The New York herald., 1878-09-24
Suits Begun Against the MOrriSania
Savings Bank Trustees.
RECEIVER BEsT'S COMPLAINT.
Two Hundred and Thirty Thou.
sand Dollars at Stake.
GOOD OUTLOOK FOR THE DEP0SlT0RS

suits against the trustees OF that institution recover
the sum OF S22O 969 6s with interest," and the papers
were served upon sixteen Of The trustees Yesterday
The whole amount involved exceeds $3.50 600 The
Arst action is Tor $l 22 99 the amount Of dividends
declared and paid at times when, alleged by the
ceiver the trustees well knew tho bank insoiven
Interest also claimed from credting OF the
spective dividends. The date OF the rst given
as June 80 1875. the others following each months
thereafter, including December 81, 1876 The trus-
tees held TO be Liable this action are
Francis +. Brugman, Philip Ebling, August
Frsu,e Henry schmidt, J. Christopher Friedman,
Valentine Fries, A. G. Huple, Michael Kuniz,
j. b. Denike, Franz Sigel and Charles Fritz
In the second suit tho planuf seeks recover the
dividends illegally paid above and the OF
S173546 CO. composed OF the items foiowing:-
First loss OF SOL 9o6 &C. growing out OF purchase
Of bonds OF the town of Southheld, Staten Island,
which tho Court OF Appeals has pronounced illegal;
and. second, deficiency OF $12i 1863 49, resulting
from loans made TO one uus H. Pratt as president
OF the deiunct New York and Montclair Railroad
Company. This suit embraces the whole amount
sought to be overwhelmingly, $220 900 6S excu-
sive Of interest. The following the names OF the
trustees Said to be liable therefor: :-Nicholas Thiol
Jacob Held, Lorenzu zoueuor ana Casper Hake. Tho
third and last suit Is against Gustavus Pe,er John
Eicher, Theodore Wilkens, Frederick Hemmer, Fran
sum OF S173,546 90. which represents the losses by
the purchases OF Southfeld bonds the loans ade
TO Pratt
BASIS COMPLAINT
In each action the complaint is almost the same.
With respect 10 the first dividend Is alleged that
tho Sth day o July, 1875 sat regular of
Board OF Trustees Of said savings BANK, ~ which
quorum oi said trustees present, required by
law, OF which quorum the defendants were, a resou-
l,t,r,, f1r.
cuding the defendants, voted, directing dividend or
interest 10 be paid 10 the deposors Tor the three and
six months PRIOR 10 the lst day July, 1875" Then
follows the amount OF the DIVIDEND anu The complain
goes 'that at the times OF declaring cred
ting and paying said dividend there were surplus
prontg applicable dividends, that at said times
The assets OF the bank were insufficient to pay its
debts" II is iurther alleged "that the declaration
pay Inent DIVE dend wholly unauthor-
zed by ana In droct violation OF the banks charter
aud the laws VI the state OF New York." Tho pro-
visions OF the charter In this relation are not very
clear. Tho only references TO the subject con-
tancd In section q and are as loilows:-
Tho said corporation shall receive deposit all Of
hs s
aud shall DC repaid when rsquired 10y the depository with
OF Trustees shall irons .i,ne time prescribe
in the payment Of the
the security Of the asposors in said corporason and
thereafter each annual examinaon Of said
| positors.
-
1875. chapter 31l section 49, more explicit. II de-
carcs that "Whenevor any interest or dividends shall
profits earned and appearing to the credit OF the
porauon, the trustee. voing ior such dividend shall
be jointly and sevefaly liable Tor the amount Of
| excess SO declared ard credited"
| INVESTMENT IN ILLEGAL BoNDa
AS to tho Southneld bonds, tue receiver gives the
dates when they were purchased and the sum aid
them Next he refers 10 article 10, o the ~ Of
the BANK suy passSa 10 win ITS charter
the duties OF the "Committcc on Finance" namely,
"to decide upon ana supcrntend the most advan-
tageous Investment OF deposits and property In gen.
era" Section Of the banks charter declares II 10
be he duy OF te trustees 10 Invest in stocks OF TINS
| State or the United States, or In stocks or
bonds OF any oity county this state.
issued IN pursuance OF law, or In bonds aud mor,.
| guges, as provided Tor IN this act" Elsewhere In
the same section, II Is declared that .'the general
business and object OF the corporation shall be
| ceve on dcposiI such sums OF money as may be from
ttmo time offered, invest tho Same in tho
sacurities stocks OF Inis state OF tho United
STATES or IN such other manner as Is authorized by
this act" This last clause evidently relates bonds
| and mortgages.
Another clause of this section seems 10 have been
inserted specially empbasz the provisions quotcd
above, declares that mo money deposited in tho
said bank SHAH DO invested. except IN tho
or stocks mentioned IN this section" The SouthGed
bonds do appear como within tho scope OF lnis
plain law. They wcro not ISSUED by ''any CITY
eounV nor ~ pusaanoo y. law, the
| been pronounced illegal by the Couyt OF Appeals.
They were purchased. II seems BY the Finance Com
rs trustees oi said savings bank and approved
the action OF the committee, the defendants, win
other OF said trustees voting Tor resolutions
Ity, ratification and approval" should this DO So
ana the rscevcr would hardly mako the assertion II
Il were notbe trustees stand excellent chance OF
| having Judgment taken against them Tor tho full
amount oil the loss resulting from tho transaction.
THh PRATT LOANS
Concerning the Pratt ioans precisely tho sane form
OF conf plaint observed aud not therefore be
repeated II should however 90 stated that tho ssc
charter Already reierrsd expressly pro-
vidcs 'that no loan shall DO made upon any
securities whatever 10 greater amount than three
fha f.f I'm n.I uunn
securities at Ihe time OF making such loat" Mono Of
the securities held collateral TO ths Pratt loans over
were deslt Ia at the Stock Excnangc, ana they
possessed any "aclua cash vaue'' IL asserted
by parties well informed In such matters
Having gathsrea the foregoing from the IN no
papers nle aud by inquiry OF tbo,s uc-
quanted With the acts HERALD representative yes
views as 10 tho probability OF his winning tho suits
and AZ TO when the suits wore ikely to be tried
THE REcElvKR's STATEMENT
Mr.. Beet said that unuer the Code this class OF
causes have preference on the calendar; that his
counsel would press them 10 trial at earliest pos
sibc moment, and that they might DO reached by
November or, at latest, IN December. Regarding
tho result tho receiver said ho entertained no
doubt 10 his obtaining Judgment ia each
case. In reference to tho lisbilty OF trustees
for such acts those oned Ia his complaint no
said tho law Is vol defined by recent Ions of our
courts The recover iurihcr stated lew ex
ccptioDs tho trustees Of the German Savrgs Bank ara
men of large means aud that a judgment against
them can readily be collected. This will DO good
ncws ior the poor dopositors, who seem In a lair
way TO recover tho larger part ~ not the whole OF tue
promised thcm this address at Morrsauln.
which was noticed at tho time by the HERALD ana
was reprinted by him Tor Distribution among the de.
posots lie then placed the loss arising IRON illegal
investments AZ $i67, ,0O0 and declared his Intention
10 apply to the Court leave to sell tho securities
and suc the trustees ior the deficiency Snould the
Court sustain my cIaim. the receiver added, IL sha
recover an amount winch with The assets would on.
able me to pay you ron eighty TO ninety cents
the dolar.p
TUE QUESTION oY DIVIDENDS
The Morrisania savings Bank iaisd IN February,
request Of the dopostors, was not made public till
july following when lac took possession OF the banks
assets Al that time no reported tho liabilities at
$2S4OJO, Of which sjs, QUO duc To banks nul.
viuuas or moneys borrowed To keep the orporation
anoat. To secure the sum last named tho truslecs
had pledged ali the cUnvcrtiDe securities, Amounting
at par TO $2G250 ana $4,000 vi tho best 6olds ana
mortgages. Tho avsilivic assets OF xJ5l %
cash. From this slender basis aud lot very poor
bonds and mortgages the receiver mas succeeded
lar In diScharging the iudeDtcdncss of SOL, ,OOO
thereDy releasing tho coateruls gwen 10 inyur, lts
payment Oul Of those ho knya. no has surn