instances, and therefore have reduced the assets of the company
on this account to the extent of $149,500." It is said that "At the
time the loans were made by a former administration the collater-
als were quoted at" etc. In fact, the loaris had been made by the
same administration that was in force at the time that report
was made — is not that so ? A. No, sir ; not altogether.
Q. In what respect had the administration changed ? A. There
had been a change in the administration of officers.
Q. In what respect were officers different? A. A change in
the ownership, of course.
Q. There had been a change in the control of the stock? A.
Control of the stock.
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Testimony of Edward W. Scott
Q. So far as the responsible administrative officers were con-
cerned, had there been any change? A. Not in the presidency
or secretaryship.
Q. In the membership of the Finance Committee? A. There
had been one or two secretaries put in there by Mr. Hadley, and
these h3,d been eliminated.
Q. liad there been any change in the Finance Committee? A.
Yes, sir.
Q. AVhat change? A. The Finance Committee was reorgan-
ized at the time of the Hadley trouble.
Q. And how was it reorganized? A. By substituting others
for those in the place that had been selected.
Q. \\^ell, state if you will who the persons were — ^who came
after his death and for whom they were substituted? A. Stephen
A. BroAwnell was retired and Mr. Ashley, whose first name I do
not reca.ll ; two Brownells I think. I could readily give you the
names if I had a list with me, but I do not think I have.
^^IR. GILBERT: Here is a list of the directors in 1897, that
'"^i^t help you.
y- What was the number of the Finance Conmiittee at the time
^se loans were made? A. Five, if I remember.
^' ^\^ho went off after the Hadley trouble? A. Stephen A.
^^^^11, Mr. Ashley — what was Mr. Ashley's name?
^^^- GILBERT: Stephen B. Ashley.
^'^^^ HUGHES: Stephen B. Ashley.
"^E WITNESS : Another Brownell. His name is not here.
^f. Thomas H. Borden.
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Testimony of Edward W. Scott
Q. Who took their places? A. E. C. Lounsbury, Abraham
M. Hyatt, C. E. Tillinghurst, I think.
Q. Then the statement in the Insurance Department report is
to the fact that the loans to Hadley had been made by a prior
administration, had reference to the Finance Committee? A.
Very largely, yes, sir.
Q. Now, from 1897 to the present time, has your company
ever been examined by the New York Insurance Department?
A. Not by the New York Insurance Department, no, sir.
Q. And has your company been examined by the Insurance
Department of any other State? A. Yes, sir.
Q. What department? A. Tennessee and Texas.
Q. When was the examination by the Tennessee department?
A. 1901.
Q. By whom was that department represented ? A. By Walter
C. Wright.
Q. Of Boston? A. Of Boston.
Q. Was Mr. Walter C. Wright at that time an applicant for
the position of consulting actuary in your company A. No, sir ;
he was not.
Q. Did he subsequently, after the examination, apply for that
appointment? A. I do not think so.
Q. Was he appointed? A. As consulting actuary, no, sir.
Q. As actuary? A. No, sir.
Q. In what capacity was he employed by your company? A.
He was employed for special work.
Q. At what time? A. I think in 1902.
Q. For how long was he employed? A. How long?
Q. Yes. A. I think he is still doing work for us.
Q. He was not connected with the Tennessee Department, was
he— he was simply retained by them? A. He was retained by the
Tennessee department.
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Testimony of Edward W. Scott
Q. He was an actuary during the business of consulting actu-
ary? A. Yes.
Q. And he was retained by them and made an examination?
A. Yes, sir.
Q. And from time to time you have retained him? A. Yes, sir.
Q. Your company has? A. Yes, sir.
Q- Now, what amounts 'have you {paid him? A. Possibly
$2,500 or $3,000.
Q. When were you examined by the Texas department? A.
At the same time.
Q- 1901? A. Yes, sir.
Q- And with the exception of those two examinations you
have not been examined since the examination of 1897 by the
^ew York department ? A. No, sir.
Q- Is this a complete statement of the real estate owned by
your company (showing witness paper). A. Yes, sir.
MR. HUGHES: I offer it in evidence.
^^^tement marked Exhibit 701, and put in evidence by Mr.
Hughes,
^- This statement shows on the left the year of acquisition
and then the statement of the property and then of its book
value? A Yes, sir.
^' The first property mentioned is Provident Building, Waco,
T^^^as, a six-story brick and stone office building, plot 82^ by
^5C>, book value $207,657.25, acquired in 1889. What did that
c^s^ the company? A. That cost the company, as I remember,
^^^ hundred and fifty odd thousand dollars. There was con-
^^outed in stone in its erection, as I am informed — of course
^^ was put up before my administration — ^to the value of
?5o,ooo, to which no charge was made. They were developing
5099 .
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Testimony of Edward W. Scott
a new quarry, and the stone was contributed, as I understand,
without any charge. Had they paid for it the cost of the building
would have been approximately $200,000.
Q. That was an original investment for the purpose of sup-
plying your company with an office building? A. Yes, sir.
Q. That was long before your administration? A. Yes, sir.
Q. The next property is 330 West i8th street, acquired in
1901, five-story and basement brick and stone apartment house,
lot 25 by 92, book value $15,098.50. What did that cost the com-
pany ? A. That cost the company what is stated there, the book
value.
Q. This is a statement of cost? A. Yes, sir.
Q. And it has not been reduced or increased? A. I think
not.
Q. Was that acquired through foreclosure? A. No, sir.
Q. For what purpose was that acquired ? A. That was taken
for a debt.
Q. It was a property upon which there had been no loan pre-
viously in favor of the company ? A. No.
Q. Was it in equity? A. It was in equity, yes, sir.
Q. And it is subject to a mortgage? A. Yes, sir, it is.
Q. At the present time ? A. Yes, sir.
Q. Whose indebtedness was cancelled by the transfer ? A. I
cannot give you the name.
MR. GILBERT: Robinson.
A. Robinson.
Q. What Robinson? A. I have not the name.
Q. Any one connected with the company? A. No, sir.
Q. How did the indebtedness arise? A. He had negotiated
for an annuity and could not complete the matter, and that was
taken in part, as I remember it, in settlement.
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Testimony of Edward W. Scott
Q. You mean as part of the consideration for the annuity ? A.
Yes, sir.
Q. It was in lieu of so much money paid the company? A.
Precisely.
Q. The next property is No. 530 to 538 Broadway, acquired
1902 to 1904, three eleven and ten-story basement fireproof brick,
stone and steel buildings at the northeast corner of Spring street,
plot 125 by 125, book value $960,779.65. For what purpose was
that property acquired? A. For what purpose?
Q. Yes. A. That was taken in exchange. For out of town
property and some property in the city.
Q. With whom did the company deal ? A. I cannot give you
the names offhand.
Q. Who was the broker ? A. Just in a moment, I think it was
James L. Libbey.
MR. GILBERT: Libbey and Vandewater.
A. (Continued) Vandewater was one and Charles E. Schuyler,
I think, sir.
BY MR. HUGHES:
Q. It is stated it was acquired from 1902 to 1904. What is the
explanation of that? A. At different times; we first acquired
532 and 534 and then we had an opportunity of making an ex-
change for the corner, which would be 530, and we effected that ;
then we thought it desirable, we had an opportunity of exchang-
H for 536 and 538.
Q. All the properties were acquired through exchanges ? A.
Yes, sir.
Q. How was the book value of $960,779.65 arrived at ? A.I
shall have to refer you to my bookkeeper for that, I think.
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Testimony of Edward W. Scott
Q. Is that more than the cost of the properties which were de-
livered in exchange ? A. Possibly.
Q. Your real estate will show that precisely ? A. Yes, sir.
MR. HUGHES : You have these data here, have you now, so
we will get at that presently ?
MR. GILBERT: Yes.
Q. The next property is No. 80 to 82 Wooster street, acquired
in 1902, seven-story and basement brick, stone and steel build-
ing, book value $70,969.41. How was that acquired? A. That
was acquired from Robinson, the same party that the Eighteenth
street property was acquired from.
Q. On what consideration ? A. The same transaction.
Q. In part payment of an annuity? A. I think I am right
there, am I not?
Q. The one is 1901 and the other 1902. A. The Eighteenth
street was taken in 1901 and the Wooster street in 1902, accord-
ing to this schedule.
MR. GILBERT: That came with 532 and 534 Broadway, not
Robinson.
THE WITNESS : I am wrong about that, Mr. Hughes, I
believe.
Q. Upon what basis was the book value arrived at in this
case of the Wooster street property — was that part of the same
transaction? A. No, not with Robinson.
Q. I mean the same transaction as the exchange in the case
of the Broadway property ? A. 530 and 532, I think.
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Testimony of Edward W, Scott
Q. Will you have a statement here showing the way that is made
up? A. Yes, sir.
Q. The next property is 511 to 515 West 112th street, 1903,
six-story and basement brick and stone, new law elevator apart-
ment house, $77400. How was that acquired? A. That was
acquired in the same manner or the same way that the Eight-
eenth street property was.
Q. This was in 1903 ? A. Yes, but not from the same party.
Q. You mean for an annuity? A. Yes.
Q. With whom did you deal ? A. Mr. TuUey. ]
Q. What Mr. Tulley ? A. I cannot give you his first name.
Q. Michael Tulley? A. Michael Tulley.
Q. Is this an equity? A. That was an equity, yes, sir.
Q. What is the amount of the encumbrance ? A. That I can-
not tell you ; that will appear.
Q. How is the book value arrived at? A. Cost.
Q. You mean cost on the basis of what ought to be paid for an
annuity? A. Yes.
Q. Have you the particulars here of these annuities? A. I
presume so.
MR. HUGHES : I would like to have those, if you please.
Q. The next property is 933 and 935 Amsterdam avenue, and
160 West io6th street, 1903, six-story and basement brick and
stone apartment house, book value $94,901.70. How was that
acquired ? A. That was acquired from Mr. Kirk, if I remember,
in the same way that the Robinson property was acquired.
Q. That was for annuities ? A. Yes, sir.
Q. Do you make a specialty of taking properties for annui-
ties? A. No, sir; I wish we could.
Q. How did it happen that you got these? A. Well, that
was a negotiation that I did not conduct myself. In fact, I had
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Testimony of Edward W. Scott
nothing to do with it. The property was talked over and pro-
posed, and it was entirely satisfactory.
Q. Was that an equity ? A. That was an equity ; yes, sir.
Q. Is that carried at the market value or what it would cost to
give the annuity on the ordinary insurance basis ? A. Carried —
taken over, do you mean?
Q. There is a book value of $94,000. How do you get at that
figure ? A. Well, that would be the cost plus any additions or
permanent improvements.
Q. Well, the initial cost? A. That I cannot tell.
Q. As a consideration for the annuity which was granted in
accordance with your tables, is that it? A. Yes, sir.
Q. No. 3 East Seventeenth street, acquired in 1905, fireproof
store and office building, nine and one-half stories, $123,232.
How was that acquired ? A. In exchange for other property.
Q. For what other property? A. Property in 113th street, I
think.
Q. Which you had obtained through foreclosure? A. No, sir;
which we had taken in exchange for some country property.
Q. How was the original property which you first obtained
acquired, through foreclosure ? A. Some of it, yes, sir.
Q. And the rest of it? A. The rest of ;t was purchased. I
think the company had it when I took control of the company.
Q. The last item is No. 35 Nassau street and 54-58 Liberty
street, acquired in 1905, fireproof office building, fifteen stories
and basement, southeast corner of Nassau and Liberty streets,
9,615 square feet $1,993,068.30. How was that acquired? A.
That was acquired in exchange.
Q. For what property ? A. Properties in the city.
MR. HUGHES: Have you the report for 1903?
MR. GILBERT: You have it there in the schedule, I think.
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Testimony of Edward W, Scott
Q. With whom was that transaction ? A. I beg pardon ?
Q. With whom was this transaction, in relation to 35 Nassau
street and 54 and 58 liberty street, carried through; who was
, the other party to the deal ? A. The brokers, or owners ?
Q. The owner. A. The Metropolitan Life.
Q. How is this figure of $1,993,068.30 arrived at? A. That is
arrived at by the value of the property transferred in exchange.
Q. Through what broker did you deal? A. McQay, or Mc-
Qay & Davies, and Charles E. Smith
Q. Frank E. Smith, wasn't it? A. Frank R Smith, yes, sir.
Q. Did you pay a commission to Frank E. Smith? A. No,
sir, we did not.
Q. Is any officer of your company interested in any of these
properties? A. No, sir.
Q. Or in any of the properties in New York in exchange for
which these properties were acquired? A. No.
Q. Did any officer of your company receive any commissions
in connection with any of these real estate transactions? A.
No, sir.
Q. Neither directly or indirectly? A. No. •
Q. When properties are taken for annuities, is a commission
paid to the agent ? A. I think not.
Q. I do not mean a commission upon the purchase or acquisi-
tion of the property as a real estate transaction A. On the
annuity ?
Q. But upon the annuity as an insurance transaction? A.
^cH, whether there was any paid in those transactions or not I
cannot say. I do not think there was.
Q. That is a matter which you can verify ? A. Yes, sir.
Q. Do you mean that these properties were taken for a paid-
"P annuity? A. Yes, sir.
Q. In other words, if A comes to you and wants to buy an
annuity of one thousand dollars a year, you will figure up his
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Testimony of Edward IV. Scott
probable expectation of life, and what he put in your hands as
a gross sum to enable you to pay that annuity ? A. Yes, sir.
Q. Now, in the cases you have mentioned, the owners of
these equities have placed the equities in your hands at a certain
valuation in consideration of your paying a certain annuity dur-
ing their lives ? A. Yes, sir.
BY THE CHAIRMAN :
Q. Have there been other instances where that has been done
than these two that have been spoken of? A. No, sir.
BY MR. HUGHES:
Q. You have mentioned three, have you not? A. Three, yes,
sir.
Q. These are the only cases ? A. All that I can recall, yes, sir.
Q. Can you, by taking the report for 1904, showing your real
estate holdings at the end of last December, identify the proper-
ties which you exchanged in consideration for this 35 Nassau
street building? A. The two first on the list — shall I mark
them ?
Q. No, you had better read them. Dictate what they are.
A. I can check them off with a pencil in just a minute, Mr.
Hughes. This is the list, Mr. Hughes, those checked. (Handing
paper.)
Q. Then the properties given in exchange for 35 Nassau
street were four lots and building thereon, on West Twenty-
seventh street, near Broadway, being Nos. 49, 51, 53 West
Twenty-seventh street, three five-story brick and stone buildings,
Nos. 203, 205, 207 West i6oth street, and two seven-story and
basement brick and stone and steel buildings, Nos. 151 to 169
inclusive. West 140th street? A. Yes, sir.
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Testimony of Edward W. Scott
MR. GILBERT: There is another, a lot on Twenty-eighth
street. I guess that is included in the others.
THE WITNESS : That is in the first.
Q- There was also included a brick and stone building, No.
50 \A/'est Twenty-eighth street? A. Yes.
Q. Now, the premises in West Twenty-seventh street and the
premises 50 West Twenty-eighth street together showed a book
value of $615,555.28? A. Yes, sir.
Q. And the three buildings on io6th street a book value of
'^^7,838? A. Yes.
Q. And the two buildings on West 140th street $351,472. Is
*at: right? A. Yes.
^^- And you took those together in arriving at your book
^^'^^« of 35 Nassau street? A. No, I think we took the market
^^J^^c there, Mr. Hughes, in the other column. I think they
^^^**^ taken over at that figure.
^^. The market values that you put the West Twenty-seventh
^ ^^ ^t and the West Twenty-eighth street properties in your last
'^^I^cii^rt to the Insurance Department were $670,000 and the io6th
^*^^**^^t property $185,000, and the West 140th street property
^3^5,000? A. Yes.
^^. Making a total of $1,120,000? A. Yes.
^^. And the book value of the A. Wait one moment.
^^^Xi will add twenty thousand dollars to the Twenty-eighth
^*^et property. A mortgage which was paid oflf prior.
^3- That makes twenty thousand dollars more? A. That
^^*^^"lces twenty thousand dollars more.
^. That would be $1,140,000? A. Yes, sir.
^. And the 35 Nassau street property is carried at a book
^'^ue of $1,193,000? A. $1,193,000. I think there was some
cash paid — ^twenty-five thousand dollars.
Q. Can you give me the whole transaction ?
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Testimony of Edward IV. Scott
MR. GILBERT: There was twenty-five thousand dollars paid
as commission of the Title Guarantee Company for examining
the title.
THE WITNESS : That was quite an item.
Q. What was the amount paid by way of commissions? A.
Eighteen thousand dollars, I think.
MR. GILBERT: One per cent, of value.
Q. To whom was that paid? A. To Maclay & Davies.
Q. And taking the cash payment, the cash payment was made
to the Metropolitan ? A. Yes, sir. The Title Guarantee Com-
pany
Q. Taking the cash payment, the mortgage discharged and
the valuation of the premises exchanged according to your last
report and expenses and commission, you figured up the total
cost of the 35 Nassau street property at $1,193,000? A. Yes,
sir.
Q. I notice by your last report, that is of December 31, 1904,
that all of the real estate carried by. you is carried at a valua-
tion somewhat in excess, or is put at a valuation somewhat in
excess of the book valuation? A. That is usual I think in all
— that is the form submitted by the departments.
Q. Well, it is usual to state book value? A. Yes, it is
usual to state book value.
Q. What I wanted to get at is whether this statement of the
values of your real estate as contrasted with the book values
was the result of an appraisement? A. Yes, sir, all of our
properties are appraised.
Q. Who appraised those properties to give you these values?
A. I cannot tell. We have the appraisals.
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Testimony of Edward W, Scott
Q. Have you a regular appraiser? A. No, independent,
outsider, sir.
Q. IZ>id you have an appraisement made before this last re-
port A?v3.s put in? A. Some time before, yes, sir. I should be
very pleased to furnish you vsrith the appraisals in each case.
Q. I -want to get at the practice of your company in that re-
spect. It is a fact that you do mark up the properties above
the cost to you, do you not? A. Not in all instances.
Q. ^Vell, you have done it in all the instances of property
owned by you at the time of the last report? A. We mark up
the property to correspond somewhat to the appraised or mar-
ket value.
Q- I want to get at what you had to base that action on. In
the form of an appraisement? A. In the form of an appraise-
ment, yes, sir.
Q- You have regular appraisals? A. Yes, sir,
Q- Are those made by the same persons or different per-
sons? A. Different persons.
y* When were these made to get the values stated in your
^ ^^port? A. Well, I should say last year or the year be-
fore.
«• They must have been shortly before December 31st, 1904,
^^^ they not, were you not stating the values A. Well,
^^S" that year or the year previous. I think all those valua-
^^^^ are made
^^- HUGHES: Let me see the report for 1903, please.
(Paper produced.)
Q- ^ow for example, on December 31st, 1903, the property
on West Twenty-seventh street, Nos. 49, 51, 53 and 55 and No.
50 West Twenty-eighth street, taken together, were put at a
book Value of $531,115.30. At the end of 1904 they are put
at book value of $615,555.28? A. Yes, sir.
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Testimony of Edward W. Scott
Q. An increase of about $85,000 in the cost? A. Well, sir,
there was a mortgage paid off in 1903 on that same property.
Q. Increasing the cost in that way? A. Yes, sir.
Q. Of what amount, what was the amount of the mortgage ?
A. I think it was $100,000.
Q. One hundred thousand dollars? A. I think so.
Q. And you put up your valuation according? A. Yes, sir.
Q. Well, the increase in valuation was only about $85,000.
A. Well
Q. Had the cost been reduced by income or did you carry
the income in your income account? A. That I do not know.
I remember it was that year that the mortgage was paid off
on that property.
Q. Was the mortgage paid off on properties on West 140th
street? A. No, sir, I think not.
Q. The book value of that property Nos. 151 to 169 inclu-
sive. West 140th street, is stated in your report at the close of
1903 at $321,550.94, and on December 31st, 1904, at $351,-
472.34, an increase in book value of about $30,000. What was
the occasion for that? A. Well, I presume that that was ow-
ing to improvements.
£^, Were you improving the property? A. I knew there
was new machinery put in that property.
Q. What machinery? A. Some engines.
Q. Well, did you improve it to the extent of $30,000? A.
Well, that I don't know. I know that the improvements amounted
to quite considerable.
Q. The market value of that property is stated in your re-
port at the end of 1903 at $330,000, and at the end of 1904 at
$365,000. Did you have that appraised in 1904? A. I think
so.
Q. You did? A. I think so.
Q. By whom? A. I don't remember.
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Testimonx of Edzcard ]\\ Scott
MR. HUGHES: Is that accurate?
MR. GILBERT: I do not remember.
Q. I find by reference to the report of 1902 that the book
val^^ o^ the premises on West Twenty-seventh street and No.
c^o^^est Twenty-eighth street is put at $430,750, and at the end
c»i 1903 that is increased to $531,000, or by $100,000. What was
the occasion of that? A. Well, perhaps that accounts for the
payment of the $100,000.
Q. The $100,000 of mortgage. If that is so, what accounts
for the increase of $85,000 from December, 1903 to 1904? A.
It must have been marked up.
Q- The book value marked up? A. Yes.
Q. HoAv could you mark up the book value without actually
expending money? I am not speaking of market value, but
^^^k value. That represents cost, does it not? A. Yes, sir.
It might have been an enhancement.
Q- No, not an enhancement-^well that is a point I would
Ike to gr^^ 2Lt. Do you mark up the book value to represent en-
hancement? A. Well, possibly that was done.
y. Oo you know whether it was done or not? A. No, I do
not.
^^- HUGHES: Let me have the report for 1901.
(Paper produced.)
y* Now, I will read upon the record the valuations of the
property consisting of eleven story fireproof brick, stone and
s eel Di4jijjng with four lots on West Twenty-seventh street,
"'^^ Broadway
T^HE WITNESS: Does that include the Twenty-eighth
street property?
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Testimony of Edward W. Scott
MR. HUGHES: I am looking for that now.
THE WITNESS: I think that $85,000 is accounted for by
the acquisition of the property bought in the year.
Q. Apparently the property in Twenty-eighth street is not
included in your report of 1901. Do you remember when that
was acquired? A. No, I do not.
Q. Well, we will start with 1902, and I will read upon the
record of eleven-story fireproof brick, stone and steel buildings
100 feet by 98 feet 9 inches, comprising four lots on West
Twenty-seventh street and the basement brick and stone build-
ing No. 50 West Twenty-eighth street on lot 25 feet by 98 feet
9 inches, report of December 31st, 1902, less mortgage not ma-