Evening star., 1932-01-31
HOLDERS OF SMITH
SECURITIES FIGHT
u. S. FOR PROPERTY
ST, 100000 in Seizures from
Pitts Sought in Suit as
Salvage in Losses.
OFFICIALS ARE NAMED
DEFENDANTS IN ACTION
Justice Let's Sets Wednesday for
Prosecution to Present I'm
pounding Proceedings.

The long struggle of F. H. Smith Co.
security holders to salvage something
from their investments was narrowed
down TO a contest between the in
vestorS and the Government yesterday
when a suit was filed in District
Supreme Court for recovery of more
than ST 100000 from the Bureau Of In
ternal Revenue.
The suit filed by Charles Malone
treasurer Of the re-organized Smith
company, asked that the Bureau be
compelled to return to the company
all property taken from G. Bryan Pitts
in satisfaction of income tax claims
amounting to 100000. The court
action was taken after company officials
received information the Internal Rev
enue Bureau had been negotiating with
Pitts for the return Of this property in
exchange for a bond covering the
amount of the tax claims.
Pitts, formerly chairman of the COM
pany'S board of directors, is now in
the District Jail, having been found
guilty Of COnSpirlng to embezzle S5000,
900 of the cOmpanyS funds The pres
ent officers of the company contend
virtually all Of the assets seized by the
bureau were directly or indirectly ac-
qutred by Pitts through theftS and that
therefore they are now the property of
the company and cannot be taken in
satisfaction OF claims against Pitts.
Damages Are Asked.
The suit, filed through Attorneys
SOL
and Richard S Doyle. named as de-
PENDANTS Galen L. TAFT, Ralph S.
Nagle and David Burnet, officials of the
bureau; Pitts, and his wife, Gladys T.
Pitts The court was asked to require
these defendants to pay money damages
to the Smith Co. for any loss it may
suffer by reason of the wrongful
seizure" of Pitts assets.
Justice F. Dickinson Let's yesterday
signed rule calling upon the defend
ants to show cause next Wednesday
why these assets should not be i'm
pounded by the court pending final de
termination Of the suit.
In asking the court to prevent return
of the property to Pitts, the suit said if
it is returned it will be concealed or
disposed of SO as to make it difficult or
impossible for the company to trace or
recover it.
The company says 1t is not fully in
formed as to the nature and location
Of all the property seized but that it
believes it includes $4,000 worth of
second-truSt notes secured on the In
vestment Building. coupons clipped
from bonds secured on the Riverside
Apartments, the Al Roy Apartments,
the Cedric Apartments, COrcOran Courts
and the Vermont Building; $l45,000
worth of Peruvian government bonds,
and between S50O,000 and Sl.000,00O
worth of jewelry.
Palm Beach Property.
Also included among the things
seized, it is said. are approximately
8 900 shares of preferred stock OF the
Smith Co.. real estate in Palm Beach
valued at S25OOOO furniture and auto
mobiles worth S2OO,0OO and a farm in
Montgomery County, Md, valued in
excess of 100000.
The petition alleges that all Of this
property was purchased by Pitts with
money estimated to have been in excess
of $2,O0O.000, which he is said to have
embezzled from the Smith Co. while
serving as its chief officer Some of the
property. it is charged, was transferred
to his wife, the details of which trans
actions are unknown to the plaintiff.
Pitts is charged in the petition with
having concealed a large amount of
personal property in addition to that
described in the suit. The company
says it has not been informed whether
any of this property has been seized
by the bureau.
Disclosures Are Requested.
The court is also asked to require the
defendants to disclose to the company
the nature, description and location of
all the property taken from Pitts or
his wife. 1t is also requested that Off
cials of the bureau be restrained from
delivering to Pitts any Of this property
pending a final determination of the
suit, and that they be held responsible
for any damages the company may SUI.
fer by reason of the alleged wrongful
seizure of this property.
It is also asked that Pitts and his
wife be required to disclose the nature
of all money and other property be-
longing to the company and held by
them, and that they also be made
liable for money damages.
Under a tentative plan recently
worked out, these assets, if recovered
by the company, would be applied in
payment of the claims of preferred
stock and bondholderS, whose ultimate
losses in an event will aggregate many