockholders, directors or officers, which sOm were deposited at inadequate rates of Interest, Instead of Investing them In proper and more remunerative re-munerative forms of Investment, and permitted per-mitted said defendant society, regularly, for a number of years past, to conceal this fact und mislead and deceive policyholders policy-holders of tho society In respect thereto by annually, on December 27 to 29. loaning loan-ing approximately $10,000,000 on collateral security, which snld loans have been regularly reg-ularly called In on January 3 or January G and tho funds redeposlted In three depositaries de-positaries from which they had been temporarily tem-porarily withdrawn for this purposi;. ' Failed to Divide Surplus. Aft.M- reciting that. the society has nt thn .-ml of each year caused a balance to be struck, purporting to show the net surplus earned during the preceding year, tho complaint declares that the defendants de-fendants have failed to divide among tho policyholder an equitable share of the, net surplus at the expiration of each live years as provlcd by the societv's ohur-ter. ohur-ter. 'i he complaint continues: Allege Rules Illegal. ' "Plaintiff further alleges that the rules and reguJutlona adopted nnd h.-retofore acted upon by tho defendant society and LV,,0f,!CMr!5- wlfh the aiI"-val and consent con-sent of the society's directors for the ns-nme,nt ns-nme,nt of tl,e enultablu share of the suiplus duo to each policyholder wkc '"! nre. lncolri'-'Ct. Illegal and improper m.rii. It :0f. ih? 1"rI,lu now held or purport pur-port ng to be held by the defendant society, so-ciety, as shown by Its statements, a sum approximating $10,000,000 Is held bv tho society, in which said sum the nrcsent poMcyholder In violation of the law and tho express terms of tho charter would fecuCla1tlons.ltereSt M"dCr aM rulc9 Millions Belong to Policy-Holders. "That the defendant society and tho individual in-dividual defendants as officers and H rectors thereof, have iicld and repo?tcd In e reports to tho tax commissioners of the city of New York that the entire, sur. p,.V, belonged to the policy holders ilt '.ne P'.3cnt policyholders of tho defendant society are entitled to the whole of the present net surplus, of the society after deducting a sufficient amount to cover all outstanding risks and other obligations, in accordance with the charter, and are entitled to hnvo an equitable share of said net surplus credited cred-ited to or paid to or apppllcd for tho benefit of each policyholder. In accordance accord-ance with the charter and with, law." |