New Mexico state record. (Santa Fe, N.M.) 1914-19??, 1916-09-08
=~ NJ g . O ~ A l. DIS r Q r d.

the President OF the First State Bank OF Las Cruces subscrib
ed for and held twent five shares Of stock Of the First State
Bank OF Tucumcari; one Fay Sperry also held stock in the
First State Bank of Tucumcari. When these parties ascer-
tanned that the First State Bank Of Tuc,mlcari was not a pay
ing institution they forced Hugh Swift TO take up their stock
and he paid or directed that the parties be paid for their stock
out OF the money held at Las Cruces belonging to the First
State Bank Of Tucumcari. Also Swift's personal note OF
SIO,Ooooo was paid out OF funds of the First State Bank Of
! ucunlcari held at Las Cruces, none of this was done bv the
direction OF or with the knowledge OF the Board Of Directors
of the First State Bank Of Trclmcari.
Subsequently filed a suit ~on'belalf of the Receiver
against the First State Bank Of Las Cruces to recover the sum
which we claim to be illegally paid on the personal account Of
swift. An investigation conVinces me that the law was con-
elusive that the First State Bank Of Las Cruces had no author
lily whatever to pay the personal Indebtedness OF any person
ont OF the funds belonging to the First State Bank of Tucum-
carl.
At the last term OF court T. II. r. Smith was indicted
by the Grand Jury at Tucumcari, for embezzlement and for
to cmbczzlc, and its attorneys filed a request with
the court asking for the right t" examine the books of the First
State Bank OF Iuctmcari; that was granted with the condi-
tl"n made Il part OF the court order that we should have the
at any time to examine the books Of the First State Bank
Of Las Cruces. This was not only made a condition bv the
but was agreed to in open court BY attorneys of T. H.
X. Smith president Of the Las Cruces Bank. A couple of
weeks ago had Mr.. ! w. McCarty appointed by Judge 1ieb
to examine the books of the Las Cruces Bank. He went to
Las Cruces and proceeded to make the examination. but the
officials OF the bank refused to permit him to have access to
'ertain books which he desired. | took the matter IN with
Earnest and he consented to deputize Mr.. McCartv to make
he investigation provided Judge Licb requested him to do So.
Judge Lieb by wire requested Mr.. Ernest to make appoint
nent, and Mr.. MCCarty proceeded to make the examination.
am enclosing herewith a copy of the report made by Mr.. Nc
ary to Mr.. Ernest. obtained an order of the court on be-
aIt OF the Receiver requiring MIR. NcCarty to turn over to,
he Receiver his report OF his investigation; that was done as
Nr. Ernest requested that the report not be div,1ged to any
'erSon unless by order of the court. Mr. McCartv doe, not
nov that am sending you this copy, as I am doing it on my
volitiOn.
think the above statement will show that the Receiver
: the First State Bank of Tuclnncari. as Receiver has 4 very
jtal interest in the condition of the First State Bank of Las
ruces, for if we are successful in obtaining Judgment which
re expect to be, we desire that we be able to collect the same,
nd think that a perusal of Mr.. McCarty's report will show
that the First State Bank of Las Cruces is at this
me practically IN an insOlVent condition. Not only is it in
n m:ovent condition. but it seems to be run for the interest
a few persons alone. Chief among whom are the President
+ that Bank. T. H. R. Smith and his immediate family.
Mr.. McCarty's report shows that 7. Fl. R. Smith owes
ne bank at Las Cruces over 100000. I have made consid-
investigation as to the financial responsibility of Mr..
for the reason that he owes the Tuclmcari bank more
IAN $4,000 My information that has been furnished me
parties who should be in a position to know, convinces me ,
lat the notes are not worth the paper on which they are
ritten. Again the President of the Las Cruces Bank. T. H.
Smith, is indebted directly and Indirectly as endorser. in
sum of over SIT.ooooo to the Las Cruces Bank. and he is
so indebted TO the First State Bank of Tuclnncari. including
tereSt. court costs and all liability on certain notes in the
I'M of over 100000. have information that he is in
lSdtlol II NlilSk"&ee, Oklahoma with some person claim =,
g Judgment for $4,000 and that there is a probability of
5 recovering the same. and that if he does receive Judgment y
Judgment will likely be paid: in that case he will probably I
solvent, but as the matter now stands his solyency depends
the uncertainty of a law suit. N
That there is an absolute violation of the State laws l.
manifest from the report. Under our law Section 253 \
the Compiled Laws, the stockholders collectively can not {
indebted to the bank either as personal security or other
Sc to an amount exceeding $I2.ooooo, and we would see
ON the report that they are indebted to the bank in more S
an twice that amount.