1.
April 8, 1932
The Owensboro Messenger
Owensboro, KY
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PLAN TO REOPEN
Steering Committee Opens Headquarters; Commissioner Says Move Will Cut Liquidation.
State Banking Commissioner R. Dorman has written the following letter to L. Freeman Little, chairman of the steering commiton the reopening of the CenTrust company, endorsing the plan being pursued. His letter follows:
Freeman Little, Owensboro,
Ky.
"Dear Sir: "This advise you that this department in with and your in your efforts re-open the Central Trust have given careful company. study to your plan tion and am the opinion that, with the hearty cooperation the business people of your communyou able to work out this re-organization and save considerable money for the depositors of the Central Trust company. feel sure that you can liquidate the Central Trust company after this re-organization has been perfected at much less expense than can be done by this department. "We are pleased note that the financial conditions throughthe country in much better shape and the people gaining confidence. No doubt you find it hard work to perfect this re-organization but with the cooperation of the general public vicinity, feel sure that what assistance from this department, you can this save your depositors and stockholders from what seems this time considloss. "When can be of assistance not hesitate to call on With best wishes for your success, remain. "Very truly yours, DORMAN, "Banking & Securities Commissioner."
The committee has opened headquarters Laswell's office. West Third street. where depositors the Trust company. are given opportunity sign the agreement reopening. This office be charge of Mr. and Mrs. Walter Gannane. Freeman Little, chairman of the steering committee on ganization. in presenting Mr. Dorletter for publication, said: "After reading the banking missioner's letter there cannot be any question whether not this agreement in regard the reopening is best thing the depositors. He states very plainly that this plan will the depositors the most money, in that penses will be saved and more
2.
May 27, 1932
The Owensboro Messenger
Owensboro, KY
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Local Laconics
-Try Pardon on spectacles. -Born, to Mr. and Mrs. George Yeiser. of Masonville, Sunday, son, James Richard. fast card, preliminary. Lower floor, 75c; balcony, 50c. Ladies free!
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-Help reorganize the Central Trust Sign the Depositor's Agreement of the Reorgan-Catfish steak, fiddler cat, Jack salmon, Buffalo and perch. Hayden's Fish Market.
3.
June 24, 1932
The Park City Daily News
Bowling Green, KY
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HOLDS PAYMENTS BANK
Suspension of Liquidation By Central Trust Co. Ordered Until July 15
DORMAN IS OVERRULED
FRANKFORT June Court of Appeals today firmed judgment Daviess Circuit Court suspending liquidation the Central Trust Company Owensboro until July The lowcourt aside the act of James Commissioner, revoking an order of suspension In appealing from the decision of Circuit Court Commissioner Dorman attacked the validity House bill 84 passed by the 1932 Legislature providing for suspension liquidation closed bank or trust company the depositopportunity to reorganize the Hold Statute Valid "The statute question in so far addressed to the Bankwas valid," Judge Willis wrote, the whole court Commissioner Dorman revoked his order of suspension May ter had been effect 20 days. The provided for suspension for reasonable would constitute reasonable time might with cumstances,' Judge Willis said, in the present case no doubt can arise that 20 days was sonable time accomplish the onerous task which the appellees had undertaken. In the exigency was proper for the Court correct the error of the commis(Continued on Page
4.
June 25, 1932
The State Journal
Frankfort, KY
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APPELLATE COURT HOLDS STATE BANK LIQUIDATION SUSPENSION ACT VALID
That part of an act of the 1932 General Assembly directing the State Banking Commissioner to suspend liquidation of a bank while an effort is being made to effect a reorganization was held valid yesterday by the Court of Appeals.
The decision was in the case of James R. Dorman, Commissioner of Banking and Securities against Frank Dell and affirmed the judgment of the Daviess Circuit Court.
On January 2. 1932, the Central Trust Company, Owensboro. suspended and placed its/assets in the hands of the Banking Commissioner for liquidation.
The Legistature passed a bill pro- viding a plan for reorganization and pursuant to its provisions a group of depositors originated a plan to reopen the bank.
On April 26. Mr. Dorman directed his deputy to suspend liquidation and twenty days later revoked the order of suspension. A number of deposi- tors intervened for the purpose of procuring an order of court setting aside the order of suspension. The circuit court set aside the act of revocation and Mr. Dorman appealed, taking the position that the act setting out a reorganization plan was
The court. in an opinion by Judge S. S. Willis. held that the act In far as it directed the Banking Com missioner to suspend liquidation for a certain time while an effort is be ing made to reorganize a bank, is valid.
5.
July 10, 1932
Messenger-Inquirer
Owensboro, KY
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TRUST
Committee To Confer With State Banking Commissioner In Frankfort On Next Thursday.
A committee for the reorganization of the Central Trust company will go to Frankfort next Thursday confer with R. Dorman, state banking commissioner, garding the reopening of the bank. The committee will take with the depositors agreements which have been signed and represent more than percent of the deposits in the closed bank. The reorganization committee announced yesterday that Mr. Dorman has already approved the plan the reorganization and all that remains to be done before reopening the bank is to have the assets the bank appraised that may be decided what debts are to be charged off against the surplus provided for that contingency the election of directors of the reopened bank. The bills payable, owed to the Citizens Union bank, the Federal Reserve the National Credit association, all of Louisville, have been reduced $100,000. was announced, and that the remaining debt will take care of itself. Members of the committe who will go Frankfort are Triplett, H. Birkhead, BresCharles Smith, John BroDr. Kirk. John Friedman. Lawrence W. Hager, Kelly Short and Freeman Little Liquidation of the bank pended by Kavanagh. Louisville; special judge, until July 15 order to give depositors time which complete the reorganplans. is understood that approximately has been signed the depositors agreement. The total deposits amounted to Nearly 2,000 depositors each having deposits of more than $25 have signed the agreement. Deposits not signed to the agreeinclude of city school funds, of city sinking funds, $12,302 of master commissioner funds and $17,000 represented depositors. There left about in depositors' funds which has not been signed. The school funds were not signed on of the decision the board of education to file suit against the treasurer of the school board and his bondsmen for the amount. The sinking fund commission was advised by the city attorney not to sign the agreement. The master commissioner's funds cannot be signed account there being 80 many vergent
6.
August 26, 1932
The Park City Daily News
Bowling Green, KY
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NEW SUITS FILED OVER AFFAIRS OF OWENSBORO BANK
OWENSBORO Aug. New litigation the affairs the closed Central Trust Company has been filed in Daviess Court. group of stockholders and positors late yesterday filed petisupplemental report by R. Dorman, State Banking Commissioner, which Dorman refused to consider reorganization and reopening the
The petitioners seek an order claring invalid Dorman's ruling jecting the reorganization opening more than of the depositors, that the court take the bank of liquidation and place the hands of depositors. Three suits seeking $29,540.11 leged due the bank notes filed by McFarland, special deputy banking commissioner.
7.
August 26, 1932
Messenger-Inquirer
Owensboro, KY
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others. The late tone was strong. The turnover exceeded 3,000,000 shares.
American telephone equipment to be installed Kweichow Province in South China.
Britain's record non-stop freight train travels 191 miles from London to Liverpool with out stop.
Depositors Central Trust Co., be sure to come to the meeting at Court House tomorrow, Saturday afternoon at m. get our bank open. Committee. Reorganization
8.
August 27, 1932
The Owensboro Messenger
Owensboro, KY
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MORE SUITS
Account $25,845 In Notes Purchased Central Trust Co.; Little For Alleged Damages.
R. McFarland, special deputy banking commissioner in charge of the affairs of the closed Central Trust company, filed two suits in Daviess circuit court late Friday afternoon, in which he is ing collect claimed to be due from W. Reno, president of the bank, on two notes and $40,000 from Freeman Little for alleged "carelessness negligence" the performance of his duty director of the institution.
In the suit against Reno, the liquidator asserts that in Central Trust company purchased from the liquidating agent for the United States National bank, note which had been executed and delivered National bank by Reno, W. McCulloch and Trefz. The assigned to the Central Trust company for the then full face value, which was between and alleged the The plaintiff states that he to give the exact amount of the note because the "said note in the bank at the time the plaintiff took charge of the fairs assets" of the bank. February 28, the note with interest amounted to asserted. second note, the date the transaction not being given the the petition, was assigned Central Trust company the liquidating agent of the National bank, this note being the petition avers. ment for the amount the Judg- two notes plus interest asked by the liquidating agent. The suit against Little sets out that the two notes which were signed the Trust company by the National bank, and which the subject of the suit against Reno, have not been paid. Further, suit asserts that ing the said Little member of the board of directors said of bank and owed to the said bank the duty of exercising due care in superintending and managing the affairs of said bank, yet said Little such director and violation of his duty and through negligence, carelessness and tence, suffered said notes and the entire interest due thereon to main uncollected until said bank closed and until said Reno became insolvent." McFarland states in the petition that since bank acquired the said notes until closed, the bank had been paying salary to Reno, out of which the bank could have collected the notes. From 1923 through 1929, the salary paid Reno year and 1930 and 1931 the amount was year, the petition states. In conclusion, the petition alleges that "by reason of gross careless-
(Continued on Page Column
9.
August 28, 1932
The Harlan Daily Enterprise
Harlan, KY
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Ask Resignation Of Liquidator
Owensboro, Ky., Aug. 27 (P)_ More than 500 depositors stormed the Central Trust Company today and demanded that Roy McFarland, liquidator appointed by Banking Commissioner James Dorman, resign. Depositors favored reorganiza-
10.
August 30, 1932
Messenger-Inquirer
Owensboro, KY
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KAVANAGH QUITS AS SPECIAL JUDGE IN TRUST CO. SUIT
(Continued From Page One) order of suspension of liquidation and his criticism of its costs. Cause of Resignation
The resignation of Judge Kavanagh grows out of a decision of the court of appeals in which it was held on August 20, published August 21 in Owensboro, that he was designated by Chief Justice Dietzman to pass upon no questions involved in the litigation except that of double liability of stockholders of the Central Trust company. He says that this is so linked with the question of suspension of liquidation and review of the banking commissioner's action in closing the bank that the three issues should be tried together, "in order to avoid multiplicity of suits, variety of judges, confusion, delay and waste. If the court of appeals concurs in Judge Kavanagh's view, the new special judge who will be appointed to sit in the case will try all of the issues. The will necessitate a successor's familiarizing himself with approximately 700 pages of testimony that has already been taken. Judge Kavanagh's statement regarding his resignation is in full as follows: Statement Issued "The Honorable Richard Priest Dietzman, chief justice, Kentucky court of appeals, on April 26 last, designated me as special judge of the Daviess circuit court to try the $400,000 double liability assessment suit against the stockholders of the Central Trust company at Owensboro. Since April 29 have presided in this matter and such other Issuing from and incident to this original action. 'Subsequent to my ordering the suspension of the Central Trust company's liquidation, which was upheld by the court of appeals June 24, and later calling the banking commissioner's attention to the extravagant liquidation expenses existing in this institution, W. P. Sandidge, attorney for the bank's liquidating agent, R. L. McFarland, wrote to Chief Justice Dietzman protesting my selection as judge in any other phase of the bank's litigation except the assessment suit. Under a rule of the court of appeals, as Judge Dietzman stated, no special judge would be selected where an objection was made.
"In this Instant case no objection was made to my presiding from April 26 to August 4. "There are three important 1ssues which one judge should try, stockholders assessment, bank liquidation suspension and review of the banking commissioner's action in closing the bank in order to avoid multiplicity of suits, variety of judges, confusion, delay and waste. "Under the set of facts herein I cannot see how I would be eligible in one portion of the case and ineligible in another. 'My resignation was effective August 22. (Signed) "J. J. Kavanagh."
11.
November 29, 1932
Messenger-Inquirer
Owensboro, KY
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Blackwell May Rule Wednesday on Agreements that Judge M. Blackwell, Dixon, special judge Central Trust company liquidation, will complete today examination the depositors agreements looking reorganization and opening of the Central Trust company. Some the agreements have been questioned by posing the plan and efore ruling necessary for the court to inspect the signed agreements Judge Blackwell Indicated he would main in Owensboro tomorrow
12.
December 23, 1932
The Owensboro Messenger
Owensboro, KY
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SCHOOL REOPENING
Recent Objections Filed Without Its Knowledge Or Consent; National Deposit Claims Its Name Used Without Authority.
At special meeting of the Board of Education of the Owensboro city schools, with all members in attendance last night statement issued with the unanimous approval of the board, claring that recent petition filed in the Daviess circuit court in Central Trust company litigation. representing the board being petitioner objector was filed without its knowledge consent. The statement addressed to the "Citizens Owensboro," says: view of the false light in which the board of education of the city Owensboro has been placed during the past few weeks by certain phases of the bank controversy. we the members of said board. wish to make following statement: have neither authorized employed any attorney represent the Central Trust company litigation for the reason that are looking to the American Surety company against whom have filed suit on the treasurer's recent petition filed in the court of Judge Blackwell which represented petitioners and objectors was filed without our knowledge consent. Had $90,000 on Deposit The board had approximately on deposit in Central Trust when closed. Since that time has filed suit against the American Surety company to recover on the bond of Clarence Morehead, treasurer for the board of education, who with the Central Trust company. Recent pleadings filed by City Attorney John Dean made the members of the board of education parties the attack being made validity of the proposed plan for the and reopening of bank. Suspension Order Entered The order Special Judge Blackwell, Dixon. suspending the liquidation of the Central Trust company for period of ninety days, until the case is prepared for submission on its merits to the reorganization and reopening the bank, was entered in the Daviess circuit court Thursday. The order provides that L. McFarland, special deputy banking commissioner, remain as custodian of the records, property and sets of the bank, for which service
13.
February 9, 1933
The Owensboro Messenger
Owensboro, KY
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FUNDS ARE BANK REOPENING
Sinking Fund Members Sign Agreement to Reorganize Central Trust.
At meeting of the board of sinking fund of the city of Owensboro, composed of Mayor Logan E. Meredith, Sam Coots W. B. Booth, the depositors agreement providing for the reorganization and reopening of the Central Trust company, was signed Wednesday. The sinking fund had more than to its credit when the bank closed. Board of trustees of the city hospital and the library had previously signed the depositors agreement. Deposits totaling slightly in excess of $1,300,000 in the Central Trust company have been pledged to the reorganization. This rep. resents nearly 80 per cent of the deposits. House Bill 84 provides that at least 75 per cent of the deposits of closed bank shall pledged to a reorganization propos-
Judge M. L. Blackwell, Dixon, special judge in Central Trust company litigation, has the proposed plan for reorganization and reop. ening of the bank under advisement ano has indicated he will render decision in the case this week.
14.
March 1, 1933
The Paducah Sun
Paducah, KY
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Owensboro Bank May Be Reopened
Ky., March conference with committee of Owensboro citizens Tuesday, James R. Dorman, state banking securities commissioner, expressed the opinion the Central Trust Company of Owensboro could be re-organized and opened. committee headed by Wilbur Miller, attorney conferred with commissioner on details of the re-organization. Circuit court has approved the opening of the bank but left the details to be worked out by the committee with the banking partment. Mr. Dorman said he would make thorough study the reorganiation plan submitted by the committee. the and committee are unable to agree, each will submit plan to the court on or before March
15.
June 8, 1933
The Owensboro Messenger
Owensboro, KY
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DECISION IN BANK CASE MAY AFFECT CENTRAL TRUST CO.
(Continued from Page One) entire bench, upheld a ruling of Judge J. J. Louisville, directing James R. Dorman, Banking and Securities commissioner, to approve reorganization plans for the reopening of the Farmers Bank & Trust company, Hardinsburg. One by one the appellate court dismissed as "without legal merit" contentions raised by the banking commissioner against validity of the 1932 statute allowing depositors to work out reorganization plans for the institution. During the period of reorganization liquidation of a closed bank is suspended.
Effect In Owensboro Case It was believed here the decision in the Hardinsburg case also would control in the Central Trust company litigation from Owensboro where a bitter legal fight has been waged for more than year between depositors and the banking commissioner and R. L. McFarland, liquidator for the institution. Questions at issue in the Hardinsburg and bank cases are substantially the same. Liquidation of the Central Trust company at Owensboro has been suspended on orders of Judge Marlin L. Blackwell, Dixon, pending a final decision by Judge Blackwell, the case having been submitted several weeks ago. Attorneys interested in the Owensboro case appeared here severa] weeks ago for the argument of the Hardinsburg case. Wilbur K. Miller, Owensboro, and Paul Basham, Hardinsburg, and John P. Haswell, Louisville, appeared on behalf of depositors' groups. Mr. Miller represents depositors interested in reopening the Central Trust company while Mr. Haswell was interested in the Hardinsburg case.
Sees No Discrimination
Judge Richardson pointed out that in the Hardinsburg case the plan could hardly be said to discriminate against minority depositors of that institution since it provided for full payment over period of several months to all creditors. Discussing the point raised by the Banking that the 1932 legislative act interfered with the "due process" of law provision of the Federal Constitution, Judge Richardson said: "It is only arbitrary restraint and impairment of contracts, not immunity from unreasonable regulations to safeguard the public interests, that the Federal Constitution prohibits.' In such a case the seeming rights of a few must "yield to the public welfare," Judge Richardson declared, although he explained later on that the plan proposed took from no one any of his rights, but, on the contrary, provided for full payment of all depositors within a reasonable period. Judge Richardson explained that the reorganization of a closed bank did not interfere with the rights to impose a double liability assessment on the stockholders. Mr. Dorman raised this point as an ob. jection to feasibility of the plan submitted by depositors of the Hardinsburg bank. Purpose to Retrieve Assets "The ultimate purpose of the law in question is to enable deposi- tors of an institution to retrieve the assets of the bank and avoid the 1088 of claims against it by and through liquidation on the part of the Banking commissioner," the opinion stated. Attorneys for the Banking commissioner in the Hardinsburg case were J. R. Eskridge, the firm of Moorman & Beard: David C. Walls Hardinsburg: Sandidge & Sandidge Owensboro; Attorney General Bailey P. Wootton and his assistant. Overton S. Hogan. Counsel for the victorious depositors were P. M. Basham, Hardinsburg; Mr. Haswell and R. Miller Holland, R. H. Slack and the firm of Cary, Miller & Kirk, all of Owensboro.
16.
June 8, 1933
The Owensboro Messenger
Owensboro, KY
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TAKE BANKS OUT OF POLITICS
Kavanagh Says Final Action Now In Hands of Courts
Louisville, Ky., June 7. -The importance of the decision by the Court of Appeals upholding constitutionality of the 1932 bank reopening law "lies in the fact that the of the banks is taken out of politics. The final authority is placed in the courts instead of in the Banking commissioner," Judge J. J. Kavanagh said here yesterday. The decision upheld the ruling given by Judge Kavanagh while presiding as special judge in trial of the suit by majority of depositors of the closed Farmers' Bank & Trust company of Hardinsburg for approval of their plan to reopen the bank. It was the second time the bank reopening law had been before the Court of Appeals, the first case, involving reopening of the closed Central Trust company of Owensboro, having been defective in that the appeal from Judge Kavanagh decision upholding the law in that case was taken by J. R. Dorman, state banking and securities commissioner, instead of by minority stockholder, as was done in the case decided Tuesday, and no decision was given on constitutionality of the law. "It is furthermore important because this is the first banking relief law in the land to receive final interpretation. The Kentucky law was based on a Michigan sta- tute, but the Michigan law has never been ruled on finally." The immediate effect of the ruling is to permit the reopening of the Hardinsburg bank with resources of $500,000 and the Owensboro bank with resources of about $3,500,000. There are about 75 other banks in the state in process of liquidation that could avail themselves of the law, provided they can prove themselves sound. The deposit liabilities of the closed state banks amount to about $35,000,000. Under the law they may reopen provided 75 per cent of the depositors of each bank approve sound plan The Hardinsburg bank is expected to be the first bank in the country to reopen after litigation over bank relief legislation. The Owensboro institution held its final reorganization in pending the decision in the Hardinsburg case. Judge Kavanagh pointed out that since he upheld the constitutional ity of the law, enunciating the principle of majority of depositors controlling assets of closed banks, the Federal government had written similar provisions into its new banking act, the Glass-Steagall bill, providing for reopening closed national banks. The amendment making that possible was sponsored by Senator Steiwar, he said.