Wrong Without Remedy: A Legal Satire.
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WRONG WITHOUT REMEDY: A LEGAL SATIRE. III. THREAT OF RECEIVERSHIP. BY WALLACE MCCAMANT. ONE morning as Anderson picked up the Globe-Democrat his eye was attracted to an item in the paper referring to the forest fires in Eastern Minnesota. N*ext day he saw that these fires had swept several small towns out of existence, and it occurred to Anderson to go to Minneapolis and look after his stock in the Provident Fire Insur ance Company. Arrived in Minneapolis, he hunted up the officials of the company and courteously requested some information from1 them as to the condition of the company's business and the extent of its losses in the recent fires. This information he secured and he learned thereby that the company had sustained quite substantial losses; he also found that there had been many cases where on policies recently written the com pany had neglected to reinsure a portion of the risk with other underwriters as was usual in insurance circles. The officials ex plained this by saying they had been excep tionally busy and had been shorthanded be cause of the recent illness of their president and the absence of a number of useful men on vacation trips. The result had been that the Provident Fire Insurance Company had lost considerably more money in the recent fires than other companies with the same vol ume of business. It was Anderson's candid opinion that the company was still abun dantly solvent, but he saw a chance to ad vance a contrary contention. He learned that the company had been obliged to bor row a large sum of money and to pledge its securities in order to obtain the credit. He also found that the president's salary was $10.000 a year and the manager's $6,000, and that both president and manager were mem
bers of the board of directors. In these facts he saw his opportunity. 'A day or two later each member of the board received a letter protesting that the salaries of these officials were excessive, and demanding that the corporation bring suit to compel the president to refund to the cor poration all he had received over $5,000 per annum and to compel the manager to pay to the company all he had received in excess of $3,000 per annum. The letter criticised the management as grossly incompetent, stated that the company was threatened with in' solvency and demanded that the board take such action as would put the corporation in liquidation. Each letter was signed by Ham ilton Anderson. A few days later Anderson was notified by the secretary that the board declined to take the action outlined in his letter. Anderson now prepared a complaint in his own name, joining the corporation, its president and its manager, as parties de fendant. He charged that the corporation was threatened with insolvency, that if the present management continued in control the corporation would become insolvent. If, however, a receiver were appointed and the company were to go into liquidation under the control of a court, he averred that the assets would pay all the debts and leave a surplus for distribution among the stock holders. He charged a fraudulent conspir acy among the directors to absorb the income in excessive salaries paid to members of the board and set up his claim as to the salaries of the president and manager. He averred' gross mismanagement in the failure of the officers to reinsure the company's risks and
