Thursday, June 28, 2012

Chauncey Depew

The Minneapolis Journal, September 28, 1905, Page 1, Column 3, Equitable Cash Enriches Depew

New York Sun Special Service.

New York. Sept. 28.-—Almost every conceivable form of corporate trickery has been revealed by the Armstrong legislative committee in its investigation of the Equitable Life Assurance society, yesterday and today. Disclosure after disclosure was made of new offenses, none of which was touched upon by either the Hendricks investigation or that of the Frick committee. It was shown:

First—That profits made by the Equitable society out of syndicate operations amounting to $139,576.24 never reached the coffers of the Equitable Life. Some of them have disappeared altogether, others have been traced into a fund known as "George H. Squire trustee account." which was kept in the Equitable Trust company.

Second—That syndicate operations, of which there are no record whatever on the books of the Equitable Life, were gone into and yielded profits which were also deposited to the credit of the George H. Squire trustee account.

'Yellow-Dog" Funds.

Third—That in addition to the "yellow-dog" funds, known as the "J. W. A. No. 3 account," [why doesn't the newspaper call it by its rightful name---the "J. W. Alexander No. 3 account?"] and the "George H. Squire trustee account," this was a third "yellow-dog" fund known as the "Marcellus Hartley [Union Carbide--the original military-industrial complexer] trustee account," which was kept in the Mercantile Trust company.

Fourth—That James H. Hyde and associates, in taking part in the Atlantic Coast Line syndicate, made a dummy loan from the Equitable Trust company for $626,000 on a note signed by E. Barrington, a clerk in the employ of the Equitable. This loan corresponds in a way with the loans made by the New York Life for $2,500,000 thru the negro messenger, George W. Marshall.

Depew in the Syndicate.

Fifth—That in the Chicago, Burlington & Quincy syndicate, formed in May, 1901, such men as Senator Chauncey M. Depew, Marcellus Hartley, William A. Wheelock. General Louis Fitzgerald, Joseph W. Alexander, James H. Hyde and George H. Squire each took a participation of $100,000 and the Equitable Life was put down by its officers for a $500,000 participation. The Equitable Life was made responsible for a total participation of $1,500,000, put up all the money called for by the syndicate manager, J. P. Morgan, and then finally received only $7,729 as its share of $37,000, which were the profits on the participation of $1,500,000. In other words, the men just named used the Equitable's money to get a share of the syndicate's profits on a subscription that was originally made hy the Equitable Life. These men paid 4 per cent interest for their proportion of the money: which the Equitable Life advanced.

Reaped on Equitable Money.

Sixth—That in the Philadelphia, Baltimore and Washington and Long Island road syndicate James H. Hyde and associates, who participated, were carried by the Equitable Life money and did not even pay interest on the sums advanced, the syndicate managers, Kuhn, Loeb & Co., paying the interest charges.

Seventh—That Senator Chauncey M. Depew and a number of other very eminent men in the old directorate of the Equitable Life participated in under-writing syndicates which sold securities to the Equitable on precisely the same line as did James H. Hyde and associates. It is believed that suits will be instituted for the recovery of

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all the syndicate profits made by these men.

Most Valuable Discovery.

The most valuable discovery made by inquisitor Hughes dealt with the George H. Squire trustee account. It was originally opened in October, 1900, in the American Deposit & Loan company, which was the predecessor of the Equitable Trust company. Henry Rogers Winthrop, financial manager of the Equitable Life, testified as to this account.

A young clerk in the employ of the Equitable named Henry Greaves, produced the passbook used by Mr. Squire with the Equitable Trust company, in which a record of the deposits to the credit of the mysterious funds was made.

One of Greaves' duties was to enter in a minute book a record of all the moneys deposited by Mr. Squire to the credit of the George H. Squire trustee account. Mr. Squire, it developed, simply Save the young man oral instructions about these entries, and in several instances he told him nothing about sums of money which eventually found their way into the mysterious account.

Profits Thru Syndicates.

The total of the deposits to this account was $165,000. Nearly all of this represented profits made by the Equitable Life in syndicate operations. In hunting down a deposit of $54,631.13, made in 1902, Mr. Hughes discovered that this sum represented the balance on an account in the Mercantile company known as the Marcellus Hartley trustee account. Mr. Hartley died some time before this transfer was made. And it is presumed that the functions, of the Hartley account were transferred upon his death to the Squire trustee account.

The Squire trustee account was wound up by transferring the balance of $100,000 to the credit of the yellow-dog fund, known as the " J. W. A."No. 3 account," carried on the books of the Mercantile Trust company. This notorious $685,000 account has been paid up.

What May Be Shown.

Mr. Hughes expects to be able to show just where the unaccounted for $65,000 of the Squire trustee account went and who got the money. Thomas B. Jordan, former controller of the Equitable; William H. Mclntyre, its former fourth vice president, and George H. Squires could have drawn against the Squire account. It is doubtful whether they will testify. Mr. Jordan and Mr. Mclntyre are out of the state and Mr. Squire is ill.

September 28, 1905, The Minneapolis Journal, Depew's Protests and Lame Excuse

Depew, April 6. 1905.—That (referring to reports that he had received large sums from the Equitable) Is a jJoke. The only money I have received has been my director's fees for attending monthly meetings.

Depew, testifying before State Superintendent of Insurance Hendricks (testimony taken May 9, 1905, and published July 11)—Mr. Hyde wanted me to come here and stay here as counsel. * * * He offered $20,000 a year. I consulted Mr. Alexander. * * * He thought It an advisable thing to do.

Depew, May 19, 1905, (testifying as to his own liability as guarantor of the Depew Improvement company's loan)—As a lawyer, I don't think so (that I am bound by my guarantee of the loan to this company) and I am informed by counsel for the receiver that it does not.

Depew, March 2.—As a member of the executive committee, I am in a position to state that every investment has been made with even greater care than the members would exercise in handling their own affairs.

Depew, Every Day Since April.—I have made no money out of the Equitable, or out of my connection with the Equitable, but my fees as a director of the society and as counsel of the society.

Sept. 27.—Q.—(By Reporter)—Senator Depew, how do you reconcile your previous statements with the testimony that you shared in syndicate profits? A.—I understood when I went into these transactions that they were at my own risk. I do not call this making money out of the Equitable.

July 12, 1905, Los Angeles Times, Page 1, Column 4, Depew’s Course Outrages Yale. Connection with Equitable Loudly Condemned. Discredit is Felt Keenly. "Town Topics" Is Accused. Fellow Members of the Corporation of University Trustees Clamor for Resignation of Their Old Colleague.

NEW HAVEN, Conn., July 11.— The disclosures made regarding the connection of Chauncey M. Depew with the Equitable Life Insurance company have deeply shocked Yale men, Depew being a member of that sedate body, the Yale corporation of university trustees. The corporation last month swallowed a million of Rockefeller's "tainted money," but the revelations regarding Depew stick in their throats.

A stout clamor went up today for Depew's resignation from the corporation. It is practically certain that if he does not resign, he will fall at re-election next year.

The prevailing Yale sentiment In the matter Is voiced In the following editorial in the New Haven Evening Register:

"Every Yale man feels the discredit of Depew's behavior, for repeatedly have they elected him to the corporation and cheered him when misunderstanding him. His alma mater gave him the degree of doctor of laws. When his term expires next year, unless he voluntarily retires, it will be necessary to remove him from the board of control. He should begin now to plan for an escape from that humiliation."

[What they (his fellow members of Skull & Bones,) were objecting to was in his getting caught--the one unpardonable sin.]

July 12, 1905, New York Times, Page 2, Equitable Testimony That Hendricks Got. Loan of $250,000 to a Depew Concern Valued at $150,000.
RECORDS FALSE, SCHIFF SAID. They Showed U. P. Sales to Society By Kuhn, Loeb & Co.-—Alexander Said He Was No Money Maker.

A summary and large section of the testimony upon which the Hendricks report on the scandals In the Equitable Life Assurance Society was based were made public yesterday by The New York World. It contains fresh revelations of dealings between United States Senator Chauncey M. Depew and the Equitable, testimony of Jacob H. Schiff in regard to the society's investments in bonds, testimony of Messrs. Hyde and Alexander, and other matters.

Mr. Depew was asked to explain what he had done to earn the $20,000 salary paid him yearly since 1889. He said:

"Mr. Hyde the elder retained me as one of the general counsel for the company about thirty years ago on a sort of a general retainer. In 1877, I think, I was elected a Director and bought my stock. Mr. Hyde was calling on me constantly for counsel. Of course I did not appear in the courts and all that, but he thought I was a master of corporation law, and he wanted my advice upon matters connected with the conduct of the business of the company and of its investments especially. At that time the company was weak on that side.

Never Presented Bill.

"I never presented a bill, but he would send me a check for what he thought my services were worth at different times. At one time, somewhere in the eighties, he came to my house every day for a while, because the company had become involved in very bad investments. He was in great distress about it and placed the matter entirely in my hands, with the result that I brought the company out of the difficulties and put them in a way that they made a great deal of money; that is, in investments that appreciated in value and things of that kind.

Then Mr. Hyde wanted me to come here permanently at a very large salary and stay here as counsel. My ambitions were in another direction than that, and, though he offered me very much more than I was getting in the general counselships which I had. I refused. I told him that, while I was perfectly willing to act act as I had been doing for such calls as he would choose to make for my legal ability and general advisory ability as lawyer, administrator, and financier, he could not offer me any consideration that would tempt me to leave where I was and the things I had and come here.

"He then sent for me one day and said, 'I wish to pay you, so that I may have a larger privilege than calling upon you at different times, but may come to you at all times, and call upon you at all times or consult you at any time, and I want to know if you would accept a retainer of $20,000 a year.'

"I consulted Mr. Alexander whether I had better do that, and he said, 'Yes, I think I would.' I said I was in some doubt about accepting an annual retainer in that way. and he said he thought it was an advisable thing to do.

Often Consulted.

"From that time out both Mr. Hyde and Mr. Alexander and others have up to the present moment consulted me on all matters where they wanted some advice outside of their regular counsel. For instance, they would come to me on lawsuits and would submit to me, Mr. Hyde especially, the situation. He was very apprehensive in lawsuits. I would take up the matter and look It over, and if I advised a settlement I would often take part in the settlement and secure terms for the company which he thought were better than could be made in any other way.

"The same way in matters recently. Since Mr. Hyde's death Mr. Alexander has consulted me, and young Mr. Hyde has consulted me in regard to matters where the company was involved in suits and where it was involved in trouble with other companies and with other States.

"My knowledge acquired in other capacities of retaining counsel all over the country has made me familiar with the men at the bar who are best for certain purposes in litigation. My advice in that matter has generally been asked and of course freely given.

His $20,000 Fees.

"The same way In regard to litigation where settlements were to be had. If I advised settlement then I consulted with the counsel, but especially consulted with the executive officers as to the terms on which these settlements were advisable and often saw the parties themselves, using whatever talent I had in that line, the position I had at the bar and generally to bring about settlements which would be for the best interests of the company. My retainer has always been subject to withdrawal at any time, any day, and when I have suggested retirement it has been objected to. It is an annual retainer of $20,000, subject to be dropped at a moment's notice. As to what the value of the services of a lawyer who gives that sort of advice is I can only say that I have received a much larger fee for one single service.

Mr. Depew then volunteered further information as follows;

"I want to say that I have recently consulted with the regularly retained attorneys of the company as to what they thought of this, and they said that I had earned all of the fee and thought the company had made a good arrangement in securing me as one of their general counsels

Mr. Depew was then asked about the loans of the Depew Improvement Company. He said:

"I have been, I think, unusually successful in my practice in pulling clients out of financial difficulties and in administering their estates when they put them in my hands, as several of them have done, and I now have properties to the amount of a good many millions of dollars of several people who leave their properties entirely in my hands to be administered as I see fit, and in all such things I have made money for the clients. But whenever I take a thing for myself I demonstrate that when a lawyer is his own client he has a fool for a client.

"The Depew Improvement Company--I don't remember when it was organized, but it was got up by some number of prominent people in Buffalo and the late Walter Webb. After it was organized the New York Central wanted to establish shops in Buffalo, but not in the city limits and on the line of the road, and they presented to the New York Central a large tract for their shops, made them a present of it, which was a very profitable thing for the company, because the land has become valuable.

"Then they named it Depew, after me, without my consent or knowledge. Of course, when they came around to see me I didn't make any row about it, but if they had consulted me about it I wouldn't have let it be done. I had no interest in it whatever. I don't know how many years it ran along, not knowing a thing about it, when one day Mr. Walter Webb came into my office and said he had formed a syndicate to buy a large block, I think a majority of the stock. I think there was a million and a half of stock in it.

The Depew Company.

"He said he had got his friends to subscribe, six of them, I believe, for $700,000 of this stock, and he had assigned $100,000 of it to me. I told him I wasn't in the habit of taking $100,000 interests, and I would rather not do it, and he said: 'Very well; I knew what you would say, and so I have opened an account in my bank. I have pur up the stock as collateral; I have borrowed $100,000 for you, so you need have no trouble, and here is a check and note and you sign these two. You have got your stock, and in three months it will be sold out and we will make a handsome profit.

"And I did what many a man has done before, I signed a note and that check. The prospects of the company seemed unusually good, and of course I was too busy a man to pay any attention to it, and it was run by Mr. Webb and by a very expensive $15,000 a year general manager.

"Precisely what was the matter with the company that it didn't get on I never knew, and don't know now. Within the last two years I think the managers of it came to me as one of the large stockholders and wanted me to advance money, loan them money, which I did; and other gentlemen, who were stockholders, did the same—-all the time presenting glowing accounts of what would happen to the company when they got water from Lake Erie, which they did, and when they got electric power from Niagara, which they did.

"Then the managers came to me and said they had a valuation on the property at $1,300,000. and that that was only 10 per cent. of the price at which the lots had been valued at the time the company was formed, and that they, had the best experts In the country to demonstrate that value on the property.

Didn't Advise Loan.

"In regard to this loan, I never had anything to do with it. I never applied for it, or advised it or asked for it. It was done, as I understand, by an application from the managers of the company and upon appraisal by the officials who are appointed for that purpose by the company itself.

"That is all I know, except that recent valuations have been brought to me by the receiver and by the people who act for me that the whole property, taken all in all, is worth about $1,000,000.

"In the meantime, when this scheme was formed of a reorganization in order to relieve the property of a floating indebtedness which was like to absorb the property outside of that covered by the Equitable mortgage, I became a guarantor for $50,000 for the money which took up that indebtedness."

Q.--Are you aware that the amount of the mortgage given to the Equitable Society was $250,000. A.--I knew generally about that; yes, Sir.

Q.--And that it had run up to about $300,000 with interests and costs? A.--I didn't know that.

Q.--You voted in favor of this loan on the Executive Committee? A.--I think I did, but I want to say that I didn't advise the loan, and was not consulted about it at all.

Q.--I suppose you are aware that in 1901 there was an appraisement made by the Insurance Department of that property, and its appraisal was $150,000? A.--No; I didn't know about that. Didn't I write a letter--

Q.--You wrote a letter to the Insurance Department, asking us to reappraise. A.--Yes; that was because the manager asked me to write the letter on the ground that the appraisers didn't understand their business, and that the appraisal was ridiculously below the real value. I have no kind of doubt, from investigations I have made, that under a proper management of people on the ground, with a capitol sufficient to invite and help new enterprises that might come there, and to build houses, &c., that not only the Equitable mortagage, but everybody is amply secured.

Q.--You said the mortgage was foreclosed and you understood that the property was bid in by the society? A.--Yes, Sir.

Q.--And that the society has been waiting to have something done about it? A.--Yes, some arrangement that I am not familiar with.

Q.--I show you an exhibit here. It is not the original, but it is claimed to be a copy of the original which is on file in the society's records. A.--I remember that.

Q.--What were the circumstance which caused you to sign that statement? A.--If I remember right, that was brought to me by a lawyer who told me that the Equitable Trust Company would take bonds sufficient--I will say right here when the guarentors signed the guaranty the manager said that no money would ever be required of us because they had parties that were going to buy the property and take it off our hands.

Q.--You mean the guaranty for the $50,000? A.--I mean this paper. The lawyer brought that to me with the statement that the Equitable Trust Company had or would make an agreement to take $700,000 bonds which were to be issued by a new company to be formed, and the details of it I don't remember.

Q.--I will ask you a word on the details. It appears that there was to be a reorganization of the company? A.--Yes.

Q.--To be stocked at $750,000? A.--Yes, Sir.

Q.--And enough of these bonds at par were to be transferred to the Equitable Society to cover the mortgage and interests and costs? A.--Yes Sir.

Q.--Then the Equitable Society was to transfer those bonds to the Equitable Trust Company? A.--Yes, Sir.

Were to Guarantee.

Q.--And get the money on them that you and Mr. Twombly and John Jacob Astor and Seward Webb were to guarantee to the Equitable Trust? A.--Yes, Sir,

Q.--And save it harmless from taking those bonds? A.--Yes, Sir.

Q.--Now the company was never organized? A.--No. Why that never went through I really don't know.

Q.--You agreed to guarantee those bonds? A.--I couldn't answer that question. I would have to refer that to the manager, and the lawyer who did it.

Q.--As a lawyer, do you think that this paper fixes any liability on you of any kind? A.--As a lawyer I don't think so and I am informed by the counsel of the receiver that it does not.

Q.--Mr. Brown says that he was advised by one of the lawyers in Alexander & Green's office that this paper held you personally liable, you and Mr. Webb? A.--If it does we can't help ourselves.

Q.--Is it your judgment now that the Equitable will lose the money? A.--I think it will make every penny of it.

Q.--How is it going to make it? A.--Out of this property. This is good property. There are 4,000 people there, twenty-eight industrles, five railroads going through it, and two trolley lines running down to it.

Q.--I don't suppose any of the gentlemen, John Jacob Astor, or Mr. Twombley, or Mr. Webb, will take it off the society's hands? A.--As I understand it there are between three and four hundred acres not covered by the mortgage, and I understand that there are a large number of lots which are now subdivided and which are on the streets which are not covered by the mortgage.

Mr. Depew was then shown the recommendation signed by him and Mr. Snyder increasing the salaries of Mr. Alexander and young Mr. Hyde. Mr. Driscoll said:

"Some people seem to think that Mr. Hyde is getting a pretty big salary for his services in the society, and it is stated here that you and Mr. Snyder were the two gentlemen who advised the last raise of $25,000 in his and Mr. Alexander's salaries. Mr. Snyder says that all he can recollect about it is that you spoke to him about it at lunch and put this paper before him to sign and he signed it. He thought all it covered was Mr. Hyde's salary."

"My recollection isn't exactly that," said Mr. Depew. "The matter was brought up in the Executive Committee and referred to Mr. Snyder and myself as a committee, and we took it up. The matter had been presented--I don't know whether to Mr. Snyder, certainly to me--before, that the enormous increase in the business, the salaries which were being received by the Presidents of the other large companies, which were understood to be $100,000. and the success that the company was having at that time in the increase of both its surplus, the amount of insurance placed upon its books, and the extension of its business in foreign countries justified these salaries, and on that presentation I assented to it."

Mr. Hyde's Salary.

Q.--Did you really think that Mr. Hyde was entitled to a salary on the merits of $100,000 a year, all things considered? A.--There is a multiplex consideration in there. In the first place, his father was the founder of the company and had built it up, and I always thought that if the elder Hyde had devoted the same talent to his individual affairs that he did to this company he would have died one of the greatest millionaires in the country. But he gave it all here, and compared with his ability and what he accomplished he left, as I understand, a very moderate estate compared to what he would have done.

Q.--Were you aware that Mr. Hyde was the one and not Mr. Alexander who wanted an increase? A.--I can't recall which one spoke to me on the subject. I rather think that Mr. Hyde wanted it more than Mr. Alexander did. I am quite sure of that.

Q.--And you had to keep the President's salary up with the Vice President's? A.--Yes, Sir, I certainly wouldn't have voted to give more salary to the Vice President than the President. Q--When you signed this recommendation to increase his salary up to $100,000, were you aware that he received about $28,000 from subsidiary companies of this society; A.--I didn't know that until this investigation began.

Depew Appraised.

Gerald R. Brown, Superintendent of the Equitable bond and mortgage department, was sworn and asked if he had the appraisement upon which the loan was made on the Depew property.

"I have the amount of it, $393,750," he said, "made by our regular appraiser, E. P. Bramwell."

Q.--How much was the loan? A.--$250,000 at 6 per cent.

Q.--The mortgages made to the Depew Ccmpany? A.--The Depew Improvement Company. The loan is still in existence. It now amounts to $275,718.94. The property has been foreclosed, and the expenses and accumulating interest since the time of foreclosure have run the claim up to that amount.

Q.--How do you carry it as a loan if it has been foreclosed? A.--Because we haven't put the referee's deeds upon record. Ever since the foreclosure proceedings to have the Depew Improvement Company reorganized and practically take the property off our hands have been going on, these negotiations have not yet reached a point where we could say they were final.

Q.--Is there any guarantee to that mortgage? A.--At the time the mortgage was made we had no bond other than the bond of the Depew Improvement Company. When the foreclosure was started, at the request of Senator Depew and the counsel of the Depew Improvement Company, H. P. Anderson, for the purpose of protecting title and shutting out claims that might make long litigation, we said that we should have some guarantee, as we did not care to buy in this property, and before the property went to sale at foreclosure.

"Mr. Anderson prepared a contract," Mr. Brown said, "between ourselves and Senator Depew and Mr. Seward Webb, by which they guaranteed to form a new company and issue bonds, which bonds they would deliver to us for the property if we would turn it over to them. In addition to that we had an agreement between the Equitable Trust Company and ourselves to pay us the amounts of our claims when we turned them over to them, and I have brought with me copies of those agreements and a statement of the proposed reorganization plan of the Depew Improvement Company.

"I understand that the Equitable Trust Company had an agreement with Messrs. Depew, Seward Webb, H. McK. Twombly, and John Jacob Astor. who were interested in the Depew Improvement Company, to pay them to take these bonds off our hands, for which they were to pay us, and that agreement was originally made in the Winter of 1903 and had until Aug. 1, 1903, to run.

"It was extended by the Equitable Trust Company until, say. Dec. 15 of that year. Meanwhile Senator Depew was doing everything in his power to get his associates to come together and reorganize the company and put in more money and take the thing off our hands. He was ready with his share and perfectly willing to carry it out as far as he was concerned, but the matter dragged along and is still in that state. We have negotiations now with some of the gentlemen, whom Senator Depew has interested in the matter, and it is possible that within a week or ten days we may have a proposition from him. We hope so, anyhow."

Q.--When we examined the Equitable in 1901 we had an appraisement made of that property? A.--Yes, you wrote to us on May l6, 1901, appraising the property at $225,000 and recommending a call of $97,000 on account.

Q.--Our appraisement at that time was, $150,000? A.--In October, 1901, you wrote us stating that you had an appraisement made and inclosing a copy of it putting the figures at $150,000. It was at that time that I notified these gentlemen and the foreclosure proceedings were begun, and we wrote to you Dec. 18, 1901, that foreclosure proceedings were in progress, and the Depew Improvement Company assured us that we would be protected. You replied to that in due course.

Q.--I think Mr. Depew wrote me that he had thought the appraisment was low, but after that we filed a report of the appraisement at $150,000? A.--Yes, and that is what started us on the foreclosure.

Q.--What was the deficiency judgment? A.--I think we bid the property in. I think our bid was $50,000 and the deficiency judgment was $198,400.98. Our claim on Feb. 9 was $249,033.49 with interest at 6 per cent, from Nov. 24, 1902, the day judgment was taken.

Q.--Will you state who appraised this property? A.--E. P. Bramwell, and I think we had an appraisement from Michael Coleman, but Mr. Bramwell's was the one I quoted.

Q.--How long since any interest has been paid on that mortgage? A.--I think the first default of interest was made in December, 1901, after the Superintendent wrote us.

Q.--It was payable semi-annually? A.--Yes, Sir, June and December.

Q.--So that six months' interest was due Dec. 1, 1901? A.--Yes, Sir. I won't be sure of the date, but I think that is the date.

Q.--And no interest has been paid since? A.--No interest has been paid since because it has been in foreclosure.

Q.--Who were the attorneys who foreclosed it? A.--Alexander & Green.

The Equitable's Guarantee.

Q.--As I understand your statement, unless there is a reorganization of the Depew Company the Equitable has no guarantee beyond the mortgage? A.--Except whatever claim we have under these guarantees.

Q.--As I understand it, Senator Depew agreed to effect a reorganization of the company? A.--Yes, Sir.

Q.--And if he did effect a reorganization of the company they were to issue bonds, and the bonds were to be taken by the Equitable Trust Company? A.--Yes, Sir.

Q.--Under an agreement made by Mr. Depew, Mr. Astor, Mr. Webb, and Mr. Twombly that they would guarantee the payment of the bonds? A.--They would take these bonds off the hands of the trust company.

Q.--So that by your statement there is no security so far as the Equitable is concerned unless the reorganization is perfected? A.--Yes, Sir.

Q.--Nor until that reorganization is effected can they issue the bonds? A.--No security than we have in the property itself and whatever claim there may be under the deficiency judgment. The Depew Improvement Company had other property in the village of Depew which was not covered by our mortgage, and the deficiency judgment ought to have some reasonable claim against that property or the equities in it. These are purely legal questions, that it would be rather difficult to explain.

Q.--Do you know how much equity they have got in other properties? A.--I don't.

Q.--Who would be likely to know? Does Mr. Depew know? A.--I think he would be likely to know; yes, Sir.

Q.--Did any lawyer for the society pass on the legality and binding force of this agreement on the part of W. S. Webb and Chauncey Depew? A.--I think it was submitted to Alexander & Green

Q.--And by whom was it submitted? A.--Probably by Mr. Anderson, the counsel for the Depew Improvement Company.

Q.--And what did Alexander & Green report on it? I refer, now especially to the first half page of that signed by Mr. Webb and Mr. Depew? A.--I don't recollect.

Q.--Did you get any advice to the effect that they would be held provided the Depew would be personally responsible? A.--I don't think the matter came up that way. I think they just confined themselves to saying that this agreement would hold if carried out.

Q.--Didn't you make any inquiry as to whether somebody would be responsible to the society? A.--Yes, I did.

Hold Depew and Webb.

Q.--What information did you get on that point? A.--When the time came later on that year we went up to Alexander & Green, and they advised us that we could hold Mr. Webb and Senator Depew.

Q.--Who advised you to that effect? A.--Messrs. Alexander & Green.

Q.--Which one of them? A.--Mr. Oliver, of the real estate department.

Q.--Did you talk with Mr. Charles B. Alexander about it? A.--Yes, I talked with him also at that time.

Q.--And what did he say? A.--He thought we could hold Senator Depew and Mr. Webb.

Q.--Personally? A.--Yes, Sir.

Q.--For the performance of this contract? A.--Yes, Sir.

Q.--And for the protection of the Equitable Society? A.--Yes, Sir.

Q.--And that the Equitable Society would be protected by giving this extension of time? A.--Yes, Sir.

Q.--You are quite sure that Mr. Alexander so advised you at the time? A.--Yes, Sir.

Q --Have you since learned that the attorneys either for Mr. Depew or Mr. Webb claimed that there is no personal liability against Mr. Webb, or Mr. Depew? A.--Mr. H. B. Anderson has given me that impression.

Q.--And who is he? A.--He is, or was, counsel for the Depew Improvement Company.

Q.--What reason have you to give, if any, for not trying to enforce your judgment of deficiency against the property of the Depew Improvement Company? A.--I reported the matter to the President and the negotiations have been in progress, as I said before, looking to the reorganization of this company and its rehabilitation, and latterly negotiations have been in progress with outside people to take hold of the matter and clear it up.

Q.--Have you personally spoken to Mr. Webb or Mr. Depew and suggested that they were personally responsible for the performance of this agreement and liable to the Equitable Society for loss? A.--I personally have not seen Mr. Webb. I have spoken to Mr. Depew because it was at his request that I examined the property a year ago.

Q.--What did you say to him on that subject? A.--At that time he led me to believe that he was going to see the Equitable through without any loss.

Q.--What did he say in substance? A.--He said in substance that he had been dragged into this matter by Walter Webb--who is now deceased--I believe a brother of Dr. Seward Webb; that the place had been named after him without his consent, and that he had sunk $125,000 to $150,000 of his own money in it, which he was willing to lose if necessary or put in more to help the Equitable out and get it out without loss.

Depew's Promise.

Q.--Did he say in substance that he would save the Equitable harmless for the delay? A.--Yes, he did.

Q.--That promise on his part has never been reduced to writing, except so far as it appears in this exhibit? A.--No, Sir.

Q.--And I suppose that you understood a personal promise of the sort was not legally binding, didn't you? A.--Yes, Sir.

Q.--Do you know if Mr. Depew made the same statement to any other person in your presence? A.--He made the statement to the Controller of the society in my presence.

Q.--To Mr. Jordan? A.--Yes. Sir. Alvin W, Krech, President of the Equitable Trust Company, recalled on June 6, was asked about the plan to save the Depew company and whether John Jacob Astor was to be one of the guarantors.

He said: A.--Yes, I believe so. I think he was one of them. They were to agree to take the bonds from the Equitable Trust Company at a price, in consideration of the Equitable Trust Company's taking these bonds from the Equitable Life Assurance Society, which should liquidate the debt to the Equitable Life Assurance Society. My best recollection is that Mr. Depew only succeeded in getting one other signature, possibly two. He did not succeed in getting them all, and those who had signed would not come in because the others did not sign.

Q.--So there is no agreement of that sort? A.--There is no agreement of that sort.

Pilgrims Society Co-Founder1

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