16381. New-York Building-Loan Banking Company (New York, NY)

Bank Information

Episode Type
Run → Suspension → Closure
Bank Type
national
Start Date
July 1, 1903*
Location
New York, New York (40.714, -74.006)

Metadata

Model
gpt-5-mini
Short Digest
19ea8cf2

Response Measures

Full suspension, Books examined

Other: Receivership appointed by court; federal bankruptcy petition filed by creditors.

Description

Articles report heavy withdrawals (700+ of 3,000 attempted) indicating a run related to a referee's report finding the company insolvent. An injunction was issued forbidding payments and receipts, and a receiver was appointed (temporary Sept 1903, made permanent Feb 1904). The sequence is a run followed by suspension/receivership and permanent closure. Dates taken from article publication context.

Events (3)
1. July 1, 1903* Run
Cause
Bank Specific Adverse Info
Cause Details
Withdrawals followed a referee's report (James J. Farren) finding the company had overestimated assets and was insolvent (deficit ~ $317,000), prompting many investors to attempt withdrawals.
Measures
None reported as a direct bank measure in the article; later injunction and receivership pursued by authorities.
Newspaper Excerpt
Out of three thousand investors who tried to withdraw deposits, more than seven hundred succeeded.
Source
newspapers
2. September 13, 1903 Suspension
Cause
Government Action
Cause Details
Attorney General Cunneen brought suit for dissolution; court proceedings resulted in injunctions and the appointment of a receiver, effectively suspending normal operations.
Newspaper Excerpt
Charles M. Preston was appointed receiver of the New-York Building-Loan Banking Company by Justice Dugro...
Source
newspapers
3. February 25, 1904 Receivership
Newspaper Excerpt
Justice Dugro... appointed Charles M. Preston permanent receiver for the New-York Building-Loan Banking Company on the application of the Attorney General in proceedings... for the dissolution of the corporation. (Article dated 1904-02-25).
Source
newspapers

Newspaper Articles (8)
1. July 23, 1903 New-York Tribune New York, NY
Article from New-York Tribune, July 23, 1903

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Article Text

WILL OPPOSE RECEIVERSHIP. N. Y. Building-Loan Banking Co. to Ask for Dismissal of Injunction. The New-York Building-Loan Banking Company will oppose the appointment of a receiver before Judge Herrick at Albany next Tuesday. It will ask that the injunction forbidding it to pay out or receive money be dismissed. The receivership case follows a report of James J. Farren, as referee, who decided that the company had overestimated its assets by $1,301,707, and instead of having a surplus and reserve fund of $984,707, had a deficit of $317,000. Out of three thousand investors who tried to withdraw deposits, more than seven hundred succeeded. There are over twelve thousand investors. in shares of the company. Five years ago it was criticised, and the State Banking Department has had it under its eye, but the business increased. It is said to be the largest company of its kind in the country. The last report of the State Banking Department, for the year ended December, 1902, shows assets of $8,861,066 58. Included in the assets are $4,669,057.68 loans on bond and mortgage and $3,905,847 49 "real estate purchased for anu leased to members and owned by the company." It received and disbursed during the year $3.462.266.55. It is classified as a "national" building and loan association by the State Banking Department.

2. August 11, 1903 New-York Tribune New York, NY
Article from New-York Tribune, August 11, 1903

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Article Text

ATTACK ON kilburn. ORDER OVER WIRE TAPPED Fight Against Appointment of Receiver for Loan Company. A. severe attack upon State Bank Superintendent Kilburn and former Attorney General Davies was made yesterday by Colonel David C. Robinson, of counsel for the New-York Building-Loan Banking Company, in opposing Attorney General Cunneen's application to have the company placed in the hands of a receiver. The argument was before Justice Dugro, in the Supreme Court, in this city, the case having been brought here on a change of venue from Albany. Attorney General Cunneen, in opening his argument for the appointment of a receiver, said an application was made in 1902 by the Attorney General to inquire into the practices and condition of the company. Later another application was made by stockholders, under the Banking law, for an examination of the company as to its practices, and both were referred to Mr. Farren, the referee, who reported that the company was insolvent to the extent of $317,467 31. The report finds that a large part of the investments of the company are excessive, and that its management has not been either conservative or prudent, but has been extravagant and reckless. Upon the filing of the report of the referee, Mr. Cunneen said he had obtained an injunction restraining the company. Justice Herrick, at Albany, he said, has approved the report, finding that the condition of the company was even worse than shown by the report. Upon the showing of the report of the referee and on the court record, Mr. Cunneen said that he would rest. Colonel Robinson, for the company, declared that the case presented a "melancholy story of two proceedings strangely discreditable to the men who have brought them." He declared that the New-York Building-Loan Banking Company was the largest loan and savings institution in the State of New-York, organized thirteen years ago with a capital of $10,000, and had grown until its capital was now more than $8,800,000. SCANDAL IN RECEIVERSHIPS. Colonel Robinson declared that the appointment of receivers has become a public scandal. and that the action in this case had been from the beginning a deliberate effort to wreck the company for the fat fees a receiver would make out of it. "In the fall of 1902 the Attorney General, who was running for the place of justice of the Supreme Court," he said, "had one deputy in Brooklyn busily engaged in the receivership business. On November 9 he suddenly discovered that this business needed a receiver. Examiners were detailed and the entire force was turned out some days later to work. They took possession of the books, and not satisfied with that, they brought letters signed by the Bank Superintendent warning the examiner in charge that he would find a depreciation in the real estate of the company. All of the property of the company is in Manhattan. Does your honor remember any depreciation in the value of property in Manhattan in 1902? Had the Tenderloin 80 far depreciated that an examiner must be instructed to find the company's property greatly depreciated?" ORDERS BY TELEPHONE OVERHEARD. Colonel Robinson said that when the examiners were in charge of the company's offices the telephone wire was tapped and stenographers made records of a conversation in which Bank Superintendent Kilburn instructed the examiners to get out their report, even though their accounts did not balance, and not to delay the matter. "I am not here to defend my predecessor or the Superintendent of Banking," said Mr. Cunneen, "but I wish to insist that the argument be confined to the issue." 'Whether the Banking Superintendent was derelict is not before me," observed Justice Dugro I think it will be before you before we get through," declared Colonel Robinson. In regard to the referee's report, Colonel Robinson said the referee had found its assets to be $8,345,241 75 and its liabilities to be $8,662.709 16. thus fixing the company's deficit at $317,000. The referee's report, he declared. showed that an error on the part of the Banking Department was the result of overestimating the company's liabilities and grossly underestimating the value of the company's assets. WENT BELOW ASSESSED VALUATIONS "The assessed valuations made for purposes of taxation," he said, "are made by men informed regarding the value of property. Here was a man from a remote county. unfamiliar with property values in Manhattan, who has reduced the valuations for the purpose of obtaining a receivership. This referee has in item after item assessed the property of this company 20 per cent less than the amount at which the people of the State have assessed it for purposes of taxation Two hundred and eight thousand dollars was cut off from our book valuation on some twenty-five pieces of property alone, and the changes were made by the referee by writing in the exact figures of this incompetent witness. Four weeks after he testified one piece had sold for nearly $40,000 more than his valuation, and this was the one piece regarding which the referee departed from the opinion of his witness friend. This property is at Lenox-ave, and One-hundredand-fourteenth-st. It sold for $240,000. and that one piece ne placed at the higher valuation." When asked who had purchased the property in Lenox-ave., Mr Robinson replied: "The president of the company The president of this company?" repeated Justice Dugro. Yes: but he bought it with the stipulation that if any one questioned the sale he would return it to the company.' The hearing was then adjourned until this morning. KILLS SELF BEFORE WIFE AND CHILD.

3. August 12, 1903 New-York Tribune New York, NY
Article from New-York Tribune, August 12, 1903

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Article Text

ASSAILS THE REFEREE. Counsel for Loan Company Says He Is Dishonest. In summing up in the hearing before Justice Dugro, of the Supreme Court, on the application for the appointment of a receiver for the New-York Building-Loan Banking Company, Joseph P. Eustace, of counsel for the company, spoke of the referee who made the report which declared the company insolvent as incompetent and dishonest. He declared that the application for the receivership had been made by malignant. dishonest people. Attorney General Cunneen is representing the State in the argument for the appointment of a receiver, and has as associate counsel ex-Assistant Attorney General Coman and Deputy Attorney General Crain. The company is represented by Colonel David C. Robinson, Joseph P. Eustace and A. C. Eustace, all of Elmira. The courtroom was filled with stockholders of the company, who listened with close attention to the proceedings in the case, a great many stockholders having all their savings tied up in the company. Colonel Robinson. who did not finish his argument on Monday, was the first to speak. He declared that the item of guarantee stock, which in the referee's report is classed as liability, was regarded by the present Superintendent of the Banking Department as a surplus, and said that the action against the company could not have been brought in good faith when it was based upon a liability which the Banking Department knew was not a liability. He also declared that there had been undervaluation to the extent of $600,000 in the real estate of the company. He asserted that the appraiser for the State, Mr. Lovett, had appraised certain parcels of ground in 1902, and that in 1903, "nagged on by the prosecution, had cut every one, all but five of his valuations, from 10 to 25 per cent." Judge Dugro asked Mr. Robinson how the credit of the company would be affected by the appointment of a temporary receiver. Colonel Robinson declared that the company's property was covered by $5,000,000 of prior mortgages, and that it needed credit to protect its mortgages. "We are behind those mortgages," he said, "with contracts to protect the stockholders, and the appointment of a temporary receiver would cause the foreclosure of many of these prior mortgages. The company would suffer great loss in consequence." J. P. Eustace summed up for the company. He said, in part: There is not one good allegation in this complaint, especially the allegation of insolvency; there is nothing in the referee's report pertinent to the appointment of a temporary receiver. The question is one of solvency or insolvency. Do the facts set forth sustain the referee's contention? The referee criticises the company, its officers and its management, but these things are not here concerned. There are other ways of correcting such abuses, if they do exist, than by dissolving the corporation. The referee in this case has attacked the honesty of the officers of this company. One of the officers is my own brother, so the attack upon him is an attack upon me, which I feel to the heart. I want your honor to take full cognizance of what I say, of the charges made by this incompetent, dishonest referee. The referee delves into the realm of dirty suspicion and brings up untrue charges against the officers of this company. The application for the receivership was made by malignant, dishonest people. Mr. Eustace eulogized Mr. Cunneen, and then expressed a desire to know what motive the Attorney General had in prosecuting the action. Mr. Cunneen sprang up. "Because," he declared, "I believe that the credulous poor are being deprived of their just earnings by this association. My sole purpose is to prevent wrong. I believe the savings of the poor are being perverted, and I will stop it if I can." Mr. Eustace replied: "The learned Attorney General was never more misled or mistaken in his life than when he took up this action at the behest of a gang of corporation wreckers." In arguing for the State, ex-Assistant Attorney General Coman said: The company has been in existence for thirteen years, and in all that time it has not matured a single share for any of its stockholders. I need not tell you that a building and loan association cannot pay a 16 per cent dividend from its earnings. The company that advertises to pay such a dividend is different only in degree from the companies that advertise 5 per cent a month. In explaining the methods of the company, Mr. Coman said it was the practice for the company to. buy a piece of property at a given price, and to take a mortgage from the shareholder for an amount in excess of the amount paid for the property, whereupon the excess would be entered in the profit and loss account. "And it was out of such profits," he added, "that the dividends of the company were declared." "The company is $63,000 in arrears on taxes and assessments on its property," he said. "A large part of its property in Yonkers was sold in 1902 for taxes and assessments. And these are accumulating at the rate of $15,000 a year. "In the thirteen years of its existence the company has accumulated $943,000 for its shareholders at a cost of $1,027,000. I say that a company with that record has no mission to perform for its stockholders: that it accumulates its funds for distribution among its officers and employes.

4. September 13, 1903 New-York Tribune New York, NY
Article from New-York Tribune, September 13, 1903

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C. M. PRESTON MADE RECEIVER. Another Step in New-York Building-Loan Banking Company Case. Charles M. Preston was appointed receiver of the New-York Building-Loan Banking Company by Justice Dugro, in the Supreme Court, yesterday. The appointment was made as the result of a suit brought in the Supreme Court by Attorney General Cunneen for a dissolution of the company. Mr. Preston is directed to file a bond of $100,000 and place all moneys received by him in the Corn Exchange Bank. Mr. Preston is president of the Equitable Securities Company and was State Superintendent of Banks from 1889 to 1896.

5. September 15, 1903 New-York Tribune New York, NY
Article from New-York Tribune, September 15, 1903

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RECEIVER PRESTON FILES BOND. Report That Building Loan Shareholders Will Fight Him Not Verified. It was stated yesterday that depositors and shareholders of the New-York Building-Loan Banking Company were to begin proceedings at once to stop the placing of the company in the hands of Charles M. Preston, as receiver. This action, it is intimated, was to be taken both on the ground that the $75,000 which it is estimated the receivership would cost is too much, and that discrimination had been made in favor of certain officials of the company, whereby they had received. cash equivalent for their stock. These rumors could not be verified yesterday from any official sources. Charles M. Preston, when seen in regard to the matter, said: "I have heard of no such movement nor of any ground for it. Of course. I cannot tell yet what may happen. Things of this sort are always liable to take an unexpected turn. However, 1 know of no trouble at present, and do not expect any. The officials and directors were closeted during the greater part of the afternoon, and declined to give any interviews. All was quiet about the building, and the under officials of the company had nothing to say. Mr. Preston yesterday filed a bond for $100,000 for the faithful performance of his duties as recelver. The bond was accepted by the court.

6. September 26, 1903 New-York Tribune New York, NY
Article from New-York Tribune, September 26, 1903

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N. Y. BUILDING LOAN PETITION FILED. An involuntary petition in bankruptcy was filed yesterday in the United States District Court against the New-York Building-Loan Banking Company, of No. 111 Fifth-ave., by four creditorsAgnes Rowsey, who has a claim of $687: Nellie E. Wall. $285: Anna A. Klodt, $247, and Samuel McCroskey, $247. The petitioners are represented by the firm of McCloskey, Belfer & Flash. of Brooklyn. The petition charges that the company was insolvent. that it committed an act in bankruptcy In permitting a receiver, Charles M. Preston. to be appointed in the Supreme Court and that the company, knowing itself to be insolvent. paid large sums of money to divers creditors, unknown to the petitioners. This, it is alleged. practically preferred them. The petition asks that a receiver be appointed at once. Tt is said that the application of the netitioners to put the company in hankruptcy was done to save the stockholders the exenses of the receivership in the State courts, the fees being much less in the federal courts.

7. October 20, 1903 New-York Tribune New York, NY
Article from New-York Tribune, October 20, 1903

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STOCKHOLDERS IN RIOT. BUILDING LOAN MEETING. Won't Bear $350,000 Deficit-Company's Lawyer Is Struck. The meeting of the stockholders of the New-York Building-Loan Banking Company, which was called yesterday by the officers of the concern to get them to bear the burden of the $350,000 deficit, and which ended in a riot, resulted. so representatives of the shareholders say, in a distinct gain for their side. The law firm of McCloskey, Belfer & Flash, which has for some time been acting in the interests of individual creditors, has been formally retained by the Protective League of the shareholders. S. J. Flash said last evening: The meeting, from which the officers expected so much, accomplished nothing for them. It was pretty effectually shown them that all efforts to clear the concern of its liabilities are in vain, and I don't think they will try to call another meeting. It was a good. lively riot, and if the police had not interfered I am positive that blood would have been shed. Pistols began to appear as soon as the officers attempted to take charge. The stockholders took possession of the meeting, passed their resolutions. and we are ready now to go ahead with an effective fight. Our petition for a receivership in the federal court was heard from to-day. The officers of the company have received five days in which to answer. At the expiration of that time we are confident that the decision will be in our favor and that Mr. Preston will be removed from the receivership and a receiver under the federal court appointed in his place. We are arranging now to engage a large hall. and in about a week will have a large mass meeting and perfect plans of action. The stockholders of the company number about fourteen thousand. They had been summoned yesterday with the hope that they could be induced to save the officers. Some five thousand enraged stockholders clamored for admittance to the Constable Building yesterday, and Fifth-ave. was blocked with the overflow. There were many demonstrative Italians in the crowd. No sooner had Joseph P. Eustace, counsel for the company, stated the object of the meeting than a general howl arose. "Swindle!" "thieves!" "robbers!" were some of the terms hurled at the thoroughly frightened officers. Mr. Eustace was roughly hustled out of the room. An Italian woman struck him in the face as he was pushed through the crowd. but he made no protest. Meanwhile reserves arrived. Then Charles S. Selner. of No. 367 Fulton-st., Brooklyn, secretary of the Protective League, served an injunction prohibiting any action on the call for the meeting and the officers retired from the field. Louis Grant was elected chairman by the stockholders and Frank Jerold secretary. The resolutions prepared by the Protective League were unanimously adopted. These resolutions represent three thousand of the shareholders. They are a protest against the holding of the meeting at the call of the officers. They also refuse to grant the proxy vote asked by the officers. They state that "either folly or knavery" is responsible for the condition of the company, and demand the resignation of all the officers and directors. Assistant District Attorney Miner announced last evening that he had received a letter from the referee, James J. Farren. of Albany; who reported that a receiver should be appointed and that a man named Preston had received the appointment. It was charged. it is declared. that the company had made false reports to the Banking Department on December 31. 1902, in that it did not give the proper assets and liabilities. Mr. Farren reported to Assistant District Attorney Miner that in his opinion the reports of the company are not fully true, and that the charges can be substantiated by documentary evidence which can be found in the County Clerks' offices in Kings, Queens, New-York and Westchester counties. It was declared that a rigid investigation would soon be under way.

8. February 25, 1904 New-York Tribune New York, NY
Article from New-York Tribune, February 25, 1904

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BUSINESS TROUBLES. Justice Dugro, of the Supreme Court, yesterday appointed Charles M. Preston permanent receiver for the New-York Building-Loan Banking Company on the application of the Attorney General in proceedings brought by the People of the State of New-York for the dissolution of the corporation. Charles M Preston was appointed temporary recelver for the corporation on September 14, 1903. The schedules in the assignment of John T. Hunt, trading as Zimdars & Hunt. electrical contractors at No. 127 Fifth-ave. and Nos. 52 and 54 Grove-st. show: Liabilities $52,558; nominal assets. $25,892; actual assets, $12,729.