The San Francisco call., 1896-09-29
PEOPLES BANK
EMBROGLIO ENDED
Judge Seawell Granted the
Defendants Motion
for Non-Suit.
OFFICIALS JUSTIFIED.
His Honor Criticizes Sheehan
for Drawing Money
Without Order.
NEW BANK LAW SUGGESTED.
Directors Urged to Proceed at Once
to the Collection of Un.
paid Capital.
NEW BANK LAW SUGGESTED.

Judge seawell yesterday granted nom
suit in the case of the people against the
secretary and directors of the defuncr
Peoples Home Savings Bank. His Honor
covers the case fully in his decision, in
which he says in part:
In this suit, which was brought against John
F. Sheehan, secretary aud manager OF the
bank, and George Stone, s. K Thornton, E. N.
Freeman, William II. Phelps and William P.
Taylor, directors, it is claimed that the de-
PENDANTS were guilty of criminal carelessness
and negligence in administration OF the bank s
affairs, and that they are not proper persons to
be intrusted with the closing OF the business
OF the bank in the interest of depositors,
creditors and stockholders.
On May 9, 1895. the bank was declared in
solvent and on April IL, 1896, the present ac-
ton was brought No attempt has been made
to impesch the defendants for honesty or in
tegrity, but only untitness on the part OF the
accused officials is s1leged.
In regard to General Sheehan. this is not q
proceeding to punith him for refusing to per-
o NIT creditor or stockholder to inspect the
books or for having made a transfer of stock
on the books of the bank without the approval
of the board of directors Neither is ii an ac-
tion against him for an accounting or to recover
moneys improperly expended by him The
questions 10 answer are: Has Sheehan been
, guilty of criminal negligence? Is he proper
person 10 be intrusted with the duties of secre-
tary and manager2 He refused three times 10
allow the books to be inspected, and l find no
excuse is offered that seems to justify this re-
IQSAl. however, Luls Is 9OI OF SUFFICIENT
gravity to merit serious consideration in the
case As far as the transfer of stock upon the
books of the bank is concerned. there is no
allegation made that any stock was trans
terred to any person outside the State.
While the action of General Sheehan In
making these transfers without the approval
of the board is not approved do not think it
supports the charge that he is not a ht person
TO occupy the position OF secretary and man
ager. Neither this nor the preceding charge
reflects upon his personal integrity. As to
Ghaa 4aar EtoTr, 4
bursements Tor which he is alleged lot TO have
taken proper vouchers he was then acting as
receiver, and Iemphatically diSapprove of the
manner In which he, without any order OF
court appropriated money OF the bank as CON-
pensation. for his services such; but in re-
gard to the other claims paid, while few
vouchers may have been imperfect there is no
question but that General Sheehan paid out
every dollar for which he claims crenit, and
fail TO see how the interests OF the depositors
will be advanced by removing him at this
time.
The charges that the directors mentioned in
the complaint were guilty of unreasonable de-
lay in calling in the unpaid capital due by
the stockholders; that they permitted Gen.
eral Sheehan TO make eXtravagant expendi-
lures and that they conspired to REM owe At
torney Flournoy are not supported by the
evidence.
One of the most pressing duties of the board
and its attorneys at present is to collect the
unpaid capital That duty is not discharged
by simply passing a resolution and giving q
list OF the stockholders to the attorney, or even
by the commencement OF suits. 1t is the duty
OF all the directors to see that the suits are
prosecuted with diligence.
C 1t is an unfortunate condition of the law
which compels the depositors of this bank to
await the pleasure of the stockholders and
their representatives, the directors, in col
lecting the unpaid capital. I would recon.
mend that the law in this respect be amended
by the Legislature that the unpaid capital
of insolvent banking institutions may be
called in and collected by an officer appointed
by the court or the Bank Commissioners with
out requiring any action on the part of the
directors.
Defendants motion for a non-suit viii
therefore be granted.