1. Stock corporations must have and maintain paid in capital of not less than $150,000 and surplus funds in excess of capital of not less than $50,000. 2 Non-stock corporations or other non-stock organizations or associations issuing non-assessable policies of insurance must have and maintain surplus funds (policyholders' surplus) in excess of all liabilities of not less than $200,000. 3. Non-stock corporations and other non-stock organizations or associations, issuing policies of insurance on an assessable basis only, must have and maintain surplus funds (policyholders' surplus) in excess of all liabilities of not less than $150,000. APPENDIX B Prospects as to settlement of claims filed with officers in charge of the liquidation of the 21 companies The first company, which became involved in 1937, is still in liquidation, and the official in charge is not in a position to make any estimate at this time as to how soon the proceedings will be completed. As yet, no dividend has been paid to any of the creditors, principally for the reason that sufficient funds have not accumulated to warrant the expense of partial dividend to the many creditors of the company. The assets of this company consist largely of real estate of the type which does not command a ready market, and the difficulty of disposing of the property at any reasonable price has hindered the liquidator in winding up the affairs of the company. It is anticipated that within the next 3 or 4 months it may be possible to pay a preliminary dividend of 5 percent, and under existing circumstances, the official in charge is unable to make any estimate as to what additional dividends will ultimately be paid to creditors. The second company became financially involved in 1937. The official in charge of liquidation proceedings has advised that thus far dividends amounting to 44 percent have been paid on personal-injury and property-damage claims. It is expected that the liquidation proceedings will be terminated in the course of the next 90 days with the payment of one further and final dividend of approximately 4 or 5 percent. The third company became involved in 1937. The official in charge of liquidation has advised that, as a result of litigation, the proceedings are still pending. The total amount of claims allowed is $33,689, and it is not possible for him to advise just how much will be available for distribution to claimants, however, it is stated that it is very apparent that there will not be sufficient funds to pay all of these claims in full. The fourth company became involved in 1938. The official in charge of liquidation reports that a total of 4,332 claims were filed for an amount of $7,646,539. Thus far, no adjudication has been made on the bulk of these claims, and he is unable at this time to inform us as to what percentage will ultimately be paid to claimants. It is expected, however, that some payment will be made to creditors during the coming year. The fifth company became financially involved in 1938. Liquidation proceedings have been terminated, and we have been advised that final judgment of the court has now been entered, under which the receiver paid a dividend of 50 percent on all approved claims. The sixth company was placed in liquidation in 1938. We have been advised by the official in charge of liquidation that the proceedings will not be terminated for at least another year. Up to this time, dividends totaling 65 percent of the amount of approved claims have been paid. No information has been furnished as to what additional dividends, if any, will be paid between now and the time the liquidation proceedings are terminated. The seventh company became financially involved in 1938, and the liquidation proceedings are still pending. Twelve thousand seven hundred and five claims have been filed for a total of $6,275,000. Ten thousand eight hundred and forty of these claims have been approved by the court for a total sum of $292,210. There are 1,865 claims that have not yet been approved by the court, and it is expected that the amount claimed will be reduced somewhat, but the official in charge of liquida. tion is unable to furnish any information on this point at the present time. The liquidator further advises that there has been much litigation in these proceedings relative to the rights of underwriters and claimants. Various questions have arisen as to the methods employed by the attorney-in-fact and the operation of the entity, and it is possible, before a distribution can be made to creditors, that more litigation will ensue. For this reason, the official in charge of liquidation is unable to state when the proceedings will be concluded, or the amount of dividend that will ultimately be paid to creditors. The eighth company became financially involved in 1938. Liquidation proceedings have not been terminated, and up to this time, a dividend of only 16.78 percent has been paid to claimants on bodily-injury and property-damage cases. The liquidator instituted a suit against the subscribers for collection of an assessment and, after trial, the court held that the subscribers were not liable. This decision was appealed, and the case is now pending in the court of civil appeals. The case will be briefed and submitted in the early fall, and the liquidator has expressed the belief that the decision of the trial court, as to liability of the subscribers, will be reversed. If so, he is of the opinion that dividends ranging from 75 percent to 100 percent of the amount of claims should ultimately be paid, although it may take another year or two to conclude the liquidation proceedings. The ninth company, which became financially involved in 1938, is still in liquidation. The principal asset of the company was an assessment against policyholders which was resisted. It is reported there have been 931 claims filed in the liquidation proceeding for a total sum of $2,818,583. It is expected that this amount will be reduced somewhat upon adjudication, but the official in charge is unable to estimate the extent of the reduction. The adjudication of claims has been withheld pending conclusion of litigation involving an interpretation of certain provisions of the State Insurance Code pertaining to the liquidation of insolvent insurance companies. No estimate of the amount of dividend, if any, that will ultimately be paid to policyholders has been furnished by the liquidator. The tenth company became financially involved in 1938. We have been advised by the official in charge that the liquidation proceedings have not yet been terminated. No approved claims have been paid to date, although it is expected that the proceedings will be terminated by November of this year, at which time it is expected that a dividend of 3 percent will be paid. The eleventh company became involved in 1939. We have no information of the status of the liquidation proceedings in this case. The twelfth company became financially involved in 1939, and it is not expected that liquidation proceedings will be concluded before the end of the year. It is stated that collection of assessments against former policyholders has been greatly delayed by reason of a number of test cases which, after having been taken, were decided in favor of the liquidator who is now proceeding with trial of approximately 2,000 suits against former policyholders of the company. It is further reported that the court has not yet passed upon the validity of any claims filed against the receiver, and collections have not proceeded far enough to enable the liquidator to form any opinion regarding the amount of dividend that will eventually be paid to creditors, although he believes it will be substantial. The thirteenth company was placed in liquidation in 1939. We have been advised by the official in charge that the liquidation proceedings have not been terminated. A dividend of 18 percent has been paid on approved claims to date and, while it is expected that the proceedings will be completed within the next 3 months, it does not appear likely that any additional amount will be paid at that time. The fourteenth company, which became involved in 1939, is still in liquidation, and no dividend has been or can be paid to creditors unless the liquidator is successful in maintaining a suit against the subscribers for an assessment. Even then, it is stated, there is some doubt about the final results, since many of the insureds were themselves insolvent, and it is expected that the assessment, if levied, will be uncollectible. It is also stated that there will be a considerable lapse of time involved in the process. The fifteenth company, which became financially involved in 1940, has paid its unsecured creditors one dividend of 5 percent. The assets have been practically liquidated except a claim against the underwriters which is now in suit. The liquidator has stated that, even though this suit is successful, he has some doubt about the ability to recover from a number of the underwriters. Nevertheless, he considers it safe to say that there will be a small final dividend paid. The sixteenth company became financially involved in 1940. The official in charge of liquidation has advised that a dividend of 60 percent has been paid on approved claims and, while there are some cases still in litigation, it is expected that after these are settled another small dividend will be paid. Liquidation The seventeenth company became financially involved in 1940. proceedings were terminated in March 1942, and while 100 cents on the dollar were paid on preferred claims, only 211⁄2 cents on the dollar were paid on policyholder obligations and claims of general creditors. The eighteenth company placed in liquidation in 1941 expects to pay a dividend of 5 percent to unsecured creditors within a month. Further dividends will depend upon success in collecting the few remaining assets and in levying and collecting an assessment against the subscribers. The nineteenth company, which became involved in 1941, has as yet paid no dividend to unsecured creditors. It is reported that the liquidation proceedings are going forward fairly satisfactorily, and that a dividend will eventually be paid; but the amount and time of payment depends on future collections and the satisfactory settlement of some litigation against the company. The twentieth company became involved in 1941, and liquidation proceedings have not yet been concluded. Assessment levied against policyholders was resisted. The court has upheld the assessment, and the liquidator is now starting action against the various policyholders who have refused to pay their assessments; but he is not in a position to advise as to the amount that will ultimately be paid to claimants or when such payment will be made. The twenty-first company became financially involved in 1942. The liquidation proceedings are still pending, and we are advised that no claims have as yet been paid. The only liquid asset of the company consists of a deposit with the Treasurer of the State, and this is the subject of litigation. If this deposit is awarded to the receiver by the courts, it will represent about the only asset available to apply to the payment of claims totaling $175,000. No information could be obtained at this time as to when the liquidation proceedings will be concluded, or the amount that will ultimately be paid to creditors. No. MC-12267 WILLIAM S. MERRIMAN BROKER APPLICATION Submitted December 19, 1942. Decided April 12, 1944 Operation by applicant at Columbus, Ohio, as a broker of transportation by motor vehicle, of clay products and building materials, between points in Ohio, Indiana, and Pennsylvania, found not consistent with the public interest and the national transportation policy. Application denied. Peter E. Dempsey and Andrew J. White, Jr., for applicant. DIVISION 5, COMMISSIONERS LEE, ROGERS, AND PATTERSON BY DIVISION 5: No exceptions were filed to the order recommended by the joint board, but it was stayed by us. Our conclusions differ from those recommended. By application filed March 11, 1942, William S. Merriman, of Columbus, Ohio, seeks a license authorizing operation as a broker, in interstate or foreign commerce, in arranging transportation by motor vehicle of clay products and building materials, between points in Ohio, Indiana, and Pennsylvania. No one opposes the application. Applicant is president and is in charge of sales, of the Buckeye Materials Company, of Columbus, a corporation engaged in the business of wholesale buying and selling of building materials. He is also president of the Standard Materials Company, a separate corporation doing a retail building-materials business only, at Columbus. Applicant and his wife, together, own approximately 90 percent of the stock of Buckeye Materials Company, hereinafter referred to as Buckeye. Buckeye handles a complete line of fireproof building materials, clay goods, lime, et cetera. The clay goods are bought from various sources in Ohio, Indiana, and Kentucky, but mostly from two plants located at Uhrichsville, Ohio. In the normal course of its business, Buckeye sells building materials which are not in stock but are shipped directly from the manufacturer or producer to the purchaser. Applicant proposes in his individual capacity to sell to manufacturers or producers, the services of motor carriers for the movement of supplies purchased by Buckeye or other jobbers, collecting from the carriers a commission of 15 percent of their freight charges. In support of his proposal, he asserts that in many instances factories are partial to a particular carrier and hold orders for an unusual length of time until such carrier is available; that such delays sometimes result in the retarding of the completion of a construction project; and that prompt and efficient transportation is important because the materials sold are not carried in stock by contractors and they have no backlog on which to rely. He further asserts that, relying solely on the shipper or the consignee for the designation of the carrier, he has not been able to obtain satisfactory transportation of supplies sold by Buckeye. Should the proposed broker service be authorized, it is conceded that at first, at least, practically all of the transportation sold to manufacturers would be that necessary in connection with purchases by Buckeye. The latter's salesmen would act as agents of applicant in obtaining return loads for the carriers whenever possible. One carrier, the Voges Trucking Company, of Dennison, Ohio, has agreed to employ applicant in arranging transportation service between points in Ohio, Indiana, and Pennsylvania. Applicant, at the time of hearing, had not contacted any other carrier. The joint board, in its report and recommended order, found that operation by applicant as a broker, at Columbus, in arranging transportation by motor vehicle, of clay products and building materials, between points in Ohio, Indiana, and Pennsylvania would be consistent with the public interest and the national transportation policy. We are convinced that the application should be denied. The record implies that the purchase price to applicant's company of merchandise shipped by the manufacturer directly to the consumer includes the cost of the transportation to destination. In other words, it does not definitely appear that applicant, as an individual, is proposing to collect from carriers a commission on transportation charges paid them by the corporation which he controls, but on the other hand the record is so meager and uncertain in this respect that it does not negative the possibility. In any event applicant. through the corporation which he controls, is a large shipper whose employment by the carriers as a broker may readily be induced by considerations other than a need for his brokerage service. The burden is on him to show affirmatively, by competent evidence, that his proposed brokerage operations will be consistent with the public interest and national transportation policy. This he has failed to do. To permit him, a shipper, without the rendition of some corresponding service of commensurate value, to exact of the carriers a commission on the business allotted to them, definitely would not be consistent with the public interest and national transportation policy. The fact that no one opposes the application is not controlling. We are of the opinion |