The San Francisco call., 1896-01-03
P. F. Dundon Fails to Have Them
Ousted From the Pacific
Bank.
WAS NO EVIDENCE OF FRAUD.
Judge Hebbard Suggests That They
Make Some Agreement to Pro.
tect Depositors.

Judge Hebbard has denied the petition
of P. F. Dundon to have renewed the direc-
tors of the Pacific Bank. The directors
whom he wished removed were: James NJ.
Mcdonald. S. F. Long, II. G. Meyer, J. L.
CogSwell, w. f. McAllister and J. 0. Jeph-
son.
The case came up under an order to show
cause why they should not be removed for
mismanagement OF the affairs of the bank.
1t was charged also that the directors had
been purchasing the claims of depositors at
less than face value and that they had al
lowed themselves to be influenced entirely
by James Mcdonald in their manageme ent
of affairs. 1t was further charged that
Mcdonald had conducted the bank more in
the interests of stockholders than of the
depositors.
Judge Hebbard holds that the depositors
do not seem to have sustained any loss
from the acts of the directors complained
of. He further holds that even if all the
allegations set forth were true, there would
still be great difficulty in attempting to
prove them. Unless fraud be proved, he
says, the method adopted by tie directors
IN settling claims, must be presumed t.
have been done In the exercise of their dis
cretlon; and there was no evidence TO show
that these discretionary powers were exer-
clsed IN bad faith or with intent to defraud.
Continuing the court says:
1t is true that the Legislature has attempted
to provide remedy through the courts by the
amendment of the act upon which this pro-
ceeding is based but under the peculiar cir
cumstances OF this case, considering the
amendment in question and section 305 of the
ClYll Code, which requires the directors of
corporation to be holders OF stock and be
elected by the stockholders, which section is
n dina thrR
could accomplish nothing by it's interference.
To illustrate: Two of the respondents CON
troll majority OF the stock. Should the court
remove respondents an election 10 fill their
places would have to be held by the stockhold-
ers. These two respondents would control
that election and would choose successors agree
able to themselves. The situation would re-
main practically unchanged.
Concedlng for the sake of argument that un-
der the amendment the court could reach out
ana select from the community six nine
men who were not stockholders and appoint
them as directors to continue the liquidation
OF the bank, where could be found men capa-
bic, or even incapable, of performing the du-
ties OF such officers, who would be willing to
devote their time, energy ana ability to the
Work Tor the sole remuneration of So per
monthly meeting and the bitter denunciatiOn
OF depositors who had been shamefully and
cruelty wronged by former officers of this
bank?
Moreover, for the court to appoint as direct
ors men who are not stockholders would be to
appoint number OF receivers in the very case
i'll which the Supreme Court has said that this
court has not the power to appoint single re-
cever.
Respondents have said that they will carry
out any recommendation OF this court" The
court therefore recommends that respondents
do Immediately, by written instruments, oral
declarations or other appropriate means, guar
antee To the directors and TO the depositors,
many of whom after years OF toll and careful
saving have become poor and distressed
through ignorance and negligence and crime
OF those who they trusted, that they Will not
take cents worth of advantage of them in
any manner whatever. If this promise be
made and fulfilled then this proceeding will
not have been altogether i'll vain.