The San Francisco call., 1895-10-17

Meroed Bank cannot be put in the hands
of receiver, and that the supreme Court
has so decided in two cases recently, and
goes on to say:
The action of the board in sending this letter
shows either willful and deliberate attempt
to mislead the depositors or such desire on
their part to shirk the duties OF their Office as
amounts almost to criminal ne gligence.
Mr.. Clunie adds that amendments to the
bank act were passed by the Legislature
and approved by the Governor May 26,
1895, giving the Commissioners full power
in the matter, and continues:
1t will thus be seen that at the date of the
Commissioners letter to the creditors, TO wit,
March %, 1895, the new act had been in effect
two DAYS and that under it the commission
had full power TO afford the relief desired by
taking the control of said bank from its diree-
tors and throwing the same into liquidation,
where 1t properly belonged.
Commissioners knew of these powers as is
shown by circular letter sent out by them
April 8, 1895, and continues:
Notwithstanding the amendment of this act
greatly increasing the powers of the commits
sion as above stated by them, and under which
they assumed such great responsibilities, alb
soutely no step was taken by the commission
for the relief OF the depositors of Merced Bank
until about the 18th of September, 1895. 4 y
About the 1st of September, 1895, the credi-
tors of the bank again awoke and this time
determined to employ counsel to protect their
interests and secure their rights. AS a result
of this call was made upon the Bank Com
mission and demand made that they proceed
to afford some relief to the depositors of the
bank. On this demand two of the Commits
sioners, Magee and Kilburn went to Merced
and were there waited upon by the creditors of
the bank and their representative, Y. G. Frost,
and met in connection with the directors of
the bank for consideration of its affairs. AT
this time an offer was made to prove the
continuous insolvency and unsafe condition of
the bank for years, and the fraud and negli
gence OF its directors in It's management; but
this attempt was shut off by a statement of the
Commissioners that without any proof other
than their own examination and the state
ments OF the bank officials, they found the
bank TO be wholly insolvent and unsafe They,
then, instead OF taking the action contem-
plated by law, and reporting the condition OF
the bank to the Attorney-General proceeded
10 arrange compromise between the directors
OF the bank and its creditors with a view to re-
organize Its board OF directors, giving three
directors TO the creditors and permitting three
OF the then directors and the president of the
bank, to retain their positions as such and
considering this arranged they leftMerced and
look no other steps Whatever, and made no re-
port of the condition of the bank as found by
them to the Attorney-General.
subsequently, about the 18th OF September,
DR.. w. n. Sherman, a representative of the
creditors and the undersigned one of their
attorneys called upon the Commissioners met
Messrs. kilburn and Fuller and then and
there demanded OF them that they report the
condition of the bank to the Attorney-General,
and that proceedings as required by the bank
act be taken against it.
This they absolutely refused to do, but finally
appointed Mr.. Hastings, their agent, to go
over the books and securities of the bank and
report its condition TO them at meeting of the
commission, to be held at Merced on October
z, 1895. This was all the concession that the
creditors were able TO secure and this was not
granted without great deal of demurring.
The report of Mr.. Hastings is quoted,
showing that he found assets with book
value OF $l5l, ,736 IL and an estimated value
of $71 ,229 90, and liabilities amounting to
$134, ,O32 OF. Mr.. Clunie continues:
meeting of the commission was held at
Merced October z, 1895, at which possession of
the bank was taken by the commission and
subsequently the insolvency and unsafe con-
dition OF the bank reported for the first time to
the Attorney-General. At the time of this
meeting it was known to the commission that
charges against them had been made to you as
Governor and were then under consideration
by you.
These are but few of the facts showing the
actions OF this commission in the matter. In
Vulnerable others could be cited to you, but no
doubt you have already become familiarized
with the same in connection with your inves-
tlgatlon OF the matter. From what we have
here shown we say that it conclusively ap-
pears that the members of the commission
must have had knowledge OF the insolvency
and unsafe condition of the Merced Bank at
least since October 16, 1894, If not before and
that on said date 1t was their duty to have re-
ported such facts to the Attorney-Gener and
not having done so they had rendered them
| selves amenable to the penalties OF section OF
the bank act.
The Attorney-General has stated positively
| to me, and who will repeat it to you, that up
to few days prior TO the 9TH of October, 1895,
he had no information whatever of the insol-
vency or unsafe condition of the bank and al
| that time the only report made to him was
verbal statement of Mr. Kilburn. And that
the first report in writing he had from the
Commissioners of such facts was made from
Merced on October z, 1895.
Mr.. Clunie then goes into the law ON the
subject to show the liability of the Com
missioners and the power of the Governor
in the ca Sc to declare their offices vacant.