The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1851-06-22
EXTRAORDINARY BANKING OPERATIONS.
The Exploded State Bank mt Morris, N. j.
The Susquehannnh Bank and the PrOtec-
tive Insurance Company.

LAMBERT NORTON, PRESIDENT, FOR THE
SAME CRIME, AND AGAINST DIRECTORS, FOR
coNsPIRAcl TO DEFRAUD THE STOCKHOLDERS OF
THE BANK
MoRRIs CorSTy CIRCUIT CouRT, June II. 1851.
This day was opened in Moristown special term Of
the Circuit Court of Morris county N j. the trial Of
indictments arising out of the operations Of the defunct
State Bank at Morris Judge Ogden, Of the Supreme
Court presided.
The case is perhaps without parallel in the history
of banking in Scw Jersey. 1t is briefly this -
The bank Incorporated the 2Sth of January
1872, with capital Of $4,000 in 1000 shares Of $50
each, under the title Of the State Bank at Morris
N.Jn 1t was regular country institution, and ap-
peared to bs conducted honestly enough but partly
from ignorance of the principles Of banking and partly
from negligence. the bank involved in difficulties
having invested the capital in real estate which was
no use in banking and having outstanding Judgment
for debts that were carried into execution The
shareholders became dissat and something wa
necessary 10 be done 1t agreed 20 seek from the
Legislature a supplementary enactment, reducing tn
par value Of the stock from $50 per share to so and t.
increase the number Of shares by admitting sab
scIbers to make the capital at least $4,000 In
the meantime no notes were to be issued. While
were busiy engaged in getting this law passed with tn
best intentions, there others connecting plot to
turn it 70 their own advantage There under
standing the stockholders that there should
the old regime went to work, with Harvey Dayton
Lambert horton and Egbert A. Thompson, a stranger
from Cincinnati to whom they transferred 2052 of the
shares out Of 2 receiving for the S2S per
being - above the par price and thus giving him
plete control Of the bank He iutro duced through
Willard Earle, officer Of the Protective insurance
Company Of Someryile-a company located in Somerset
county j., but having its real of operations at
Wall street, New York This company was also mixed
in th. h.nlr .in@n,
as man Of capital but he paid for the BY $4,000
in Susquehannah Bank bills which turned out to be
not worth . rush. and by checks lent him by Harvey
Dayton the cashier of the bank and by David sandeson
which checks were afterwards removed from the bank
the former for $4,000, being replaced bya check OF
Thonp-rn himself; and the latter for nearly $4,000
being paid away in dscounting draft Of the Somerve
Protective IL surauce Company Of which Sanderon was
director sandeIson also director of the State
Bank at Morris Thompson drew check after check till
he drew to the amount Of $4,000 ~ oyerdrawng his
own account 10 the extent OF $4,000 and getting pos
session OF the assets, real estate the bank worth
Sl90o But before all this could be mplshed 1t was
necessary to have bona de cash capital In the bank OF
at least Sh oeo for the law organizing the bank anew
was passed on the IIth Of February lS49 on condition
that before bsning operations should be resumed the
president aud cashier should that there bona
de capital Of at least 900 depo,ed for banking pur
affidavit is the subject of ndictmen against Dayton and
Norton Operations In the bank on the 2lst
Of August and then Egbert A. Thompson & Co had it
all ti.ir own way They issued notes 8 like thunder
and Thompson took $4,000 or them the to opc-
rate there while willard Earle tho secretary of the
someryle Protective Insurance Company, got $4,000
more TO circulate and be went West and South 1t is
said, TO losses Of the insurance company these
notes lie died suddenly, and his family got the notes
and claimed them their They presented $1,000
Of them to the agent the bank but there
was no funds TO pay them except the susqueaaunah /
notes and that bank had just caycd in, and also the
somervlle Insurance Company Thus the bubble burst
ON the 3lt Of October two months after Its reorganiza
tion the bank defunct and IL for fraud alleged
to have been rerpctrated at meeting Of the directors
that time, that the latter are to take their trial
Meantime receivers in chineery we're appointed and |
civil and criminal proceedings instituted All that
remained Of the property OF the bank $4,000 Of tn.
Susquehannah bills, aud few dimes. Indictments were
found by the Grand Jury against the president cashier
and directors The indictment for perjury the first
q the kind ever tried and its validity objected to.
The removed by cerorG to the Supreme Court
snd after argument. the validity established, and
tbe esse sent back to be tried here as a record.
Morton who was formerly connected with the anal I
Bank at Albany which failed not appeared in an-
TO the indictment, and i is su'pectcd he will not,
unless Dayton Is acquitted lie Is the father Of Norton
the convicted libcer, who Ia here watching the pro-
yress Of the trial
The STATE Is. Harey Dayton for Perjwy-The Court
assembled Of III o'clock, and Harvey Day put
trial The following jury sworn the defendant
ercsins hs right challenge the Of nineteen
peremptorily and two CT three for cause -
David NJ. Force, Daniel II. owen.
Mahlon hAla, Isaac Is Corwin,
Amos Pruddcp, Sss II. Hopkins,
Jos. W. Headly, Gilbert Bodine,
One q the jurors Is ascerained be a relative the
accused but Il not discovered till hs sworn.
There number Of ladies in the gallery and the in
terest appeared to be very great,
The counsel for the state are Attorney General Elmer
and Theodore Little Esd Counsel for dsfencs, q "
Pennington u. I frcnghuysen, aud Hon. j. W Miller.
Mr. Little opened the case for the State. lie said
by act entitled AN act to establish state banks ia
New Jersey passed January s 1872 bank was estab-
iished at Morristovn by the corporate Of "rhe
President Directors and Co Of the State Bank 1T Nor
rs" The charter FOR twenty years The bank went
into operation under that charter the 10th February
lse By act entitled An act to extend the act ncor
porsting state banks in New jersey the said charter
snd supplements to II continued until the drst
Monday in February 1899 On the 18th February 1915,
Ing state Banks in New jersey the charter and sup
plements continued in force till ihe first Monday in
February 1896 The bank continuei In sS'stence until
tied AN act for the relief Of the President Directors ani
Company of the State Bank at Morris tMr Littleherr
r,ad the act and proceeded This act accepted by
the Board Of Directors the "a II April 1870 On the
18th August 1919 there two meetings Of the board
and new dynasty formed and the bank passed un
the control Of gers. Edward Condit resigned
his once President, aud Lambert Notion ce,te
in his place ON the 10th August lSl9 the defendant
cashier Of the bank and Norton a. president msie
their afhdsvt before Charles u. scoheld master ia
chanccry in this town agreeably 70 the requirement of
the fourth section a the Law OF February II, lslo
It's In the making Of this affidavit that the indctmen
charges the defendant with having w.lfy. cor.
rupty and falsely. The affidavit alcd in TIE oaice
cfthc Secretary d stae, August 2 lsia aud the bank
then resumed its hness and continued until October
81 when cessei 20 redeem its bi and fal r. will
be TO sustain this indictment for the State TO
show, ~ competent aud satisfactory evidence that tn
state Bank nj Morris the 10Th August 1850 had
@ cash capital a sl0ooo; and that the defendant
knew this fact or had the u knowing H. We viii
produce tbe several laws referred to, the original st
hdsvit signed by the defendant and 10 before g.
~ seo6csd nsster 10 chancery; show tho defendants
admissions No to what composed the S4lOo0 capital
rred TO- and sep show by the books q thu bsn that
much than half " the stood o. the credit II
one Egbcrt A. Thompson. and q not nj tho time the
property f the bank; that 80 y his credit until the
22d dAugus 1872 and checks t0 - mount Of ~ 003 "
that day charged to him by he bank that e tho
$4,000 s2ls conf osed n the check Of d. Ss ider
sou on the State Bank VI Elizabeth and not good
for the sneunt that that check II good and pro.
perly called cash. constituted part Of the capital n
The bsnk b, was loancl .s The d,iendLnt -tool