MR. HUGHES: That is all, Mr. Winthrop. Mr. Junk, will you take the stand.
DANIEL M. JUNK, called as a witness,being duly sworn, testified as follows:
BY MR. HUGHES:
Q. Mr. Junk, you are connected with the Cafe Savarin? A. Yes, sir. *
Q. How long have you been connected with it? A. I have been its secretary and treasurer since 1896, the 19th of November.
Q. What is that, a corporation? A. The Savarin, the present Cafe Savarin is a corporation organized under the laws of the State of New York in 1896. It succeeded a New Jersey corporation which was organized in 1890. That in turn succeeded the Societe Anonyme des restaurants aux Stats Unis which was a company formed under the laws of the Republic of France for the purpose of operating the Cafe Savarin.
Q. When was the Societe Anonyme des restaurants aux Stats Unis formed? A. In 1887.
Q. This French corporation which was started in 1887 had what capital? A. I take it from the record and such fragmentary information as has come to my knowledge, that it had a capital of $100,000, approximately, well, about $90,000.
Q. And was that the company that started the Cafe Savarin in the Equitable Building? A. It was.
Q. Do you know who were the stockholders in that company? A. I do not.
Q. Have you any information on that subject? A. Vague.
Q. That company was succeeded by the New Jersey corporation in 1890? A. Yes, sir.
Q. And that New Jersey corporation continued the restaurant business of the Cafe Savarin? A. It did.
Q. What was the stock, total capital stock at that time? A. $100,000.
Q. And who held that? A. It is held by various individuals in their names, but for the benefit of the Equitable Life Assurance Society. Gustav Duval was the president, Robert Stetson was the secretary and treasurer.
Q. Who held the certificates of stock? A. My own knowledge on that subject is gained also from fragmentary information that has come to me from papers that I have seen. It was held partly by General Stahel who was the president, for the Equitable Life Assurance Society. It was in his name but it was deposited with the Mercantile Trust Company for a loan. General Stahel had no personal interest in it whatever.
Q. What was the amount of the loan? A. $88,000.
Q. Who were responsible for the loan? A. Well, the stock of the Savarin Company was deposited as collateral for the loan.
Q. Was there a note? A. A note for $88,000.
Q. Do you know who was on the note? A. I don't know.
Q. Do you know the inception of that loan? I do not.
Q. Or what the money was used for? A. I take it that it was for the equipment and purchase of supplies.
Q. Do you know whether the stock of the New Jersey corporation was paid up? A. The record is that it was.
Q. Was it paid up by turning over the restaurant property of the Societe des Anonyme des restaurants aux Stats Unis? A. The sale by the Societe Anonyme des restaurants aux Stats Unis to the Cafe Savarin Company was that the entire business and assets of that company should be turned over to the New Jersey corporation in consideration of the delivery of the capital stock of the New Jersey company.
Q. And was there a previous loan which was assumed by the New Jersey Company? A.I assume that that loan had been made prior to the formation of the New Jersey company.
Q. It is your best information that it was the money originally borrowed in that way which went to the fitting up of the restaurant? A. It is my impression.
Q. And that money was borrowed from whom? A. The Mercantile Trust Company.
Q. Now, next, in 1896, the New York corporation succeeded the New Jersey corporation with a capital of how much? A. $100,000.
Q. And that capital was made up in what way? A.The New York corporation took over the New Jersey corporation. The stock in the New Jersey corporation was retired and the new stock was issued and substituted for the stock of the New Jersey company.
Q. What was done with the loan? A. The loan passed at various times from the Mercantile Trust Company to the Western National Bank and later to the Equitable Life Assurance Society.
Q. Has it been paid up? A. It has been liquidated down to $25,000.
Q. By whom? A. Out of the Cafe Savarin Company's resources.
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Q. And that New York corporation has continued to operate the Cafe Savarin from the time of its organization to the present day? A. The New York corporation?
Q. Yes. A. It has.
Q. And the stock of the New York corporation is held by whom? A. In the main, 495 shares are held now in the name of the Equitable Life Assurance Society. There are five qualifying shares for directors. The directors of the company are people who are identified with the Equitable Life Assurance Society.
Q. And the total number of shares is 500? A. 500. The original capital was $100,000, and it was reduced in 1890 to $50,000, the payment being made out of the resources of the Cafe Savarin to the then holder of its obligations.
Q. That is, that capital was reduced and this money paid in the liquidation of the loan held by the Mercantile Trust Company? A. In liquidation of that loan. It was not held by the Mercantile Trust Company at that time.
Q. No individuals profited. by it? A. No individuals profited in any way.
Q. So that from the time of the organization of the New Jersey corporation in 1890 down to the present time the situation has been that either in the name of persons connected with it or in its own name, the Equitable has had all of the stock? A. It has had all the stock and all the benefits.
Q. Of the Cafe Savarin? A. Of the Cafe Savarin Company's receipts.
Q. And is it your information that prior to that the persons interested in the French society were connected with the Equitable? A. Yes, sir, so far as I am able to learn.
Q. It has been an Equitable enterprise? A. It has been an Equitable enterprise from its inception.
O. Is there a lease to the Cafe Savarin? A. There is a lease to old Societe Anonyme des Restaurants aux Stats Unis, bearing date of July 19, 1887.
MR. HUGHES: I offer that in evidence.
(Paper marked Exhibit No. 382.)
THE WITNESS: That was modified
MR. HUGHES: Wait a moment. This lease is dated July 19, 1887, and is made by the Equitable Life Assurance Society to the Societe Anonyme des Restaurants aux Unis, and it leases certain premises described, the lease to begin on the first day of August, 1887, and to continue for twenty years, until August 1, 1907.
It provides or contains the covenant:
First—That the parties of the second part will carry on a first-class restaurant, dining-room and cafe, according to law. That they shall hold the party of the first part harmless from all damages that may be incurred on account of the business, and that no other business shall be carried on in such rooms than that above named.
Second—That the parties of the second part shall provide all employees' plate, linen, cutlery, kitchen utensils, and other things necessary for conducting the business. They shall also provide such waiters, plate and linen, and so forth, as necessary in fitting up the rooms to be occupied by the Lawyers' Downtown Club, and by the Underwriters' Club, which may be located in said building.
Third—As to the removal of ashes, garbage and so forth.
Fourth—Provides that the parties of the second part will pay to the party of the first part, as a rental for said premises annually, a sum which shall be equal to fifteen per cent. of the gross amount which shall be received by the parties of the second part in the conduct of their business in said building, including all receipts from the clubs herein named. That they will keep an account of all receipts from every source. Suitable books shall be kept, open to the party of the first part at stated times. That the party of the first part shall pay the said rental, equal in amount to fifteen per cent. of the gross receipts, on the first days of August, November, February and May, in quarterly payments. That the receipts for wines or liquors shall not be embraced or considered as part of the receipts. That such sales by said parties of the second part in the case or cask are to be allowed as a private business of their own.
Fifth—That they shall furnish a proper, substantial and wholesome meal for the clerks of the party of the first part, for the sum of fifty cents for each meal, the number of employees to be about one hundred.
Sixth—That the parties of the second part shall furnish to the Lawyers' Downtown Club, and to the Underwriters' Club, who shall have rooms in such building, all such supplies, meals, or refreshments as shall be required.
Seventh: That they shall avoid interference with tenants or occupants of the building.
Eighth: That they shall not assign or sublet.
Ninth: That there shall be an arbitration of differences.
Tenth: Access to books.
Eleventh: Surrender of premises.
THE WITNESS: It was modified by this lease (handing paper).
Q. The lease you now show me was a modification under date of May 1, 1888? A. Yes.
MR. HUGHES: I offer it in evidence.
(Paper marked Exhibit No. 383.)
(Exhibit No. 383 will be found in the Book of Exhibits.)
MR. HUGHES: This was a lease made May 1, 1888, between the same parties, reciting the former lease and providing for a modification.
Q. Just point out the modification. A. The modification was as to the rent particularly, and as to additional space.
MR. HUGHES: The modification consists in additional space.
THE WITNESS: And there was a stipulated rental there of an amount per annum instead of fifteen per cent.
Q. Will you point it out? A. I think it is on the first page, Mr. Hughes.
MR. HUGHES: The modification consists in the leasing of additional space, and for a fixed sum as rental, to wit, fifty thousand dollars a year, as a fair and proper rent for the premises above described, unfurnished and in consideration of the extraordinary expense of the lessor in fitting and furnishing the said premises for the business of a cafe, and premises, the further annual rent of six thousand dollars, making a total annual rent of fifty-six thousand dollars. The term is stated as twenty years from May 1, 1888, to May 1, 1908.
Q. The covenants are the same? A. Practically the same. There was a further modification.
Q. Where is that? A. That is in this, a third instrument.
MR. HUGHES: Also a modification as to the amount to be paid for meals ordered for the clerks of the lessor, fixing the price at sixty cents.
Q. I think those are all in this paper, are they not? A. In that paper, yes. Here is another, April 7, 1891.
MR. HUGHES: I offer that in evidence.
(Paper marked Exhibit No. 384.)
(Exhibit No. 384, will be found in the Book of Exhibits.)
MR. HUGHES: This agreement is dated April, 7, 1891, between the Equitable Life Assurance Society and the Cafe Savarin Company.
Q. This is the New Jersey corporation? A. Yes, sir.
MR. HUGHES: It provides as follows, after reciting the agreement of May, 1888, the party of the second part out of its gross receipts in its business shall pay all expenses connected with the conduct thereof, including the expenses connected with the Lawyers' Club, and after such payment shall pay to the party of the first part the whole amount of its net
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receipts from the said business except so much thereof as shall be necessary from time to time to pay the interest upon a certain note held by the Mercantile Trust Company made by J. Stahel, February 15, 1890, for the sum of $88,000, the interest on said note to be paid out of said net receipts. As security for the payment of said note one thousand shares of the capital stock of the said Cafe Savarin Comany were pledged to the holder of said note. The amount so paid as interest upon said note is to be taken and held to be a dividend upon the said stock so pledged for the payment of said note. Supplementary to this is a memorandum as follows:
"Memorandum to John Stahel. In accordance with the new agreement made by the Equitable Life Assurance Society and the Cafe Savarin Company on the 7th day of April, 1891, you are hereby authorized to see that 75 per cent. of the Lawyers' Club dues are turned over regularly every month to the Cafe Savarin Company, who will under the above referred to agreement defray all the Lawyers' Club expenses for waiters, kitchen, and so forth. You will also see that the balance on hand from the remaining 25 per cent. of the members' dues and which under the agreement with the Lawyers' Club is disbursed by the Lawyers' Club house committee, is also turned over to the Cafe Savarin at the end of every six months. You are further directed to see that the Cafe Savarin will at the end of every six months turn over to the Equitable Life Assurance Society as rent, the profits of the Cafe Savarin together with the profits of the Lawyers' Club arising out of the 75 and 25 per cent. account.
(Signed) Henry B. Hyde.
April 7, 1901."
Q. What is the next lease? A. Have you the Lawyers' Club lease?
Q. Is that the last? A. That is the last of the New Jersey corporation.
Q. When the New York corporation was formed in 1896 it took over this lease as one of the assets of the New Jersey corporation? A. Yes.
Q. And it is now in possession of the premises described pursuant to this lease? A. The New York corporation?
Q. Yes. A. Yes.
Q. The premises covered by this lease include that part of the Equitable Building occupied by the Lawyers' Club? A. They do—well, not in that lease, no, I beg your pardon. The two taken together with the Lawyers' Club.
Q. These leases I have thus far read do not include the space occupied by the Lawyers' Club? A. No, sir.
Q. Was there a separate lease made to the Lawyers' Club? A. There was.
MR. HUGHES: I offer that paper in evidence.
(Paper marked Exhibit 385.)
(EXHIBIT 385, will be found in the book of Exhibits.)
MR. HUGHES: This is a lease dated, January 1, 1888, between the Equitable Life Assurance Society of the United States and the Lawyers' Downtown Club, a corporation organized and existing under and by virtue of the laws of the State of New York, for the term of twenty years. It contains the .following provision in substance.
First. The Society agrees at its own cost and expense to decorate, paint, carpet, and furnish the club room and maintain the same in a thorough, complete, and elegant style.
Second. To keep the club rooms and all the furniture and decorations in good order and repair.
Third. That the tenant of the public restaurant in the Equitable building and the kitchen and other premises appurtenant thereto shall furnish for the members of the Club and their guests during certain hours, meals and so forth of a quality which shall be first class and so forth and all necessary service.
THE WITNESS: There is a stipulation regarding the difference in the bill of fare prices.
MR. HUGHES: And it shall be provided that the prices shall be at least ten per cent. below the usual card prices charged in the public restaurant in the basement. That the service shall include all necessary servants and all linen, china and so forth incident to the maintenance of the Club, and in consideration thereof the Club is not to permit any other party to cater for it as long as the Society fulfils the terms of the agreement and the supplies and service are satisfactory to the governors of the Club.
Fourth. The Society agrees to furnish electric light, gas and heat and that the janitor of the Equitable Building shall keep the club windows in order and care for fires, and so forth.
Fifth. That if during the term of the lease the tenant of the public restaurant shall fail to properly furnish the Club as above provided, in that event the Society agrees to furnish in some convenient portion of the Equitable Building such kitchen and laundry accomodations, appointments and so forth for the exclusive use of the Club, and to pay any deficiency out of the rental herein referred to.
Sixth. The Society agrees that it will use the space marked upon the annexed diagram library, for the library known as the Equitable law library, and that every member of the Club shall during the term of his membership have a right to enter the library and use the books subject to the rules and regulations in regard to the same, that may be made by the Library Committee.
The lease then provides that it is upon the following conditions:
First. The Club agrees that it will pay as rental to the Society 75 per cent. of the dues as now prescribed in the Bylaws and collected from its members as the same shall be received and out of the balance of said dues it will after paying all proper expenses incident to the maintenance and management of the club including all supplies in the nature of stationery, newspapers, periodicals, liveries, salaries of superintendent and assistants and such other expenses as may be regarded by the governors of this club or a majority thereof as proper and necessary, and the club agrees to pay over to the Society any unexpended balance of said dues remaining at the end of each year during the continuance of the lease.
Second. The club agrees that during the term of the lease the portion of the building set aside for its use will only be used for the purposes of a first class club establishment.
Third. That the club will not let or underlet the rooms or any part thereof. That it will keep books of account of receipts and expenditures open to the president or vice-president of the Society or any other person authorized by them.
Fourth. The club agrees it will use all reasonable means to keep its membership at all times during the time of this lease to the number of 600 and dues as now prescribed by the Bylaws.
Fifth. It it further agreed that in consideration of One dollar and the premises the Society shall not hold any of the officers, governors or members of the club in any way liable for anything under this arrangement.
It is further agreed that the dues from the members shall date from the first day of January, 1888, and thereafter the annual dues shall be due and payable on the first days of January and July.
Then follows a diagram of the premises.
Q. Are there any further agreements relative to the management of the Cafe Savarin or the Lawyers' Club? A. The Cafe Savarin took certain space formerly occupied by the Mercantile Safe Deposit Company, in 1890. I think it was February 28, 1890 (handing paper).
Q. And this is the agreement relating to that space? A. It is.
MR. HUGHES: I offer it in evidence.
(Paper marked Exhibit 386.)
(EXHIBIT 386, will be found in the Book of Exhibits.)
THE WITNESS: That is a copy. I do not have the original.
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MR. HUGHES: This is an indenture, dated, February 28, 1890, between the Equitable Life Assurance Society, the Mercantile Safe Deposit Company and the Cafe Savarin Company. It provides for a lease by the Mercantile Safe Deposit Company to the Cafe Savarin Company subject to the conditions of the lease between the Equitable Life Assurance Society and the Mercantile Safe Deposit Company of certain portions of the latter's premises in the Equitable building.
THE WITNESS: That has been brought down to date by extensions.
Q. And this practice outlined in the agreement with the Cafe Savarin and Lawyers' Club has been maintained, to wit, that the Lawyers' Club pays over to the Cafe Savarin 75 per cent. of its dues? A. That was modified in 1892, whereby the Cafe Savarin Company takes all the receipts of the Lawyers' Club and pays all its expenses and turns the unexpended balance over to the Society.
Q. Have you that agreement? A. It looks as though I did not have it here. Inadvertently I have left that behind.
Q. That is provided for here? A. It is the same thing in effect as the original papers provide for, because you will notice that while they paid over 75 per cent at first, after paying expenses as stipulated in the 25 per cent., they turned over the balance to the Cafe Savarin or to the Equitable Life Assurance Society.
Q. What expenses does the Lawyers' Club meet then? A. At the present time none except through us.
Q. When you say through us, you mean through the Cafe Savarin? A. The Cafe Savarin takes all the receipts of the Lawyers' Club and pays all its expenses, including cost of supplies furnished, help and expenses of every other character or nature whatever.
Q. And it also takes all its own receipts and pays all its own expenses? A. Yes.
Q. And then the net balance that remains, whether of Lawyers' Club's operations or Cafe Savarin operations, is paid over as rent to the Equitable? A. To the Equitable.
Q. Is there any deduction in order to pay dividends? A. In the records of the company there appears but two years in which dividends were paid, and the word dividend is a misnomer. Those dividends were declared for the purpose of paying interest on the obligation of $88,000 held by the Mercantile Trust Company. That is a recapitulation of our receipts and expenses since the year 1881 (handing paper).
Q. This paper? A. Yes.
Q. Do these totals include the expenses of the Lawyers' Club? A. They do.
MR. HUGHES: I offer that paper in evidence.
(Paper marked Exhibit 387.)
Q. The first column in this paper is headed Dues. That means Lawyers' Club dues? A. Yes.
Q. The second column is headed receipts. What does that mean? A. That is the entire receipts, which includes the dues.
Q. The next is supplies and expenses? A. That is all disbursements of every character.
Q. Profits is the difference between the two columns? A. Yes.
Q. And then the rents is the amount of that paid to the Equitable? A. Paid to the Equitable.
Q. And in the next column is an amount in 1891 paid to the Mercantile Safe Deposit Company? A. That was the only year, that year and I think the year before, but the record of the year before I would not undertake to furnish any evidence regarding.
Q. And the next in the way of dividends are items of interest apparently? A. Items of interest. They should be characterized as items of interest, although they appear as dividends.
Q. In other years they were under the head of expenses? A. Yes.
Q. And the final column, Debt Cancelled, is the amount applied on the loan to the Mercantile Trust Company? A. Various obligations, not only of that but there was another obligation of about $62,000 with the $88,000 one. All that debt has been liquidated down to $25,000.
MR. HUGHES: This will be spread upon the record at this point. I will simply note for the information of the Committee that the net profits which are here stated under the head of rents from all operations appear to have been in the last few years as follows:
and in addition $40,334.39.
THE WITNESS: To the liquidation of the loan, yes.
MR. HUGHES: Applied to the liquidation of the loan. In the year 1900, $90,000 and $50,000 applied to the liquidation of the loan; 1901, $105,000 and $13,180.41 applied to the liquidation of the loan. In 1902, $110,000; in 1903, $110,000; 1904, $140,000.
Q. These amounts that were applied to the liquidation of loans in the years mentioned were applied out of this amount as rent or in addition? A. Partly out of the earnings and partly out of resources.
Q. What resources were they aside from the earnings? A. Well, we had more capital than we required.
Q. You mean the fifty thousand dollars that was applied in 1900? A. Yes.
Q. Take the forty thousand dollars applied in 1899, was that paid out of the one hundred and five thousand? A. Out of the $146,941.75.
Q. Out of the $146,941.75 profit? A. Yes, $105,000 applied to rental and $40,000 applied to the liquidation of the loan, partial liquidation.
Q. What was done with the difference between profits in the years 1902, 1903 and 1904, and the amount stated to have been paid in the way of rent? A. That is explained in this foot note. There were small balances that could not be adjusted during the year, and they were carried into the rent account which was an obligation of the company to the Equitable Life Assurance Society. That obligation stands at present approximately $25,000. I do not know the exact amount, but it is an obligation of the company to the Society, and can be adjusted at any time upon demand.
Q. Do the Equitable or the Cafe Savarin have anything to do with the introduction of members into the Lawyers' Club? A. That is handled by the governors of the Club.
Q. The Equitable and the Cafe Savarin Company merely have to do with the A. Operation.
Q. The expenses and operations of the Club? A. Yes, sir.
Q. But the club governors and membership is in the control of the club through its governors? A. Yes.
MR. COX: What is that club, is it a separate organization or corporation?
THE WITNESS: It is an association.
Q. It was formed under the Act relating to social organizations. A. Formed in 1888, I believe. Up to the present year we have earned up to the end of October a hundred and seventy-four thousand and some odd dollars. Our total receipts for the ten months ending October 31, 1905, were $658,246.35. The expenses in that time and disbursements have been $404,062.03, leaving an amount of earnings applicable to rent of $174,184.28.
BY THE CHAIRMAN:
Q. That does not include any dues from the Club? A. It does include them.
BY MR. HUGHES:
Q. That is the receipts after deducting all dues from the club, receipts from the restaurant, deducting expenses? A. Yes, that leaves——
Q. That is up until November 1st? A. That is up until November 1st. Of that amount $150,000 has been paid over to the Equitable in lieu of rent.
BY MR. COX:
Q. Why is the large increase in the net earnings as compared with the former years? A. I am afraid I might be considered egotistical if I told you. A little economy in the management.
Q. Is there any other information in regard to the Cafe Savarin or the Equitable's relation to it that you have at your
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hand, or have we the whole story? A. I will not volunteer, but I am here to tell you anything you desire.
Q. Is there anything further with regard to matters received by the Equitable which you can state? A. I covered everything in my tabulation.
Q. Is there anything in regard to expenses incurred by the Equitable which you have not stated? A. Unless you considered my own salary possibly. I am attached to the cashier's department of the Equitable Life Assurance Society.
Q. What is the personal management of the Cafe Savarin? A. The directorate is composed of Judge William A. Day, James F. Wilson, Mr. Louis M. Bailey, and George V. Turner and myself.
Q. Who is the president of the Cafe Savarin Company? A. James F. Wilson.
Q. Does he get any salary? A. Not from the Savarin. His labor is purely that of love.
Q. Does he get anything for his love? A. Well, I mean so far as the Savarin is concerned.
Q. Does he get anything from the Equitable? A. Yes, that is, he is like myself, an Equitable employe.
Q. Do you get a salary from the Equitable? A. I do.
Q. Do you get anything from the Cafe Savarin? A. I do not.
Q. Do any of the officers of the Cafe Savarin get anything from the Cafe Savarin? A. They do not, sir.
Q. They are paid by the Equitable? A. Yes, sir.
Q. What is total amount of the salary paid to those who are in the Savarin management, paid by the Equitable Society? A. I am not in a position to state. I know my own, of course.
Q. You don't know the others? A. No.
Q. Then if you will give me the names I will find out. A. Mr. James F. Wilson is the only one that performs any active duty.
Q. Besides Mr. James F. Wilson and yourself, is there any one connected with the Savarin Society or with the management that gets any money from the Equitable Life? A. Well, not as a consideration for their duties in the Savarin. They are all men who are actively engaged in departments in the Equitable, where they perform a sufficient amount of service to warrant the salary they get. I personally perform more service for the Equitable than I do for the Savarin.
Q. You do this because of your relation to the Equitable? A. Yes.
Q. Is there any executive officer of the Equitable that is paid out of the receipts of the Cafe Savarin? A. Absolutely none.
Q. Any director of the Equitable paid out of the receipts of the Cafe Savarin business? A. No, sir. There is no benefit derived in any way whatever from the restaurant business.
Q. In order that we may know just what the net amount is received by the Equitable from the operation of the Cafe Savarin Company, which stands to it in lieu of rent, inasmuch as the salaries of the executive officers of the Cafe Savarin Company are paid by the Equitable, I should like to have a statement of that. A. I will endeavor to furnish that, or I will ask for it at least, from the authorities of the Equitable.
Q. Does the Cafe Savarin Company furnish lunches to any persons connected with the Equitable free of charge? A. They do not.
Q. Or any supplies of any sort? A. They do not.
Q. Those two are officers or directors or otherwise connected with the Equitable except under this provision for the giving of lunches to clerks, pay for what they get? A. They pay for what they get.
Q. At the same rate as others pay? A. Yes.
BY MR. COX:
Q. Has that always been so? A. That has always been so.