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Merced Bank cannot be put in the hands of a receiver, and that the Supreme Court has so decided in two cases recently, and goes on to say: The action of the board in sending this letter shows either a willful and deliberate attempt to mislead the depositors or such a desire office on as their part to shirk the duties of their amounts almost to criminal ne gligence. Mr. Clunie adds that amendments to the bank act were passed by the Legislature and approved by the Governor May 26, 1895, giving the Commissioners full power in the matter, and continues: It will thus be seen that at the date of the Commissioners' letter to the creditors, to wit, March 28, 1895, the new act had been in effect two days, and that under it the commission had full power to afford the relief desired by taking the control of said bank from its directors and throwing the same into liquidation, where it properly belonged. Mr. Clunie goes on to show that the Commissioners knew of these powers as is shown by a circular letter sent out by them April 9, 1895, and continues: Notwithstanding the amendment of this act greatly sion as above increasing stated the by them, powers and of under the commis- which they assumed such great responsibilities, absolutely no step was taken by the commission for the relief of the depositors of Merced Bank until about the 12th of September, 1895. About the 1st of September, 1895, the creditors of the bank again awoke and this time determined to employ counsel to protect their interests and secure their rights. As a result this a call was made upon the Bank Comof mission and a demand made that they proceed to afford some relief to the depositors of the bank. On this demand two of the Commissioners, Magee and Kilburn, went to Merced and were there waited upon by the creditors of the bank and their representative, V. G. Frost, and met in connection with the directors of the bank for a consideration of its affairs. At this time an offer was made to prove the continuous insolvency and unsafe condition of the bank for years, and the fraud and negligence of its directors in its management; but this attempt was shut off by a statement of the Commissioners that without any proof other than their own examination and the statements of the bank officials, they found the bank to be wholly insolvent and unsafe. They, then, instead of taking the action contemplated by law, and reporting the condition of the bank to the Attorney-General proceeded to arrange a compromise between the directors of the bank and its creditors with a view to reorganize its board of directors, giving three directors to the creditors and permitting three of the then directors, and the president of the bank, to retain their positions as such, and considering this arranged they left Merced and took no other steps whatever, and made no report of the condition of the bank as found by them to the Attorney-General Subsequently, about the 15th of September, Dr. W. N. Sherman, a representative of the creditors, and the undersigned, as one of their attorneys, called upon the Commissioners, met Messrs. Kilburn and Fuller and then and there demanded of them that they report the condition of the bank to the Attorney-General, and that proceedings as required by the bank act be taken against it. This they absolutely refused to do, but finally appointed Mr. Hastings, their agent, to go over the books and securities of the bank and reporti its condition to them ata meeting of the commission, to be held at Merced, on October 1895. This was all the concession that the creditors were able to secure, and this was not granted without a great deal of demurring. The report of Mr. Hastings is quoted, showing that he found assets with a book value of $151,736 17 and an estimated value of $71,229 95, and liabilities amounting to $134,032 01. Mr. Clunie continues: A meeting of the commission was held at Merced October 7, 1895, at which possession of the bank was taken by the commission and subsequently the insolvency and unsafe condition of the bank reported for the first time to the Attorney-General At the time of this meeting it was known to the commission that charges against them had been made to you as Governor and were then under consideration by you. These are but a few of the facts showing the actions of this commission in the matter. Innumerable others could be cited to you, but no doubt you have already become familiarized with the same in connection with your investigation of the matter. From what we have here shown we say that it conclusively appears that the members of the commission must have had knowledge of the insolvency and unsafe condition of the Merced Bank at least since October 16, 1894, if not before, and that on said date it was their duty to have reported such facts to the Attorney-General, and not having done so they had rendered themselves amenable to the penalties of section 6 of the bank act. The Attorney-General has stated positively to me, and who will repeat it to you, that up to a few days prior to the 7th of October, 1895, he had no information whatever of the insolvency or unsafe condition of the bank, and at that time the only report made to him was verbal statement of Mr. Kilburn. And that the first report in writing he had from the Commissioners of such facts was made from Merced on October 7, 1895. Mr. Clunie then goes into the law on the subject to show the liability of the Commissioners and the power of the Governor in the case to declare their offices
