Article Text
His Acts Criticized mit its funds to be used as they often were, prevent the sale of stock of the bank, or to consummate its pur chase, and thus to create false appearance for of larger market value than in the eyes people who had use own funds, the funds of the positors of the bank either to carry their therein or to pur chase the stock as an Dividends Excessive As to the bank's earnings the alle"In reporting on 1930 tions to the was said that year ducting all etc., were Following this was the 'this sum has been appropriated as follows': after which appeared table showing the amounts used to pay dividends, the amounts charged for depreciation, the amounts charged off for losses, and the amounts charged to the contingent reserve account 'In actual as shown by the sworn reports of the bank, the com- bined earnings from all its activities in the year 1930 were only or about 81 cents for each share of common stock, but in the report to the stated that per share of common stock was $3.07 'It was also stated in the report that each department showed net earnings for the year and gratifying to tell you that profit was earned by each of our seven branches. The stockholders were not informed the report of the new $200,000 line which had been authorized in the preceding month, and already largely availed of. The stockholders never were informed of the organization of any of Vacar Interstate or Hampton Gardens, or of the existence of any corporation having the relationship of the bank and its affairs which those had. Charges Regarding alleged shortin the operation of the bank, the in equity further states All the defendants. Holladay, Camp and Durrett some years prior the closing of the bank were personally in financial condition which them unable to pay current obligations for they were and thus wholly them from properly as ficers of the in the of collecting debts due which plainly should have been required to be and were directed by the board and its committee to be collected, and in the security for poorly loans and and generally as to existing credits and whether to extend credits and the conditions of the extension of the same. "They were the four senior officers of the yet of them by son of the existence of joint owneror property many of the debtors to the bank in large amounts, loans and of being jointly obligated with these debtors. and close business associates of these debtors, who were themselves debtors to the upon obligations to the bank and other creditors, must inevitably themselves have been discredited financially and themselves placed in position of having demands for made upon them which they could not meet if by the imposition of added financial burdens upon the debtors, as condition of the continuance of existing credits by the bank or declination to extend additional credits in order to the financial needs of these debtors, they had precipitated crisis in the affairs of such debtors to the bank. "The failure of the directors when this condition became apparent did more than two years before the final closing of the bank. to have supplanted these chief officers of the bank with bankers whose financial affairs were liquid and condition, and who did not have complicated of interests which many debtors in large amounts to our bank, whose loans were undesirable. was another important element in the final failing and closing of the its years, the bank made practice of doing intrinsically unsound acts which in the exercise of reasonable to perform their duties as directors the have it to should not the end of an of strength of the in the minds of the not justified by its true and to conceal its shrinkage of or for other collateral which acts had an imporeffect upon its final failure and because of the additional freezing of its assets caused thereby and the increase in its obliga tions West End Taken Over "Of the take. West End Bank. the assumption of the deposit liability of The Richmond Trust Company, and the construction and opening in 1930 of the Southside office building at cost of approximately $150,000 and the opening and operating of the branches at 207 West Broad Street and at Fifteenth and Main streets, and the emexecutive officers in 1931 and in 1932 without in or to enable them to correct the bad practices permit ted by the official personnel as prev. iously constituted and primarily only for the purpose of attracting new deposits to the or assisting in the retention of deposits. Accompanying this was failure during the depression period to exercise reasonable care to operating expenses they should been in order to maintain proper relation- ship between them and the income of the bank. "The complainants allege that many of these wrongdoings and wrongful omissions by some of the defendants were willful and done and omitted with then existing of the wrongful nature and of their effect upon the of the bank and for the promotion of interests adverse to the interests of the bank "The complainants also allege that the wrongful acts and omissions referred to in the paragraphs numbered as stated above in this paragraph in combination with each other, brought about the condition of the bank which existed at March 4. 1933, as the direct and and reasonably result and caused the loss of the capital and surplus the bank contributed by its stockholders by bring. ing about the compulsory closing of the bank, the liquidation of its affairs and receivership the bank counsel instituted suit against alleging unlawful and of dividends. The bill equity filed terday alleging gross separate and distinct legal proceeding.