First National Bank (Chattanooga, TN)

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REALTY TRANSFERS

Durham Land company to C. L. Newman and wife, land at Soddy; $333.

L. W. Alexander and wife to Carl Gibbs, Vaughn's addition; $1,000.

American Trust and Banking company, trustee, to I. O. Payne and wife, lot 2, block 20, Glennwood addition; $4,965.50.

First National bank, trustee, to E. A. Lawman, and First National bank, receiver, part of lot 17, Mountain Land company, $2,500; lot 5, McCallie Avenue Land company, $2,500.

Mountain City Investment company, trustee, to J. G. King and F. F. Moore, lot 17, Richmond addition; $3,500.

First National bank to John Gilbert King, part of lot W, Oak street; $10,000.

Mrs. Annie Brody to Harry Brody, part of lot 27, Richmond addition; $4,000.

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SHINBAUM SUIT MISLEADS, SAYS BANK ATTORNEY

Frierson Asserts Bankers Will Deny Substitution of Collateral Behind Certificates.

The suit of Shinbaum against the First National bank, asking the appointment of receivers to the real estate participating certificates, is "misleading and vigorously denied.' William of the law firm of Williams the bank's said "The bank is prepared to disprove all the charges misconduct in the management the participation certificates." Mr. pared The hind certificates everything else, suffered the depression: but the officers the bank are confident with return of thing like normal real estate ket. they can in time by judicious and be liquidated that certificate holders will lose little nothing They feel sure that there is no for the low estimate placed on them in Mr. Shinbaum's

Charges Substitution Through Attorneys Charles Moore Alper Mr. Shinbaum filed in Tuesday noon alleging that the stituted for valuable posted to secure row the Reconstruction Finance The suit also alleged that such acts the bank "breach trust" and examples the rectors First bank the Chattanooga outgrowth the liable to depositors and the National started selling the set forth in the them blocks and kept funds segregated, but later this plan pooled money. Cash Certificates. The bank the petition declares, cash them par, plus When the started. holders tificates began to cash their certifi cates and this drained the cash assets forced to borrow money For this

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PROPERTY OF BANK DEEDED

First National Building Goes to National in Transfer.

Transfer of the Chattanooga NationBank building from the First National bank its successor, the Chattanooga National bank, which was fected Jan. 16 during formation of the new bank, was formally probated with the county court clerk register yesterday afternoon The building. which occupies the corEighth Market through Broad. valued $900,000 the transfer. The deed signed Durham, Other realty yesterday Virgie Ware M. Espy and wife, Fourth district; Sadd. trustee, to First National bank, receiver, Sevier Trust trustee, First National bank, American Trust and Banking company, Trust company, trustee, Hill City; Wooden and wife to and Gray's acres; Brock trustee, Carla Kibler, Hood

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FIRST NATIONAL'S ANSWER DENIES ILLEGAL SWITCHING OF MORTGAGE POOL NOTES

ASSERTS RIGHT TO SHIFT

Fall in Property Values Caused by Depression Basis of Plea.

MISMANAGEMENT COUNT TERMED FALSE CHARGE

Reply to Petition of Shinbaum Brands Hints at Collusion in Naming Receivers 'Gratuitous Statement With No Basis in Fact.'

Denial that illegal substitutions were made in securities backing up its $10,000,000 participation certificate mortgage pool, was made by the First National bank in a pleading filed in chancery court yesterday through the law firm of Williams & Frierson.

While admitting that the bank substituted securities in the pool, it insisted that it had that legal right and that no securities put in the pool were of less value than those taken down.

The petition was filed in answer to one filed several days ago by A. I. Shinbaum, holder of a $5,000 certificate, through Attorney Charles C. Moore, charging that the bank took down valuable securities, sold them, or pledged them to borrow from the Reconstruction Finance corporation and substituted undesirable securities in their place.

A detailed history of the mortgage pool from its inception up until it was placed into the hands of the receivers was included in the bank's pleading. Also in answer to Shinbaum's petition, answers were filed by E. H. Lawman, co-receiver of the mortgage pool, and by Attorney Charles C. Coffey, trustee for several certificate holders. Mr. Coffey prepared and filed his own answer. Mr. Lawmen's answer was filed by Attorney J. B. Sizer.

Shinbaum is seeking to remove the First National bank as receiver of the mortgage pool and charges mismanagement and unlawful substitution to the directors of the First National bank in the manner in which it has managed the assets of the pool. Such mismanagement, he alleges, makes the officers and stockholders liable for any losses suffered by certificate holders.

The necessity for reorganization of the First National bank into the Chattanooga National bank last Dec. 31 was due to the efforts of the First National bank to meet the constant drain of its resources caused by certificate holders cashing in their certificates, and in many instances before maturity, the bank's answer stated. It is also maintained that the borrowers' inability to pay on their loans injured the general condition of the bank.

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GARVIN OPPOSED TO FEES

Calls Renewal Charges First National Makes 'Absurd' Action.

BANK'S ATTORNEY DENIES CHARGES ALWAYS MADE

Chancellor Agrees Separation of Receivers for Bank and Mortgage Pool Necessary—Certificate Holders Say They're Satisfied.

Collection of 2 per cent. commission for renewal of mortgages placed as security in the First National bank's $10,000,000 participation certificate pool is "an outrage," Chancellor Garvin declared yesterday while hearing arguments of counsel over the affairs of the pool.

Through petition of A. I. Shinbaum, who holds a $5,000 participation certificate, Chancellor Garvin opened hearings on several questions concerning the conduct of the bank with reference to the pool. Shinbaum's petition was filed through Attorney Charles C. Moore, who insisted that the bank is now collecting the 2 per cent. commission and applying it to its own use. This money properly should be set aside for the benefit of the certificate holders and the bank has no authority to appropriate it, the attorney asserted.

Attorney W. L. Frierson, who represents the defendant, denied, however, that the bank is charging 2 per cent. commission on all renewals and said in some instances no charge is made. He further contended that the bank is acting in the capacity of an agent between the certificate holder and the mortgagor and is entitled to collect a commission.

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SUED; BANK'S RECEIVERS WITHHELD DECLARATION with the Another in connection LUBRICATION SERVICE bank's receivership National certificate mortgage the participation yesterfiled chancery withheld by day, although Lynch. by John Lee, The suit brought individually Mrs. John and ElizaMarket trustees for Robert Mrs. Augusta beth Mrs. Lillian Ray Stanfiel, for 24-HOUR Jean Mrs. Pat Wrecker Service Pat Howell, Mary E. Hamilton county. Phone 6-2126 of Letitia A. Ord Fassnacht Mrs. Emily & Son Howell Washington, Complete Automobile Service First First National bank, against S. CofCharles Securities corporation, Corner 13th and Fort Sts.

Column Three. See Page Twelve,

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company. the First National bank and the Chattanooga National are one and the same thing The petition further alleges that the Chattanooga National was formed pri marily of insolvency The formation of the institution was fraudulent according to the petition The petitioners further allege that part of the 000,000 in participation certificates were sold when officers of the bank knew the pool was insolvent The petition reiterated the contention in the first suit that the officers of the bank had substituted good collateral behind the certificates with collateral not as so that loan could be obtained from the Reconstruction Finance at the time the Chattanooga National bank was These exchanges were made for the benefit of the bank and not the certificate holders, it is Removal of E. H Lawman and the First National bank as receivers is requested in the petition The names were added to the petition of Mr Shinbaum Mrs. Julia in certificates Hale F H. 82 Hudder tora were joined to The Rev 323. and Mrs Hudder

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HOLDERS FAVOR NEW POOL PLAN BY HEAVY VOTE

From Page Five. the brain trust of Chattanooga. made good that had splendid to work with.' The committee's plan aroused instant objection some holders, while others defended. Chairman Guerry opened the meeting to any speak. made various certificate holdthe debating constant call for "question," Chairman Guerry refused open the voting unhe given all speakchance to sentiments Judge who opened when questioned to operation receivership. who said represents certifiholders, said he wanted to know "some facts before for client.' Particularly, did Swaney inquire money First National lecting the mortgages; he asked what costing operate the receivership. that the $10,000,000 thrown into receivership, many questions. withare voting observed. Dyer Judge Swaney with the statement that thought the bank about breaking on renewal collections and the expenses ership the has long to the pool that it administering. point

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REAL ESTATE TITLE VESTED IN LAWMAN

Mortgage Pool Matters Discussed With Garvin.

Title to real estate now in the First National bank receiver for the mortgage pool and H. receivers was ordered in Mr. receiver deLawman cree filed Wednesday morning. order the the First against Coffey was following Chancellor Garvin's ference in receiver and attorwhich the in the case participated. General matters in connection the operation the mortgage The said were discussed. that Receiver list for his he consider up. other brought this and that defiled within the next few exchange cerLoan bank bonds tificates for under certain conditions. plan been suggested to will the basis upon which this can be done.

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RECEIVER OF BANK POOL MOVES OFFICE JAMES

The receiver of the First National mortgage tion certificate moved his office Volunteer building the ground floor of the James buildtransfer of the office dered by Garvin, being operations the mortgage pool from bank. H. Lawman receiver for the pool.

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RECEIVER ASKS LAWYERS' HELP ON ASSESSMENT

Kent Unable to Decide Who Are of Defunct Bank.

CASE MAY END IN COURTS

Coffey Looks to Comptroller to Decide to Which Bank Each Creditor Belongs.

Unable to decide who are the stockholders defunct National Paul Kent terday that he is seeking gal advice to the he should take carry the order of the comptroller directing 100 per cent. assessment against the holders of the bank's capital stock. The law firms Whitaker Whitaker and Sizer, Chambliss Kefauver were requested Receiver Kent to advise him what steps he should take to make the assessment. The attorneys called into the conference Receive. Kent Sizer, Estes Kefauver and Maj. Phil Whitaker. Both Mr Sizer and Maj. Whitaker have been studying First NaNational for some time, both having appeared attorneys in Shinbaum case, which holders of mortgage participation tificates sought to recover for any loss they might sustain from the officers and directors of the bank. In this case Mr. Sizer certificate holdMr. Whitaker represented Taylor Durham, who was First National, Chattanooga National and the First Securities company. Comptroller O'Conner ordered Receiver Kent to levy the assessment before May 28. The order directs Receiver Kent to "take all necessary proceedings, suit otherwise, enforce the extent the individual liability of the said stockholders.' The holder of the stock of record the First Securities company, adjunct of the First National bank. This company, according to court pleadings, insolvent and unable to meet its obligations. assessment against therefore, could be of little avail to the depositors and other creditors of the Chattanooga bank. The the First the identical with of First bank, being considby receiver and his attorneys possible source for recovery of the assessment. likely that tlement the question be reached in the which has arisresult the National bank First National bank the question who the depositors creditors National creditors of the Chattanooga National Receiver Charles Coffey, of the First said yesterday first steps towards settling this question would have to taken by the comptroller the Until this settled no distrirency. bution the assessment First stockholders can The against the National bank stockholders levied of May There 500 individuals hold First National stock. Under from has no choice push the There yesterday assessment be the many result of rigid enforcement the order were being preyesterday Many held savings from against the First When National bank closed its doors had deposits aggredeposits cent. has Kent said yesterday little another from the assets the bank unless the receiver able realize against holders the bank's capital stock. That cannot than the find place make an but the First

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Would Cancel Bank's Lease

Receiver Coffey Asks Authority for Action.

Court authority for an agreement to cancel the lease for the Main Street branch of the First National Bank was asked by Receiver C. S Coffey in petition filed Tuesday in Chancery Court through his attorney C. Moore The bank leased property at 1473 Market Street in 1928 from Ira S. Post for term of twenty years. The lessor agreed to cancellation of the lease provided that he be given title to the vault and other fixtures and improvements in the building, the pe. tition Couch Litigation. Further W. H and his former wife, Mrs. Ethel Mai Couch, was in Chan cery Court when Mrs. Couch filed bill against her -husband, Grace Holley and W O Couch The bill stated that on Sept 21 1932 the couple entered into sep aration agreement Couch was to give her certain property and pay her $150 month as long as she remained unmarried divorce was granted short time later in Circuit Court and the separation agreement was incorporated into the decree Mrs. Couch that has not paid her the promised $150

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Permission to resign as trustee of a deed of trust executed by the Lucey Manufacturing corporation in 1925 was requested by Charles Coffey, receiver for the First National bank, in a chancery petition filed yesterday against the Lucey plant, P. J. Kent, Chattanooga National bank receiver, First Securities company and Commercial National bank.

The Lucey corporation obtained a $500,000 loan in 1925, part of which is unpaid, the petition, filed through Attorney H. W. Durand, Jr., related. The First National bank, original trustee, wants to resign as trustee, have an accounting, and receive a full discharge. Appointment of a successor trustee is asked.