Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 18, no. 451: November 4, 1876

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Real Estate Record AND BUILDERS' GUIDE. Vol. XVIII. NEW YOEK, SATUEDAY, NOVEMBEE 4, 1876. No. 451 Publislied Weekly by CIjD §leal (f sf ate %ttaxii %%^omimx. TERMS. ONK YEAR, in advance.. ..$10.00. Communications should be addressed to C. MV. SWEET, Nos. 345 AND 347 Broadway. NOTICE TO SUBSCRIBERS OF THE BANKER AND TRADESMAN. In accordance with the terms of an agreement entered into between the PvEAL Estate Record A.ssociation and the Bankers' and Traders' Com pany (Limited), the Real Estate Record news¬ paper is sent this week and will be sent every week hereafter to every subscriber of the Banker AND Tradesman for the term of his subscription to the last named paper. Readers of the Banker AND Tradesjian not familiar wdth the contents of the Real Estate Record vrill find, upon pe¬ rusal, that while it contains aU the important fea¬ tures of the Banker and Tradesman, it also has a number of specialties distinctively its own which cannot be found in any other jom-nal, a familiarity \vitli which will give the patrons of the Banker and Tradesman no cause to regret the change. FRAUDULENT TRUSTEES. Disguise it, shut cm- eyes to it, gloss it over as we may, the truth stares us in the face, that a gi-im spectre stallis cm- land, whose lineaments are weU defined and unmistakeable as those of official malfeasance and corruption. The people shrink appaUed before its obnoxious and loath¬ some presence; it clogs cm- industry, depresses our enterprise, stifles our prosperity, assuming its concrete form in multiplied and extortionate tax¬ ation, absorbing the substance of the body politic with the greed of the Condor. A dank and dark atmosphere envelopes and obscm-es the fair hori¬ zon that once surroimded our commercial and po¬ litical life, pervading all the grades of official sta¬ tion and entering the recesses of corporate and private trusts. Leaving to the daUy press the task of dealing with this iniquity as it displays itself amid the functions of public life, it becomes our duty to ex¬ pose its inroads upon the special domain which we represent. We enter upon the subject vrith anjrthing but an equable frame of mind, Its details shock and alarm us, as they have already spread terror and misery through oiir various communities, The bankrupt and failing sa-rings banks and life in=- Siiranoe companies are legitimate results of this widespread epidemic. Of late years it has been notorious that many of these institutions were in¬ corporated, not for legitimate purposes, but for the sole and secretly acknowledged design of attract¬ ing the slender savings of the poor, and employing them for the private gain and emolument of trvs- teesaadofficei's. The uwd'/aqp^-ajicii is now being exposed in the investigations and reports of re¬ ceivers. However disgraceful their investments in stocks and bonds may have been, we record but the tnith when we say that the bonds aud mort¬ gages which appear among their assets are more likely to be tainted with fraud, and though they are usually relied upon as the soimdes-t securities, they ofttimes only cover up villainies which should consign their pei-potrators to the State's prison. This invasion of our peculiar domain in one of its most sacred departments arouses om- in¬ dignation ; in the light of recent events we acknowl¬ edge oui- cidpabUity in not having exposed these ways and means of fraud before. Om- weekly record during the past eight years would have fui-nished to any intelligent obsei-ver an insight into the processes of these fraudulent institutions and the doings of these fraudulent ti-ustees. In no way probably can fraud be more adroitly cov¬ ered up than'in the loaning of funds on bond and mortgage. The law relating to these insta-uments, designed to ensure and preserve their integrity is so stringent that none but rogues dare to violate it. Hence the eagei-ness with which they seek the shelter of these favorite forms of securities for car¬ rying on their nefarious practices. We have be¬ fore called attention in these columns to the case of an institution which loaned its funds on bond and mortgage, but audaciously withheld from the principal sum a clear bonus of ten per cent., in direct contravention of law and to the complete invalidation of the bond and mortgage. Upon attempting to collect this mortgage, the maker plead the statute of usm-y, and under its harsh pen¬ alties is hkely to escape the payment of the entire sum. And this is but a sample, we are sorry to say, of the loans made by these fraudulent institii- tions and their fraudulent trastees. The laws of this State regidating hfe insm-ance and saving in¬ stitutions are of the most exacting and compre¬ hensive character, and, if faithfully administered, would ensure the complete protection of all whose interests are involved. In the examination of their assets it is comparatively easy to determine the value of many of theii- stocks and bonds. But the examination of the bonds and mortgages is seldom thorougWy made, because of the difficulty attending the proper appraisement of the property upon which the mortgages are liens. It should be the duty of the State examiner, in investigating such institutions as loan money on bond and moi-t- gage to engage the sei-vices of experts, and to make at least yearly appraisals of the property mortgaged, so as to detei-mine what ratio the sum loaned beai-s to the total value. We could select from our mortgage Ust almost evei-y week cases of loans made by institutions which can safely be said to represent three-fifths if not the whole of an honest valuation of the property mortgaged. In the future we may feel called upon in this particulai' branch of om- duty, and with the view of assisting the examiner in the performance of his office, to specially denote mortgages made by institutions which we consider unsafe. This much we would gladly do for the protection and further¬ ance of public interests. We can, of course, only establish allegations of fraud in such cases as come •within the scope of our personal knowledge, but the eadsteuce of many mortgages i^ our list fairl^-sug- gests the mference that unlawful means or culpa¬ ble recklessness have marked their inception. Until this crimmal or unwise use of coi-porate fimds is stopped, we must expect a continuance or an aggi'avation of the evils which have recently afflicted our community. These fraudident tiaistees have been suddenly and i-uthlessly overtaken by the present revulsion winch has pitilessly micovered many a nice scheme of peculation. .The more foolhardy of them may hope to continue these illegal practices, expecting that some fresh scheme of inflation or some favoi^ able tm-n of the markets may waft prices up again to the point of redeeming their rascahty ; but no effort shall be left imti-ied on om- part to expose these miwarrantable acts of fiduciary institutionf. We have no heart to enter into the particulars of those cases of felonious defaidt on the part of private trustees which have been spread before the public in the daily prints, and which have be¬ smirched with infamy names that were once held liigh in professional and social esteem. They sei-ve as instances to demonstrate that the vice of corruption has penetrated the sacred recesses of private fiduciary trasts, whereby trustees, who have been honored with the dearest and most imjihcit confidence, have proved faithless and recreant. Unless these acts meet with stei-n and uncom promising reprobation on the part of our whole commmuty, the words ti-ust and trastee will be¬ come the mast despised in our vocabulary. Peo¬ ple will shrink from confiding the care of their for¬ tunes to individuals and will disti-ust institutions even when \visely managed. In almost every case these frauds have attached to institutions of recent mushroom gi-owth, officer¬ ed and managed by cliques of notorious and un¬ scrupulous men. Happily, however, the hard tim'js are gradually vrinnowing the chaff from the wheat. It is to be hoped that the State Examiner. will be unsparing in his investigation of aU remain¬ ing doubtful corporations, that the axe may be laid at the root of this special corruption, and that when we emerge from this prolonged and exhaust¬ ing revulsion we may have the satisfaction of knowing that sm-viving flduciai-y institutions are sound to the core, trustworthy, honored and hon¬ orable in their dealings. The fraudulent private ti-ustee must be made to feel the ostracism of public opinion until legisla¬ tive enactments declare his career a felony. OUR WATER FAMINE. Om- boasted water supply, having been sub¬ jected to the severe test of a long continued drouth, has been found defective, and in fact insufficient in such an emergency. It must be borne in mind that this large supply, notwithstanding official assurances of an ample reserve, is only rel¬ ative. The natural increase of om- population and extension of the gi-owth of our city, to^ gether with the possible contingencies of drouth and conflagi-ation, are important factors to be taken into account iii the calculation. The supply that was more than abundant ten years ago has by the increase of building improvements become to¬ tally inadequate,. It is well ^W^ W' itt ^