Evening star., 1929-12-19
COURT UNDECIDED
ON SMITH RECEIVER
Realty Financing Company
Denies Insolvency, Irregu-
laritieS and Fraud.

Justice Alfred A. Wheat announced
today that he has given "much con-
sideration" to the application presented
to him yesterday for appointment of a
temporary receiver for the F. H. Smith
Co., but as yet has not reached de-
cision.
The application, calling for appoint
ment OF temporary receiver, injunc-
tion and accounting of the Smith COM
pany and certain of its officials, was
made in behalf of four Of the company'S
bOndholders.
Justice Wheat said this morning that
counsel on both sides have the rest of
today to file briefs, If they desire to do
so, on the question of the court S
authority to appoint a receiver on the
application of bondholders in the alb
Sence Of claims from judgment creditors.
The co:rt was asked yesterday to
deny the application by Wilton j. Lam
bert and Rudolph H. 'Yeatman, appear
ing for the defendants of the F. H.
Smith Co., the Smith Selling Co., Rep
reSentative Frederick N. zihlman, Daniel
r. Crissinger, G.. Bryan Pitts. Samuel
j. Henry and Henry C.. Maddux. A
receiver was asked for the corpora
ton and the officers named, with the
exception OF MadduX.
Mr.. Lambert submitted affidavitS from
the defendants which alleged that the
Smith company is solvent, that it has
never defaulted on its bonds and that
it has never been guilty of the irregu-
lar practices charged by the plaintiffs.
In refutation of the defendants affi-
davitS, counsel for the plaintiffs today
filed with the court the original report
OF Nugent Dodds, assistant to the At
torney General, which set forth a
lengthy recital of alleged irregularities
on the part of the Smith company Mr..
Lambert objected to the filing of this
report in the case on the ground that
1t was not an affidavit, but the court
declined to intervene.
The defendants were not present to
contest the receivership motion. Mr..
Lambert submitted affidavits form them,
making a general denial of the claims
of the plaintiffs.
Removal Of Offices Is Basis.
The petition for a receiver, injunction
and accounting was brought by At
torney w. Gwynn Gardiner, represent
ing Andrew B. Caldwell, Grace Cald-
well, 340l Sixteenth street; Mary H.
Farmer. 1864 Columbia road, and Eva
b. Middleton, 1919 Oak street. all
identified as bondholders and creditors
of the Smith company. These petit
TONERS were joined by Mrs. Alma
Morton, 600 Twentieth street, repre-
sented by Robert II. McNeill.
Several times during the hearing
Justice Wheat announced that he would
be extremely reluctant" to appoint a
receiver for the individual defendants
In the petition. At other times
he indicated his unwillingneSs to name
a receiver for the corporation unless it
could be shown that the interests of
the bondholderS made such action
imperative.
The petition rested largely on the
that the Smith company re-
Gently has moved to New York, remov-
ing from this jurisdiction certain of
their papers and effects"
ZihIman Is Criticized.
In discussing this action, Mr.. Gardiner
said, Washington was good enough for
them while they were taking in $7,000,-
900 of the peoples money in stock and
millions more in bonds, many of which
are certainly worthless now"
'Zihlman," he said received large
sums for lending his influence to the
enterprises. A salary of $780,
900 year, was paid CriSSinger, for
lending his name to the company and
being in its Offices to meet unfortunate
customers"
In other particulars his statements
TO the court followed closely the bill
of complaint filed last week.
Mr.. McNeill said that his client, the
intervening petitioner. had originally
purchased from the company good
per cent mortgage bonds en- the Boule-
ward apartments, but that an official OF
the Smith concern persuaded her to
trade these bonds for some o. the COM
pany's preferred stock by miSrepresent-
ing to her the true value OF this stock.
Company Claimed Solvent.
Appearing for the defendants in con-
junction with Lambert & Yeatman,
Frank G. Raickle of New York told the
court that the plaintiffs made no ale
CATION that the Smith company Is in
solvent, that the net worth of the COM
pany Is in excess of SIC, 100000 and that
the Smith company itself is not Cbli-
gated on any of the bondS He said
the Smith company merely acted as
agent for other corporations and denied
that these other corporations were its
subsidiaries.
1T would be manifestly unfair" he
declared, Ito appoint receiver for this
on no other grounds than the
charges of these plaintiffs,
who represent very small minority
of the stockholders. Such an action
would be highly prejudicial to the in
terestS of the company and the ma
jority of the stockholders" Answering
a question put by the court, Mr.. Raickle
said the company has never defaulted
on one of its bonds.
The principal affidavit in denial Of
the plaintiffs charges was that of c.
Albert Anadale, vice president Of the
F.. H Smith Co. and the Smith Sell
ing Co.
He said in part: ''None of the money
received from the sale of the company's
preferred stock has been converted or
to the personal use of any
Of the officers or directors of the COM
pany and that none Of the assets OF
the corporation have been diSsipated
miSuSed or applied to the personal use
Of any of the officers or directors"
He also asserted that to the best of
his knowledge all of the circulars and
OF the F. H! Smith Co.
in connection with the sale of its pre-
ferred stock and bonds issues are true.
Mr.. Gardiner had charged that the
Fairfax Apartments in Philadelphia
was financed by straw man" in the
employe of the Smith company and
that it is carrying mortgages far in
excess OF its true value. These charges
were denied by Anadale.
He said the apartment house was
built and, financed by Emory l.. CO.
blentz, president of the Central Trust
Co. of Maryland, who has never been
connected with the Smith company in
any way. The Smith company's only
with the apartment, he