The morning news. [volume] (Savannah, Ga.) 1887-1900, 1891-05-29
AFTERTHE COLLATERALS
The BOND SUITS AGAINST THE
MERCHANTS BANK BEGUN.


Story of tie Manipulation OF the
Collaterals Deposited in the Bank.
The first suit against the Merchants Ma
tional Bank, growing out Of the defalcation
of the late Cashier Gadsden, was begun yes
terday afternoon in the city court before
Judge Harden and a jury.
The case is that Of L. J. Guiluartin
against the bank for the recovery Of fifteen
bonds of the South Georgia and Florida
Railroad Company of the par value Of
$1,000 each, which were deposited in the
bank through Cashier Gadsien.
Charles n. West, Esq. and J. r. Saussy
Esq, represented the plaintiffs. and Erwin,
duBignon & Chisholm the bank.
The case is one of unusual interest to
business men generally, and they crowded
the court room all the afternoon. Every
seat was occupied Bankers, brokers, cotton
men, merchants and lawyers were largely
represented.
Mr.. Saussy opened the case for the
plaintiff by reading the declaration. Mr.
Erwin read the answer of the bank, which
practically was what is known in law as a
general denial
THE SPECIAL RECEIPTS.
J. J. Gaudry, OF the late firm OF HERON
& Gaudry. and for many years cashier and
confidential clerk for Guilmartin & Co.,
was the first witness put upon the stand.
He identified the signature of Cashier
Gadsden on the special" receipts given
Guilmartin & Co. by him for Stocks bonds,
aud other collaterals placed with the bank
for the purpose of raising money in the
north.
The witness also recorded two other "spe-
cial" receipts, both of which were given by
Gadsden for the bonds sued for. The re.
ceipts and signatures were then offered in
evidence by Mr.. West, but Mr.. Erwin
raised an objection. A lively legal tilt en-
sued, after which Judge Harden decided TO
admit the papers subject TO the objection.
The receipts were dated March z, 1887, and
March 2. 1887.
T. P Ravenel, Esq, was the next witness.
Mr.. Ravenels evidence was brief and had
no effect upon the issue. He testified that
he W as temporary administrator of Gads-
denis estate.
CAPT. GUILMARTIN's STATEMENT.
Capt Guilmartin, the plaintiff, was next
called. Mr.. West began questioning him
as to when his first transactions with the
bank began Mr. Erwin put Mr.. West on
notice that he would object to the line of
evidence. as it had nothing TO do with the
question at issue. Mr.. West replied that
it had, as he said he intended to
show by Capt. Guilmartin's evidence
that it had been the custom of the
bank to allow the cashier to give receipts
for collateral put up for loans Capt Gull
martin then went into a detail Of the vari-
Gus loans he had made. They began on
May II, 1881, and continued until he went
out of business. Each time he received re-
ceipts signed Thomas Gadsden, Cashier"
The collsterals were placed with the bank
for loans from northern parties, mostly the
National Bank of the Republic, of New York.
He would take Gadsden's receipt, attach it
to his note and forward it to New York.
where the note would be discounted. When
he paid the note the cashiers receipt was
always returned to him, and he would pre-
sent it to the Merchants bank and secure
his collaterals.
CONSIDERED THE BANK REsPoNsIBLF
Capt. Guilmartins testimony was clear
aud concise. He considered Cashier Gads-
den an honest man, and when he placed his
bonds with him and took his receipt as cashier
he supposed che bank was responsible. On
his numerous loans in New York, which
were transacted through the Merchants
areceipt from Gadsden. Capt Guilmartin
was a director, and owned seventy-five
shares Of stock in the bank, and was under
the impression that everything was all
right.
Mr.. Erwin asked why he left the bonds in
the bank from March .. 1887, until April,
1891. Capt. Guilmartin replied
that be considered them perfectly
safe. he was a stakeholder in the bank,
owning IS shares Of stock, and he thought
the bonds just as safe there as anywhere
else.
DR.. Heron testified in substance the
same as Capt Guilmartiu, and was on the
stand for quite awhile. He identified the re-
ceipts given by Gadsden, and!was present on
several occasions when Gadsden signed
them.
THE TRANSACTIONS KNOWN.
Mr.. Gaudry was recalled by Mr.. West.
de testified TO having received all the re-
celpts from Gadsden for Guilmartin & Co. Is
eollaterak placed with the Merchants Bank
Tor loans to be made on the National Bank
OF the Republic of New York On one
occasion he was met by Capt
Hammond. rfesident of the bank, when
coilaterals for loan and get a special re-
ceipt Capt. Hammond remarked to him.
yes, that's the way you do us. When
money is tight you want to borrow from US,
but when it is easy you borrow from New
York and pay up your demand loans here. y
Mr. Gaudry went on to state that he was
satisfied that Capt. Hammond knew Of the
transaction. as be held the oonaterals and
unsigned receipts openly in his hand.
Mr.. Erwin demanded of the witness how
he knew Capt. Hammond was aware that
he was going to get special" receipt for
the collaterals from Gadsden.
Il took it for granted, as he couldn't help
seeing the eollateral in my hand, !" replied
Mr.. Gaudry.
NOT A LEGAL OPINION.
s"Do you give that as another legal opin-
ion, Mr.. Gaudry9" asked Mr.. Erwin with g
smile.
mo, sir" replied the witness. 81 give il
as matter of fact"
The answer was so pointed that it SET
everybody in the court room laughing, and
rather upset the attorney.
At the conclusion of Mr. Gaudry's testi-
mony MIR. West read to the Jury the
answers to the interrogatories sent
to the cashier of the National
Bank of the Republic. The cashier stated
that his bank recognized Gadsdens receipts
for the collaterals deposited in the
Merchants Bank and made him loans
upon it. He believed that
the directors of the Merchants National
were cognizant of the transactions, aud au-
thorized them, on account Of conversations
had with the late President Brigham and
the present president, Capt. Hammond. In
these conversations the officials had never
objected in any way to the transactions,
and left the impression on his mind that