The morning news. [volume] (Savannah, Ga.) 1887-1900, 1892-01-10
SUING FOR SECURITIES.
BROKER DRMEBEs CASE AGAINST
THE MERCHANTS BANK.

A Complicated Litigation Resulting
From Cashier Gadsden's Crooked
ness-The Suit Brought to Reco yer
ColIaserals Deposited as Security for
Loans-The Bang Claims the Securi-
ties Sued for Were Never Deposited
as Stated-An Important Question to
Bankers and Brokers TO Be Decided
by the Suit
The case Of r. NJ Demsre vs.. the Mer-
chants National Bank of Savannah occu-
pied the attention Of the city court yester>
day. Il is an interesting case and will
probably not be concluded before Tuesday.
The suit grows ont of the Gadsden
troubles. 1t is based upon q differ
ent claim, however, from the other
suits following the discovery of Gads-
denis defalcations, which were lost by
the bank. The Carhart and Guilmartin suits
were brought for the recovery Of securities
deposited with the cashier for safe keeping.
In the Demere suit action Is brought for the
recovery Of the collateral deposited as
security for loans received. The bank
alleges that certain collaterals claimed 10
have been deposited by Mr.. Demere as
security for loans were never deposited, and
Ibhl JULIET COAi0tck ~ We lAAoNbAStGAN All VIC
loans made.
THE AMOUNT INVOLVED.
Mr.. Demere had six loans in the bank at
the time OF Gadsden's death, amounting to
SIS, 600, secured by collateral amounting to
above S35, 900.
One of these loans was for $4,000. which
Mr.. Demere had made for Gadsden. The
note was in Mr.. Demere's name, Gadsden
putting up the collateral and was secured
by sixty shares Of Central railroad stock
and four 81, 600 Western North Carolina
railroad bonds. each as collateral This note
was made Oct. IL, 1890. Deo 80. 1890.
$500 was paid on the note and tweaty-
eight shares of Central railroad stock and
three Of the bonds were withdrawn.
The bank made its examination OF its
affairs and the securities on hand Dec. 81
and a statement was made ami sworn to
that everything was all right. and that all
the securities shown on the books were
there
After Gadsden's death Mr.. Demere, know
ing that one of these loans was for Gads-
denis benefit, and that the loan was over
margined, in order TO let the bank get the
tenetit Of the margin, notified it that this
was Gadsden's loan.
REFUSED TO RETURN HIS SECURITIES.
A few days 6fterward he wanted t. take
down another loan due, and asked for his
collateral. The bank declined TO allow him
to take up any of his notes, or to return
any Of his collateral. unless be secured
them for the note for $4,000, made Oot H.
1850, which, it was claimed, was uncovered
by collateral, the hank claiming that no
collateral had ever been deposited as
security for it.
Mr. Demere. on the idea that the COL
lateral is there or was placed there, is suing
the bank to recover in Irover the collateral
q 81 .lH VII jPb 1a inns chOnlA
have teen surrendered to him on payment
of the note, because his other Totes were all
amply secured. The bank claims
on the other hand, that it had
general len on all the collateral put up
by Mr.. Demere OH all his notes for any
balance due or to become due, ard that as
there was no collateral on the note of Dot.
II be could not take down the collateral on
the 81 300 note without paying all of his
tndebtness to the bank.
THE BANKS CLAIM.
The bank contends that this is the only
point ID the case. Mr.. Demere contends
that If he can prove the collateral was put
up on the note OF Oct. IL, the bank being
amply secured on all other loans should hand
over the collateral on these loans on the
payment OF the notes.
The bank Is represented by Erwin, du-
Bignon & Chisholm and Mr.. Demere by
Charlton & Nackall.
The witnesses examined yesterday were
President s. P. Hamilton of the bank, r.
#. Burdell, cashier of the Chatham Bank
Theodore Gordon and +. C. WyIly, brokers,
Capt. Henry Blum, president of the Ger
mania Bank and Andrew Monroe, the COL
ored porter Of the Me- chants bank
The examination of President Hamilton
occupied all the morning and part Of the
afternoon. lie was subjected to a very
searching cross-examination by Mr. Charl-
ton, who obtained very little satisfaction
from his testimony however, though some
of bis admissions were not beneficial to the
banks side of the case.
Mr. Hamilton denied that any collateral
had been deposited against Mr.. Demere's
$4,000 note. He held that the bank had a
lien upon all collateral deposited by a bor-
rover until all loans or balances due are
paid.
THE OUTSIDE TESTIMONY.
Cashier Burdell of the Chatham Bank tes-
titled to Cashier Gadsden's sending for sixty
shares OF Central stock which he had de-
posted as security for a loan in the Chats
ham Bank. but which he paid up on Oct TO-
Monroe, the porter, remembered having
been sent By Mr.. Gadsden and receiving
the stock
Mr.. WILLY and Mr.. Gordon testified as TO
the custom of the banks in making loans on
collateral and the payment of the same.
they stated that the custom was to deposit
collateral for each loan and withdraw it
upon the payment Of the loan. They said 1t
was not the custom of the banks to hold the
collateral Of one loan for the payment of
another.
President Blum of the Germania Bank
was of tie same opinion. He says that
II the banks were to hold all of brokers or
business mans collateral until he had paid
all balances due it would require million
aire to do business. The witnesses were
closely questioned by Mr.. Erwin, who is
conducting the case for the bank
All the witnesses yesterday were put up
by the plaintiff. The banks witnesses will
be on the stand Monday. The position
of the bank is, first, that
Mr. Demere's loans were insufficiently
secured and second that If insuficiently
secured he could not withdraw his collateral
or any note SO long as other notes remained
thus insufhciently secured.
The case was adjourned until u O'Clock
Tomorrow. 1t will probably be Continued
through tomorrow and Tuesday. Its being
watched with great interest by the bankers
and brokers Of the city.