Bank reopened under conservatorship after the March 1933 banking holiday and was later placed in federal receivership in November 1933.
Events (5)
1.December 31, 1932Chartered
Source
historical_nic
+60 days
2.March 1, 1933*Suspension
Cause
Government Action
Cause Details
Closed during the nationwide/state banking holiday and restrictions imposed under conservatorship following the March 1933 banking holiday
Newspaper Excerpt
resumed business under restrictions...opened Friday morning in charge Patten
Source
newspapers
+16 days
3.March 17, 1933Reopening
Newspaper Excerpt
Lobbies Crowded as Chattanooga National Resumes Business Under Restrictions. ... The opened Friday morning in charge Patten and Taylor Durham Edward Finlay, deputies, resuming business limited basis.
Source
newspapers
+8 months
4.November 6, 1933Receivership
Newspaper Excerpt
Appointment of Paul Kent...appears assured The comptroller of the currency has decided appoint receiver for the bank replace Durham
VISIT LOCAL BANK MAKE DEPOSITS
Lobbies Crowded as Chattanooga National Resumes Business Under Restrictions.
SEEK TO REDEEM SCRIP
Conservator and Aides Ask Authority to Take Up Paper and Pay Certain Funds.
With hundreds persons thronging the lobbles of Chattanooga make posits secure additional Information regarding Its operations, Conservator Patten and his two deputy conservators Friday further Instructions from the of the currency on the restrictions. The opened Friday morning in charge Patten and Taylor Durham Edward Finlay, deputies, resuming business limited basis. The conservators have requested cerchanges restrictions which would enlarge the functions the bank carry These included request for permission redeem the serip issued the bank, ruling on secured deposits which would permit payIng out these funds, and authority pay certified cashier's checks. Secured deposits Include funds of the national, state, city and county governments.
Conservators Praised.
Chattanoogans visited the bank durthe day Friday. Many of the bank officials, the conhis two aides on the steps reopen the Institution. fact, there was apparent genfeeling of optimism in business the opinion that business here were definitely on the trend freely expressed. Deposits in the two leading banks Tuesday steadily increased day while were the Chattamany customers deposits during the American and Banking Hamilton Tuesday, did Elmo and Trust National open receive deposits on other functions All deposits since March subject to although the for the present permitted funds deposited prior to date, nor can the bank make present functions of the bank making collections. exchanges. change and acceptance of gold deposit Safe deposit box renters have Examination. The next step in the movement to
(Continued on Page 2.)
PUSH PLANS TO OPEN NEW BANK
Details Expected to Be Worked Out Within tion Forming.
(Continued from Page 1.) be Thereased to fifteen members Mr. Lupton has that over $200,000 of the common stock has been and that national bank. ing charter for the enterprise has been proved upon the sale of the balance of the $400,000 of common
Arrangements were made for depos. tors to the 40 per cent be paid on the purchase in the new bank Announcement of plans which will result in the of 000 000 in was being enthusiasti. cally received by trade leaders That release of the frozen deposits will greatly aid business here was generally conceded. The payment will enable hundreds to meet and to have beer defor months The City and ty were an The 40 per cent payment on depos Its applies to funds in the bank prior to the national bank holiday Funds deposited the of a are to in full at The Chattanooga National did not open the end of Patten was named and Edward Finlay and Taylor R Durham as. sistant conservators. The bank opened the following Since that time the bank has oper. ated restricted The ment WAR immediately put under way whereby the as possible could be released The present plan is result of months of negotiation and numer our between Washington officials. the bank's committee and the
PAUL KENT LOOMS BANK RECEIVER
Memphian Expected to Be Man for Chattanooga National.
Recommended by Both Bachman and McKellar to Replace Taylor Durham.
Appointment of Paul Kent. Memphis receiver the Chattanooga National bank has been recommended the comptroller the currency United States Senators Nathan Bachman and Kenneth McKellar, according to dispatch from Washington night appointment. the dispatch stated. "appears assured The comptroller of the currency has decided appoint receiver for the bank replace Durham, who been acting for the institution the few months. Durham an officer of the defunct bank. The two attemptappointed but due the policy of the comptroller of the currency receivers of national banks are not residents in the where the banks are Mr. Kent is an experienced banker. been connected old First National Memphis, and Charles Miles. Union City He came here the following the of appointment. returned Union without taking the duties office Conservator Durham continued liquidation the when Miles decided to take charge Chattanooga National bank was until the banking holidays started first opened during the banking holidays and operated restricted basis. but opened normal after the banking holidays started.
Kent W ould Accept Bank Receiver Job
Paul Kent Memphis banker would accept the appointment as receiver of the Chattanooga Na tional bank the is offered to him the banker said in Memphis Friday reported from Washington that an agreement has been reached as to his appointment and an announcement is shortly expected fro mthe comptroller Mr. Kent would replace Tavior uidating the bank's assets The appointment of an out-of-town man to liquidate banks and he replacing of conservators with receivers are two policies of the comptroller Charles W. Miles. Jr., Union City banker. was first offered the receiver's job, but declined to accept
To Get Post
Mr. Kent. prominent Memphis bankconsidered certain to get the post of federal receiver for the Chattanooga National bank. Formerly connected with the Union and Planters bank of Memphis, Mr. Kent more recently has been secretary and treasurer of the Progressive Building and Loan company in Memphis
KENT ASSUMES RECEIVER POST OF CLOSED BANK
Memphian Arrives Wednesday. Intends Speedy Liquidation of Chattanooga National.
An liquidation assets of Chattanooga Bank with possible of Memphis up his who by of the for after of to that of receiver took said at Mr and
CHOSEN RECEIVER
Paul Kent to Take Over Work National. Chattanooga for
Will Also Appointee Report Take Charge of First National Unverified. of the appointment of of receiver for Kent, bank, was Chattanooga by Taylor Durreceived yesterday and the receiver arrive expected known for several days had been Kent had been selected for Mr. the had daily. The expected Mr. Durham yesterday by from the comptroller the morning at Washington, relieving him currency Monday night. for several days Unverified reports receiver for the ChattaNational would charge First National, from which bank but first-named not substantiated information received here yesterday. Although nothing definite is in prossecond dividend payment by for Chattanooga National, appointment receiver places bank in line by the corporation for dividend Finance The conservator system is used only when the bank contemand Reconstruction plates Finance corporation cannot loan, made On the arrival of the receiver, the will turn over all his to new official and all the transferred to new books. will involve great mass of dework requiring some time. thought that probably have closed suspended for about three weeks facilitate the task of transferring the records to the receiver's Kent formerly was connected was connected with building loan asHis follows declination the first by Miles, of the Exchange bank, of Union City.
BANK RECEIVER MOVES SUITE TO FOURTH FLOOR receiver of the Offices of the bank the second terday afternoon of Chattanooga National building to the fourth floor afford 419 of double former amount space. O'Neal, special of the in 418. tion, have his office Kent, receiver, will 420 general reception room.
SECOND BANK
Chattanooga National Stock Owners Must Pay 100 Per Cent.
TOTAL RUNS $1,500,000
Chancery Hearing Testimony Indicated Defunct Company Owns Shares.
Official announcement of an order from T. O'Connor, comptroller the currency, assess stockholders the defunct Chattanooga National 100 cent. meet the liabilities the institution creditors made here yesterday by Paul Kent, receiver for the bank. The order came yesterday afternoon and Receiver Kent made public upon receipt. The stock which has been issued by the Chattanooga National bank totals Kent announced. Arrangements for payment on the stock will similar those made in the assessment the comptroller against stockholders of the First National Other than to say the order been issued 100 cent. assessment $1,500,000, the ceiver said he not able to make public further details.
Payment Plan Expected.
The order issued to the First National bank that the would required pay the before May in cash. further however, was worked out for the First National which will entitle them to make down sue bearing notes for the remainder, to be paid monthly in three consecutive installments. Similar arrangements will be availaof National, Mr. Kent said, adding that not in position to say when ment the National stockholders due, or give list stockholders. The order of assessment against the Chattanooga National stockholders terday the as the defunct According entered in First National chancery recently, that practically share the Chattanooga owned the Securities company, subsidiary the First National bank. It was further pleaded by the First National that the First company insolvent. With that and his attorneys faced the reaching the proper parties, there any, levy against. The First Securities company chartered Tennessee and under state stockholders corporation for its debts. However, theories discussed legal circles which lead that against the of the First who are directors the First Securities company, may tried. thought day that Kent withheld the details the comptroller's order view the that litigation stock the First when National was organized likely to
Minutes Show Details. The minutes the First National bank of 1932, date Chattanooga ganized, show that the First contracted 124,300 shares National agreeing to pay share The par $10 share and the extra $10 was paid meet the surplus and undivided profits The contract made with the First National contract, according to First minutes, First agreed purchase the stock the First agreed furnish its subsidiary the money which make purchase. The First tional agreed the First Securicompany which stock and took note with stock collateral for the loan. was further the minutes, that Securities secure pledge others shares share. bank also agreed advance to the Securities comfor 25,000 remaining shares the Chattanooga The bank to shares among dividend and charge the against the surplus. The National agreed contract with the First assume to deposiall amounts owing letters credit; unpaid dividends; taxes and expenses; debtedness amounts all and debts, shown the books contract the Chattathe First National provided that National did not liability for debts to assume Finance corporation; the Volunteer liability of business the any liability, any, growing out the mortgages, bonds, adjudicated liabilities against the First National in pending future litigation major obligadisclosed books. The minutes further show that under the contract cash hand; items loan discount departdue on due letters credit; States certificates indebtedStates bonds other ness; United stocks and redemption fund treasury United States; the bank building; notes all furniture and items; all policies; policies on Sadd insurance and Hoskins. was further shown the minutes loans bank date totaling were pledged the borrowed The in the the to the amount and the the new bank to cover losses against uncollected items. The First National's debt to the ReconstrucFinance the time corporation totaled board authorized new loan of
The executive committee of the bank 1932, when the First the year with the First the National, included Patten, Fred
See Page Fourteen, Column Four.
Unborn Baby's Right To Alimony Fought
An unborn child's right to share alimony decree awarded against its father was argued before Judge Oscar Yarnell in first division of circuit court in the petition of Dorothy M. Cockrell against her former husband, Grover L. Cockoptometrist. Mrs. Cockrell obtained a final divorce decree in October of 1933, at which time she accepted lump $700 for alimony Her second child was born in December Through her attorney, James H. Anderson, she asked yesterday for more mony for both the second and the first child Dr. Cockrell's & Ballard, contended that the decree could not be modified in favor of child who was born at the time the decree was entered, and insisted that an unborn child could not be party to decree Judge Yarnell took the question under advisement The plea of Paul Kent, Chattanooga National bank receiver, through Attorney Estes Kefauver, for new trial in his suit to break George K. Brown lease on soda fountain space in the bank building, taken under advisement by Judge Yarnell.
BANK RECEIVER APPEALS FOR FIFTH OF MILL DEBT
The financial condition of the Champion Knitting mills has become so "hopelessly insolvent" that a 20 per cent. settlement of $120,000 indebtedness the company owes the Chattanooga National bank was asked in a petition filed in chancery court yesterday.
Paul J. Kent, receiver of the Chattanooga National, brought the litigation ex parte through his attorney, Estes Kefauver. A majority of the creditors of the Knitting company, the petition stated, have agreed to accept a 20 per cent. payment. The mills had $13,175.13 on deposit in the Chattanooga National
CITY DEPOSIT PAID BY BANK RECEIVER
Grubb Account Included by Chattanooga National.
Loss Averted by City in Removal of Collateral From Safety Deposit Box.
The city of Chattanooga paid in the Chattanooga National yesterday, including the deposit to the account French city ing tax collector, Paul Kent, receiver Attorneys for the receiver ruled that the Grubb deposit and payable full Mr. to the for deposit and the French Until this delivered the had its When the bank was under had ruled that the in Mr Grubb's name could paid secured deposit by Burnet Whitaker, for Sam Whitaker out of town Its point, Mr Kent that the Grubb money deposited by agent for city and, therefore, was in bonds, posted secure city removed by officials the Chattanooga National from the safety deposit box and pledged Reconstruction corporation needed bank's aswas revealed recently
Bank Receiver Collects Over
Kent's Report to Comptroller Reveals Liquidation Prog. ress Chattanooga National.
Liabilities Over 12 Million
Cash Collections From Assets $3,710,595.
A total of 83 884,539 55 has been collected from the assets of the Chattanooga National Bank Receiver Paul Kent set out in report Thursday to the Comptroller of Currency The statement of condi tion is as of the quarter ending June 30 It gives the figures on liquidation the period from Aug 1933. to June 30. 1934 The report shows the book value of assets the of of the bank's operation at $17,118 Additional assets acquired since suspension book of are shown This makes total of assets of 08 The total cash collected from sets shown at 710,595 19 and for additional assets 36, making total cash collected of 55 The total remaining uncollected after small of loss and offset allowed on assets
Liabilities Total $12,841,640
Total of are shown These are liabilities date suspension unsecured and addi established $13,977.35 Secured and preferred paid in total paid liabilities and proved $28 662 while un secured paid or proved are shown 433 Under sources Items shown are from interest premiums lected by receiver and held tee for owners, 284 RFC loan received making total
Under listed pay ment the RFC 444 and dividend per creditors Secured and preferred liabilities paid total $3,231 756.07 Cash in hands of and comptroller $235 059.38 Expenses of receivership are shown at $84,089.02 Collateral count held creditors and given at $138 These with an $4,073 20 for taxes make total bursements of every character" of $8,643,823.85 Kent said that the process of liquidation had been proceding of business con ditions He explained that is no prospect dividend ceivership further reduce the RFC loans
Phil Whitaker Is Named As Attorney for Receiver
Maj. Phil B. Whitaker has been named replace Whitaker an attorney for the Chattanooga National Bank receiver ship. Receiver Paul Kent has re ceived notice of the appointment from O'Conner Sam Whitaker as special assist ant the United States Attorney General is now carrying on an inves tigation in the State Washing ton. He has been "out of the city for several and will probably not complete his work for time Maj. Phil Whitaker already has been looking after some of the legal in connection with the for his brother There are neys for the receiver, Estes Kefauver being the other
Bank Receiver Sues Bush Estate on Note
Paul J. Kent receiver of the Chat tanooga National Bank. brought suit in Chancery Court Monday afternoon against Albert Bush administrator of the estate of T. G Bush The collection of $5,000 note sought The note has been pledged to the
Bank Receiver Petitions Authority to Lease Space lease of part of the ground the Chatta Bank Building to Creighton's asked petition was filed in Court by Paul Kent receiver of the Chattanooga Na Bank The stated that the 1934 1939 The get per cent Creighton's of rent the Whitaker Whitaker filed the petition The disabilities of Floyd Raper and Cheatham Haynes 20-year youths Lon Foust on the hear of
Bank Defended By Frierson
(Continued From Page One.) on facts as disclosed in this record. that the First National Bank did not until the Chattanooga National Bank failed, an oc currence that rendered valueless 1,500,000 of its assets that otherwise 47% could have been utilized to pay off he all of its outstanding Blamed. But the court must realize that almost after the zation of this new bank the first of 1933. bank trouble Knoxviile acted here other trouble at Mem phis had bad effect, and bank fail ures in all parts of the country lead ing up to closing all by the militated against fair stable increasing, the gen distrust of banks the part generally brought by the had resulted in continued heavy so it the closed all Chattanooga First National Bank became and facts as placed before do not the creditors of the National Bank have any against bank the oral lor the bank Federal Court Tuesday Lynch had started the argument afternoon and continued again Thursday morning Frierson talked for an hour and concluding at for In the part his argu insisted the the Chattanooga Na tional act by the First Na tional escape its bilities This the question in good miting dis aster The officers bank on the National But would this have on the go take and the had the same stockholders the "Cut Loose Liabilities days Then came dis management have can save the stockholders * they create new tion take of old when the ers provided and the left No such things are of for his including decisions and three theories on was proceeding any of he would the First Na tional Bank accruing after new bank was created These Regardless the solvency of the First after the creation the National the institution could be held liable for the creditors The transfer the First insolvent stripping it its Creditor due protection re gardless of the right of solvency or insolvency Lynch cited a Supreme Court de the case of North ern Railroad Paul his the debts transfer by themselves to themselves be resorted to for the defeat less of the good faith with which is made
Liable for testified Other by the attorney show that which the business bank another transfer of am assets from the First National the the Cha the concern receiving the assets left the to the of and its for claims clusion but this Judge from Maj. Phil the bank was speak first when the afternoon session He the pool pected to about five min pledged to utes and will followed by nance Judge and the happened? he by Capt. the transfer of of the First National Chat anoga National Bank an absurdity and Judge James Lynch Wednesday aft started record Federal District the case and others against used the National only those Judge the loans seeking transfer of assets praised National held invalid and the ceeds those applied tors of the National Bank The greater of the ing in have Judge based the of the case as heard in "So Hamilton Holding the late other and Judge Taylor heard Judge anxiety opening argument Frierson and and Phil Whitaker the two banks and have been ver for the and B. representing num ber of dvertisement and Judge Lynch was National the Judge "Taylor Durham goat bore the this Judge Lynch As first vice president of the he was the and what he the bank knew what he did the testimony introduced been Chancery Court and made part this record discloses by Durham for the been used months of 1932 he was engaged working on proposed organiza tion of the Chattanooga National ration Bank the
Robb's Ignored. "Where that us? This shows that 1932 the chief bank Mr. Robb Chattanooga wrote letter to the which he called attention to the Lynch fact that from the had not This same letter that the mortgage pool was as 'dump ing ground' for undesirable and slow assets' in order that these undesir able assets might be removed from the assets of the bank and its child the First Securities Company "So it easy to see this rec and the ord that when Chief Examiner Robb's letter was read at that called
Depositors Assured 35 Per Cent.
Creditors of banks which did not open after the banking holiday in March, 1933, have received 74.15 per cent of the amount due them, Mr. O'Connor said in his address. Here, depositors of the Chattanooga National, which assumed the deposit liability of the First, have received 40 per cent. Mr. Kent estimates that they will receive a total of 75 per cent. This does not include any funds which may be secured as a result of the litigation.
"I have gone over the notes and assets owned by the Chattanooga National," Mr. Kent said. "Out of the assets we will collect enough to pay another 35 per cent to depositors. This will mean a total repayment of 75 per cent to depositors.
"However, we cannot expect to collect a sufficient amount to do this under two years. It is possible to accelerate collections, but should we do that we would jeopardize the many business concerns and manufacturers indebted to the Chattanooga National. We have followed a conservative policy so as not to injure these interests."
RFC Paid $5,500,000.
"Altogether the RFC has loaned a total of $8,750,000 to the First and Chattanooga National. Business would be impaired if we took out money to pay this obligation any faster than we have been doing. We have collected more than $5,500,000 from assets which has been returned to the RFC. This amount has been taken out of business channels here.
"If receivers are successful in lawsuits" filed against directors and stockholders of the two banks, it is very probable depositors will be paid in full."
There are too many "unknown quantities" to estimate the amount creditors of the First National will receive, Mr. Coffey explained. In the case of the First National, there are suits pending to establish claims of about $1,700,000 against the bank. The receiver, on the other hand, is seeking judgment of some $3,000,000 from officers and directors.
Participation certificate holders have been awarded judgment of $500,000 against the First National, on which Mr. Coffey is now preparing to pay a 40 per cent dividend plus interest. Necessary papers for the dividend have been certified to Washington for final action. Now pending in Federal Court is a petition to offset some $140,000 in funds allegedly advanced
(Continued on Page 20.)
Bank runs are almost always and everywhere a deterioration of bank fundamentals.
But not for you.
You are the measure-zero exception: great fundamentals, solid bank, and yet the Diamond Dybvig fairy spread its rumor. Depositors woke up. Your collateral was not prepositioned. The Clearinghouse had it for you.
Do not pass Go. Do not collect $200. Go directly to jail… or worse.