Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1921-02-14

Q. by Mr.. Murphy: Now I direct
your attention to No. 10, the A. NJ.
Groysnor deal.
A. by Mr.. Lofthus: This line consists
OF notes ranging from a memo m
signed notation in the sum of $3.50
total Of $~29,426.33. This deal came
into the bank in the late spring or
carly summer Of 1918 at the instance
of Thomas Allen Box and j. J. Hast
ingS. Mrs. A. M. Grovsnor is a woman
who lives at Casselton and was prior
to that time a very wealthy widow.
'For this line Of credit the bank holds
several second mortgages as security
for the larger proportion Of the line
extended. There is a prior encum-
brance, however, ahead Of all the
bank security for this loan Of some
thing around $4,000 held by banks
prior creditors. It should be stated
that the bank security consists of sec
ond loans on eight quarter sections of
land n a valuable piece Of city-prop-
erty. This line Is entirely too large and
ever pay out in full. 1t was extended
without any regard to the collateral
behind it, and it is a fair illustration
of much Of the random banking done
by this institution.
Q. Now you also, among your Off
Gals duties, are required to make an
examination Of the Bank of North
Dakota, are you not? A. I I'M.
Q. Twice a year. isn't it? A. Until
the last Initiated law went into effect. I
consider a my duties as examiner
OF the Bank of North Dakota is now
at an end.
Q. But prior to hat time you made
examinations at least twice a year?
a. l did.
Q. Now do you not know it to be a
fact h a there is at the present time
or was on December 5, 1920, held by
the Bank of North Dakota, as COL
lateral to a loa to the Scandinavian
American bank, notes signed by A. M.
Grovsnor for s1,912.90 without securi-
ty n another note signed by the
same person for $4,000, without Sc
curity. Do o know whether that u
true, or not? A. I don't know.
q. Now will you please turn to what
ts described there as the Porter-Kim-
ball line, in Mr.. Haldorson's report
and read what he says? I think it Is
No. IL On the list? A. Yes
@. Read that please. A. This line
amounting in all to $%15,O66.57. This
consists of two notes signed by the
Peoples Clay Products and Fuel COM
pany, a~ggregating $7,S91.77. and two
notes signed by the National Briquet-
ting company. aggregating $~7,174.S0.
All of these notes are endorsed by
Porter Kimball and J.W. Deemy, own
ers and officers of the two companies.
h above line is excessive. 1t is with
gu security Of any kind and is wholly
unjustiied by the worth of the COM
pany or its officers. This line is ex-
tremely poor n has been ordered
gu repeatedly both by the banking
department and the directors. Both Of
these concerns have heavy obliga-
,tions with other banks in this state
and are failing to meet them"
Q. Is that a fact that the banking
department had ordered those loans
out of the bank several times? A, I
am not positive. 1t must have happen
ed before my time as examiner. NV
report will show. Only one examina-
ton was made of the Scandinavian
American bank of Fargo at the time
that l was state examiner and before
h controversy.
Q. You just went in in June, 1920?
A. June 16, 1919.
Q. Their was an examination made
that September, was there not? A.
Yes sir.
Q. Well now, don't you know it to
be a fact that the Bank of North Da-
kota at the present time holds as col
lateral to a loan of the Scandinavian
American bank a note signed by the
Peoples Power, Fuel and Clay Pro-
ducts company, by Porter Kimball.
for $4,000 with no security, and anoth-
er note signed by the Peoples Power,