# Appendix — American Insurance v. Lucas > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385610_0027%3A4 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1941 - **Citation:** 314 U.S. 575 ## Text we . beet n . / "RICAN INSURANCE, COMPANY, “A CORPORATION, ? : 308 Eagle Star and British Dominions Insurance Company = 309 East and West Insurance Company —* 310 Equitable Fire and Ma- rine Insurance Com- pany ve ™ 312 Federal Union Insurance Company — * 313 Fidelity Phenix Fire In- surance Company = * 314 Fire Association of Phila- delphia =.* 315 Fireman’s Fund Insur- ance Company = * 316 Firemen’s Insurance Company ie Court Number 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 334 335 336 First American Fire In- surance Company Franklin Fire Insurance Company of Phila- delphia Franklin National Insur- ance Company Girard Fire and Marine Insurance Company Glens Falls Insurance Company Globe and Rutgers Fire Insurance Company Granite State Fire Insur- ance Company Great American Insur- ance Company Guaranty Fire Insurance Company of Providence The Hanover Fire Insur- ance Company Hartford Fire Insurance Company The Home Insurance Company Home Fire and Marine In- surance Company Hudson Insurance Com- pany Imperial Assurance Com- pany Importers and Exporters Insurance Company Insurance Company of North America Insurance Company of the State of Pennsyl- vania The Law Union and Rock Insurance Company, Ltd. INSTITUTION OF LITIGATION vs. Ray B. Lucas, et al. vs. vs. vs. vs. vs. Vs. vs. Vs. vs. vs. Vs. vs. vs. vs. Vs. vs. Vs. “ec “ ‘ec 56 INSTITUTION oF LITIGATION 338 Liverpool and London and Globe Insurance Com- pany, Ltd. vs. Ray B. Lucas, et al. 339 The London Assurance Corporation > 340 London and Lancashire Insurance Company, Ltd. vs. “ 341 London and Provincial Marine and General Ins. Co., Ltd. = * 342 London and Scottish As- surance Corporation, Ltd. =“ * 343 Lumbermen’s Insurance Company = * 344 Manhattan Fire and Ma- rine Insurance Com- pany =-.* 345 Massachusetts Fire and Marine Insurance Com- pany = = 346 Mechanics Insurance Company of Philadel- phia vw * 347 Merchants Insurance Company vs. * 348 Merchants Fire Assur- ance Corporation of New York = _ 349 Merchants Fire Insurance Company “= * 350 Mercury Insurance Com- pany 2 ™ 351 Michigan Fire and Ma- rine Insurance Com- pany vs. “ 352 Milwaukee Mechanics In- surance Company = * Court Number 355 356 357 358 359 361 362 363 364 366 367 369 370 371 372 374 375 354 National Ben Franklin Fire Insurance Com- pany National Fire Insurance Company of Hartford National Liberty Insur- ance Company America National Reserve Insur- ance Company National Security Fire In- surance Company National Union Fire In- surance Company The Newark Fire Insur- ance Company New England Fire Insur- ance Company New Hampshire Fire In- surance Company New Jersey Insurance Company New York Underwriters Insurance Company Niagara Fire Insurance Company The Northern Assurance Company, Ltd. Northern Insurance Com- pany North River Insurance Company Northwestern Fire and Marine Insurance Com- pany Norwich Union Fire In- surance Society, Ltd. Old Colony Insurance Company vs. Ray B. Lucas, et al. vs. vs. vs. LINSTITUTION_OF_ LITIGATION “ “ “ INSTITUTION OF LITIGATION 376 Orient Insurance Com- pany vs. Ray B. Lucas, et al. 377 Pacific Fire Insurance Company =“ 378 Palatine Insurance Com- pany, Ltd. vs. “ 379 Patriotic Insurance Com- pany of America = * 381 Philadelphia Fire and Marine Insurance Com- pany vs. “ 382 Phoenix Assurance Com- pany, Ltd. a. 383 The Phoenix Insurance Company et al. vs. “ 385 Presidential Fire and Ma- rine Insurance Com- pany — 386 Providence Washington Insurance Company —-* 387 Provident Fire Insur- ance Company ~~“ * 389 Queen Insurance Com- pany of America vs. “ 390 Reliance Insurance Com- pany of Philadelphia vs. “ 391 Rhode Island Insurance Company "“* 392 Royal Exchange Assur- ance =” 393 Royal Insurance Com- pany, Ltd. ~~ 394 Safeguard Insurance Company —* 395 St. Paul Fire and Marine Insurance Company — 396 Scottish Union and Na- tional Insurance Com- pany ~~ * Court Number 398 399 400 401 402 403 410 411 412 413 414 397 Security Insurance Com- pany of New Haven Sentinel Fire Insurance Company Springfield Fire and Ma- rine Insurance Com- pany Standard Fire Insurance Company of Connecti- cut Standard Fire Insurance Company of New Jersey Star Insurance Company of America The State Assurance Com- pany, Ltd. Stuyvesant Insurance Company Sun Insurance Office, Ltd. Superior Fire Insurance Company Svea Fire and Life Insur- ance Company Tokio Marine and Fire Insurance Company, Ltd. Transcontinental - Insur- ance Company The Travelers Fire In- surance Company Twin City Fire Insur- ance Company Union Assurance Society, Ltd. Union Fire Insurance Company United Firemen’s Insur- ance Company of Phila- delphia INSTITUTION OF LITIGATION vs. Ray B. Lucas, et al. vs. vs. VS. VS. vs. vs. vs. Vs. Vs. Vs. vs. vs. 6“ “ce “cc “cc sé “cc “ 60 INSTITUTION oF LITIGATION 415 United States Fire In- surance Co. vs. Ray B. Lucas, et al. 416 United States Merchants and Shippers Insurance Company 2 * 418 Victory Insurance Com- pany vs. “ 419 Westchester Fire Insur- ance Company i 420 Western Assurance Com- pany vs. “* 422 The World Fire and Ma- rine Insurance Com- pany vs. 423 Yorkshire Insurance Company, Ltd. “= * 425 Mechanics and Traders Insurance Company’ vs. “ 426 Potomac Insurance Com- pany of the District of Columbia” “ * STATE COURT LITIGATION DECREES IN STATE COURT RESTITUTION CASES. In the early part of 1935, D. F. Calfee, referee, in the state court case, had found in substance that the com es were entitled to two thirds of their increase on the fire class of business and all of their increase on the tornado class; and the case was pending on exceptions to that report by both sides (Folonie, III, 212). In December, 1935, there was a decree rendered in the restitution case in which the court, not at the instance of the insurance companies’ attorneys, incorporated $200,- 000.00 of the judgment against those companies in addi- tion to the amounts which it was found they were en- titled to restore or bound to restore. The court distrib- uted that pro rata over all the companies in its decree, and Mr. Folonie saw Mr. O’Malley repeatedly over a short period of time after that to get Mr. O’Malley to spe- cifically agree that he would not demand this $200,000.00 which they had ee he was to have; in addition to what the court already collected. Mr. O’Malley INSTITUTION OF LITIGATION 61 finally agreed that that was correct; so that the proceeds would inure to him, and he should not exact the $200,- 000.00 all over again, as agreed in the written contract (Folonie, III, 192). The fact that there was not a complete identity made Mr. Folonie feel that there might be a claim that it was in addition to the $200,000.00. In fact, it was an identical item. There was an exact identity of parties in the res- titution case in which the judgment was rendered, but the $200,000.00 that the court incorporated into the judg- ment was not identified as being the $200,000.00 that they had stipulated in writing they would pay to the Super- intendent to reimburse him for expense in that litigation. The parties in the new and old litigation differed (Folonie, III, 192). Plaintiff’s Exhibit 330 (IV, 474-511) is a certified copy of a final judgment entered by the Circuit Court of Cole County, Missouri, December, 1935, in the case of Aetna Insurance Company et al. v. R. E. O’Malley, (III, 473-474). The judgment recites that the matter came on to be heard on defendant’s motion for restitution, asking restitution for amounts asserted to have been collected by the plaintiff in excess of lawful and legal rates upon fire, lightning, hail, and windstorm insurance transacted by the plaintiffs in the State of Missouri between No- vember 15, 1922, and August 8, 1929, and also upon the report of the commissioners and custodians appointed by the court and the exceptions to the report (III, 474). It recites that the court finds that each of the plaintiffs presented and filed its full and complete account with the commissioners and custodians showing the _ total amount of excess premiums by them respectively collected in excess of that justified by the order of the Superin- tendent of Insurance of October 9, 1922, and the amount in its hands remaining unrestored to policyholders, and that they are truly and correctly accounted for, reported, and are in the respective amounts therein set out. The decree then sets out opposite the name of each of the plaintiffs in said case the total excess collections as to each of said companies, and the amount not refunded to policyholders by each of said companies, and the total of collections by all the companies was $12,354,747.96, and that the total of the amounts not refunded to policy- holders was $1,613,402.81 (III, 474-481). The decree then recites that, subsequent to making such full, true, and complete accounts, certain of the 62 INSTITUTION OF LITIGATION plaintiffs therein named made payments to the commis- sioners of amounts in addition to those contained in their accounts creative of an additional liability for restitution as to them, and that such plaintiffs had made corrections in their accounts. The names of such last mentioned plaintiffs were then set out, with amounts of such ad- ditional payments made by them set opposite their names, and it is recited that the total of such additional payments amounted to $1,436.31 (III, 481-482). The decree then recites that the interest properly to be calculated against the sum owing by respective plain- tiffs, as the court had by its order of December 14, 1934 directed, is, as respects such plaintiffs respectively, in amounts as follows: The name of each plaintiff is then set out, such amount of interest as to each company is set opposite each name, and it is recited that the total amount of such interest is $857,688.09 (III, 482-487). The decree then recites that the court further finds that certain plaintiffs therein next enumerated addition- ally owe and ought to pay amounts owing as restitution for which they assert they issued outstanding checks and drafts and which the court finds is subject to restitution, notwithstanding such additional amounts and such checks and drafts are outstanding, which are found to be as follows: Then follows the name of each plaintiff and opposite the name of each is the amount so found for which such companies had issued outstanding checks and drafts, and there is a recitation that the total thereof is $48,492.63 (III, 488-490). The decree then recites that, in addition, the plain- tiffs and the Patriotic Insurance Company ought justly to further pay the sum of $200,000.00 which they had agreed to pay to the Superintendent of Insurance, and that in addition to the specific sums found owing as resti- tution, the sum of $199,618.22 of said $200,000.00 should, by the plaintiffs in the aggregate, be paid as additional restitution, which said sum is allocated to the respec- tive plaintiffs (III, 490), in the proportion that excess ' collections of each bears to the total excess collections of all remaining plaintiffs, which said distribution of $199,618.23 is in the respective sums as follows: (The sum of $381.77 to be aSsessed against the Patriotic In- surance Company in a separate suit for restitution pend- INSTITUTION OF LITIGATION 63 ing in such a court.) Then follows the name of each of the plaintiffs and opposite each name appears the amount assignable to each out of $200,000.00 (III, 490-496). The decree then recites that the plaintiffs have re- spectively paid to the commissioners and custodians sums on account of restitution above recited for which they are entitled to credit in the amounts hereinafter respectively recited, namely: Then follows the name of each plaintiff and opposite the name of each appears the amount so paid to the com- missioners and custodians (III, 496-502). The decree then recites that the court finds that the Chicago Fire and Marine Insurance Company and the Fidelity Union Fire Insurance Company, plaintiffs there- in, are insolvent and that any judgment against them would be uncollectible; that therefore the sums assigned against them in the sum of $200,000.00 are assigned against the remaining plaintiffs and that the Chicago Fire and Marine Insurance Company and Fidelity Union Fire Insurance Company are dismissed from the proceed- ing (III, 502-503). The decree then recites that respective plaintiffs are still indebted to the defendant as representative of pol- icyholders, and still owe, as amounts. necessary to make full and complete restitution to policyholders, the sums set opposite their. respective names thereafter appearing, and therefore (II, 503), the court doth order, decree, and adjudge that each plaintiff shall respectively pay into the registry of the court the balance respectively owing as therein next recited, namely: Then follows the name of each plaintiff, and op- posite the name of each appears the amount of the bal- ance owing ky them and reciting that the total of the a owing by the plaintiffs is $1,067,948.80 (III, 503- ). The decree then recites that the court further orders, decrees and adjudges that, whereas the accounting made by Northern Insurance Company of New York includes the accounting of and was made for and in behalf of As- surance Company of America, ag restitution on its part (III, 508); that the accounting made by Phoenix Insur- ance Company of Connecticut ifcludes an accounting of restitution owing by Central Stftes Fire Insurance Com- pany, and Connecticut Fire Insurance Company, Equi- table Fire and Marine Insurance Company and Minneap- 64 INSTITUTION OF LITIGATION olis Fire and Marine Insurance Company, therefore, up- on payment by (III, 508-509) Northern Insurance Com- pany and by Phoenix Insurance Company as above pro- vided, of amount found by them owing it shall constitute a satisfaction and discharge of claim of restitution against those companies, and that all provisions of the judgment thereafter contained, wherein reference is made to plain- tiffs, are declared to be applicable to said mentioned com- panies as well as to those specifically listed (III, 509), The decree then contains provisions as to how and when payment shall be made by the respective plaintiffs to the commissioners and custodians of the court, and for the report thereof to the court, and that upon making of such payments, the respective plaintiffs are entitled to have the judgment against them satisfied and dis- charged (III, 509) and by such action on their part will have made full restitution to all policyholders from whom any unlawful or excess premium collections were ex- acted and collected in excess of the legal rate fixed by the order of the Superintendent of Insurance of October 9, 1922; that all policyholders are enjoined and restrained from asserting or making any claim for restitution against the plaintiffs or any of them who so comply, because of exaction of excess premium collections in excess of the rate fixed by said order on October 9, 1922, and collected between November 15, 1922, and August 8, 1929. The decree recites that said policyholders shall have their sole recourse against the sums so paid into court (III, 509). The decree recites that the Commercial Union Fire In- surance Company has paid to the commissioners and cus- todians in excess of its liabilities for restitution, out- standing drafts and checks, interest and pro rata part of the $200,000.00, and directs the commissioners and cus- todians to refund said excess to said company in the sum of $2,990.70, and that said Commercial Union Fire In- surance Company (III, 509-510) is discharged from all obligations for restitution. It is further provided that upon payment of the re- spective amounts therein adjudged, the plaintiffs and the 510.511) on their bond are discharged and released (III, 510-511). Plaintiff's Exhibit 331 (III, 511-512) is the certificate of the clerk of the Circuit Court of Cole County, Mis- souri, that the above judgment is satisfied of record by INSTITUTION OF LITIGATION 65 the following entry which appears on the margin of the record: “This judgment is satisfied in full, debt, inter- est, and costs, this 16th day of January, 1936, and I do further certify that in accordance with the provi- sions of the within judgment and decree the sums therein adjudged to be paid have been paid to the Commissioners and Custodians as therein required and said Commissioners and said Custodians have, in accordance with said judgment and decree, reported to the Court that all the parties therein named have paid to them the amounts therein adjudged to be so paid.” Plaintiff’s Exhibit 332 (III, 513) is a copy of the final judgment of the Circuit Court of Cole County, Missouri, in the case of R. E. O’Malley, Superintendent of the In- surance Department of the State of Missouri, plaintiff, y. Patriotic Assurance Co., Ltd., and Patriotic Insurance Company, defendants, No. 7825. It is similar to the judg- ment, Exhibit 330, except that only two insurance com- nies are defendants. It shows that these two defend- ants’ total excess collection was $23,641.13; that the amount not refunded to policyholders was $16,793.14, which last sum has been ordered paid to the- commissioners and custodians as provided for in an order of October 5, 1935; that the interest properly calculated against such said un- refunded sum is $4,787.45; that the pro rata of the $200,- 000.00 (III, 513-514), which the companies agreed to pay to the Superintendent of Insurance, as to these de- fendants, is $381.77; that the defendants are still in- debted to plaintiff, as representatives of policyholders, and still owe the sum of $5,169.22, as the amount neces- sary to make full and complete restitution to policyholders. It is ordered, adjudged, and decreed that defendant, Patriotic Insurance Company, shall pay into the registry of the court the sum of $5,169.22. The decree is dated December 2, 1935 (III, 514-515). Attorney for plaintiffs stated to the master during the hearing that the judgment (Exhibit 332) was satis- fied of record on June 16, 1937. Attorney for defendant, in making his admission, did not expressly admit that the judgment was so satisfied and did not deny the state- ment of plaintiffs’ attorney (III, 512). 66 INSTITUTION OF LITIGATION THE SETTLEMENT. On May 18, 1935, a written agreement of settlement of these cases was signed by R. Emmet O'Malley, Su- perintendent of the Insurance Department of the State of Missouri, and Charles R. Street, as agent for the stock fire insurance companies, parties to rate litigation in the United States District Court for the Western District of Missouri and in the Circuit Court of Cole County, Mis- souri (see “XIV Negotiation of Settlement”). The objects of the settlement were: (1) To satisfy the local agent, (2) To satisfy some companies that felt that they were sick and tired of this litigation and ex- pense, and (3) It was interfering with the progress of “our business in Missouri” (Bell, I, 139). The companies were unable to make filings of rates and to procure the policy forms and coverages which were filed in adjoining states; in other words, their prog- ress in Missouri was being blocked by this continuous, longstanding litigation. They had better sacrifice some- thing than continue it. The agents would have profited to a greater extent if the settlement had been made, with the agent getting only the commission on that part of the impounded premiums which the companies retained (Bell, I, 139). Under the settlement Mr. O’Malley put a new rate schedule into effect which theoretically raised the rate level over the one which Mr. Hyde had fixed. The minimum or maximum figure that Mr. Street set up in the compromise was about 97 1-2. While he raised the level at the same time by re-rating individual classes of risks, it did not come out just exactly that way. It came out very much lower. While he got the raise in the rate level, yet when you reclassify your risks the ef- fect on the gross income of the Missouri compromise did not amount to what it would if you had just put in that raise of level and let it go at that. The bare outline of the rate charge was that they had previously drawn up figures which were approximately between the 105 level and the 90 level. That was done in the summer of 1934; but at this time they contemplated that it was very es- sential to get increases on certain particular classes. Those increases were the ones which were foregone after Mr. Terry’s conference with Mr. Street in 1935 (Terry, II, 385-386). . After the stipulation for settlement Mr. Folonie worked almost. continuously on presenting the. matter to respective courts in which cases were pending and in dis- cussion of the matter with Mr: Street and others in in- INSTITUTION OF LITIGATION 67 terest, to facilitate appropriate court orders securing the completion and approval of the settlement by the courts. Mr. Folonie was often in conference with Mr. Street in regard to those matters (Folonie, III, 191). After the compromise was agreed upon, Mr. Terry started, in'a general way, to prepare the details of the filings. He had no conference with Mr. Street in regard to the matter (Terry, III, 384). Mr. Folonie and Mr. Berger prepared the motions for a decree in Mr. Berger’s office, and Mr. Berger verified the motion. At that time Mr. Berger absolutely believed that the compromise had been made in good faith, or he would not have verified the motion (Berger, III, 395). The decree was entered on February 1, 1936 (Folonie, III, 191). THE DECREE OF THIS COURT. Defendants’ Exhibit “3” was introduced in evidence (I, 32-40), which is a copy of the decree that was ren- dered by this court on February 1, 1936, and entered in each of the 137 companion cases. It recites that the cause came on to be heard upon the verified motion of plaintiff for a decree and a stipulation executed by counsel for plaintiff and defendants; that evidence was heard in open court; that no policyholders contributing to the funds deposited under order of the court ‘had intervened as permitted by an order of the court on November 13, 1935, and It Was Ordered, Adjudged and Decreed as follows: “1. The controversy herein having been settled and disposed of by the parties and no controversy between the parties remaining, this cause is hereby dismissed. “9 The court does direct W. T. Kemper, heretofore appointed Custodian of the said funds, to distribute the said impounded funds in his custody as follows: “A. As respects funds reported and impounded by plaintiff upon policies effective prior to May 1, 1935, he is directed to refund to (pay to) the assured (policy- holders), in the manner hereinafter provided, one fifth (1/5th) of all net amounts so impounded. As —_ funds reported and impounded by plaintiff upon policies effective after April 30, 1935, he is directed to refund to (pay to) the assured, in the manner hereinafter provided, one-third (1/3rd) of all net amounts so impounded. Such payments shall be made to the respective assured on the prorata basis of the net amounts impounded on their re- spective policies. 68 INSTITUTION OF LITIGATION “Aa. The Custodian shall additionally pay to the as. sured, assured’s proportion of the net interest and ac- cretions from impounded funds as same exists at the date of this Decfee, such proportion to be ascertained and de. termined aS hereinafter in this sub-clause Aa provided, The amount assignable to case of plaintiff shall be an amount bearing the same ratio to the total amount of net interest and accretions as the total net amount of funds impounded by this plaintiff bears to the whole net sum impounded by this plaintiff and all of the other contribut- ing companies to the funds impounded with the Custodian (such other contributing companies being plaintiffs in companion cases in which decrees identical with this Decree are being entered concurrently with the entry of this Decree, including those companies mentioned in paragraph 9 hereof). This amount so found properly as- signable to Plaintiff’s case shall be allocated to all as- sured of this plaintiff to the extent and in the same proportion aS the impounded fund is allocated to them in sub-paragraph A above. For the purpose of distribution to assured this Sum so allocated to all assured of plaintiff shall be divided into 276 moieties, whereof 23 moieties shall be allocated to policies appearing on the report for the first impounding period, and 22 moieties to policies reported on the report for the second impounding period, and so progressively one moiety less for policies reported for each suc€€SSive impounding period. The fund so al- located to anY impounding period shall be prorated among the several policies appearing on the report of this plain- tiff for such impounding period by finding the ratio exist- ing between the amount of the fund so allocated to such impounding Period, and such portion of the total funds impounded by this plaintiff for such impounding period as shall be allocated to the assured according to the pro- visions of subparagraph A above, and by applying such ratio to the amount to be refunded to the assured (as pro- vided in subparagraph A above) out of the total premiums impounded for such period in respect of each such policy. The foregoing provisions as to distribution of in- terest and accretions to assured is upon the assumption that the plaintiff has made 23 impounding reports; and if the plaintiff has made less than 23 impounding reports, the CustodiaM shall make the distribution in a similar manner and #pon a similar basis. “In determining net earnings and accretions for purposes of this paragraph the Custodian shall take into INSTITUTION OF LITIGATION 69 consideration as of the date of this Decree: Bank deposits and accrued interest, market value of securities at closing ice on New York Stock Exchange at close of business at date of this Decree, accrued interest thereon, accounts re- ceivable, expenses paid in advance, and from aggregate of above deduct total remaining impounded principal, all unpaid allowances and expenses of the Custodian. The difference so computed shall be the net interest and ac- cretions within the meaning of this paragraph. “Determination of net interest and accretions for other shall be made in accordance with usual ac- counting practice. “Ab. To render certain, and not subject to fluctu- ation, the amount so to be paid to the assured, the Cus- todian is directed to sell and convert into cash sufficient of the securities now in his custody to create a fund from which the Custodian shall make restitution to as- sured as respects both impounded fund and net interest and accretions as herein provided, and if the amount can- not by him be calculated with certainty, he may create such fund upon estimation subject to later correction by him, which said sums so derived he shall deposit, sub- ject to his withdrawal as Custodian, as a trust fund with The Commerce Trust Company of Kansas City, Missouri, out of which the Custodian shall make distribution to as- sured, but such trust company shall not be responsible for the disposition of such fund by the Custodian; Pro- vided, that if such sum or sums be deposited upon estima- tion, and be later found to be excessive or inadequate, the Custodian shall make the necessary adjustments in said trust fund. “Ac. The Custodian shall pay and distribute to the assured the amounts as provided in paragraph A and para- graph Aa hereinabove, as soon as is practical for him after closing his books and accounts, and shall pay the said sums on each policy by the issuing and mailing of a check to the assured named in the original impounding report in his ession, and to the addressses therein given, Pro- vided, however, that if there are or shall be any claims or assignments filed with him that create any dispute as to who is entitled to the fund due on any particular policy, he may apply to this Court for further orders in regard thereto; the Court retaining full jurisdiction to make any and all further orders in regard to the preservation, pay- ment and distribution of these funds, as to the method and 70 INSTITUTION OF LITIGATION manner of so doing, the determination of the rights of particular parties to receive the funds, and any and all other matters in connection therewith except that such or assignments must be filed with the Custodian on or before June 30, 1936, or be forever barred in distribu- tion under this Decree. The Custodian shall not be re- quired to personally sign such checks, but may delegate others to sign same, or may use any of the customary signature-making or check signing devices in executing same. The Custodian may place on such checks a re. cital providing that same shall not be valid unless pre- sented for payment on or before a date to be fixed by him. “B. At the time, in the manner, and subject to the withholding, and the right to withhold, and upon the con- ditions, hereinafter set forth, the Custodian shall distrib- ute and pay: “1. To the plaintiff, 50% of the net fund reported and impounded with him by the plaintiff upon all policies upon which impounding is made; and “2. To Robert J. Folonie, one of the counsel for plaintiff, and Charles R. Street, Chairman of the Com- mittee for the Insurance Companies, who, for them, are supervising this litigation, as Trustees for and on behalf of plaintiff, or the survivor of them or their successor or suc- cessors, 30% of the net funds reported and impounded as respects all policies effective prior to May 1, 1935, and 16-74% of the net funds reported and impounded by the plaintiff upon policies effective after April 30, 1935, which said sums so paid to said Trustees are paid to them as Trustees for the plaintiff for which (as well as any other amounts to be paid to them under this Decree) they shall account only to the plaintiff; but if this Court shall so order, they are to file a report of disbursements with the Judges of this Court. The Custodian shall not be obligated to see to the application by the Trustees of the amounts by him paid to them under the provisions of this Decree. “The Custodian is directed forthwith to disburse to the plaintiff as a partial payment on account of the above mentioned distribution provided for plaintiff, an amount equivalent to 50% of the net fund impounded. with the Custodian by plaintiff up to July 15, 1935; and the Cus- todian is directed forthwith to disburse to said Robert J. Folonie and Charles R. Street, Trustees, as a ‘partial payment’on account of the above mentioned distribution provided for said Trustees, an amount equivalent to 30% INSTITUTION OF LITIGATION 71 of the net fund impounded with the Custodian by said plaintiff up to July 15, 1935; Provided, however, that if these distributions (together with the distributions to be to the assured under the provisions of subpara- A hereof) would result in distributing all or within five per cent (5%) of the total net fund impounded by the plaintiff, the Custodian is authorized to reduce the percentage or amount of the distribution to the plain- tiff to an amount that will leave in the possession of the Custodian after making provision for refunds for the as- sured under paragraph A, a sum equivalent to five per cent (5%) of the total net fund impounded by the plain- tiff. The balance of the fund remaining subject to distribu- tion to the plaintiff and the Trustees respectively as pro- vided in this subparagraph B shall be withheld and re- tained by the Custodian subject to the further order of the Court. “All payments in this Decree provided, whether of principal distributable to plaintiff, or principal or interest and accretions distributable to the Trustees, shall be made by the Custodian as far as practicable by the de- livery to the party entitled to receive payment, of se- curities held by the Custodian, to be selected by the Cus- todian, which shall be accepted and credited on the amount payable at the market value thereof (including accrued interest) as reflected by the closing quotation on the New York Stock Exchange at the close of busi- ness on the last business day preceding the date of the —- making delivery, or ordering the shipment ereof. “C, The Custodian shall, out of the balance of ac- cretions and interest left after charging against the same the amount to be refunded to assured under the provisions of paragraph Aa hereof, pay the court costs; all unpaid or future expenses of the Custodian as have been or may be by the Court authorized and the lawful charges of and allowances to the present or past officers or appointees of this Court, and their agents, employees and attorneys; and other charges which may be by the Court from time to time directed. Any interest or gain from the handling of the funds subsequent to the date of this Decree shall be added to the interest and accre- tions above referred to, and if any securities shall be sold at a loss or other losses occur, the deficiency shall be charged against such balance. 72 INSTITUTION OF LITIGATION “After the Custodian has made all of the payments and distributions required under the provisions of this Decree, the remainder of said fund not so expended or required, shall be paid to Robert J. Folonie and Charles R. Street, Trustees for the plaintiff, or the survivor of them, or their successors, provided that if at any time it shall be made to appear to the Court that it is unneces- sary to longer retain all of said fund, then upon proper application therefor the Court may order payment to the Trustees of such part as the Court finds to be in excess of the amount necessary to be retained for such purpose. “The Custodian need not allocate or assign any part of the net balance of interest and accretions fund as same exists at any time, to the plaintiff, as said fund has been derived from the investment of funds of this plaintiff and the other said companies having companion suits in this Court as part of this same controversy. “D. The amounts which under the provisions of paragraph B hereof are to be withheld and retained by the Custodian subject to the further orders of the Court, may be resorted to in case the above interest and accre- tions fund shall be exhausted, in which event said amount so retained shall be subject to having imposed against it all charges above provided to be made against said in- terest and increment fund. If the Court shall at any time deem the amount so withheld and retained to be excessive, or to be no longer necessary, upon proper ap- plication therefor it may order the distribution thereof in whole or in part. “3. Whenever reference is made herein to im- pounded funds, or fund reported and impounded by plain- tiff, or plaintiffs, it includes the principal amount of im- pounded funds in the hands of the Custodian at the date of this Decree, or the principal amount of funds that may come into his hands at some later date as herein pro- vided. By the term ‘net amounts impounded,’ or the term ‘net funds’ impounded, is meant the amount of the prin- cipal of all impounded funds remaining after all credits by cancellation, or otherwise, have been allowed by the Custodian. No interest or accretions shall be considered in determining either the amount of the impounded funds, or the amount of the net impounded funds. In making distribution as herein provided, the Custodian may rely upon any facts contained in the records of im- pounding as filed by the plaintiff, and shall not be re- INSTITUTION OF LITIGATION 73 uired to consider any facts outside of said records ex- cept as contemplated in Ac above. “4. The Federal Reserve Bank of Kansas City is hereby authorized and directed to deliver any or all bonds now or hereafter held by it for said W. T. Kemper, as Custodian, to, or as directed by said W. T. Kemper. “5 Except to the extent that same may be incon- sistent with specific provisions hereof, all power and au- thority given to the Custodian by this Court under any of its orders heretofore entered, shall continue until fur- ther order of the Court. “g. The Custodian is authorized to permit or re- quire the plaintiff to report other additional impound- ings of any premium collections respecting policies effec- tive prior to November 11, 1935, and not previously re- ported, and cancellations or endorsements effective prior to November 11, 1935, upon policies effective prior to that date, and shall advise the plaintiff by mail at least ten (10) days before the final closing of his books after which no further reports will be accepted. Such additional and supplemental reports shall be considered as supple- mental and additional to and a part of the impounding reports for the twenty-third impounding period. “7 Notwithstanding dismissal of this cause, the Court expressly reserves power and authority, and re- tains jurisdiction as respects taxation and assessment of costs and allowances for fees to its officers and appointees (and their attorneys and agents) for services already ren- dered, or hereafter rendered, and to make orders respect- ing the obligation of the parties, or the fund for payment thereof, and to make further orders in aid of distribution of impounded moneys, and to make appropriate orders respecting sale, investment, safe-guarding and distribu- tion of impounded moneys, interest and accretions, and disposition of office furniture and fixtures, and dis- charge of incidental costs and expenses, and to make fur- ther orders respecting disposition of records and files in the possession of the Custodian, and to require reports and: accounts respecting performance of duties by the Custodian and restitution of moneys to assured, and to take any action deemed necessary to effectuate the pur- poses of this Decree. Jurisdiction over all persons or parties affected by this Decree is reserved for all pur- poses of effectuating this Decree. 74 INSTITUTION OF LITIGATION “8. The plaintiff and its sureties are hereby dis- charged from liability upon temporary injunction bond and interlocutory injunction bond heretofore exacted by this Court and entered into by the plaintiff and its sureties. _ “9. It appearing to the Court that separate deposits have been made with the Custodian by Underwriters Grain Association and special deposit made by Pittsburgh Underwriters Department, and separate accounts and re- ports filed by them embodying an impounding for more than one insurance company, the provisions as to distri- bution to assured above provided, shall be made in iden- tical manner as respects the said funds; and the pay- ments herein provided to be made to the plaintiff shall, as respects such special funds, be made to the said Un- derwriters Grain Association and the said Pittsburgh Un- derwriters Department as if they were a plaintiff herein and subject to like payment to them and to the Trustees as is herein provided respecting payments to insurance companies, except only that payments provided to be made to the plaintiff shall, as respects said funds, be made to said depositors of said funds. “10. The plaintiff, the defendants, the aforesaid Robert J. Folonie and Charles R. Street as Trustees, and the parties mentioned in paragraph 9 thereof, in open court, consent to the making and entering of this Decree. The above Trustees and the parties mentioned in para- graph 9 hereof enter their several appearances as parties hereto and nominate the present counsel for plaintiff as their counsel herein and they andthe parties to this suit consent for themselves and their successors that service of notice of any subsequent proceeding in this suit may be upon the present attorneys of record, or their suc- cessors, for the parties. “Entered this lst day of February, 1936. “KIMBROUGH STONE, Judge of the Circuit Court. ALBERT L. REEVES, Judge of the District Court. MERRILL E. OTI!s, Judge of the District Court.” INSTITUTION OF LITIGATION DECLARATION OF TRUST. Defendant’s Exhibit “4” (I, 40 of trust dated February 7, 1936, executed by Street and J. Folonie, do hereby declare funds which now ar heir hands, and certain securi of certain come to t now are or may come i and pursuant to the terms Court of the United. of Missouri, Central Di entered in case i led “American E. O’Malley, et al.,” urt being all pending cases o 426, both inclusive, sty R. said co from No. 270 t certain causes were but were theretofo we have reduced to po in the custody of City Robert J. Folonie. It is as follows: 75 -44) is a declaration Charles R. “The undersigned, Charles R. Street and Robert themselves trustees pany, as follows: “Receipt Number A94024 87 549 A63940 A716442 A65650 A90151 and securities may, 1n tody and suant to cuit Court of Co can Constitution “And it is anticipa Kind of Bonds Treasury Notes B1938, 2 7/8%, due 6-15-38 Treasury Notes B-1939, 1 3/8%, due 12-15-39 Home Owners’ Loan A 3%, due 5-1-52 Treasury Bonds 1955-60 2 7/8%, due 3-15-60 Treasury Notes A 1938 2 5/8%, due 2-1-38 Treasury Bonds 3%, due 6-15-48 Treasury Bonds 1941 3 1/4%, due 8-1-41 Home Owners’ A 3%, due 5-1-52 n equity, control, pursuan decrees which may le County, Misso Denomination $100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 e or may hereafter ties which nto their possession, under of decree of the District States for the Western District vision, being a certain decree No. 270 in said court, Insurance Company, plaintiff, v. and other cases pending in in said court, in which series not pending at February 1, 1936, re dismissed. As such trustees ssession certain securities now National Bank & Trust Com- Par Value $100,000.00 400,000.00 100,000.00 200,000.00 200,000.00 700,000.00 600,000.00 200,000.00 ted that further sums of money ‘n like manner, come to our cus- t to such decree and pur- ‘be entered by the Cir- uri, in case of Ameri- Fire Assurance Company V. O’Mal- INSTITUTION OF LITIGATION ley, or by order of the Supreme Court of Missouri in said cause on appeal. “Both of the undersigned do declare that they have no personal interest in said fund directly, al- tho said Robert J. Folonie has a contingent interest therein, arising out of unpaid fees and expenses which may, in the future, be discharged therefrom, for services rendered and to be rendered, and expendi- tures made and to be made in connection with such litigation. “Said moneys and securities above mentioned are held in trust for the benefit of interested insurance companies, namely, insurance companies involved in litigation in the courts of Missouri in connection with insurance rates, the general nature whereof is well known to such interested insurance companies so rep- resented by said trustees. “The conduct of such litigation has been en- trusted by various companies involved therein to the conduct and management of Subscribers Actuarial Committee, which is a committee existing and cre- ated by interested insurance companies for manage- ment of such litigation and who have had the conduct thereof under their supervision. The said committee has a membership which changes from time to time, the present membership thereof consisting of Charles R. Street, chairman; Herbert A. Clark, vice-chair- man; George Bell, John C. Harding, Walter D. Wil- liams, Ernest A. Henne and Fred W. Koeckert. “Said trustees will, out of the moneys in their hands, pay various sums provided in certain Memo- randum of Agreement, made May 18, 1935, between Charles R. Street, as agent for stock fire insurance companies, and R. Emmet O’Malley, superintendent of insurance, and witnessed by Robert J. Folonie and John T. Barker, a copy of which is hereto attached. Said trustees will undertake discharging the obliga- tions of such agreement according to their interpre- tation and understanding thereof, and, in particular, payment of certain sums to the Superintendent of In- surance and his attorneys, as therein prescribed, and will additionally pay therefrom any sums arising by way of costs, fees, and expenses assessed or adj dged by any court in which such matters are pending, se- curing vouchers for such payments; and for other INSTITUTION OF LITIGATION ~ ents not so arising out of court orders, judgments, or assessment of costs and fees, will disburse moneys and securities in their hands under direction of Sub- scribers Actuarial Committee, which directions they will secure from them in writing, to be evidenced by orders or directions for payment upon certification of J. V. Parker, secretary for such committee, or his suc- cessor, of action of such committee, or upon the signed order of any two members of such committee, which shall be evidence of the action of such committee in authorizing and directing any payments from such moneys and funds. “The trustees may convert any of such securities and sell or cause to be sold any of them, and may invest or reinvest the proceeds thereof in their dis- cretion. “Such trustees shall continue to act until the ses of the trust are completed, namely, disposi- tion of all financial attributes of such litigation, in- cluding not only sums assessed against the companies for costs, fees and expenses which may properly be discharged therefrom, but also such fees, expenses, repayments of loans or other disbursements which may be so certified to them by Subscribers Actuarial Committee in the manner in which certification there- of is above provided. ’ “The trustees will keep such amount as they deem proper from time to time in bank account, sub- ject to their withdrawal, and, when the purposes of the trust are completed, will distribute the amount remaining under direction of Subscribers Actuarial Committee. “In the event of the death or written resigna- tion of C. R. Street, or upon some new person being created as chairman of Subscribers Actuarial Com- mittee, the Subscribers Actuarial Committee may designate a successor, and such successor, as a con- dition of succession, shall cause notice thereof to be given to W. T. Kemper, custodian, or his successor in that position; and upon the death or resignation in writing of Robert J. Folonie, the Subscribers Ac- tuarial Committee shall select a successor, who shall be an attorney at law and who shall, if the said case in the District Court of the United States above men- tioned be still pending in any particular, file an entry of appearance in said court and show his succession INSTITUTION OF LITIGATION to the court and file his appearance therein and sub- mit to the jurisdiction of said court. “Said trustees declare it to be their intent, after the purposes of this trust are fulfilled, to distribute to insurance companies, or representatives of insur- ance companies entitled thereto, the remaining of such fund and secure the approval of Subscribers Actuarial Committee to such proposed distribution as making an appropriate distribution thereof. “It is here set forth as information for the bene- fit of all parties concerned that the Subscribers Ac- tuarial Committee is a Committee created by the companies, of all classes, who are subscribers to cer- tain activities in which the companies are individ- ually and jointly interested, one of the functions of the Subscribers Actuarial Committee being represen- tation of all companies associated in litigation con- cerning matters of general interest, which included and includes the rate litigation in the State of Mis- souri. “Said trustees propose to open a bank account with City National Bank & Trust Company and to give directions to said City National Bank & Trust Company from time to time as to the sale, purchase or conversion of securities, and to make withdrawals from deposits by them made in such bank; but said City National Bank & Trust Company shall not be required to inquire into the authority o. said trustees in any acts by them so taken, nor justification nor warrant of said trustees in making any payments, nor verify that appropriate authority from Subscrib- ers Actuarial Committee has been secured by such trustees for performance of any act by them. “In Witness Whereof, we have hereunto affixed our signatures and seals this 7th day of February, A. D. 1936. (Signed) Charles R. Street (Seal) (Signed) Robert J. Folonie (Seal)” Mr. Folonie and Mr. Street executed this declaration of trust after the federal court decree was entered, where- by they took charge of the 30 per cent of the impounded premiums (Folonie, III, 191). Then they proceeded to administer that trust (Folonie, III, 191, 193) in accord- ance with its terms (Folonie, III, 191), and paid out sums INSTITUTION OF LITIGATION 79 in ce with Mr. Folonie’s report filed in this court at a later date (Folonie, III, 193). It was anticipated that the 30 per cent would be uate for the payment of all expense in connection with the litigation. They did not know what all the ex- might be. It was discussed at the time the set- tlement was drafted. Mr. Folonie, revealing no figures, discussed that the companies were away behind in pay- ing his compensation. The settlement contemplated set- tling both the state and the federal cases. The impound- ment in Jefferson City had been depleted to pretty nearly $100,000.00 by allowances out of the principal. There were matters of allowances to special masters, referees, injunction bonds, and everything else; so they had no way of knowing at that time just what all the expenses were going to be. But it was contemplated that the 30 cent would be more than adequate to do it; other- wise they would have set up more. They felt sure it was more than adequate (Berger, III, 395-396). The 30 per cent aggregated over $2,500,000.00 (Folo- nie, III, 191). The trustees never paid anything out of this trust fund without a written direction from the Sub- scribers Actuarial Committee (Folonie, III, 215). In the early party of March, 1936, the trustees started to make a distribution of 6 per cent out of the 30 per cent. It was the subject of discussion between Mr. Street and Mr. Folonie. They were mutually agreed that they had more money in trust than would be required for prob- able expenditures in the future. Witness wanted to dis- tribute $1,000,000.00 to the companies to divest themselves of responsibility for the money, and to freeze a profit they had in the bonds which would show quite a material profit if they sold them at that time, and which might disappear if they kept them long enough. Mr. Street opposed this, and said $500,000.00 was enough. They could not tell what they would need the money for. After discussions on that proceeding for some little time, Mr. Folonie gave in to Mr. Street and they agreed on a dis- tribution to the companies of 6 per cent. Checks were drawn for that distribution. Mr. Folonie drew a form, or letter of communication to go with that. He thinks that Mr. Street had the checks made out and sent them to him to sign. Mr. Folonie made a list of the companies and the amounts each one was entitled to, and had it verified. He checked each check to see that the amounts 80 INSTITUTION OF LITIGATION were correct, and delivered all the checks to Mr. Street for distribution to the companies about March 9. Within ten days after that Mr. Street told Mr. Folonie that he had changed his mind, that he thought it would be ad- visable to follow witness’ suggestion to distribute $1,- 000,000.00 instead of one-half million dollars, and that the probabilities were that they would lose some of the profit on the bonds if they held them too long; that he would send the checks back to Mr. Folonie and they would cance] them and make new checks (Folonie, III, 193-194). Mr. Folonie brought over his book in which he keeps all of the trustees’ business and everything he thinks has any bearing on it. Mr. Street finally sent back pieces of checks to witness, consisting of the righthand end of each check, showing the number, the amount in dol- lars (not the amount written out) and in most cases, the tail-end of the names “Street and Folonie” and the word “trustees.” Mr. Street said he had destroyed the remainder of those checks. Mr. Folonie had his office go through before he would take any further action, to check up and see that these were all the checks that he had signed, and he found that there were a number of checks missing. He instructed the bookkeeper to paste in some kind of a little slip showing the missing checks, which she did. When witness called Mr. Street’s attention to the fact that some of the checks were missing, Mr. Street said that he had delivered a few of the checks to people he happened to see, and the thing to do was to make checks for 11 per cent to those who had not had their checks, and to make checks to each one of those missing for the difference between the amount they had already received and the 11 per cent. That was done, and the checks were made, and on the succeeding pages of wit- ness’ book appears each of the checks for the 6 per cent that were outstanding and all of the checks made in the second batch. Those in the second batch for 11 per cent were also dated March 9, 1936, by Mr. Street. He an- tedated the checks to the date of the former checks. Mr. Folonie did not raise any question about his doing this, and did not think it was important (Folonie, III, 194). Mr. Folonie and Mr. Henne had heretofore filed in this case a complete accounting up to the date of that ac- count, of the disposition of the 30 per cent impounded fund which stood in the names of Mr. Folonie and Mr. Street and later, Mr. Folonie and Mr. Henne as trustees. INSTITUTION OF LITIGATION 81 It was made by certified public accountants, checked by Mr. Folonie, and is meticulously correct (Folonie, III, 223). Plaintiff's Exhibit 329 (III, 437-472) is the report of Robert J. Folonie, surviving trustee, and Ernest A. Henne, successor trustee, showing receipts and disburse- ments covering the existence of trust from February 7, 1936, to and including the 11th day of February, 1939. The report is dated February 24, 1939, is signed by the surviving trustee and the successor trustee, and is sup- ed by the affidavits of Robert J. Folonie and Ernest A. Henne. Attached thereto is a copy of the declara- tion of trust signed by Charles R. Street and Robert J. Folonie and the report of Walton, Joplin, Langer & Co., certified public accountants. It is as follows: “Report OF ROBERT J. FoLoNIE, SURVIVING TRUSTEE, AND Ernest A. HENNE, SUCCESSOR TRUSTEE. The undersigned, Robert J. Folonie, surviving Trustee, and Ernest A. Henne, successor Trustee, submit herewith a report of receipts and disbursements covering the entire time that the Trust herein involved has been in existence, namely, from the 7th day of February, 1936, to and including the llth day of February, 1939. The rights and duties of the Trustees are set forth in a certain Declaration of Trust, a true copy of which is attached hereto, marked Exhibit ‘A’ and made a part hereof. Charles -R. Street, one of the Trustees desig- nated under said Declaration of Trust, died on the first day of February, 1938, and the undersigned, Ernest A. Henne, was, on said date, appointed successor Trustee by the Subscribers Actuarial Committee, pursuant to the provisions of the said Declaration of Trust. The sole and only assets at any time coming into the action, direct to City National Bank and Trust Company, Custodian under said Trust Agreement. The said City National Bank and Trust Company has collected the income upon the securities in the Trust Fund and has, in each instance, sold those securities which were con- verted into cash. The moneys received have been de- posited in said bank to the credit of the Trustees and have been paid out solely on checks signed by both Trustees. 82 INSTITUTION OF LITIGATION The affidavit of Robert J. Folonie attached hereto certifies to the correctness of said report in all respects and the affidavit of Ernest A. Henne attached hereto cer. tifies to the correctness of the report as respects all trans- actions of the Trustees from the first day of February, 1938, to the 11th day of February, 1939. Dated February 24, 1939. Respectfully submitted, (Signed) Robert J. Folonie , Surviving Trustee (Signed) Ernest A. Henne Successor Trustee AFFIDAVIT OF ROBERT J. FOLONIE, ATTACHED TO AND FORMING A PART OF THF. REPORT FILED IN FEDERAL CouRT. State of Illinois, County of Cook, ss. Robert J. Folonie, of lawful age, being first duly sworn, on oath says: I have made detailed examination of the report of Walton, Joplin, Langer & Company, Certi- fied Public Accountants, covering receipts and disburse- ments of Charles R. Street and Robert J. Folonie, Trus- tees, and Ernest A. Henne, Successor to Charles R. Street, deceased, which is attached to and made a part of the report of the Trustees. Said report is true in every particular to my personal knowledge. The Trustees have never, at any time, received any moneys, securities, property, or any other thing of value except as set forth in said audit. All of the securities and moneys shown by said audit to have been received by the Trustees were transmitted directly from W. T. Kem- per, Custodian in the above entitled actions, to City Na- tional Bank & Trust Company of Chicago, Custodian un- der the Trust Agreement (Exhibit ‘A’ attached to the Trustee’s Report). All interest upon such securities was collected by City National Bank & Trust Company and credited to the account of the Trustees, and all securities which were converted into cash were sold by City Na- tional Bank & Trust Company and the proceeds credited to the account of the Trustees. All payments from the Trust Funds were paid by checks drawn on City National Bank & Trust Company, signed by Robert J. Folonie and Charles R. Street, Trus- tees, during the latter’s lifetime, and by Robert J. Fo- INSTITUTION OF LITIGATION 83 Jonie and Ernest A. Henne, Trustees, after the death of the said Charles R. Street. The original checks under which all such disbursements were made are nov in the possession of the Trustees and were examined by the auditors whose report is attached to the report of the Trustees. The list of checks set forth in the auditors’ report covers every disbursement made by the Trustees at any time and this list correctly sets forth the name of the payee actually receiving the check, the date and amount of each check, and its number. The list of voided checks set forth in said report is true and correct and none of said checks were cashed. Each check is endorsed by the payee and banks only, except as specifically noted in auditors’ report. Every distribution or payment made by the Trustees to any of the fire insurance companies was made by me with the intent and understanding that the money would be received and retained by such fire insurance company. I never, at any time, had any agreement, express OF im- plied, direct or indirect, that any such payment should be applied by any such fire insurance company in any way, or for any pupose, other than to be retained by such in- surance company as its absolute property. No part of any money paid to any fire insurance company was ever re- turned to the Trustees, nor did any of said companies, at any time after the receipt of any payment from the Trus- tees, pay any sum of money, or deliver any securities, or thing of value whatsoever to the Trustees. Nor did this affiant receive any money, securities or other thing of value from any of said companies after said said payments so made, or otherwise. The only moneys received by this affiant during said period from the Trust myself and my partners and no part thereof was paid to any other person. Affiant says that incidental expense of affiant’s law firm was reimbursed by Missouri Inspection Bureau, the total of such payments from January 1, 1936, Affiant has no knowledge whatever respecting the supposed fund alleged by the Amicus Curiae and the Su- 84 INSTITUTION OF LITIGATION perintendent of Insurance to have been received by Mr. Street during the year 1936. At some time during the year 1936, C. R. Street presented to affiant a few checks from fire insurance companies, some five to ten, more or less, in number, payable to C. R. Street and affiant, or to C. R. Street and Hicks & Folonie, and requested affiant to endorse such checks to C. R. Street, then stating that it was money which he was returning to, or accounting to the companies for. None of said checks were payable to the Trustees. Neither affiant nor his law firm had any interest in said checks or proceeds thereof, and affiant at- tached no importance to the circumstance and did not no- tice and cannot now state the amounts of said checks, the makers, or dates. Affiant has no knowledge as to whether this circumstance is in anywise related to the supposed fund suggested by Amicus Curiae, nor has affiant any knowledge as to the disposition made by C. R. Street of said checks, or the proceeds thereof. Affiant further says that disbursements made by Trustees were on written order of Subscribers Actuarial Committee, in possession of affiant, that no orders, oral or in writing, were given by said Committee to affiant or to knowledge of affiant for any other disbursements than those shown in auditors’ report. Further affiant saith not. (Signed) Robert J. Folonie Subscribed and sworn to before me this 24th day of February, 1939. (Signed) Lauretta A. Gauger (Seal) Notary Public My commission expires November 16, 1939. AFFIDAVIT OF ERNEST A. HENNE ATTACHED TO AND FORMING A PART OF THE REPORT FILED IN FEDERAL CouRrT. State of Illinois County of Cook ss. Ernest A. Henne, of lawful age, being first duly sworn, on oath says: I have carefully examined the report of Walton, Joplin, Langer & Company, Certified Public Ac- countants, covering receipts and disbursements of Charles R. Street and Robert J. Folonie, Trustees, and Er- nest A. Henne, successor Trustee, attached hereto and made a part of the report of the Trustees. INSTITUTION OF LITIGATION 85 As to that portion of the report covering transac- tions of the Trustees occurring prior to February 1, 1938, the date of my appointment, the facts stated are true to the best of my knowledge, information and belief. As to the transactions shown in said report occurring after February 1, 1938, the same are true and correct to my personal knowledge. Further affiant saith not. (Signed) Ernest A. Henne Subscribed and sworn to before me this 24th day of February, 1939. (Signed) Lawrence J. Lawson (Seal) Notary Public My commission expires March 12, 1939.” (Note: The declaration of trust is here set out in full.) “WALTON, JOPLIN, LANGER & Co. Certified Public Accountants 231 South LaSalle Street Chicago John A. Stolp, C. P. A. Members Edw. Wm. Krueger, C. P. A. American Institute Walter H. Rohe, C. P. A. Of Accountants National Association Cost Accountants We have made an examination of the books and rec- ords of Robert J. Folonie (C. R. Street, Deceased Febru- ary 1, 1938, E. A. Henne, Successor) Trustees under a certain declaration of trust dated February 7, 1936 and present herewith the following statments: Exhibit A, Summary Statement of Cash Receipts and Disbursements, February 7, 1936 to February 11, 1939 Detailed Statement of Cash Receipts, February 7, 1936 to February 11, 1939 Detailed Statement of Cash Disburse- ments, February 7, 1936 to February 11, 1939 Statement of Securities and Cash Re- ceived from W. T. Kemper, Custodian and Total Collections, Realized there- INSTITUTION OF LITIGATION from by Trustees, February 7, 1936 to February 11, 1939 E, Statement of Distributions to Insurance Companies. In connection with our examination we found that all income due from securities was properly collected. We examined cancelled checks for all disbursements, The disbursements were further supported by receipted statements except as to the payment of $197.70 to Chas, W. Hermann, Jr. and except as to payments to insurance companies which, however, were evidenced by the can- celled checks. The cancelled checks were endorsed only by payees and banks except as to certain checks to Robert J. Folonie which were endorsed by McKinney, Folonie & Grear, and check No. 1 to R. E. O’Malley, Su- perintendent of Insurance, Missouri, which was endorsed by stamp as follows: ‘Pay to the order of Richard R. Nacy, State Treasurer for Deposit only February 20, 1936 Insur- ance Department of Missouri R. E. O’Malley, Super- intendent of Insurance.’ ‘Pay to the order of Central Missouri Trust Co. Jefferson City, Missouri February 21, 1936, Richard R. Nacy, Treasurer of Missouri.’ Authorizations from the Subscribers Actuarial Com- mittee directing the payment of all disbursements are on file with the trustees. We made no verification of the authenticity of such authorizations. The City National Bank and Trust Company of Chi- cago was the sole depository of the trustees. All re- ceipts and disbursements as detailed in Exhibits B and C were checked with the bank’s original records at the office of the bank, and we hereby certify that the receipts and disbursements as detailed in Exhibits B and C corre- spond with the records of the bank in all respects and that there are no other receipts or disbursements shown by the bank’s records with the following exceptions: On May 25, 1936 the bank’s records showed a credit of $50,000.00 and a debit of $50,000.00 on the same date reversing the previous entry. These entries on the bank’s records do not appear on the trustees’ books nor in the detailed statements of cash receipts and disbursements (Exhibits B and C). On May 25, 1936 the trustees de- posited a check for $50,000.00 received from W. T. Kem- INSTITUTION OF LITIGATION 87 The bank called attention to the fact ge on this check would be a con- eck be put ersed the credit entry for $50,000.00 ited the trustees’ account with $49,999.90, representing the collection on the $50,000.00 check less a collection charge of ten cents. The authenticity of these entries evidenced by the collection memorandum in the pank’s files for the credit of $49,999.90 which stated thereon, ‘Deposited May 25, 1936, charged back and en- tered for collection May 25, 1936.’ In Exhibit C there are listed a large number of voided checks among check numbers 7 to 147, inclusive. The Subscribers Actuarial Committee originally directed the trustees to make a distribution of 6% of impounded pre- miums to the insurance companies as of March 9, 1936. Checks in this amount were made out to the insurance companies. The Subscribers’ Actuarial Committee then revoked this order and directed a payment of 11% of im- pounded premiums to the insurance companies. The checks for the 6% payment were then voided except in the case of twelve checks which were delivered to the insurance companies, and in those cases the insurance companies received a further check in the amount of 5% of impounded premiums to give them a total distribution of 11% as of March 9, 1936. Where insurance companies received two checks for the 11% distribution the checks are cross-referenced in Exhibit c. At February 11, 1939 the trustees had received an authorization from the Subscribers’ Actuarial Committee approving the payment of $20,000.00 to Morrison, Nugent, Berger, Byers & Johns for legal services for the year 1938, but payment had not been made for such services at February 11, 1939. The sole asset of the trustees at February 11, 1939, was cash on deposit in the amount of $120,620.08 as shown in Exhibit A, which amount was certified to by the de- pository, the City National Bank and Trust Company of Chicago. (Signed) Walton, Joplin, Langer & Co. Chicago, Illinois February 23, 1939.” INSTITUTION OF LITIGATION EXHIBIT A. Pace 1. ROBERT J. FOLONIE (C. R. STREET, DECEASED FEBRUARY 1, 1938, E. A. HENNE, SUCCESSOR) TRUSTEES Summary Statement of Cash Receipts and Disbursements February 7, 1936 to February 11, 1939 CASH RECEIPTS: On sale of Securities (Exhibit D): Par Value $2,500,000.00 Premiums received above par 115,179.70 Accrued Interest 9,383.33 $2,624,563.03 On collection of Coupons on Securities (Exhibit D) 44,562.50 Cash collections from W. T. Kemper, Custodian 101,436.67 Less: Bank Collection Charges .20 101,436.47 $2,770,562, CASH DISBURSEMENTS: To R. E. O'Malley, Superintendent of Insurance, in pro rata payment of sum of $200,000.00 payable pursuant to terms of settlement agreement of May 18, 1935 169,440.00 To John T. Barker in pro rata pay- ment of sum of $500,000.00 payable pursuant to terms of settlement agreement of May 18, 1935 423,600.00 To Mercantile-Commerce Bank & Trust Co., St. Louis, in payment of note dated December 12, 1935 150,000.00 To Hicks and Folonie for legal serv- ices 95,000.00 To Robert J. Folonie for legal services 150,000.00 To McKinney, Folonie and Grear for legal services 55,000.00 To Morrison, Nugent, Wylder and Berger for legal services 85,000.00 To Morrison, Nugent, Berger, Byers and Johns for legal services 22,500.00 To Raglund, Otto and Potter: For legal services 20,000.00 For expenses 313.46 20,313.46 To Igoe, Carroll and Keefe for legal services 30,000.00 To David W. Peters: For legal services 1,500.00 For expenses 100.00 1,600.00 To W. S. Peters for shorthand re- porting 470.80 INSTITUTION OF LITIGATION To Chas. Ww. Hermann, Jr. for court to Gus G. LeCompte for court re- men! nd si Fidelity & Deposit Co. for pre- gn cayman on injunction bond & Co. for premium Company, services To City National Bank and Trust Company, Chicago for exchange charges AT Carried forward 1,206,404.78 2,770.562.00 EXHIBIT A. PAGE 2. Summary Statement of Cash Receipts and Disbursements February 7, 1936 to February 11, 1939 CASH RECEIPTS brought forward $2,770,562.00 CASH DISBURSEMENTS brought for- ward and continued $1,206,404.78 To V. Frank Banta for preparation of ' 1936 Federal income tax return 50.00 To Walton, Joplin, Langer & Co. for audi' services and preparation of 1937 Federal income tax return 242.50 To insurance Companies (Exhibit E): Mar. 9, 1936 - 11% of impounded premiums $992,230.69 Dec. 24, 1937 - 5% of impounded premiums 451,013.95 1,443,244.64 Total Cash Disbursements 2,649,941.92 Balance on Deposit at City National Bank and Trust Company, Chicago at ———— February 11, 1939 $ 120,620.08 ———— oo INSTITUTION OF LITIGATION EXHIBIT B. Pace l. ROBERT J. FOLONIE (C. R. STREET, DECEASED FEBRUARY 1, 1938, E. A. HENNE, SUCCESSOR) TRUSTEES Detailed Statement of Cash Receipts February 7, 1936 to February 11, 1939 Date Feb. 8, 1936 Proceeds of sale of United States of eee 3%% Treasury Bonds due 8-1-41: Par value $600,000.00 Premium received 50,437.50 Accrued interest received 2-1-36 to 2-8-36 379.16 $ 650,816, Proceeds of sale of United States of Soeuse 2-%% Treasury Bonds due -15-60: Par value 100,000.00 Premium received 406.25 Accrued interest received 9-15-35 to 2-8-36 1,142.01 101,548.25 8, 1936 Proceeds of sale of Home Owners’ Loan —peee, Series “A” Bonds due Par value 300,000.00 Premium received 3,375.00 Accrued interest received 11-1-35 to 2-8-36 2,425.00 . 10, 1936 Proceeds of sale of United States of ic 2-53% Treasury Notes due Par value 200,000.00 Premium received 9,375.00 Accrued interest received 2-1-38 to 3-10-36 548.08 . 16, 1936 Collection of March 15, 1936 coupons on $100,000 par value United States of America 2-%% Treasury Bonds due 3-15-36 1,437.50 . 18, 1936 Proceeds of sale of United States of heey 2-%% Treasury Bonds due -15-60: Par value 100,000.00 Premium received 1,406.25 Accrued interest received 3-15-36 to 3-18-36 23.96 101,430.21 Mar. 18, 1936 Proceeds of sale of United States of America 1-%% Treasury Notes due 12-15-39: Par value Premium received — ot ea received 12-15-35 to May 26, 1936 June 15, 1936 June 17, 1936 Oct. 3, 1936 Dec. 15, 1936 June 15, 1937 Sept. 3, 1937 Nov. 5, 1937 Dec. 15, 1937 Dec, 22, 1937 INSTITUTION OF LITIGATION EXHIBIT B. PAGE 2. Detailed Statement of Cash Receipts February 7, 1936 to February 11, 1939 Proceeds of sale of United States of America 2-%% Treasury Notes due -35 to 4-14-36 Check from W. T. Kemper, Custodian Less: Collection charge Collection of June 15, 1936 coupons on $700,000 par value United States of America 3% Treasury Bonds due 6-15-48 Check from W. T. Kemper, Custodian Less: Collection charge Check from W. T. Kemper, Custodian Collection of December 15, 1936 coupons on $700,000 par value United States of America 3% Treasury Bonds due 6-15-48 Collection of June 15, 1937 coupons on $700,000 par value United States of America 3% Treasury Bonds due 6-15-48 Proceeds of sale of United States of America 3% Treasury Bonds due 6-15-48: Par value Premium received a interest received 6-15-37 to Proceeds of sale of United States of America 3% Treasury Bonds due 6-15-48: Par value Premium received Aare interest received 6-15-37 to Collection of December 15, 1937 coupons on $575,000 par value United States of America 3% Treasury Bonds due 6-15-48 Proceeds of sale of United States of America 3% Treasury Bonds due 6-15-48: Par value Premium received Accrued interest received 12-15-37 to 12-22-37 $100,000.00 5,406.25 950.48 50,000.00 10 nee 48,000.00 10 — ———— 50,000.00 1,750.00 325.00 —_———_——— 75,000.00 3,304.69 875.00 425,000.00 22,179.69 247.92 —_—_—_ — $ 106,356.73 49,999.90 10,500.00 47,999.90 3,436.67 10,500.00 10,500.00 52,075.00 79,179.69 8,625.00 447,427.61 INSTITUTION OF LITIGATION EXHIBIT B. PacE 3. Detailed Statement of Cash Receipts February 7, 1936 to February 11, 1939 Date May 26, 1938 Proceeds of sale of United States of America 3% ‘Treasury Bonds due Premium received Accrued interest received 12-15-37 to 5-26-38 June 15, 1938 Collection of June 15, 1938 coupons on 00,000 par value United States of America 3% Treasury Bonds due 6-15-48 Dec. 15, 1938 Collection of December 15, 1938 coupons on $100,000 par value United States of America 3% Treasury Bonds due 6-15-48 Feb. 2, 1939 Proceeds of sale of United States of America 3% Treasury Bonds due 6-15-48: Par value Premium received —— interest received 12-15-38 to Total Receipts for the Period $ 50,000.00 3,710.94 670.83 $ 543817 100,000.00 9,078.13 383.33 109,461.46 $2,770,562.00 INSTITUTION OF LITIGATION EXHIBIT C. Pace 1. ROBERT J. FOLONIE (C. R. STREET, DECEASED FEBRUARY 1, 1938, E. A. HENNE, SUCCESSOR) TRUSTEES Detailed Statement of Cash Disbursements February 7, 1936 to February 11, 1939 10, 1936 To R. E. O’Malley, Superintendent of Insurance, Missouri, in_ pro rata payment of sum of $200,- 000 payable pursuant to terms of settlement agreement of May 18, 1935 To John T. Barker in pro rata payment of sum of $500,000 pay- able pursuant to terms of settle- ment agreement of May 18, 1935 To Lawton-Byrne-Bruner Insur- ance Agency Company for pre- mium payment on bond To Fidelity & Deposit Co. for premium payments on injunction bond To Hicks & Folonie for 1933 and 1934 legal services To David W. Peters For legal services For expenses Distribution to Insurance Com- panies, representing a 11% pay- ment of impounded premiums: Voided INSTITUTION OF LITIGATION EXHIBIT C. PAGE 2. Detailed Statement of Cash Disbursements February 7, 1936 to February 11, 1939 Voided Mar. 9, 1936 Concordia Fire Insurance Co. $ 3,429.89 (This check represents a 6% distribution; balance of 5% on this distribution paid by Check No. 172) Voided Mar. 9, 1936 Fire Association of Philadelphia 4,625.84 (This check represents a 6% dis- tribution; balance of 5% on this distribution paid by Check No. 184) Voided Mar. 9, 1936 Firemens Insurance Co. This check represents a 6% distripution; balance of 5% on this distribution paid by Check No. 186) Voided Mar. 9, 1936 Girard Fire & Marine Insur- ance Co. (This check represents a 6% distribution; balance of 5% on this distribution paid by Check No. 190) Voided 2ezaszazeaee Reg S Sessssaeazssse 1936 1936 1936 1936 1936 INSTITUTION OF LITIGATION EXHIBIT C. Pace 3. Detailed Statement of Cash Disbursements February 7, 1936 to February 11, 1939 Voided Lumbermen’s Insurance Co. (This check represents a 6% dis- tribution; balance of 5% on this — paid by Check No. Voided Mechanics Insurance Co. (This check represents a 6% dis- tribution; balance of 5% on this — paid by Check No. Voided Mercury Insurance Co. (This check represents a 6% dis- tribution; balance of 5% on this Sno paid by Check No. Voided Milwaukee Mechanics Insurance Co. (This check represents a 6% dis- tribution; balance of 5% on this distribution paid by Check No. 220) National Ben Franklin Fire Insur- ance Co. (This check represents a 6% dis- tribution; balance of 5% on this distribution paid by Check No. 221) Voided $ 1,928.10 464.59 1,596.45 4,065.27 1,631.92 95 INSTITUTION OF LITIGATION EXHIBIT C. Pace 4. Detailed Statement of Cash Disbursements February 7, 1936 to February 11, 1939 Mar. 9, 1936 Reliance Insurance Co. $ 1,254.82 (This check represents a 6% dis- tribution; balance of 5% on this —_— paid by Check No, a it tate ie ee el ee Voided Mar. 9, 1936 St. Paul Fire & Marine Insurance Co, 4,946.14 (This check represents a 6% dis- tribution; balance of 5% on this , - teaaaae paid by Check No. Voided INSTITUTION OF LITIGATION EXHIBIT C. Pace 5. Voided 2 Mar. 9, 1936 Victory Insurance Co. (This check represents a 6% distribution; balance of 5% on this distribution paid by Check No. 279) Voided American Insurance Co. Agricultural Insurance Co. Aetna Insurance Co. Alliance Insurance Co. American Alliance Insurance Co. American Central Insurance Co. American Eagle Fire Insurance Co. American Union Insurance Co. Atlas Assurance Co. Automobile Insurance Co. Bankers & Shippers Insurance Co. Boston Insurance Co. British American Assurance Co. Caledonian Insurance Co. California Insurance Co. Camden Fire Insurance Association Detailed Statement of Cash Disbursements February 7, 1936 to February 11, 1939 $ 757.35 19,568.80 4,489.97 23,820.38 2,370.35 8,786.94 16,694.87 5,192.61 2,766.32 4,750.18 11,699.43 4,534.14 11,551.21 1,192.82 1,090.12 2,151.96 5,063.50 Chicago Fire & Marine Insurance Co. 1,137.83 Citizens Insurance Co. City of New York Insurance Co. Columbia Insurance Co. Columbia Fire Insurance Co. Commerce Insurance Co. Commercial Union Assurance Co. a. nee Union Fire Insurance 0. Concordia Fire Insurance Co. (This check represents a 5% distribution; balance of 6% on - ee paid by Check oO. 6,076.83 5,876.64 3,046.33 2,858.24 INSTITUTION OF LITIGATION EXHIBIT C. PacE 6. Detailed Statement of Cash Disbursements February 7, 1936 to February 11, 1939 Connecticut Fire Insurance Co. $11,025.92 Continental Insurance Co. 31,518.13 County Fire Insurance Co. "570. 98 Detroit Fire & Marine Insurance Co. 1,974.34 a. “aga Fire & Marine Insurance sees 1,972.52 & British Dominion Co. 2,262.87 West Insurance Co. 2,865.63 eo . “epee Fire & Marine Insurance osmeen Federal Union Insurance Co. 1,416.39 Fidelity-Phenix Fire Insurance Co. 37,036.10 Fire Association of Philadelphia 3,854.86 (This check represents a 5% distribution; Pe ce of 6% on os paid by Check 0 Firemen’s Fund Insurance Co. 12,626.26 Firemen’s Insurance Co. 6,012.40 (This check represents a 5% distribution; balance of 6% on ~ — paid by Check oO. First American Fire Insurance Co. 2,867.80 Franklin Fire Insurance Co. 17,742.14 Franklin National Insurance Co. 2,086.43 Girard Fire & Marine Insurance Co. 1,820.25 (This check represents a 5% distribution; nce of 6% on ag oan, paid by Check 0 Glens Falls Insurance Co. 5,479.88 Globe & Rutgers Fire Insurance Co. 6, 276.18 Granite State Fire Insurance Co. Great American Insurance Co. Guaranty Fire Insurance Co. Hanover Fire Insurance Co. Hartford Fire Insurance Co. Home Insurance Co. — Fire & Marine Insurance 0. Hudson Insurance Co. Imperial Assurance Co. 2'339. 71 Importers & Exporters Insurance Co. 5,460. 96 Ins Company of North America 19,587.45 4,128.71 2,876.79 0. 19,023.87 London ante Corporation 6,594.00 INSTITUTION OF LITIGATION +) EXHIBIT C. PacE 7. Detailed Statement of Cash Disbursements February 7, 1936 to February 11, 1939 on } wr Date 8 Mar. 9, 1936 London & Lancashire Insurance Co. $ 8,255.62 oC 7" London & Provincial Marine & General Insurance Co. 1,061.92 mx, ee London & Scottish Assurance Corp. 1,481.32 ,. C4 Lumbermens Insurance Co. 1,606.75 (This check represents a 5% dis- tribution; balance of 6% on this distribution paid by Check No. 70) nM oe « Manhattan Fire & Marine Insur- ance Co. 1,092.73 as Massachusetts Fire & Marine In- surance Co. 1,719.88 oe. F* Mechanics Insurance Co. 387.17 (This check represents a 5% dis- tribution; balance of 6% on this _— paid by Check No. aa # ™ Merchants Insurance Co. 2,223.98 ae «© Merchants Fire Assurance Cor- poration 6,628.58 —s = * Merchants Fire Insurance Co. 1,335.21 aa Mercury Insurance Co. 1,330.37 (This check represents a 5% dis- tribution; balance of 6% on -this —_— paid by Check No. ae. * © Michigan Fire & Marine Insurance Co. 1,741.83 es = * Milwaukee Mechanics Insurance Co. 3,387.72 (This check represents a 5% dis- tribution; balance of 6% on this — paid by Check No. soe .F © National Ben Franklin Fire Insur- ance Co. 1,359.93 (This check represents a 5% dis- tribution; balance of 6% on this — paid by Check No. es ee National Fire Insurance Co. 33,870.37 ao. = National Liberty Insurance Co. 9,372.85 Ie aden National Reserve Insurance Co. 1,487.34 ON adits National Security Fire Insurance Co. 1,214.82 = ry. 6S National Union Fire Insurance Co. 8,841.79 a A ee Newark Fire Insurance Co. 3,137.38 ee oe New England Fire Insurance Co. 1,754.40 a New Hampshire Fire Insurance Co. 8,435.27 mee. e.* New Jersey Insurance Co. 3,085.00 oo New York Underwriters Insurance Co. 16,602.45 ae Niagara Fire Insurance Co. 5,496.24 meee Northern Assurance Co. Ltd. 9,321.75 1 SNM lig Northern Insurance Co. 8,006.26 oe eC North River Insurance Co. 7,405.25 INSTITUTION OF LITIGATION EXHIBIT C. Pace 8. Detailed Statement of Cash Disbursements February 7, 1936 to February 11, 1939 9, 1936 Northwestern Fire & Marine In- surance Co. $ 1,441.86 Norwich Union Fire Insurance Society, Ltd. 4,843.02 Old Colony Insurance Co. 1,862.52 Orient Insurance Co. 7,713.73 Pacific Fire Insurance Co. 3,524.78 Palatine Insurance Co., Ltd. 3,672.23 Patriotic Insurance Co. 548.49 Philadelphia Fire & Marine In- . 617.05 surance ” Phoenix Assurance Co., Ltd. 8,503.43 Phoenix Insurance Co. 13,258.61 Central States Fire Insurance Co. 3,695.33 Minneapolis Fire & Marine Insur- ance Co, 2,482.83 Presidential Fire & Marine Insur- 390.12 ance Co. Providence Washington Insurance Co. 4,810.80 Provident Fire Insurance Co. 847.40 Queen Insurance Co. of America 11,323.14 Reliance Insurance Co. 1,045.68 (This check represents a 5% dis- 4 tribution; balance of 6% on this _ paid by Check No. ee pessssss 6. 292 Rhode Island Insurance Co. 5,825.77 , Royal Exchange Assurance 12,066.93 Royal Insurance Co. Ltd. 10,779.72 Safeguard Insurance Co. 1,089.87 St. Paul Fire & Marine Insur- , ance Co. 4,121.78 (This check represents a 5% dis- tribution; balance of 6% on this — paid by Check No. Scottish Union & National Insur- ance Co. 5 Security Insurance Co. ; Sentinel Fire Insurance Co. . Springfield Fire & Marine Insur- ance Co. : Standard Fire Insurance Co. ; Standard Fire Insurance Co. 5 Star Insurance Co. of America , State Assurance Co. Ltd. Stuyvesant Insurance Co. é Sun Insurance Office, Ltd. 5 | Superior Fire Insurance Co. Svea Fire & Life Insurance Co. Tokio Marine & Fire Insurance Co. ntinental Insurance Co. Travelers Fire Insurance Co. INSTITUTION OF LITIGATION EXHIBIT C. Pace 9. Detailed Statement of Cash Disbursements February 7, 1986 to February 11, 1939 t 9, 1936 Twin City Fire Insurance Co. $ 1,084.05 ae Union Assurance Society, Ltd. 1,689.17 « Union Fire Insurance Co. 1,746.00 « United Firemens Insurance Co. 236.25 - United States Fire Insurance Co. 16,718.31 “ United States Merchants & Shippers Insurance Co. 921.80 af Victory Insurance Co. 631.12 (This check popeeeene a 5% distribution; balance of 6% on this distribution paid by Check No. 138) Westchester Fire Insurance Co. 7,848.29 Western Assurance Co. 2,036.24 Western Fire Insurance Co. World Fire & Marine Insurance Co. Yorkshire Insurance Co. Mechanics & Traders Insurance Co. Potomac Insurance Co. Underwriters Grain Association Pittsburgh Underwriters 8 SNBBS gz SESSLeSs=s Total distribution to Insurance Companies on first distribution 992,230.69 To W. S. Peters for shorthand: re- i 470.80 porting To Morrison Nugent, Wylder & Berger for legal services 20,000.00 To Mercantile-Commerce Bank & Trust Co., St. Louis, in payment of note dated December 12, 1935 150,000.00 To W. B. Johnson & Co. for pre- mium payment on appeal bond 250.00 To City National Bank and Trust Company, crmenge for safekeep- ing services to May 5, 1936 187.50 To City National Bank and Trust Company, ee for safekeep- ing services to August 5, 1936 131.25 Missing To City National Bank and Trust Company, Chicago for exchange charge AT To Robert J. Folonie on account, 1935 legal services 50,000.00 To Morrison, Nugent, Wylder & ey for balance due on 1935 legal services 40,000.00 To City National Bank and Trust Company, Chicago for safekeep- ing services to November 5, 1936 131.25 (1) Bank memo charge. INSTITUTION OF LITIGATION EXHIBIT C. Pace 10. Detailed Statement of Cash Disbursements February 7, 1936 to February 11, 1939 Date 12, 1937 To City National Bank and Trust Company, —— for safekeep- ing services to February 5, 1937 9, 1937 To Ragland, Otto & Potter For legal services For expenses To Chas, W. Hermann, Jr. for court reporting To City National Bank and Trust Company, Chicago for safekeep- ing services to 5, 1937 To W. B. Johnson & Co. for pre- mium payment on appeal bond To V. Frank Banta for preparation of 1936 Federal Income Tax Return To Walton, Joplin, Langer & Co. for audit of trustees’ books to March 18, 1937 To Morrison, Nugent, Wylder & Berger for 1936 legal services To Ragland, Otto & Potter for bal- ance due on 1935 and 1936 legal services To City National Bank and Trust Company for safekeeping serv- ices to August 5, 1937 To Robert J. Folonie on account 1935 and 1936 legal services To Igoe, Carroll & Keefe for 1935 and 1936 legal services To Gus G. LeCompte, court reporter, for preparation of bill of ex- ceptions To City National Bank and Trust Company for safekeeping serv- ices to November 5, 193 To Robert J. Folonie for balance due on 1935 and 1936 legal services Distributions to Insurance Com- panies, representing a 5% pay- ment of impounded premiums: Dec. 24, 1937 Agricultural Insurance Co. se ~ S American Insurance Co. (1) Checks carried no numbers. Probably should have been numbered 301, 302, 308 and 309. $15,000.00 313.46 $15,313.46 321 € Sf SBRBRER SSRESEESERS ER BRREBRE SESRER FE enaneeerrnereee ees seeee sd eS saeane INSTITUTION OF LITIGATION EXHIBIT C. Pace 11. Detailed Statement of Cash Disbursements February 7, 1936 to February 11, 1939 Aetna Insurance Co. Alliance Insurance Co. American Alliance Insurance Co. American Central Insurance Co. American Eagle Fire Insurance Co. American Union Insurance Co. Atlas Insurance Co. Automobile Insurance Co. Bankers & Shippers Insurance Co. Boston Insurance Co. British American Assurance Co. Caledonian Insurance Co. California Insurance Co. Camden Fire Insurance Co. Chicago Fire & Marine Insurance Co. Citizens Insurance Co. City of New York Insurance Co. Columbia Insurance Co. Columbia Fire Insurance Co. Commerce Insurance Co. Commercial Union Assurance Co. Commercial Union Fire Insurance oO. Concordia Fire Insurance Co. - Connecticut Fire Insurance Co. Continental Insurance Co. County Fire Insurance Co. Detroit Fire & Marine Insurance Co. cane Fire & Marine Insurance ts) Eagle Fire Insurance Co. of N. Y. Eagle Star & British Dominion Insurance Co. East & West Insurance Co. — Fire & Marine Insurance 0. Federal Union Insurance Co. Fidelity-Phenix Fire Insurance Co. Fire Association of Philadelphia Firemans Fund Insurance Co. Firemens Insurance Co. First American Fire Insurance Co. Franklin Fire Insurance Co. Franklin National Insurance Co. Girard Fire & Marine Insurance Co. Glens Falls Insurance Co. Globe & Rutgers Fire Insurance Co. Granite State Fire Insurance Co. Great American Insurance Co. $10,827.45 1,077.43 3,994.06 7,588.58 2,360.28 1,257.42 2,159.17 5,317.92 2,060.97 5,250.55 542.19 495.51 978.16 2,301.59 517.20 2,762.20 2,671.20 190.09 824.12 386.53 3,393.24 1,384.69 2,909.50 896.60 1,028.58 1,302.56 1,786.06 643.81 16,834.59 3,854.86 5,739.21 6,012.40 1,303.54 8,064.61 948.38 INSTITUTION OF LITIGATION EXHIBIT C. Pace 12. Detailed Statement of Cash Disbursements February 7, 1936 to February 11, 1939 Guaranty Fire Insurance Co. $ 290.34 Hanover Fire Insurance Co. 4,116.48 Hartford Fire Insurance Co. 23,829.09 Home Insurance Co. 32,946.34 Home Fire & Marine Insurance Co. 1,259.23 Hudson Insurance Co. 615.67 Imperial Assurance Co. 1,063.50 Importers & Exporters Insurance Co 2,482.25 Insurance Co. of North America 8,903.39 Insurance Co. of State of Penn- sylvania 1,876.69 Law Union & Rock Insurance Co. 1,307.63 The Liverpool & London & Globe Insurance Co. Ltd. 8,647.21 2,997.27 3,752.55 482.69 London & Scottish Assurance Corp 673.33 Lasiesmesite Insurance Co. 1,606.75 ar . “uae Fire & Marine Insurance Massachusetts Fire & Marine Insurance Co. Mechanics Insurance Co. Merchants Insurance Co. Merchants Fire Assurance Corp. Merchants Fire Insurance Co. Mercury Insurance Co. 1,330. 37 Michigan Fire & Marine Insur- ance Co. 791.74 Milwaukee Mechanics Insurance Co. 3,387.73 National Ben Franklin Fire Insur- ance Co. 1,359.93 National Fire Insurance Co. 15,395.62 National Liberty Insurance Co. 4,260.39 National Reserve Insurance Co. 676.07 National Security Fire Insurance Co. National Union Fire Insurance Co. Newark Fire Insurance Co. New England Fire Insurance Co. New Hampshire Fire Insurance Co. New Jersey Insurance Co. New York Underwriters Insurance Co. Niagara Fire Insurance Co. Northern Assurance Co. Northern Insurance Co. North River Insurance Co. Northwestern Fire & Marine In- surance Co. S&S BSSsse 858 cz 2css & ito eniy Marine & a ee ee ed en ee ee ee |, i i iii, i ai in ion INSTITUTION OF LITIGATION EXHIBIT C. PacE 13. Detailed Statement of Cash Disbursements February 7, 1936 to February 11, 1939 Norwich Union Fire Insurance Co. $ 2,201.37 Old Colony Insurance Co. : Orient Insurance Co. Pacific Fire Insurance Co. Palatine Insurance Co. Patriotic Insurance Co. Philadelphia Fire & Marine In- surance Co. 2,553.21 Phoenix Assurance Co. 3,865.20 Phoenix Insurance Co. 6,026.64 Central States Fire Insurance Co. 1,679.70 Minneapolis Fire & Marine Insur- ance Co. 1,128.56 Presidential Fire & Marine In- surance Co. Providence Washington Insurance Co. Provident Fire Insurance Co. Queen Insurance Co. Reliance Insurance Co. Rhode Island Insurance Co. Royal Exchange Assurance Co. Royal Insurance Co. Safe Insurance Co. 7 St. Paul Fire & Marine Insur- ance Co. Scottish Union & National Insur- ance Co. 4,414.51 Security Insurance Co. 2,960.75 Sentinel Fire Insurance Co. 1,032.22 Springfield Fire & Marine In- nouns 8 ,200. Standard Star Insurance Co. State Assurance Co. Stuyvesant Insurance Co. Sun Insurance Office Superior Fire Insurance Co. Svea Fire & Life Insurance Co. Tokio Marine & Fire Insurance Co. Transcontinental Insurance Co. Travelers Fire Insurance Co. Twin City Fire Insurance Co. Union Assurance Societ Union Fire Insurance Co. United Firemen’s Insurance Co. United States Fire Insurance Co. United States Merchants & Ship- pers ce Co. eeeneeeee sd eseeanezeeest Victory Insurance Co. Westchester Fire Insurance Co. BE HESSASSSSBSSSSSES SSR EF S INSTITUTION OF LITIGATION EXHIBIT C. PacE 14. Detailed Statement of Cash Disbursements February 7, 1936 to February 11, 1939 24, 1937 Western Assurance Co. $ 925.57 » Ss Western Fire Insurance Co. 1,696.64 World Fire & Marine Insurance Co. 1,164.51 Yorkshire Insurance Co. 1,972.93 Mechanics & Traders Insurance Co. 1,644.88 Potomac Insurance Co. 2,450.74 Underwriters Grain Association 2,070.98 Pittsburg Underwriters 149.93 Total distribution to Insurance Companies on second distribu- tion To Walton, Joplin, Langer & Co. for audit of trustees’ hooks to February 1, 1938, special report for second distribution to insur- ance companies, and preparation of 1937 Federal Income Tax Return To City National Bank and Trust Company, Chicago for safekeep- ing services to May 5, 1938 To Morrison, Nugent, Berger, Byers & Johns for 1937 legal services To Igoe, Carroll & Keefe for 1937 legal services To McKinney, Folonie & Grear for 1937 legal services To City National Bank and Trust Company, Chicago for safekeep- ing services to August 5, 1938 To City National Bank and Trust Company, Chicago for safekeep- ing services to November 5, 1938 To McKinney, Folonie & Grear for 1938 legal services Total Cash Disbursements for the Period Pollad ey} OJ s}dyaooy YyseD [BIOL ’Z9S'OLL" Poyiead ey} Joy s}dyaooy YyseD [HIOL sasreyo uoToeT[09 Yue :Sse’] ‘SLL uvIPOIsND wos PeAyecde1 jUNOUTe JeAO saojsniy, Aq pezy[eer sseoxy ’ ys¥O pue sajjinseg Uy Ssee}sniL pesreyo yunowe [BOL uerpoysng ‘seduieyy “.L “MM WOIF PIATI901 YSBD OCP’ uelpoysnd ‘reduiey “L “MM Wory peayedel YseD eo'Szt'699'2%$ os'zos'se$ scese’6$ OL'ELI'STIIS ov0'oes'z$ "Se" 109" "LZS" 4% 000‘00S‘z$ LO'OTS'T 00°0S7'S 000°002 98-8-2 SLs’ "os" "SLs" ; ¢ ‘dio ueo'y sIsUMO eUWIOH 9T6LE Os" LEv‘OS 000‘009 9€-8-% * 189° F “OC w/TE spuog AmseelL *S ‘1 (seese £T'8L0°6 —« 000'00T._-—«s=—«GE-Z-Z (sv019 PeOIL'E OOO'DS — BE-92-E \zeLve GNGLT'ZS 000'STH —«LE-ZE~ZT (oo'szg eo'poc’s «= O00'SL_ LE “SIT oo'szt'ss (0osze dorset o00'0s = LE-E-G S66" ; sIe" ‘ spuog Amseory ‘Ss ‘f go'ees — OO'SLE'E © 00'00Z_—=s«ME-OT-E ; (96% ST9ORT —000°00T=—-9E-BI-E OSLEV'T (TOIT Sz'90% Q00'00T =: SE-B-Z ‘ ; oo-st-e 0s «W/L B . ge'809 © OO'SZT'T = 000"00T_—«« EBS 189" 00'0SL i ' ws-I-¢ £ 9SZIPT OO'OSL'® 000'00F + = 9E~BT“E ; TeTZ $ 00°SzT" ; ee-st-2t B/E T $ eros $ Sz90r's $ 000'00T $ 9E-FI-F zrsea'sot $ z9'°00b $ ; p BE-SI-9 -%B/L Z SUOTIIETIOD P2I}92T19D 3S010}UT umnyjwleld anteA eq T830.L 98019}U] anieA TH30.L yseiszUuT «= pensi00V wed penis0V ied ss t= Vv & jeyyusuery, JO sozeq 38 seojsniL pesreyd s}UNOUTY 38 UBTPOYsND ‘JeduiIOM “L “M woly + peAjeoey eeet ‘It Axeniqeg 0} 96T “L Areniqed seojsniy, AQ UWloIZaIOYL, PezTeey SuOHImIOD 1830L pue ‘L “MA WOR peajeosy YseD pues SayfNseS JO qUSUI9}BIS SUMLSAUL (HOSSOONS ‘ENNGH “V “S ‘86 ‘I AUVAUAAE GASVAO “LATULS “U ‘O) AINOTOM 'f Luaaou ‘d LIGQInxa 3 E E ) Z S 5 ; xa INSTITUTION OF LITIGATION EXHIBIT E. Pace 1. Robert J. Folonie (C. R. Street, deceased February 1, 1938, E. A. Henne, Successor) Trustees Statement of Distribution to Insurance Companies First Second Insurance Impounded Distribution Distribution Company Premiums 11% 5% American Insurance $ 177,898.21 $ 19,568.80 $ 8,894.91 Agricultural Insurance 40,817.91 489.97 Aetna Insurance Alliance Insurance a American Alliance Insurance 79,881.29 American Central Insurance 151,771.51 American Eagle Fire Insurance 47,205.52 American Union Insurance Atlas Assurance Automobile Insurance Bankers & Shippers Insurance 41,219.47 4,534.14 Boston Insurance 105,011.03 11,551.21 British American Assurance 10,843.79 1,192.82 Caledonian Insurance 9,910.15 1,090.12 California Insurance 19,563.29 2,151.96 Camden Fire Insurance 46,031.80 5,063.50 Chicago Fire & Marine Insurance Citizens Insurance City of New York Insurance Columbia Insurance Columbia Fire Insurance Commerce Insurance Commercial Union Assurance Commercial Union Fire Insurance Concordia Fire Insurance Connecticut Fire Insurance Continental Insurance County Fire Insurance Detroit Fire & Marine Insurance 17,948.57 1,974.34 Dubuque Fire & Marine Insurance 58,190.05 6,400.91 Eagle Fire Insurance of New York 17,931.97 1,972.52 Eagle Star & British Dominions Insurance 20,571.54 2,262.87 East & West Insurance 26,051.21 Equitable Fire & Marine Insurance 35,721.19 Federal Union Insurance 12,876.29 Fidelity Phenix Fire Insurance 336,691.80 Fire Association of Philadelphia 77,097.25 Fireman’s Fund Insurance 114,784.23 Fireman’s Insurance 120,247.98 First American Fire Insurance 26,070.88 Carried forward 2,698,829.81 296,871.29 134,941.48 [eS Saree... E™ SESESE EZSSSERESE EE SSSSE SSRE SBBRE SEEBES SE a INSTITUTION OF LITIGATION EXHIBIT E. PAGE 2. Statement of Distributions to Insurance Companies Insurance Company Brought forward Franklin Fire Insurance Franklin National Insurance Girard Fire & Marine Insurance Glens Falls Insurance Globe & Rutgers Fire Insurance Granite State Fire Insurance Great American Insurance Guaranty Fire Insurance Hanover Fire Insurance Hartford Fire Insurance Home Insurance Home Fire & Marine Insurance Hudson Insurance Imperial Assurance Importers & Exporters Insurance Insurance Co. of North America Insurance Co. of the State of Pennsylvania Law Union & Rock Insurance Liverpool & London & Globe Ins. London Assurance Corporation London & Lancashire Insurance London & Provincial Marine & General Insurance London & Scottish Assurance Lumbermen’s Insurance Manhattan Fire & Marine Insurance Massachusetts Fire & Marine Ins. Mechanics Insurance Merchants Insurance Merchants Fire Assurance Merchants Fire Insurance Mercury Insurance Michigan Fire & Marine Insurance Milwaukee Mechanics Insurance National Ben Franklin Fire Insurance National Fire Insurance National Liberty Insurance National Reserve Insurance National Security Fire Insurance National Union Fire Insurance Newark Fire Insurance 161,292.23 18,967.58 36,404.96 49,817.05 57,056.22 16,359.30 219,232.70 5,806.88 82,329.66 476,581.87 658,926.75 25,184.57 12,313.37 21,270.09 49,645.05 178,067.72 37,533.74 26,152.68 172,944.26 59,945.48 75,051.09 9,653.79 13,466.59 32,135.01 9,933.90 15,635.29 7,743.24 20,218.04 60,259.86 12,138.27 26,607.44 15,834.79 67,754.50 27,198.68 307,912.43 85,207.70 13,521.30 11,043.86 80,379.93 28,521.63 Second First Impounded Distribution Distribution Premiums 11% 5% $2,698,829.81 $296,871.29 $134,941.48 17,742.14 2,086.43 9,056.26 52,424.01 72,481.94 2,770.30 1,254.47 2,339.71 5,460.96 19,587.45 4,128.71 2,876.79 19,023.87 6,594.00 8,255.62 1,061.92 1,481.32 3,534.85 7,452.99 2,991.85 3,137.38 482.69 673.33 791.74 3,387.73 1,359.93 15,395.62 4,260.39 676.07 552.19 4,019.00 1,426.08 Carried forward 5,984,879.31 658,336.71 299,243.94 INSTITUTION OF LITIGATION EXHIBIT E. Pace 3. Statement of Distributions to Insurance Companies First Second Insurance Impounded Distribution Distribution Company Premiums 11% 5% Brought forward $5,984,879.31 $658,336.71 $299,243.94 New England Fire Insurance 15,949.12 New Hampshire Fire Insurance 76,684.24 New Jersey Insurance 28,045.44 New York Underwriters Insurance 150,931.36 Niagara Fire Insurance 49,965.79 Northern Assurance 84,743.20 Northern Insurance 72,784.14 North River Insurance 67,320.42 Northwestern Fire & Marine 13,107.78 Insurance Norwich Union Fire Insurance 44,027.49 Old Colony Insurance 16,932.00 Orient Insurance 70,124.78 Pacific Fire Insurance 32,043.43 Palatine Insurance 33,383.92 Patriotic Insurance 4,986.23 Philadelphia Fire & Marine Insurance 51,064.11 ‘ 2,553.21 Phoenix Assurance 77,303.92 ; 3,865.20 Phoenix Insurance 120,532.85 ‘ 6,026.64 Central States Fire Insurance 33,593.90 ’ 1,679.70 Minneapolis Fire & Marine Insurance 22,571.18 Presidential Fire & Marine Insurance 3,546.55 Providence Washington Insurance 43,734.55 Provident Fire Insurance 7,703.65 Queen Insurance 102,937.62 Reliance Insurance 20,913.67 Rhode Island Insurance 52,961.55 i Royal Exchange Assurance 109,699.40 12,066.93 Royal Insurance 97,997.48 10,779.72 Safe Insurance 1,089.87 St. Paul Fire & Marine Insurance Scottish Union & Nat’l Insurance Security Insurance Sentinel Fire Insurance Springfield Fire & Marine [nsurance Standard Fire Insurance Standard Fire Insurance Star Insurance State Assurance Stuyvesant Insurance Sun Insurance Carried forward 8,233,879.92 905,726.79 411,694.00 | Sil sssasa INSTITUTION OF LITIGATION EXHIBIT E. Pace 4. Statement of Distributions to Insurance Companies Insurance Company Brought forward Superior Fire Insurance Svea Fire & Life Insurance Tokio Marine & Fire Insurance Transcontinental Insurance Travelers Fire Insurance Twin City Fire Insurance Union Assurance Society Union Fire Insurance United Fireman’s Insurance United States Fire Insurance United States Merchants & Shippers Insurance Victory Insurance Westchester Fire Insurance Western Assurance Western Fire Insurance World Fire & Marine Insurance Yorksire Insurance Mechanics & Traders Insurance Potomac Insurance Underwriters Grain Association Pittsburg Underwriters Insurance 20,304.31 12,958.26 35,957.32 13,324.72 174,764.18 9,855.00 15,356.05 15,872.72 2,147.70 151,984.68 8,379.96 12,622.45 71,348.10 18,511.32 33,932.74 23,290.23 39,458.64 32,897.51 49,014.84 41,419.67 2,998.69 2,233.47 1,425.41 16,718.31 921.80 1,388.47 7,848.29 2,036.24 3,732.60 2,561.93 4,340.45 3,618.73 5,391.63 4,556.16 329.86 , Second First Impounded Distribution Distribution Premiums 11% 5% $8,233.879.92 $905,726.79 $411,694.00 1,015.22 647.91 1,797.87 $9,020,279.01 IMPOUNDMENT OF FUNDS AND DISTRIBUTIONS. $992,230.69 $451,013.95 During the pendency of the litigation sixteen and two-thirds per cent of the collected premiums were im- pounded (Darlington, II, 289). It was admitted that the 1937 check for 5 per cent of the impounded premiums was from Street and Folonie as trustees (I, 457). When the funds were impounded the amount thereof was the difference between what the companies were in fact charging and what they would have been entitled to under the order of the Superintendent of Insurance, including whatever percentage, 15, 20, 25 per cent would be coming to the agents. Witness thinks that, to that extent, they were interested in the impounded funds (Bell, I, 138). 112 INSTITUTION OF LITIGATION Under the decree the companies received 50 per cent outright from the custodian, less some percentage held for incidental or unforeseen expenses (Henne, I, 49). Plaintiff’s Exhibit 335 (III, 523-531) is a statement of the various accounts taken from the records of this court’s custodian as of June 30, 1939. It shows the name of each company having a case in the federal court, the total amount impounded by each company with the cus- todian, the amount distributed to the companies under the order of February 1, 1936, the amount distributed to the trustees and the residue, or balance. The distribution to the company and distributions to the trustees related to impoundings up to May 1, 1935, and so the balance, or residue, represents impoundings beyond May 1, 1935, or if no impoundings were made beyond 1935, it represents 5 per cent of their previous impoundings. The column “Amount returned to custodian” is the amount paid back by the companies to the custodian in accordance with an order made May 29, 1939. The amounts that each com- pany paid back include those distributed by the custodian to the trustees. The last column shows the dates on which the companies made that restitution. The amounts distributed to the companies and to the trustees were distributed between February 1 and June, 1936, on various dates. Some of the companies were first sent bonds and then one check was sent and then another check was sent. The custodians just worked on the ag- gregate with the trustees. The account number as to these companies is the court number, except that account 901 is the Underwriters Grain Association; 902 is the Pittsburgh Underwriters, and 903 is the Genera) Cover Department. They did not have suits pending in the federal court. Witness thinks they are merely impound- ing accounts, but represent impoundings of policies that were written in which these companies were interested. The Underwriters Grain Association and the Pittsburgh Underwriters made restitution direct to the custodian. The unnumbered attached sheet is the breakdown on general cover. 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Qe°9PS'S °OD “SUL SUTIEN F OtTA TETITOPTSSTZ @B°TSS'SS 4° OD “SUT CUTAUR F CATA STTOdveuTTR ee°sso‘e9e = °OD eoUBmMeul ert, S0RN9G TEZIUED Ot’ es ‘Ost krredmog eouwe.meul xrruecqg Ta* Tot ‘ee fkwedmog eouvmesy xTucogg 90°909°GS “OD “SU eutreN = OuTA BTQCTOPET TUS T6°9@0‘9 kuedmod eouemeul eTZ0TAIBE 48°999 ‘9S Luedmop eouemsUl CUTRUT EE T9*e6e‘es *OD SQUBMsUL OtTg OTITOCE Luse@®ecd souv.megl prenseseu fLuedmop eouv.meur tefoy eouv.mssy eSusyorg Tefoy *OD SOUBMeUl PESTS] epogy fLuedmod eouv.meul eoustT ey fuedwod eous.msdl aeen® *OD SOUBMSUL SSTg QuepTAcdg *OO *SUl UOgPUTSM eomepTAcdg. 6g-0e-9 te*ses‘? $ os amis qnqIsau aiva “ae LKV ZNVdWOO OL GaLOGI SLsIa ZAOORV @0°98s.‘9L ¢ fuedmop eoussmeul 3uetap qTaINnO dar TaVaNOO 20 SRE tMOQORV TVLOL ; sah! tlckeranaadiaaae (9 eBeg - penutau0o) 3 E ? New York MEetTtnc, 1935 165 and he hoped that ten or a dozen companies would be willing to advance it and the money would be used for such purpose (Culver, III, 400). He said he wanted this money to discharge certain legal expense, including at- torney fees, that he wanted to get settled first (Koeck- ert, I, 503). He stated that it was necessary at this time to provide funds (Cartlidge, I, 463-464, 467) for certain expenses (Cartlidge, I, 463) in connection with negotia- tion for settlement (Cartlidge, I, 467, 468) before any set- tlement could be made ( artlidge, I, 463-464) that he would require (Warner) or needed (Haid, Koeckert) or had to have (Koeckert) or wanted to raise (Kurth) some money (Kurth, I, 424; Barbour, I, 342) for legal expenses (Warner, III, 352; Koeckert, I, 515, 498; Haid, II, 381, 379). When Mr. Street said he wanted this for legal expense, that was when he got the first money (Kurth, I, 444). He was unable to determine what the total amount of the ex- pense would be (Haid, II, 379). Mr. Street did not explain any more to witness as to why this was needed before any settlement was negotiated. Witness did not follow through as to whether Mr. Street had to pay the com- panies’ lawyers before they could go on with the settle- ment, or why they could not pay their lawyers after the settlement. It did not occur te witness (Kurth, I, 425). It was to be used for legal fees in connection with the compromise (Koeckert, I, 498; Koop, I, 396). Witness does not remember Mr. Street’s having told them that it was legal expense (Cartlidge, I, 470). He said it was expenses (Kurth, I, 424). He mentioned legal expenses in a general way (Kurth, I, 425). He said there would be expenses in connection with it, but he did not specify what expenses (Barbour, I, 342). Witness knew that Mr. Street was in fact requesting them to deliver money to him for expenses provided it was agreed upon that he was to enter into negotiations for the settlement ( Barbour, I, 342). Witness thinks Mr. Street had something to suggest in the way of certain funds needed to be set up in order to provide for preliminary expenses. Mr. Street felt he needed the money (Koeckert, I, 497). He did not tell a single expenditure that would be made (Koeckert, I, 499). Witness does not think that Mr. Street made reference to any specific ex- penses, except that they were legal expenses (Culver, 166 New York MEEtT«nG, 1935 III, 1). That is the only explanation he gave (Haid, II, 381). Witness did not ask why Mr. Street would need legal fees to make a compromise (Haid, II, 383; Koeckert, I, 498). Witness never gave a thought one way or the other to what legal expenses had to be arranged for a legitimate compromise of the case (Haid, II, 383). No one made any inquiry as to the nature of the legal ex- penses (Warner, III, 354). Witness did not ask what legal fees, or whether it was for lawyers (Kurth, I, 438). Mr. Street did not tell to whom he was going to deliver the money (Barbour, I, 343). Witness does not recall that anybody asked why the money was necessary or to whom it was to be finally disbursed (Cart- lidge, I, 468). Witness never had any talk with Mr. Street at the meeting about to whom he was going to turn over the money (Koeckert, I, 511). No question was asked as to what it was for (Haid, II, 381) or what the legal expenses would be (Culver, III, 400). Witness did not know what his purpose was and never had any idea in his mind that Mr. Street wanted it for the purpose of employing other counsel (Haid, II, 388). He does not not know that it was not to be used for the purpose of employing other counsel (Haid, II, 389). Other than the employment of additional counsel, witness can conceive of no other legal expenses necessary for a legitimate compromise of this case (Haid, II, 389). Witness could at that time conceive of no expense “that they could not make a settlement.” The reason was not stated (Kurth, I, 438; Cartlidge, I, 467) and witness did not question it at all (Cartlidge, I, 467) witness understood it to be for attorneys (Haid, II, 381). Mr. Street was in Chicago with the Fidelity-Phenix at the time of the Kansas rate litigation and the Arkansas rate litigation. Mr. Haid does not remember that when those cases were settled the companies always paid the attorneys for the state; so that did not affect his judg- ment at all (Haid, II, 384-385). His explanation of legal expenses seemed sufficient to witness (Haid, II, 381). So far as witness personally was concerned, Mr. Street’s mere mention of the fact that he wanted to raise $100,000.00 in connection with the Missouri litigation and that it would be fully ac- counted for, was sufficient (Kurth, I, 425). New York Meetinc, 1935 167 Counsel read witness a memorandum, stating: “It is necessary in carrying on this activity to use temporarily $100,000.00 which will be accounted for when the settlement is made. We are asked to contribute our portion of this sum as shown below.” Witness said that substantially that happened «in this meeting (Cartlidge, I, 470). Witness understood he was paying legal expenses in connection with the Missouri litigation (Warner, III, 359). Witness’ recollection was that Mr. Street did not con- nect the money with the settlement. He was endeavoring to make a settlement, and he stated that he needed it for legal expenses in connection with the Missouri litigation; not with the settlement (Haid, II, 387). It was legal expense “not necessarily would approve a compromise” (Warner, III, 360). He did not tell them that if they raised $100,000.00 he thought he might be able to make a settlement. As witness recalls, it was not contingent on that (Cartlidge, I, 467). Witness does not remember or cannot recall that, Mr. Street said any- thing about the return of the money (Culver, Warner) or any part of it (Warner) in the event the settlement could not be put through, and witness thinks that no one present asked him (Culver, III, 401; Warner, III, 354). Mr. Street did not tell witness with whom he had discussed the compromise (Warner, III, 360). Asked what legal fees he had in mind that Mr. Street would have in trying to make a compromise, witness said there was such an army of lawyers employed at all times that he would not have been surprised if he had two or three more. At some of the committee meetings, Mr. Street let drop that lawyers had something to with the compromise. Mr. Street did not say anything about what lawyers’ services would be required in connection with the compromise. If he did, witness does not recollect it, and witness never asked him. It was not necessarily fees, but legal expense in connection with the compromise (Koeckert, I, 498-499). He did not say to whom attorneys’ fees were to be paid (Warner, III, 353). There was no discussion about the attorneys in any way, and no mention of any names of any attorneys within witness’ re [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385610_0027%3A4. Public record. Not legal advice.