The sun. [volume] (New York [N.Y.]) 1833-1916, 1878-07-26
erGLIGENT BANK TRUSTEES.
.,posrTORs ~ NEW ROCHELLE SUING
p' ,,op me MONEY THEY LOSE

rto New Rochelle Savings Bank was
-" 20 bc insolvcnt by the Bank Department
,Io state In November last. Depositors
q VOC ia doorways. but could get no salts
,n,gr exclamation Tho next morning William
i y ,,,,,,brey the Secretary absconded. II is
I''.a,osed that he il in Canada. An action was
",,n TO have the bank dissolved. and
yisara NJ. Tompkins Of New Rochelle
Ia anroin,cd receiver. Investigation showed
49,, Humphrey had stolen $1,000 Of
,s Wv" hanks money. His method had been ex-
",odnely simple. For example; when a de-
',si,or would bring him 800. Humphrey
hid duly credit him with the amount on his
'',.s.book and send him away satiflcd On
,to hooks " tho bank. however. he would
s.sst the depositor with 80 and would pocket
ns difference. Also. when man who
,oa borrowed money OF the bank paid the debt
uamphrey would give him receipt. but would
,,,,in the bond and mortgage documents on
ablch the money had been loaned. Having
converted the money TO his own use. he would
.tow these documents to the Bank Department
r,ominer as assets. They wero sworn to as
a..s,s by the President. George ]. Penneld. and
M himself During 1876 and 1877 these reports
rsre also sworn to by an examining committee
In one case 1t is alleged that among
ina mortgages sworn to rs assets by
NJ penneld was $500 mortgage that
had been satisfied personally by himself
The mortgages 80 misuscd range from $500 to
5000. Yet. under the law Of 1875. the trustees
were compelled to make thorough examine
uon Of all the books Of the bank on Jan. OF
zach year when the receiver sent notices to
s1..t, bn bn,lsa nff tho hapk q nxrpH
10 be in it's debt large numbers Of astonished
customers came forward with their receipts. In
almost every case where borrowed money had
been repaid to the bank, 1t was found that the
borrowers had not insisted on return to them
pithe mortgaged documents.
On the discovery OF these and other irregu-
hrtes. Mr.. Martin J. Keogh. counsel for the
receiver made application to tho supreme
cour, for permission for the receiver TO sue the
trustees. After due notice TO Attorney Cen
,ral shoemaker. Judge Dykman granted
~ order on Saturday last authorizing an action
against the trustees for s25,0OO-the full amount
Of the loss sustained by the dcpositors. The
ground ~ the action is gross negligence and u
Il said that this is the first time that proceed
inls against savings bank trustees, based on
this ground have ever been Instituted IN TINS
State. On obtaining the order. Mr. kcogh forth
with drew the complaints. Tn" charges IN these
complaints which put the trustees 81 their De,
fence nrr substantially Ms follows They tailed
To- require Humphrey to furnish a suitable bond
for the faithful performance ~ his duties tai
though IL is rumor"d that after Humphrey ran
away and before the receiver got possess on,
when the bank with all lis papers was under
control Of the trustees. q bond whl'h hhd
ior Humphrey was stolen or DESTROYED;
That under their charter they were prohibited
from loaning. money on any real estate which
wis not worth double tn" amount IT the sum
naned vet II Is alleged that they loaned 81 300
t. man named William shaw. in the town OF
Nesi Farms, on an unim .onn SWAMP l9t
rcazed on sale only s77 IS. They also
loaned to Lewis s,eineee,r $1,000 5000, % prom
which WAS never worth that amount. much less
double that amount and for which. when put
W FOR sale under foreclosure by the receiver.
no bids were received. 1t was bought in by the
Trcriy"r and On Wednesday sold by him to the
highest bidder for $1,000. The trustees ike
wise It IS avcrred in violation OF one Of their
gage from Charles II. Roosevelt on property
In New Rochelle. on which the bank has sus-
tanned a loss OF $3.50 They likewise took other
assignments OF mortgages In similar violation
OF their bylaws. one being from Peter krayer
Of 81 100 on properly never worth thnt amount.
AMI which. when recently offered .e i9r
Further. 1t 10 ayerred that. in violation
q their charter, which prohibited them from
loanng more than 5000 to any one per-
10 Michael Ball, a barroom keeper So. 500 on the
same piece Of property on Main street. in New
Rochelle. thereby becoming individually liable
for 81 500. being the excess OF the $4,000 allowed
by the charter.
The fourth count in the complaint charges
that since 1870, when Humphrey FIRST acted as
Secretary OF the bank he was continuously
stealing in tho clumsy and fragrant manner
while he was in receipt OF salary from the
trustees AS their agent. that the exercise Of the
slightest diligence would have detected his
wrong doing. and that by complying with thu
provisions OF the law of 1872 which
Jan. In each year imperative. his pecnl ations
which were greatest during 1876 and 1877. could
have been easily discovered; that Humphrey
WAS an ignorant man and grossly incapable d
discharging the duties ~ secretary oi say
ings bank that no regular bank books wer,
kept; that his cash book was never balanced
and that the minutes OF the meetings were no
recorded. RS required by law:
During 1877 i is charged that the trustees
borrowed 5000 from the National Loan am
Trust Company without authority OF law; tina
no Investments were made during that time
and that such loan must have been made Tor th'
purpose Of paying dividends which were never
earned. and in direct violation OF their charter
1t ID charged that they declared ant
paid dividends without any vote havinl
been taken for that purpose, when no entry
when there WAS no surplus; thereby becomi M
severallv and Jointly liable under the bankinl
law Of 1873 for tue amount OF dividends SO paid
aggregating Sl3. 900. They wiliully and inten
tionally deceived the Banking Department nnt
their depostore II Is averred. by making falls
reports certifying that the bank had certain
amounts on deposit mt the National Trust Com
pany when In fact they knew 10 the contrary;
On the day previous to the coming OF the TX
an iner from the Banking Department, Treas
urer Thomas l.. Dishrow. II is charged. woulC
deposit in the National Trust Company a sun
sufficient b. make IL appear that the bank had
surplus. and on the day following the departure
OF the Examiner would W draw the money
which did not belong to the INK.
The complaint also alleges that there was
violation Of the hank charter. which speciii'all.
prohibits any trustee Of the bank frofl procur
ingh loan Of the bank funds on property IL
which he is directly or indirefly Interested
George j. Prnneld WAS the owner OF three
Rochelle. and Jessie Colebrook, who afterwar'
became trustee, the owner OF the remaining
one-iourth II is averred that Pcnfleld ostensibl
conveyed 10 Colehrook his interest In said land
Whlrh Conveyance was recorded COlehroOk 20
from IN" Nank loan of $4,000 on the property
conveyed back to prunold hil three fourths In
Ierrst. Whl'h CONVEYANCE WIS not recorded
penneld was mus, lu Tact tho complaint charges
the owner throughout and got this loan from
the bank while b" WAS It's President
Mr.. heOgh caused "A notice 10 be SERVED veg
terday on each of the trustees. requesting hin
10 meet the receiver NJ his office last evening
Tho trustees met. and were informed hy Mr.
keOgh, 10 the presence OF the rnrciy.r that OF
discovering the gross IRREGULARITIES ana lllpga
ats II hecame his duty 10 advise tho r,cniyor /
institute An action against them, but tina, hnfor
doing 50 the receiver desired a. afford thnm NJ
opportunity Of making good the deneinnc,
The trustees were taken 10y SURPRISE. The
would not agree 10 make restitution assert n
hat they were not knowingly parties TO the dis
houest acts Of the late Secretary.
The summons and oomp nts that were rend
al s.Ntlf. I'm fNttu