Hanover State Bank (Hanover, KS)

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Two Banks Fail

[United Press Leased Wire Service. ] TOPEKA, Kansas, May 18.-Tightening of the money market was indirectly held today to be responsible for the failure of two Kansas banks yesterday with slight losses to depositors. The Hanover state bank closed its doors volutarily yesterday. Officials said the suspension was due to carrying overdue wheat loans because of failure of farmers to get cars to ship Reserves were low and their crops. the result was an excess of loans over deposits, it was stated. Z. O. Johnson, cashier of the Auine bank, is said to have confessed that he borrowed $86,000 of the bank's funds to build up a stock farm. High cost of labor and food made the farm a "white elephant."

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TO NAME RECEIVER Hanover Bank Shortages IncreaseJaedecke Is Still Missing. Walter E. Wilson, state bank commissioner, will name a receiver for the Hanover State bank in the next few days. Announcement. of the plan to put the bank in the hands of a receiver was made by Ed Chapman, state examiner, in charge of the Washington county institution. Shortages of August Jaedicke, Jr., president and principal stockholder of the Hanover bank, continued to grow as the state bank examiners made a further investigation of the bank's securities. It is possible, according to reports from Hanover, that Jaedicke's shortages may total $150,000. The bank is not under the state bank guaranty laws. No word has been received from the missing bank president. He had a full four days' start on the state if he sought to escape from justice. It was three days after his closing of the bank that the first intimation of shortages was given. the public. Jaedecke left Hanover in his motor car. Rewards have been offered for his arrest, but no news has come as to his probable location at this time. Commissioner Wilson is in Wichita today. He will return to Hanover Saturday and may name a receiver for the bank at that time.

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August Jaedicke Did Not Loot Safe Deposit Vault. Dugald Spencer Appointed Receiver of Hanover Bank. NET SPREAD FOR SHUGART Nebraskan Believed to Have Engineered "Kiting" System. Depositors Meet to Discuss Settlement of Trouble. Hanover, Kan., May 24.-August Jaedicke, Jr., president of the Hanover deState bank, did not loot safety posit boxes in his institution, accord- afting to information available this ernoon. A number of safety boxes were opened today. Patrons found ditheir securities intact. Shortages rectly chargeable to the bank are now estimated at $138,000. Jaedicke's personal defalcations may boost the community's loss to $500,000. Causes Great Relief. Walter E. Wilson. state bank commissioner, is here with S. N. Brewster, John former attorney general, and Hunt. Both Brewster and Hunt bank have been specially retained by the of commissioner to direct settlement legal tangles growing out of the bank trouble. True relief was felt in Hanover that towhen first reports indicated Jaeday in safety boxes in the were safe. a securities dicke bank With the seem- commountain high loss for munity ingly thru the bank president's felt manipulation of funds, fear was been that safety box patrons may have victims. added to the list of Jaedicke's Receiver Is Appointed. Depositors of the bank will meet for today to discuss methods trouble. late of the banking settlement community is seemingly Numerous pleased The present procedure. have with conservative business men radi- secriticised and condemned newspapers. verely cal reports sent to certain made Reports that threats had been were deCommissioner Wilson appeals against were statements that for nied, been as sent to Governor Allen had his removal from office. Wilson today announced appointof Dugald Spencer,forme moyor ren ment Hanover, as temporary of for the bank. Spencer bank imceiver arranged to enable boxes. mediately to inspect their safety permanent patrons appointment of a to GovPending Wilson appeal in y n receiver. Allen for additional rewards hunt y ernor with the nation-wide president of connection Jaedicke, Jr., and bank it for August whose personal million the shortages bank, may exceed a half 1, dollars. Warrants Out for Shugart. r. were issued today for the it Warrants of C. E. Shugart, of Lincoln, from 's arrest according to information with y Neb., Shugart is charged his is Hanover. Jaedicke in carrying out theory sysaiding loot of the bank. One that Shuf tematic failure is to the effect a "kitn of the associates employed bank ing" gart system and and that Jaedicke's a victim. was not known whether Shugart Nes e It is prosecuted in Kansas been or arwill be Jaedicke has not week 1, e braska. rested, altho he left his bank a ago. n Letter Tells of Shortages. letter from Jaedicke and to 1a A lengthy telling of bank shortages to e his wife his deeds, was reported Wilienumerating possession of Commissioner such be in Jaedicke has denied admits one a al son. Mrs. to her. She but :letter came received, it is reported. husband e flatly letter was denies claims that her his defalcations. [e it outlined the Hanover bank, which examiners in a iIn found a check ledger transe have shows Jaedicke's much d large degree This book will be of knotted et actions. in straightening out banker's problems value surrounding the transactions.

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Warrant for Man in Kansas Bank Failure BY THE ASSOCIATED PRESS TOPEKA KANS. May 24.-Developments in the Hanover State Bank case today included the issuance of a warrant for the arrest of J. H. Shugart, of Lincoln Nebraska charged with complicity with August Jaedicke Jr. the fugitive bank president, and the appointment of a temporary receiver for the bank.

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BANK WRECKER IS SOUGHT Warrant Issued for Nebraska Man in Failure of Kansas Bank TOPEKA, Kan., May 24.-Deveopments in the Hanover State bank today included the issuance of a warrant for the arrest of J. H. Shugart of Lincoln, Neb., charged with complicity with August Jaedicke jr., the fugitive bank president, and the appointment of a temporary receiver for the bank. Accorling to information obtained at the bank commissioner's office today, the warrant for Shugart was issued at Hanover and charges Shugart with aiding Jaqdicke in a systematic looting of the bank. Whether Jaedicke was a factor in or a victim of the allegel "kiting" of checks and securities ,which is said to have been instrumental in the wreckage of the bank, has not been determined, officials say. HANOVER, Kan., May 24.-One of the first acts of the temporary receiver of the defenct Hanover State bank today was to permit those having safety deposit boxes to inspect them. These patrons reported the contents of their boxes were intact.

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TWO Charged With Looting of Bank Hanover, Kan., May 24.-One of the rst acts of the temporary receiver the defunct Hanover State Bank day was to permit those having fety deposit boxes to ispect them. hese patrons reported the contents their boxes were intact. Topeka, Kan., May 24.-Developent in the Hanover State bank case day included the issuance of a warnt for the arrest of J. H. Shugart f Lincoln, Nebraska, charged with omplicity with August Jaedicke, Jr., he fugitive bank president, and the ppointment of a temporary receiver or the bank. According to information obtained the bank commissioner's office toay the warrant for Shugart was isued at Hanover, and charges Shugart ith aiding Jaedicke in a systematic poting of the bank. Whether Jaed-

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ASK CHANGE AT HONOVER Delegation Requests New Receiver in Defunct Jaedicke Bank. Frank H. Foster. state bank commissioner, has been urged by a delegation from Hanover to change receivers of the defunct Jaedicke bank. Supporters of the proposed change, as well as opponents of the proposition, appeared before the state commissioner. The bank. according to estimates by John Hunt. Topeka attorney, will not pay creditors more than 50 per cent. Dugold Spence was named by Walter E. Wilson as receiver for the Hanover State bank when August Jaedicke's failure became known. Since Spence's appointment the bank has been reorganized. Officers of the new bank want T. J. Martin appointed. Other bankers in Washington county, including Senator R. J. Hyland, opposition banker, declared the state department should make no change in the receivership. Such action. they said. would give undue advantage to the reorganized institution.

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STATE CONTROLS TEN BANKS B

V. Curry Is Official Receiver for All Institutions. Ten state banks are now closed and under control of the state bank commissioner. B. V. Curry, an assistant bank commissioner, is the official receiver of all ten of these institutions. In addition to the ten, there are nine banks in the state now operating under individual receivers. The ten banks under state control and of which Mr. Curry is receiver: Farmers' State bank, Washington. State Savings bank, Leavenworth. Farmers' State bank, Quenemo. C. M. Condon & Co., State bank, Oswego. Traders' State bank, Arkansas City. Citizens State bank, Geuda Springs. Exchange State bank, Wichita, State bank of Hope. Citizens' State bank, Harper. Farmers State Bank, Belmont. Mr. Curry has just been appointed receiver of the Citizens State Bank of Harper, the last bank to be closed by State Bank Commissioner Foster. Following -are the institutions now operating under private receivers: Citizens State Bank, Manhattan. People's State Bank. Salina. Broeker-Lefferdink Bank, Salina. Farmers and Merchants Bank, Pawnee Rock. Farmers State Bank, McCune. Viola State Bank, Viola. Aulne State Bank, Aulne. Hanover State Bank, Hanover. Farmers State Bank, Spring Hill.

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O. L. CLARKE APPOINTED DEPUTY BANK RECEIVER

O. L. Clarke has been appointed by C. J. Peterson, bank commissioner, as assistant receiver for four defunct banks, the Farmers State Bank at Washington, the Hanover State Bank and the Peoples State Bank at Hanover and the State Bank of Arrington. Mr. Clarke returned from a trip to Topeka, Wednesday morning and will begin his duties at once. He is now on a month's leave of absence from the postoffice and will no doubt soon be relieved of that responsibility as a call has been made for postmaster's examination.

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New Bank Receiver

O. L. Clarke of Washington returned from Topeka last week with the announcement that he had been appointed a deputy bank receiver, and is to have direct charge of the Farmers State Bank of Washington, the State Bank of Arrington, the Peoples State Bank and the Hanover State Bank of this city. This change was brought about by a change in politics of the state. It is expected that it will be two or three weeks before Mr. Clarke enters actively on his duties.

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SUIT FILED AGAINST BANK RECEIVER

DELIVERY OF DIVIDEND CHECKS STOPPED

Surety Company Files Suit Against Receiver on Claim Arising From Bond.

Delivery of the remaining dividend checks for the final dividend of the defunct Hanover State Bank has been stopped temporarily as the result of a suit filed by the American Surety Company of New York against the Receiver of the institution for the payment of a claim they made against the bank some eighteen months ago. The following statement by O. L. Clarke of Washington, assistant to the receiver of the bank explains the nature of the suit.

"A suit has been filed by the American Surety Company of New York against the Receiver of the Hanover State Bank to compel the Receiver to pay in full a claim filed by that company about a year and a half ago. The company has been paid four dividends on the claim, but now asks payment of the claim in full. Until the suit is settled or decided, the Banking department has ordered that no more dividend checks be delivered. This will doubtless be somewhat disappointing to those who have not yet received their dividend checks, but is a situation that apparently cannot be prevented. About the only remedy is to wait and hope for an early settlement.

"The claim in question grew out of the fidelity bond of August Jaedicke Jr., which was carried with the American Surety Company. When the bank failed, the company was compelled to pay to the Receiver the amount of the bond, $10,000. Later when some of Mr. Jaedicke's personal property was turned over to the Receiver, (the telephone company being the largest item) the Surety Company contended this was a recovery of a part of the shortage and that the company was entitled to a claim for its proportionate share of the recovery. The total shortage was arrived at, and after lengthy consideration, the company was allowed a claim in the amount of $1,019.33. The claim was filed on the same blank and in the same form as other common claims and was allowed as such. Dividend checks were issued to and cashed by the company. No objection was made until about two months ago (more than a year after the filing of the claim and the cashing of the checks for the 1st, 2nd, 3rd and 4th dividends) when the company asked for the payment of the claim in full, and was informed by the Receiver that nothing would be forthcoming until further dividends were declared, the claim being classed as a 'common claim.' The Receiver considered the matter settled. No further word was received from the company until after the greater portion of the final dividend checks had been given out, when notice was received that a suit had been filed against the Receiver to compel payment of the claim in full. As all the available funds have been set aside in the dividend account the question to decide, in the event the suit was decided in favor of the surety company, is where would the money come from.

"The guess of the writer is that the Surety Company has not a 'ghost of a chance' to make its claim preferred, but he is not the attorney for the Surety Company, nor the Receiver, nor the Court, and his guess, like the opinion of the ordinary man of the street, amounts to mighty little in the final settlement of the matter. So as we said in the beginning, about the only apparent solution seems to be to wait and hope for an early settlement."