The morning call., 1893-11-05
TO WIND 1T UP.
The New Receivers in the
Pacific Bank.
JUDGE HEBBARD'S DECREE.
Are tile Bank Commissioners
Court Creatures
AN APPEAL WILL BE TAKEN.
The Supreme Court to Be Asked
Whether the Bank Directors
Shall Have No Voice.

lie LOOK D0IQ yesterday mOTDluS, anu 1,
practically without legal status, except as
he is the saiaried employe OF the Board OF
Bank Commissioners.
Whether the Bank Commissioners are
| receivers. acting as any other receivers ap-
pointed by the Superior Court. or whether
they are serving independently, as pro-
| vided by the California statutes. will have
to be decided by the Supreme Court.
At the opening hour yesterday the full
board. acting under the decree of Judge
Hebbard. formally took charge. relieving
Receiver Wiley. They counted the cash.
examined the bonds, notes and other Sc
curities, and found the same correct.
That is to say-they were the same as
when Receiver Wiley took charge.
Mr.. Farnum was placed at the head of
affairs, acting for the Commissioners. The
following employees were retained: o. f.
Minor, note-teller; S. w. Morse. book
keeper. and Mrs. Graham. stenographer
and typewriter. Some one TO serve as
janitOr and messenger is yet to be selected.
Mr. FarDum is not altogether unfamiliar
with the affairs of the Pacific Bank. He
entered its service in November. 1874, as
note-teller, exchange-teller and receiving
teller, having graduated from the National
Bank of the Republic. Washington, ID. c..
Since that time he has served The National
Gold Bank and Trust Company, the MeT-
chants Exchange Bank, the Oakland Bank
of Savings, the First National of Pasadena,
and the Peoples Home Savings, where he
was manager up TO two months ago. For
four years he was on the board OF Bank
Commissioners, and part of the time its
president
1t is understood that the salaries paid to
the manager and employees are very small
in proportion to the work to be performed.
''Have you made an estimate of the
probable resources of the bank?" asked
CALL reporter of Mr. Farnum.
NO; have not made what would prop
erly be called an estimate. but / guess its
assets will realize S750.000," was the an
Swer. THE liabilities are about twice
that sum. and the stockholders will have
to make up the deficiency"
'Is the bank in charge of the Superior
Court or the Bank Commissioners"
II should say both, but perhaps you had
better ask ths lawyers. | have been placed
here to wind up the affairs of the bank.
and shall stay at the pleasure of the Bank
Commissioners, who placed me here"
"Will you confer with the bank direc-
tors or Mr.. Mcdonald. the former man.
ager, with regard to winding up the af-
fairs?"
No; 1 think lone of them will be con-
The decree of Judge Hebbard, published
In full in Yesterdays CALL, provoked
much comment among members of the bar.
and its sOuDdneSs was discussed over many
a lunch table. More than one lawyer had
looked up section II of IAN act creating
Board of Bank Commissioners and pre-
scrlbng their duties and powers"
Section II refers TO proceedings against
unsafe corporations. and reads:
If any corporation mentioned in this act
wh iS n solvent which harpaffnr
become insolveut, be thrown into liquidation
by process of law, or by the order or consent OF
its stockholders, directors managing officers.
managers or creditors, the affairs Of such cor
poraion shall be closed and the business
thereof settled within four years from the time
1t shall be declared TO be Insolvent or be
throw into Liquidation as the case may be,
unless at the expiration of such time II shall
obtain the consent. in writing, from majority
of the Board of Bank Commissioners TO con-
tinue In liquidation for longer period. Any
corporation mentioned herein now IN liquidation
or that may hereafter be thrown into liquidation
shall make seml-annual reports OF ihe condl-
tion OF its affairs 10 the Bank Commissioners in
the same manner as the solvent banks men,
toned IN this act, and in addition thereto shall
state the amount OF dividends paid, debts col
lecled and the amount realized on properly
sold, If any, since the previous report The
Bank Commissioners shall have the power
and IL is hereby made their duty TO ex-
anime the condition of every such corporation
in liquldaiion in the same manner as In the
case of solvent banks; and shall have general
supervisory control OF any such corporation.
They shall have the power TO designate the
number OF officers and employees necessary TO
close up the business of any such corporation
ana to fix the salaries of the same and shall do
all In their power TO make such liquidation
economical and as eXpedi ious as the interests
OF the depositors and stockholders VIII admit.
The question which lawyers asked each
other was this: In view of the. powers
conferred by the statute, namely, general
supervisory CONTROL did not Judge Heb
h,r far tran r1f fpa
the Bank Commissioners and deprive the
directors of the Pacific Bank.of their legal
right to conduct the liquidation under
Supervisory control ?" Did henot make
the Bank Commissioners creatures of the
Superior Court when they are by statute
creatures of the State: =:
A very we'll Informed lawyer made this
comment, which was approved by two
fellow-cOunSelorS, to reporter of this
paper: LAS | view it, the Judge has said
that Notwithstanding the fact that section
II of the bank act provides that the Bank
Commiss oners shall have the right 10
prescribe the number of employees and fix
their compensation to act in liquidation.
still if in the opinion of the court the
Bank Commissioners should be deemed
| too eXtravagant as to number of employees
| and their compensation the court would
take upon itself to review the action of the
| Bank Commissioners and fix such compen-
| SdbIUU DIS III lut UplulOu VI Lu6 WOu
| be just. In the event of it being necessary
to bring action TO collect accounts of the
bank the Bank Commissioners must from
| time to time, as occasion arises. apply to
the court for permission to bring such
suit"
| Questioned as to what legal action. if
any. the directors of the bank would take
henry c. McPike of Dunno & McPike,
attorneys for the Pacific Bank, said:
you may say that we shall take such
action as will bring the case before the
| Supreme Court, which will be asked to
decide whether or not the decree means
that the directors of the Pacific Bank
shall have any voice in the liquidation of
its business; whether the directors are
defunctis officio. and the affairs of the bank
placed exclusively in the hands OF the
| Bank Commissioners.
I'VE gather from the remarks OF Judge
Hebbard when he entered the decree that
| he onsdered that the Bank Commission
| ers occupy the same relation to the court
as ordinary receivers, and the liquidation
of the bank must be conducted under the
| direction of the court
ut will be coDtended on behalf OF the
! directors of the bank that the law does
not warrant the court in proceeding 10
such great length, and that the directors
| have the right to act for the corporation