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able in 60 days. Mr. Gregory testified that he did not receive cent for these notes, and that he had not paid penny or on the principal. admitting, however that he signed renewals the ing after the bank not notes on April 1922. Another high light in the proceedings was the of Smoot, cashier of the defunct bank who said that he gave the three Gregory notes, aggregating $15,000. Mr. Norwood on June 17. for collection, and that Norwood did not replace the notes, or pay anything them up to the time of the crash. He told of receipt signed by Mr. Nor wood, reading as follows "Received of Smoot, cashier three notes of Gregory aggre gating $15,000." (Signed D. Nor wood. An addenda on the receipt, dated June Mr. Smoot read follows: "I'll get you for cash of these this not for the three." Smoot further testified that no renewal notes were put the bank for the three notes after they were taken out and receipted for by Mr Norwood. Mr. Smoot. upon cross examination by Mr. Hoey. admitted that present when Norwood and Doughton were discussing the advisability of closing the bank. He also told of Mr calculat ing on présenting Rouser and Gregory notes as substitution the three Gregory notes for $15,000, but said that the beaccept the notes. He said he was present when Mr. Norwood offered these papers to Mr McLean, the ceiver, and Mr. Folger, the bank examiner. He also recounted discussion be tween Doughton and Norwood eral days before the closing of the institution, at which time, Smoot stated, Mrs. Norwood offered $15. 000 in stock of the Halifax Mills, of South Boston, Va., in payment for the Gregory notes, and this june ture Smoot admitted that this $15, 000 went into the bonk's coffers, stating that, "as understand it. the stock was given to Mr. Doughton.' When questioned as to the rela tified. in his justification of the loans made to the mills. He said that the mills at this time are solvent, from the standpoint of assets and liabilities, and that had 25 per cent of their value been realizable in cash that they would never have been forced receivership. BOUGHT IN INSTALLMENTS On cross examination by District Attorney Linney, Norwood admitted that the mills were originally bought the installment plan: cash and mortgage for the Clyde mills; cash and $300,000 mortgage for the mills; cash and $270,000 for the Newton Mills, and that the Nancy mills were bought from receiver for $30,000 and about $150,000 spent on improvthese mills Mr. Norwood said he did not know until yesterday that the direct, direct and affiliated liabilities of his to the bank amounted to over $500,000. He denied going to people Salisbury and offering them stock the mills, only to get their notes put in the bank and he said that did not tell them they would not to pay for the stock. He said he could not remember selling in the mills stock to L. Daniels, negro, of Salisbury, claiming he did not know Daniels: remembered selling $6,000 to H. Fiarley, but he could not recall selling $10,000 stock to Hancock. but did not deny that he did. When asked by the district attorney if had been loaned by the Peoples' bank, secured by stock which he, Norwood. was paying interest the time the bank failMr Norwood replied: would not say did not don't know. He admitted that he was in the bankrupt court, and that the schedof his assets showed $700. but on re-direct examination conducted by Clyde Hoey, of defense counsel, be said that most of his assets consisted of stocks, which had been put up as collateral for loans THE GREGORY NOTE
Mr. Jones, an expert accountant for the government, identified deposit slip for the Mecklenburg mills, for $75,603. and included in this was note for G., $15,this being the Gregory notes. Welch, director in the defunct bank, testified that he had never heard of the Gregory notes before the failure of the bank D. Foust, receiver for the Peoples' National bank, testified that the Halifax Mills stock was worth February 29, 1924, $47.50 per share, while the par value of this was $100. G. McGowan, receiver for the Mecklenburg mills, said that audit of that company's books by Todd and McAuley Charlotte, showed fixed assets of 1,507,840.92 and current with liabilities of $1,364,806.38, leaving worth of $784,109.62. He testified concerning Norwood's in debtedness the mills as amount to and that the Norwood and due the mills totaled $20,060.80, and that in receivables also value. He said that, "boiled down, the assets are not worth as much as the mortgages on the mills properties. The district attorney about this time exclaimed that man with million is no more entitled to break the law than man who is worth nothing," and Mr. Dinney then in quired: "Is it any excuse come in and say: worth or above the The evidence of the defense wa admitted. however. the testimony going on to show that the four mills the time of the transaction under notice were appraised by Boston Philadelphia and another auditing concern worth one and a hall million dollars. Dr. J. Busbee, Roswan. Julian. McCubbins and John M. McCarliss, all directors of the de funct bank, knew nothing concern ing the presence of the Gregory notes in the bank. Mr. McCarliss testified he did not know the notes were in the bank, stating paid the cashier to run the bank." Luther W. Jones, then special bank accountant for the government, who is now an expert accountant stated that he examined the Peoples' bank, commencing the examination August 24 and completing it October
Over the objection of the defense Mr. Jones stated that the direct lia bility of Mr. Norwood to the bank February 10. 1922, was with an indirect liability to the insti tution of $15,500. and on March 13, 1922, Norwood's drect bank liability was $18,500 and indirect $73,890. At this time the Mecklenburg mills had a direct liability of to bank. with indirect liability; New ton mlils, $17,560 direct and about indirect, as of February 10: Nancy, $17,000 direct, and Clyde $16,600 direct. When the bank failed. Mr. Jones testified, the direct. indirect and affiliated liabilities of Mr. Norwood to the bank amounted to That the capital stock of the bank, on June the night before the bank closed. was $100,000 surplus and $324,082 undivided profits. On by Mr. Brooks, Mr. Jones said that at the time of the Gregory notes Mr. Norwood owed the bank direct about $18,000 and about $15,000 indirect. District Attorney Linney intro duced ledged sheet No. 13, acocunt No. of the Mecklenburg mills. and at this point defense counsel admit ter that the $15,000 from the Gregory notes went to the credit of the Meck lenburg mills, February 10, 1922, in the deposit of $75,000 credited to the account the mills. Mr. Linney also pointed out that February 1922, the Mecklenburg mills issued check for and that this caused an overdraft of about $1,000. The defense object ed to the evidence tending to show overdraft.
