Putnam patriot., 1913-09-26
WINDHAM COUNTY SAVINGS BANK CASE
Business Methods Shown
Settled by Agreement after Conference

menus. NIT. W eliS answered ffN0 str, we are trying to show that the bank took property on foreclosure and car ried it on their books for several years as mortgage loans.s "It carried in- terest, didn't it,' said MT. Henuey. "No sir, said MT. Wells. MT. Wells said he claimed that the property was not carried AS foreclosed real estate and it was reported to the commits sioners as mortgage loans which made
 the report false to that extent.
 Young admitted that loan made to him was for his fathers benefit. His
 father WAS at that time treasurer. A
 note with collateral in the name of 1 Frank r. Irusty taken In witness
 name for Trusty who was director. ] A joint note of Fanny G. Paine, wife of John Paine a director, NJ. C. Per
 kins, wife of James Perkins president,
 and C. G. Young, wife of C. C. Young
 treasurer, for 1000 was discounted. It
 was shown that some S2B, GOO had been loaned E. D. Starkweather, at that time IS or 70 years old, employed in the bank as clerk at a salary of S200 year. The collateral for the loan was Amalgamated copper and Union Pa ellie preferred stock. Ten shares of Amalgamaled had been sold at profit of $500 MT. Wells stated that he could not tell from the books who made this profit. Mrs. F. P. Warren borrowed $500 on a bank book of her husband, a director, as collateral. An other time she received $500 on the same collateral. There were several of these loans to Mrs. Warren and Mrs. Paine introduced. Mir. Wells called the attention of the court to q loan to J. A. Paine Dec. 18th, 1909, for Sl 300 with his deposit book as collateral. Counsel said, 'sfhis is especially iilu
 minating because the directors' record shows vote to loan Fanny \. Paine q zoo 2 In regard to these loans counsel stated that there was no claim that they were not paid nor that the collateral was not sufficient. They had all been voted by the directors. He did claim that under the statute the bank had no right ito loan money to it's officers, and under it's charter had no right to loan to Il corporator. There were thirty-six Of these loan transac. lons shown by the books in evidence and they were still being shown when court adjourned. Some were made Ia wives of officials, some to sons, and few directly to the officials themselves, all secured by collateral which was not questioned.
 Earle Young resumed the stand Wednesday morning. Evidence was introduced to show that excessive loans :had been made In violation Of the statute. Sales of various pieces of
 property were introduced where mort gages had been taken back, in one in- stance for the full amount, and in sev- eral for big portion 1t. The statute only allows 90 percent to be so taken.
 The next testimony was to show re- ceipt of excessive deposits contrary to Section 3435 of the statutes which sets forth that not more than Sl 900 shal be received from any one depositor in one year. Accounts of different of- ficials Of the bank were shown where numerous deposits had been made and then on the same day that deposit was made the amount would be trans i f. f.f. method was taken to cover up the fact that money in excess of the statutory amount WAS received from depositofs. The witness ssaled that he could not
 remember to whom or for what pur~ pose the transfers were made. This although two such accounts stood in bis own name. After he finished hts testimony Judge Holcomb asked nim 1 if he knew ol any instance where de- posits had been made to bank ol-
 lieiaI's account and then transferred to an individual depositor's account where deposits to the statutory limit had been made and ne admitted that he did. These transfer accounts were in the name of Irving Young, two in the name of f. c. Young, one being as trustee, Frank F. Warren, E. D. Stark weather, all connected with tue bank.
 Dividends were not charged oil until after they had been declared and en- tered to the credit of depositors. This it was explained was because that, ai- though the money had been earned, 1t had not been received. The principal source of income were mortgage loans which were payable in advance.
 IL was shown that several errors had been found by examiners since the bank closed and IL was explained that the reason that these errors had not been found by the bank officials was because there had never been trial balance taken since the bank was or ganized.s
 IL was stated that the banks hold ings were put In the books hrst al their market value. According to witness the bank commissioners had suggested that they be put iii at their par vaiue --S