Mr. DANDY. I am vice president of Occidental in charge of group insurance operations. Mr. WELTMER. Mr. Dandy, I would like to have you read a letter under your signature the date of which is August 20, 1951, to Mr. Jordan L. Jones, 1812 J Street, Sacramento, Calif. Would you read it aloud, please? Mr. DANDY (reading): Subject: Las Vegas Sheet Metal Workers. DEAR JORDAN: You asked me to investigate the possibility of paying standard graded commissions on this case. I find that we quoted reduced rates with the understanding that it would be pooled with the Southern California Sheet Metal Workers and that the same retention would apply to both policies. Obviously, the commission must be the same on both of them. However, if it is possible for you to obtain an agreement that we retain during the first year 17 percent of the premiums on the Las Vegas case, we are willing to pay you 42-percent first-year commission instead of 2% percent which would otherwise be payable. The renewals will be 2 percent which is the same amount allowed on the southern California case. I am sorry that it is not possible for us to allow any higher first-year commission. I would again urge that you take advantage of the assistance which our regional group supervisors can give you on these cases and thus cut down your expenses in connection with the selling of them. I can assure you that our supervisors have no commission interest in group cases, but act entirely as salaried representatives of Occidental. Best personal regards. J. P. DANDY, Vice President. Mr. WELTMER. If I understand that letter correctly, it indicates that you offered to pay Mr. Jones a 42-percent commission for the first year, instead of 212, if he were successful in obtaining an agreement so that your company could obtain 172 percent for the first year. Seventeen percent, excuse me. Will you explain why you believe that your broker, Mr. Jones, would be in a position to assure your company in 1951 that the Las Vegas Sheet Metal Workers welfare plan would be pooled with the Los Angeles group? Mr. DANDY. Well, the only way that he could assure us that would be after consultation with the trustees of the southern California group and get their approval of such a pooling. Mr. WELTMER. What influence did your broker, Mr. Jones, command in this situation? Mr. DANDY. Well, he was the broker. I don't think I could answer what influence he had. He is the man that we always dealt with, or we dealt with mainly, on the group case. Mr. WELTMER. What would be the advantage of your company in getting a 2-percent increase in the retention rate and turning around and giving the entire 2 percent to Mr. Jones as commission? Mr. DANDY. None at all. Mr. WELTMER. I have here a letter-a photostat of a letter-dated July 30, 1951. It is a memorandum to Mr. Don Lee Hartman, assistant group superintendent, and signed by G. V. Jenkins, administrative assistant: This will acknowledge your July 27 inquiry concerning general agent's overwriting commission on the above case. It appears, Don, that we may not have complete information in our files since I believe this is the case that we discussed with Bill Royer several weeks ago, at which time he explained to us that he had been working on this case through the employer, and that Herb Eagle had made a trip to Las Vegas and explained to him that unless he left this case alone it was quite possible that Occidental would lose this business entirely. The reason behind Herb Eagle's visit, as it was explained to me, was that Royer was not looked upon with favor in the eyes of the union and that they wanted him to have no part of this business. Since, if these facts are true, it would undoubtedly have a bearing upon our decision as to overwriting credit, we would like to have as much information about this case and its origination as possible before making a decision. G. W. JENKINS, Administrative Assistant. Mr. Dandy, would you state who it was that looked upon your representative, Bill Royer, in disfavor? Mr. LUCAS. Pardon me, Counsel. Will you connect Mr. Dandy with that letter before he answers the question? Mr. WELTMER. The letter is from the Occidental Life Insurance Co., and it is a memorandum from one section to another section of Mr. Dandy's office. I would like to have him, since he is in charge of this section, explain who looked upon Mr. Royer with disfavor. Mr. LUCAS. Would Mr. Dandy have any reason to know about the contents of this letter? Mr. WELTMER. Yes; he would. Would you repeat the question? (The reporter read from his notes as requested.) Mr. DANDY. In the letter it says The reason behind Herb Eagle's visit, it was explained to me, was that Royer was not looked upon * * * Who was the person who explained to him—I am sorry, I don't know. Mr. MCCABE. Mr. Dandy, could you tell us for the record who Mr. Rover is? Mr. DANDY. Mr. Royer is the general agent of the company in Nevada. Mr. MCCABE. Does he have an assigned territory? Mr. DANDY. Yes; Nevada. Mr. MCCABE. The State of Nevada is his territory? Mr. DANDY. I believe at that time it was southern Nevada. He now has the entire State of Nevada. Mr. MCCABE. According to this memorandum, someone in the union looked upon him with disfavor? Mr. DANDY. Yes, sir; that is what the letter says. Mr. MCCABE. Did I understand you correctly a moment ago to say that you had no knowledge as to the identity of this person who might look on him with disfavor? Mr. DANDY. That is right; I don't. Mr. MCCABE. Have you ever heard of that subject before? Mr. DANDY. I have no recollection of that particular thing. I see there is no copy of this letter sent to me at the time it was written. I have, of course, seen it in the files since then. That was 3 years later. Mr. MCCABE. Do you have any idea of reasons why anyone might look upon him with disfavor? Mr. DANDY. Yes. I think, or at least the inference is in here, that he has been dealing with the employers, I assume endeavoring to sell them group insurance. No, singular; it says employer. I don't know who that would be. It is not employers. And the inference is also there because he was doing that, that he was not in favor in the eyes of the union. Mr. WELTMER. Mr. Dandy, I would like to read two more photostats of letters and possibly it might refresh your memory on the subject. One is January 10, 1952, to Mr. Don L. Hartman, assistant group superintendent, Occidental Life Insurance Co., signed by Mr. Irvin Barr, general agent: DEAR DON: I must apologize for not answering the letters that I have been receiving in regards to signing commission agreements on the above case. Every week since receiving the first letter I had expected to be in the home office to discuss this case. I wouldn't mind giving my friend Bill Royer the commissions on this small case because I started him in the business and I am interested in his success. However, I certainly do not want to establish precedent in the sheet-metal case which I am sure we have control of and we are going to expand it in to other areas. In fact, we have just received approval from the Wage Stabilization Board on other locals and this approval is over and above the 10 percent which they already have obtained. I expect to be in the home office very soon and will be glad to discuss this commission agreement at that time. The other one is also to Mr. Don Lee Hartman, assistant group superintendent, and signed by Robert Rush, supervisor of group sales, administrative section, Occidental Life Insurance Co.: Attached is a memo from Gordon Jenkins stating that we do not have complete information on the above case. It is true that the union officials have indicated that they did not wish Mr. Royer to participate in any part of the commissions, however, I believe that they were referring to soliciting agent commissions. It is certainly not within their power to dictate to us how the overwriting commission will be disposed of. The application for this case has been received and the underwriting department has presented the question of the proper name to show in the acknowledgment letter. This is a bit awkward since it is actually in Herb Eagle's territory and Herb at one time was trying to write the case from an employer standpoint. Jordon Jones has evidently handled all negotiations directly with the home office up to this date. It is my recommendation that we again request from the agency department a decision regarding the overwriting. The problem of the correct person to designate in the acknowledgment letter seems to be our problem and I recommend that we do not show Herb Eagle's name in the letter but rather make the letter in a general form so that it merely acknowledges receipt of the application and does not refer to any specific group office. Mr. MCCABE. Mr. Dandy, while counsel is presenting these, could you identify Mr. Barr for us? Mr. DANDY. Mr. Barr is the Sacramento general agent, in the Sacramento and surrounding territory. Mr. MCCABE. His territory, then, would be contiguous to joining that of Mr. Royer? Mr. DANDY. May I have it reread? (The reporter read from his notes as requested.) Mr. DANDY. No, at that time, Mr. Royer just had southern Nevada, and I don't believe the Sacramento territory-now, I would not know exactly whether it goes down into the wastelands along the Californiasouthern Nevada border for sure. Mr. MCCABE. Would Mr. Barr's territory include that of Mr. Royer? Mr. DANDY. No, except that that territory is not a complete distinction. I would like to explain that, if I might, about general agents. Mr. MCCABE. I think for the moment I want to establish the identity and territory of these gentlemen. Mr. Weltmer will follow through with his questions. Mr. WELTMER. Do you have any other comment to make on the letters, Mr. Dandy? Mr. DANDY. I Would like to explain about general agents which are referred to in this letter, if I might. Mr. WELTMER. The thing I would like to know now, Mr. Dandy, is if you knew who they were talking about when they looked upon Mr. Royer with disfavor. I thought perhaps those letters might refresh your memory. Mr. DANDY. I am surmising, I do not know of my own knowledge, it would look like Mr. Rush had said to him, because I noticed that in his memorandum, Mr. Rush says: It is true that the union officials have indicated that they did not wish Mr. Royer to participate in any part of the commissions. Mr. WELTMER. Mr. Dandy, do you know whether or not this man was Tom Hanley? Mr. DANDY. No; I wouldn't. I also would not know whether that was a direct indication to Mr. Rush or whether it had come to him through a second party or through a third party. There is no indication in the letter to say which it would be. I had no knowledge of Mr. Rush having any contact with any of the union officials. Mr. MCCABE. Mr. Dandy, do you have any reason to doubt the fact that some union official looked upon Mr. Royer with disfavor? Mr. DANDY. No, sir. Mr. MCCABE. You have no reason to doubt that? Mr. DANDY. I have no reason to doubt it, although I have no reason to affirm it either. I don't know, other than what is said in here. Mr. MCCABE. And those are your company's memoranda? Mr. WELTMER. I would like to read an excerpt from a letter dated April 29, 1954, to the trustees of the Sheet Metal Workers Welfare Fund of Southern California, Arizona, and Nevada, 2008 West Seventh Street, Los Angeles 5, Calif. It is in relation to group policy No. 2355-LH, signed by Mr. Halverson, assistant vice president. This is in specific reference to the insurance of unemployed or retired members. It says this, in quotes: Therefore, effective June 1, 1954, it will be necessary that all persons insured fully meet the eligibility requirements as set forth in the master policy. Will you explain why your company permits insurance of unemployed and retired members when the policy clearly states that it covers persons who are in full-time active employment with an employer who is a party to an existing trust agreement? Mr. DANDY. May I see it? Mr. WELTMER. Yes. (Document handed.) Mr. DANDY. Could I speak with Mr. Halverson for a second on that? Mr. WELTMER. Certainly. (Witness conferred.) 53814-54-pt. 1-12 Mr. DANDY. I am not sure, Mr. Weltmer, whether you read the first paragraph of this letter. Did you? Mr. WELTMER. Yes, I have read it. It was recently brought to our attention * ** We had just found out that they had been covering retired members. The premiums were being paid for them. The retired members were paying the premiums into the trust office and the administrator was sending us the premium for the retired members along with the others. However, the policy contract, as it stood, certainly did not cover retired members. I think you read the wording. It referred to working for employers. We, therefore, advised them that this couldn't go on. We would have to terminate the insurance on these retired members. Mr. WELTMER. In other words, it was entirely without your knowledge? Mr. DANDY. Yes. Did you read the entire letter, Mr. Weltmer? Mr. WELTMER. Yes, I read the entire letter. Mr. NEARY. It wasn't read into the record, and I think we ought to read it. The CHAIRMAN. It is so ordered. Mr. DANDY (reading): It was recently brought to our attention that certain retired members were being covered under this policy. Such a procedure is entirely outside the terms of the contract, and the administrator was advised through your broker, Mr. Jordan Jones, that immediate action was necessary to remove these persons from the plan. It appears that preliminary steps have been taken to accomplish this end. We sincerely feel that the continuing success of the plan is dependent, to a great extent, upon removing these individuals without delay. Therefore, effective June 1, 1954, it will be necessary that all persons insured fully meet the eligibility requirements as set forth in the master policy. In order that a minimum amount of hardship will be worked upon those retired members who have been insured, they will be permitted to convert their life and hospital coverages in accordance with the policy provisions. However, this does not extend the conversion privilege to retired members who have not been so insured. The CHAIRMAN. Mr. Dandy, that letter is dated when? Mr. DANDY. April 29, 1954. The CHAIRMAN. April 29, 1954? Mr. DANDY. Yes. The CHAIRMAN. For how long had the policy been going on before that letter was written? Mr. DANDY. The policy was issued January 1, 1951. At what date, sir, they started to cover retired members, I don't know. We found it just shortly before this letter. The CHAIRMAN. You do not make a policy of following your insurance policies outstanding? Mr. DANDY. In this case, there was an administrator appointed by the joint trustees, the employer trustees and the employee trustees, to handle all the details of the plan. The master policy was in the administrator's hands. We have no reason to assume that he is not following the terms of the policy. Until something comes up to indicate that he isn't, on a matter like this, particularly, there is no reason for us to check into it, sir. We must assume the administrator |