The Detroit times., 1910-08-25
sCH00LMATEs,N0W
IN BITTER FEUO
As BANKERS
Story of Years Is Continued in Law
Suit in Ionia Which Involves the
Standing of Certified Check
Of One.
Incidentally There Is Discovered
Some Laxity on the Part Of State
Bank Examiner.
fFrom a STAFF correspondent)

lONlA, fhiSA., Au6. %o-- w hSA 40 -
certified check not certified check?
How many loopholes can you find In
the state banking law and its admin
istration?
These are questions soon to be
threshed out in the circuit court In
Ionia.
Under the uninteresting title OF
Preston vs.. The National Bank OF
Ionia there lies the outcropping of
a feud between the banking interests
of the Reformatory City that goes
back into the years, has colored ev-
cry political contest in the city
and has lined up the business men
of the town into factions siding with
the different banks.
Behind the bank feud there Is a
personal one, too, that goes back
to barefoot days in the little red
schoolhouse.
Incidentally there Is raised the
question as to how closely the state
banking department keeps track OF
the affairs of the banking institutions
In the smaller cities of the state.
As the case Of Preston vs. The
National Bank of Ionia now stands,
the plaintiff has secured an in1unc-
ton restraining the National Bank
OF Ionia from turning over money
to the other defendant the National
Bank of Traverse City, the sum OF
$2,7S7 collected upon a check issued
by the plaintiff.
This check is very interesting
one.
So far as is known 1t is unique in
banking.
It purports to be certified. In fact.
Il says that II Is, with the important
provision that the conditions OF o
certain letter of the maker, I. b..
Preston, should be fulfilled. The GER
tifcation, SO alleged. Is signed by
A. ]. Hemingway, the assistant
cashier OF the State Bank OF lonia.
Mr.. Preston, the maker Of the check,
is president of that institution and
one of the leading high financiers OF
Michigan, being largely interested In
western timber lands, besides manu-
featuring lines nearer home.
The question that the state banking
commission seems to haze slid over
is the nature of the liability created
by a check of the sort described. Is
Il
definition, or Is 1t merely a bluff at
certification that Is good enough to
get by the bank to which II was pre-
scented, but not good enough to hold
the Ionia bank liable II 1t happened
to be sued upon II.
This particular check does not ap-
pear on the sworn statements OF the
bank as a liability under the heading
OF certified checks, as called for in
the reports to the state banking COM
missioner.
Mr.. Preston says that II is not re-
quired by law that certified checks,
especially "contingently" certified
checks, such as the one under con-
sideration, should appear separately
In the bank report. and further that
II had never been the custom OF the
state bank of Ionia to do 80.
The bank commissioner says, how
ever, that II is most certainly re-
quired of all banks and that 1t de-
feated the purpose Of public state
ments of banking institutions II they
did not so appear.
Mr.. Preston admitted that 1t was
the general practice to report such
ably bad banking not to list them,
and, further. that In view OF the stir
that is now being created about this
particular check, the State bank would
probably list them In the future.
One thing seems to be pretty well
established The checks, whatever
they were, and however the deal in
which they we're given out, became
liabilities of the State Bank Of Ionia
as soon as the cashier put his sig
nature to- them. II that was the case,
why did they not so appear In the re-
ports to the state banking commits
sioner? That official says that II is
required. The State bank says that
Il is not required and did not do 1t.
In other words, Is the state banking
law administered by the commissioner
in the interests of the depositors, or
Is IL administered as the individual
banks see At to suit the convenience
of the principal stakeholder?
From an unprejudiced standpoint
this seems a pretty important ques-
ton for the public to investigate.
There is no suggestion In any
quarter that the State Bank of Ionia
is in any way embarrassed. Mr.. Pres.
ton has ample funds on deposit and
ample collateral In addition to meet
any demand that may come out OF
the case. It is not a question OF sol
vency, as the bank Is perfectly sound.
II is a question OF enforcement OF
the banking laws.
Il is much better to discover such
methods and properly punish them be-
fore the depositors have lost money
than II is to deplore them after the
case has been aired in the bankruptcy
courts.
Lax bank inspection should not be
overlooked merely because a failure
is not involved. FINANCE.