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674 X-6907 IN THE COURT Of C6WON PLEAS 5 mm# , PHILADELPHIA COUNTY, PENNSYLVANIA * A. B. MOBLEY, AS SUPERINTENDENT OF BANKS FOR THE STATE OF GEORGIA, IN POSSESSION OF THE ASSETS AND BUSINESS OF CITIZENSFLO YfiBANK & TRUST COMPANY, A CORPORATION OF ROME, GEORGIA; and CITIZE$TS-FLOYD BANK AND TRUST COMPANY, A CORPORATION OF ROME, GEORGIA, PLAINTIFFS VS NUMBER 763 JUNE TERM, 1931 FEDERAL RESERVE BANK OF PHILADELPHIA, A CORPORATION, DEFENDANT, STATEMENT OF CLAIM A. B. Motley, a s S u p e r i n t e n d e n t of Banks f o r t h e S t a t e of Georgia, i n p o s s e s s i o n of t h e a s s e t s and b u s i n e s s of C i t i z e n s - F l o y d Bank and T r u s t Company, a b a n k i n g c o r p o r a t i o n under t h e laws of Georgia, and s a i d C i t i z e n s - F l o y d Bank and T r u s t Company, b e i n g t h e p l a i n t i f f s above named, b r i n g t h i s a c t i o n a g a i n s t t h e F e d e r a l Reserve Bank of P h i l a d e l p h i a , a c o r p o r a t i o n under t h e laws of t h e U n i t e d S t a t e s , b e i n g t h e d e f e n d a n t above named, to r e c o v e r damages in t h e sum of $250,000.00, which sum i s j u s t l y due and p a y a b l e by Defendant upon a cause of a c t i o n whereof the f o l l o w i n g i s a s t a t e m e n t : - 1 At t h e times and upon t h e o c c a s i o n s h e r e i n a f t e r r e f e r r e d to p l a i n t i f f Bank was and now i s a banking c o r p o r a t i o n e x i s t i n g and o r g a n i z e d under t h e laws of t h e S t a t e of Georgia, w i t h i t s p r i n c i p a l o f f i c e and p l a c e of b u s i n e s s in t h e City of Rome, in t h e S t a t e of Georgia. 2nd p a g e . X-6907 \ - • ->• 3 Defendant now i s and a t a l l times h e r e i n a f t e r mentioned was a c o r p o r a t i o n e x i s t i n g and o r g a n i z e d under and by v i r t u e of t h e laws of t h e U n i t e d S t a t e s , more p a r t i c u l a r l y under t h e terms and p r o v i s i o n s of t h e Act of Congress, approved December 23rd, 1913, and a s h e r e a f t e r amended, to which Act and Amendment t h e r e t o r e f e r e n c e i s h e r e b y d u l y made, s a i d Act of Congress b e i n g g e n e r a l l y known a s t h e F e d e r a l R e s e r v e A c t , and s a i d Defendant h a s and h a s had i t s p r i n c i p a l o f f i c e and c h i e f p l a c e of b u s i n e s s i n t h e City of P h i l a d e l p h i a , i n t h e S t a t e of P e n n s y l v a n i a , and i s s u b j e c t t o t h e j u r i s d i c t i o n of t h i s Honorable Court. I - 3 - On and p r i o r to November 1 3 t h , 1930, A. B. Mobley was and h e now i s t h e S u p e r i n t e n d e n t of Banks f o r t h e S t a t e of Georgia, and a s such i s t h e c h i e f o f f i c e r of t h e Department of Banking, c r e a t e d under and by v i r t u e of the terms of an Act of t h e L e g i s l a t u r e approved August 1 6 t h , 1919; amended by an Act approved August 2 1 s t , 1922, and a g a i n amended by an Act approved August 2 6 t h , 1925. The Act i s voluminous, b u t r e f e r e n c e i s h e r e b y duly made t h e r e t o , a s may be m a t e r i a l , n e c e s s a r y or p r o p e r . I t i s c o d i f i e d i n s e c t i o n s 2262(a) to 2 2 8 2 ( a ) , i n c l u s i v e , i n Volume 8, 1922 Supplement, and Volume 12, 1926 Supp l e m e n t , of P a r k ' s Annotated Code of Georgia. The most p e r t i n e n t p a r t s t h e r e o f a r e s e t f o r t h and made a p a r t hereof, as Exhibit A hereto. - 4 On o r about November 1 3 t h , 1930, such S u p e r i n t e n d e n t of Banks, s a i d A. B. Mobley, took p o s s e s s i o n of t h e a s s e t s of s a i d p l a i n t i f f Bank, 676 X-5907 3rd page. and s i n c e s a i d d a t e h a s , a s such o f f i c i a l , l i q u i d a t e d a l l of i t s a s s i g n a b l e a s s e t s , n o t i n c l u d i n g i n s a i d l i q u i d a t i o n , however, t h i s cause of a c t i o n . — 5 — P l a i n t i f f Bank under i t s c h a r t e r conducted a commercial banking b u s i n e s s a t Home, Georgia, c o n t i n u o u s l y from J a n u a r y , 1924, u n t i l November 1 3 t h , 1 9 3 0 . — 0 During t h e month of J u n e , 1930, Harper M a n u f a c t u r i n g Company, C o n s o l i d a t e d Grocery Company, P u r i t y I c e Cream Conn any, I n c . and J . P . B e i d , a l l of Rome, Georgia, were, w i t h many o t h e r s , d e p o s i t o r s i n and each had a checking account w i t h p l a i n t i f f Bank, and r e s p e c t i v e l y were e n t i t l e d to draw and i s s u e checks a g a i n s t t h e i r r e s p e c t i v e d e p o s i t s f o r t h e payment of money on p r e s e n t a t i o n and demand. - 7 On o r about June 4 t h , 1930, s a i d Harper M a n u f a c t u r i n g Company, h a v i n g then and t h e r e a checking account a s a f o r e s a i d , w i t h s u f f i c i e n t b a l a n c e to i t s c r e d i t , drew a g a i n s t s a i d account i t s check number 2641, d a t e d June 4 t h , 1930, in t h e sum of $ 1 5 . 4 0 , paya b l e to t h e o r d e r of J . E. Hhoads and Sons, and i s s u e d and d e l i v e r e d s a i d check to s a i d p a y e e , then and now a r e s i d e n t of P h i l a d e l p h i a , P e n n s y l v a n i a , w i t h t h e p u r p o s e and i n t e n t i o n t h a t s a i d check b e p r e s e n t e d by s a i d payee i n r e g u l a r c o u r s e to P l a i n t i f f Bank, a s t h e drawee t h e r e i n , f o r payment. — 0 — S a i d check *was d e p o s i t e d by t h e s a i d payee w i t h t h e C e n t r a l X-6907 4th page. H a t i o h a l Bank of P h i l a d e l p h i a oh or about June 7 t h , 1930, and was "by s a i d bank i n t u r n endorsed and t r a n s m i t t e d to t h e Defendant f o r collection. Whereupon t h e Defendant, without cause and c o n t r a r y to t h e t r u t h , a t t a c h e d a s l i p of p a p e r to t h e f a c e of s a i d check b e a r i n g t h e words "Bank Reported Closed" and r e t u r n e d s a i d check as a w o r t h l e s s and u n c o l l e c t i b l e item to t h e s a i d Central n a t i o n a l Bank. A t r u e and c o r r e c t copy of s a i d check, i n c l u d i n g a l l endorsements on t h e back t h e r e o f , i s h e r e u n t o annexed, made a p a r t h e r e o f and marked "Exhibit 1". The s l i p of p a p e r a t t a c h e d to s a i d check, above r e f e r r e d t o , was i n form t h e same a s " E x h i b i t 3" h e r e i n a f t e r r e f e r r e d t o , save and except t h e d a t e and amount. - 9 By s a i d quoted words so a t t a c h e d to s a i d check Defendant meant by t h e word "Bank" t h e s a i d C i t i z e n s - F l o y d Bank and T r u s t Company. By t h e word "Closed" Defendant meant and in e f f e c t s a i d t h a t s a i d P l a i n t i f f Bank was not open f o r b u s i n e s s and was no l o n g e r engaged in b u s i n e s s b u t had c l o s e d i t s doors, f a i l e d f i n a n c i a l l y and had ceased to f u n c t i o n a s a bank and t h a t s a i d check was, t h e r e f o r e , w o r t h l e s s and could n o t be p a i d on p r e s e n t a t i o n and demand. - 10 - Said check w i t h t h e s a i d words so a t t a c h e d , a s a f o r e s a i d , i n due c o u r s e of b u s i n e s s was r e t u r n e d a s w o r t h l e s s and u n c o l l e c t i b l e by s a i d Defendant to i t s s a i d c o r r e s p o n d e n t bank, and i n due c o u r s e and i n a c c o r d a n c e w i t h t h e i n t e n t , p u r p o s e and o b j e c t of t h e Defendant was by i t s s a i d c o r r e s p o n d e n t r e t u r n e d to s a i d Bhoads and Sons, and i n due c o u r s e and i n accordance w i t h t h e i n t e n t , p u r p o s e and o b j e c t 678 X-6907 5 t h page* of s a i d D e f e n d a n t , was by s a i d |hoadB and dons r e t u r n e d to s a i d Harper M a n u f a c t u r i n g Company, t h e maker t h e r e o f , a s a w o r t h l e s s check, and was r e c e i v e d (so dishonored) by t h e o f f i c e r s and employees t h e r e o f . And moreover, i n accordance w i t h t h e i n t e n t , p u r p o s e and o b j e c t of t h e s a i d D e f e n d a n t , t h e s a i d f a l s e i n f o r m a t i o n and s t a t e m e n t so stamped on and a t t a c h e d t o s a i d check was by t h e o f f i c e r s and employees of s a i d Harper M a n u f a c t u r i n g Company given and p u b l i s h e d to o t h e r p e r s o n s who were t h e n and t h e r e d e p o s i t o r s and customers of s a i d P l a i n t i f f Bank. 1 - 10-A - By r e f e r e n c e to t h e endorsements on t h e s a i d check of Harper M a n u f a c t u r i n g Company, i t a p p e a r s t h a t s a i d check was r e d e p o s i t e d by t h e s a i d p a y e e on o r about June 2 4 t h , 1930, and on o r about s a i d d a t e a g a i n came i n t o t h e hands of t h e Defendant from t h e s a i d C e n t r a l N a t i o n a l Bank of P h i l a d e l p h i a and was a g a i n r e t u r n e d by t h e Defendant a s a w o r t h l e s s and u n c o l l e c t i b l e item, w i t h t h e n o t a t i o n , in subs t a n c e and e f f e c t , t h a t t h e P l a i n t i f f Bank, t h e drawee i n s a i d check, was r e p o r t e d c l o s e d and a g a i n t h e s a i d l i b e l o u s s t a t e m e n t was p u b l i s h ed through v a r i o u s c h a n n e l s h e r e i n b e f o r e o u t l i n e d . Further reference to t h e s a i d check shows t h a t i t was f i n a l l y handled through banking c h a n n e l s , o t h e r than t h e Defendant, was p r e s e n t e d to t h e P l a i n t i f f Bank f o r payment and was p a i d on o r about August 2 0 t h , 1930. - 1 1 On o r about June 9 t h , 1930, Consolidated Grocery Company of Rome, h a v i n g then and t h e r e a checking a c c o u n t , a s a f o r e s a i d , w i t h s u f f i c i e n t b a l a n c e to i t s c r e d i t , drew a g a i n s t s a i d account i t s check number 891, d a t e d June 9 t h , 1930, in t h e sum of $67*83, p a y a b l e to t h e X-6907 6th page. o r d e r of Campbell Soup Company 0 damden, Mew J e r s e y , and i s s u e d and d e l i v e r e d s a i d check to s a i d payee w i t h t h e p u r p o s e and i n t e n t i o n t h a t s a i d check be p r e s e n t e d by s a i d payee i n r e g u l a r c o u r s e to P l a i n t i f f Bank, a s t h e drawee t h e r e i n , f o r payment. — 12 — S a i d check was d e p o s i t e d by s a i d payee w i t h the F i r s t Camden R a t i o n a l Bank and T r u s t Company, of Camden, Hew J e r s e y , on o r about June 1 1 t h , 1930, and was by s a i d Bank i n t u r n endorsed and t r a n s m i t t e d to t h e Defendant f o r c o l l e c t i o n . D e f e n d a n t , w i t h o u t cause and c o n t r a r y to t h e t r u t h , a t t a c h e d a s l i p of p a p e r to t h e f a c e of s a i d check b e a r i n g t h e words "Bank Reported Closed", and r e t u r n e d s a i d check a s a w o r t h l e s s and u n c o l l e c t i b l e item to t h e s a i d F i r s t Camden N a t i o n a l Bank and Trust Company. A t r u e and c o r r e c t p h o t o s t a t i c copy of s a i d check, i n c l u d i n g a l l endorsements on t h e bank t h e r e o f , i s h e r e u n t o annexed and made a p a r t h e r e o f and marked " E x h i b i t 2 " . A t r u e and c o r r e c t copy of s a i d s l i p of p a p e r which was a t t a c h e d t o t h e f a c e of s a i d check and b e a r i n g t h e words "Bank Reported Closed" i s , a l s o , h e r e u n t o annexed and made a p a r t hereof and marked " E x h i b i t 3 " . — 13 — By s a i d quoted words so a t t a c h e d to s a i d check Defendant meant by t h e word "Bank" s a i d C i t i z e n s - F l o y d Bank and T r u s t Company. By t h e word "Closed" Defendant meant and i n e f f e c t s a i d t h a t s a i d P l a i n t i f f Bank was n o t open and was no l o n g e r engaged i n b u s i n e s s , b u t had c l o s e d i t s d o o r s , f a i l e d f i n a n c i a l l y and had c e a s e d to f u n c t i o n a s a bank, and t h a t s a i d check was, t h e r e f o r e , w o r t h l e s s and c o u l d not be p a i d on p r e s e n t a t i o n and demand. X-6907 08Q 7 th page; - 14 w S a i d check, w i t h t h e s a i d words so a t t a c h e d a s a f o r e s a i d , i n due c o u r s e of "business was r e t u r n e d a s w o r t h l e s s and u n c o l l e c t i b l e by t h e Defendant to i t s s a i d c o r r e s p o n d e n t , and in due c o u r s e and i n accordance w i t h t h e i n t e n t , p u r p o s e and o b j e c t pf t h e Defendant was by i t s s a i d c o r r e s p o n d e n t r e t u r n e d to s a i d Campbell Soup Company, and i n due c o u r s e and i n accordance w i t h t h e i n t e n t , p u r p o s e and o b j e c t of t h e d e f e n d a n t was b y s a i d Campbell Soup Company r e t u r n e d t o s a i d C o n s o l i d a t e d Grocery Company, t h e maker t h e r e o f , a s a w o r t h l e s s check and was r e c e i v e d (so dishonored) by t h e o f f i c e r s and employees t h e r e o f . And moreover i n accordance w i t h t h e i n t e n t , p u r p o s e and o b j e c t of t h e s a i d D e f e n d a n t , t h e s a i d f a l s e i n f o r m a t i o n and s t a t e m e n t so stamped on o r a t t a c h e d to s a i d check was by t h e o f f i c e r s and employees of s a i d C o n s o l i d a t e d Grocery Company g i v e n and p u b l i s h e d to o t h e r p e r s o n s who t h e n and t h e r e were d e p o s i t o r s and customers of t h e P l a i n t i f f Bank. - 15 By r e f e r e n c e to t h e endorsements on t h e back of s a i d check i t w i l l appear t h a t same was r e d e p o s i t e d by t h e payee t h e r e o f and r e e n d o r s e d to t h e d e f e n d a n t on or about June 2 7 t h , 1930, when t h e s a i d check was a g a i n r e t u r n e d a s w o r t h l e s s and u n c o l l e c t i b l e . By f u r t h e r r e f e r e n c e t o t h e s a i d endorsements i t w i l l appear t h a t t h e r e a f t e r and t h r o u g h o t h e r b a n k i n g channels s a i d check was d u l y p r e s e n t e d to P l a i n t i f f Bank and p a i d on o r about J u l y 3 r d , 1930. - 16 - On o r about June 1 4 t h , 1930, P u r i t y I c e Cream Company, I n c . , h a v i n g t h e n and t h e r e a checking account a s a f o r e s a i d , w i t h X-6907 8th page. s u f f i c i e n t b a l a n c e to i t s credit;» drew a g a i n s t s a i d account i t s check number 7582, d a t e d June 1 4 t h , 1930, i n t h e sum of $119.42, p a y a b l e to t h e o r d e r of R e f r i g e r a t i o n Discount Corp., of D e t r o i t , Michigan, and i s s u e d and d e l i v e r e d s a i d check t o s a i d payee w i t h t h e p u r p o s e and i n t e n t i o n t h a t s a i d check be p r e s e n t e d by s a i d payee i n r e g u l a r c o u r s e to P l a i n t i f f Bank, a s t h e drawee, f o r payment. - 17 S a i d check was d e p o s i t e d by s a i d payee w i t h t h e P e o p l e s Wayne County Sank of D e t r o i t , Michigan, by whom t h e check was forwarded through r e g u l a r b a n k i n g c h a n n e l s to t h e F i r s t R a t i o n a l Bank, P h i l a d e l p h i a , P e n n s y l v a n i a , which l a s t named bank endorsed and t r a n s m i t t e d s a i d check to t h e Defendant f o r c o l l e c t i o n , on o r about June 2 0 t h , 1930. D e f e n d a n t , w i t h o u t cause and c o n t r a r y to t h e t r u t h , a t t a c h e d a s l i p of p a p e r to t h e f a c e of s a i d check, b e a r i n g t h e words "Bank R e p o r t e d Closed" and t h e r e was stamped w i t h a r u b b e r stamp on t h e b a c k of t h e s a i d check t h e same words, And r e t u r n e d s a i d check a s a w o r t h l e s s and u n c o l l e c t i b l e item to t h e s a i d F i r s t N a t i o n a l Bank of Philadelphia. A t r u e and c o r r e c t p h o t o s t a t i c copy of s a i d check, i n c l u d i n g a l l endorsements on t h e back t h e r e o f , i s h e r e u n t o annexed, made a p a r t h e r e o f , a n d marked " E x h i b i t 4 " . The s l i p of p a p e r a t t a c h - ed to t h e f a c e of s a i d check i s of t h e same form, t e n o r and e f f e c t a s shown in " E x h i b i t 3 " , e x c e p t i n g o n l y t h e d a t e , number and amount. — 18 — ' By s a i d quoted words so a t t a c h e d to s a i d check Defendant meant by t h e word "Bank!' s a i d C i t i z e n s - F l o y d Bank and T r u s t Company. By t h e word " Closed" Defendant meant and i n e f f e c t s a i d t h a t s a i d 682 X-5907 9th page. P l a i h t i f f Sank Was n o t open and WsLa no l o n g e r engaged i n b u s i n e s s , b u t had c l o s e d i t s d o o r s , f a i l e d f i n a n c i a l l y and had c e a s e d to f u n c t i o n a s a hank and t h a t s a i d check was, t h e r e f o r e , w o r t h l e s s and could n o t be p a i d on p r e s e n t a t i o n and demand. - 19 Said check w i t h t h e words so a t t a c h e d , a s well a s stanroed on t h e back t h e r e o f , a s a f o r e s a i d , i n due c o u r s e of b u s i n e s s was r e t u r n e d a s w o r t h l e s s and u n c o l l e c t i b l e by t h e Defendant t o i t s s a i d c o r r e s p o n d e n t bank and in due c o u r s e and in accordance w i t h t h e i n t e n t , p u r p o s e and o b j e c t of t h e Defendant was by i t s s a i d corresponde n t r e t u r n e d , through t h e b a n k i n g c h a n n e l s i n d i c a t e d by t h e endorsements on t h e s a i d check, to t h e s a i d R e f r i g e r a t i o n Discount C o r p . , and i n due c o u r s e and i n accordance w i t h the i n t e n t , purpose and o b j e c t of s a i d Defendant was by t h e s a i d R e f r i g e r a t i o n Discount Corp., r e t u r n e d to s a i d P u r i t y I c e Cream Company, t h e maker t h e r e o f , a s a w o r t h l e s s check and was r e c e i v e d (so d i s h o n o r e d ) by t h e o f f i c e r s and employees thereof. And moreover i n accordance w i t h t h e i n t e n t , p u r p o s e and o b j e c t of t h e d e f e n d a n t t h e s a i d f a l s e i n f o r m a t i o n and s t a t e m e n t so stamped on and a t t a c h e d to s a i d check was by t h e o f f i c e r s and employees of t h e s a i d P u r i t y I c e Cream Company, I n c . , given and p u b l i s h e d t o o t h e r p e r s o n s who t h e n and t h e r e were d e p o s i t o r s and customers of P l a i n t i f f Bank. - 20 - By r e f e r e n c e to t h e endorsements on t h e back of s a i d check i t w i l l appear t h a t same was t h e r e a f t e r p r e s e n t e d to P l a i n t i f f Bank f o r payment t h r o u g h o t h e r c h a n n e l s and was p a i d on J u l y 3 r d , 1930. X-6907 10th page. — 21 — On o r about June 23rd, 1930, J . P . Held, of Borne, Georgia, h a v i n g then and t h e r e a checking account a s a f o r e s a i d , w i t h s u f f i c i e n t b a l a n c e to i t s c r e d i t , drew a g a i n s t s a i d account h i s check number 415 d a t e d June 2 3 r d , 1930, i n t h e sum of $25.48, p a y a b l e to t h e o r d e r of Frank H. F l e e r Corpn. of P h i l a d e l p h i a , P e n n s y l v a n i a , and i s s u e d and d e l i v e r e d s a i d check t o s a i d payee w i t h t h e "ourpose and i n t e n t i o n t h a t s a i d check be p r e s e n t e d by s a i d payee in r e g u l a r c o u r s e to P l a i n t i f f Bank, a s t h e drawee t h e r e i n , f o r payment. — 22 — Said check was d e p o s i t e d by s a i d payee w i t h t h e N o r t h w e s t e r n N a t i o n a l Sank of P h i l a d e l p h i a , on or about June 2 7 t h , 1930, and was by s a i d bank in t u r n endorsed and t r a n s m i t t e d on s a i d d a t e t o t h e Defendant f o r c o l l e c t i o n . D e f e n d a n t , w i t h o u t cause and c o n t r a r y to t h e t r u t h , a t t a c h e d a s l i p of p a p e r to t h e f a c e of s a i d check, b e a r i n g t h e words "Bank Reported Closed" and r e t u r n e d s a i d check a s a w o r t h l e s s and u n c o l l e c t i b l e item to t h e s a i d Northwestern N a t i o n a l Bank. A t r u e and c o r r e c t p h o t o s t a t i c copy of s a i d check, i n c l u d i n g a l l endorsements on t h e b a c k t h e r e o f i s h e r e t o annexed, made a p a r t h e r e o f and marked " E x h i b i t 5 " . The s l i p of p a p e r t h e r e t o a t t a c h e d by t h e Defendant i s of t h e same form, t e n o r and e f f e c t , a s shown i n " E x h i b i t 3 " , e x c e p t i n g t h e number, d a t e and amount. - 23 By s a i d quoted words so a t t a c h e d to s a i d check, Defendant meant by t h e word "Bank" s a i d C i t i z e n s - F l o y d Bank and T r u s t Company. By t h e word "Closed" Defendant meant and i n e f f e c t s a i d t h a t s a i d X-6907 11th page. P l a i n t i f f . Bank was not open and Wad no l o n g e r engaged, in b u s i n e s s , b u t had c l o s e d i t s d o o r s , f a i l e d f i n a n c i a l l y and had ceased to f u n c t i o n a s a bank and t h a t s a i d check was, t h e r e f o r e , w o r t h l e s s and c o u l d not be p a i d on p r e s e n t a t i o n and demand, — 24 — Said check w i t h t h e words so a t t a c h e d a s a f o r e s a i d , i n due c o u r s e of b u s i n e s s was r e t u r n e d a s w o r t h l e s s and u n c o l l e c t i b l e by t h e d e f e n d a n t to i t s s a i d correspondent bank and in due c o u r s e and i n accordance w i t h t h e i n t e n t , -purpose and o b j e c t of s a i d Defendant was by i t s s a i d c o r r e s p o n d e n t r e t u r n e d to s a i d Frank H. F l e e r Corpn., and i n due c o u r s e and in accordance w i t h t h e i n t e n t , p u r p o s e and o b j e c t of t h e Defendant was by s a i d Frank H. F l e e r Corpn, r e t u r n e d t o s a i d J . P . B e i d , t h e maker t h e r e o f , a s a w o r t h l e s s check and was r e c e i v e d (so d i s h o n o r e d ) by t h e s a i d maker and h i s employees, And moreover i n a c c o r d a n c e w i t h t h e i n t e n t , p u r p o s e and o b j e c t of t h e s a i d D e f e n d a n t , t h e s a i d f a l s e i n f o r m a t i o n and s t a t e m e n t so stamped on and a t t a c h e d to s a i d check was by t h e s a i d maker and his- employees given and p u b l i s h e d to o t h e r p e r s o n s , who were t h e n and t h e r e d e p o s i t o r s and customers of t h e P l a i n t i f f Bank. — 25 By r e f e r e n c e to t h e endorsements a p p e a r i n g on s a i d check, i t w i l l appear t h a t t h e r e a f t e r same was p r e s e n t e d through o t h e r c h a n n e l s to P l a i n t i f f Bank and was on J u l y 1 0 t h , 1930, d u l y p a i d , — 26 — By t h e s a i d words "Bank Reported Closed" so stamped a n d / o r a t t a c h e d , a s a f o r e s a i d , to each and a l l of t h e above d e s c r i b e d f o u r (4) X-6907. C 1 2 t h page* checks drawn by t h e s a i d v a r i o u s d t e o d i t o r s on P l a i n t i f f Bank, Defendant meant end intended to convey, and by a l l p e r s o n s Defendant was u n d e r s t o o d to mean and to s t a t e t h e P l a i n t i f f Bank was n o t f u n c t i o n i n g b u t had f a i l e d f i n a n c i a l l y , and was not open f o r banking b u s i n e s s , t h a t i t was not f i n a n c i a l l y capable of honoring s a i d checks o r e i t h e r of them or any check drawn on i t were same to be duly p r e sented f o r payment, and f u r t h e r t h a t P l a i n t i f f Bank was i n an unsound and i n s o l v e n t c o n d i t i o n f i n a n c i a l l y and s a i d meaning and each and a l l of them was t h e one had and understood from s a i d p u b l i s h e d words by a l l p e r s o n s i n t o whose hands each of t h e s a i d f o u r dishonored checks came or p a s s e d . - 27 In t r u t h and in f a c t P l a i n t i f f Bank on t h e d a t e s of each of s a i d f o u r checks and p r i o r t h e r e t o and subsequent t h e r e t o was open f o r b u s i n e s s , was p e r f o r m i n g i t s f u n c t i o n s as a bank, was s o l v e n t and would have honored each and a l l of s a i d f o u r checks on p r e s e n t a t i o n and was in a sound f i n a n c i a l c o n d i t i o n and, a s s t a t e d , each and a l l of s a i d checks were honored and p a i d when f i n a l l y p r e s e n t e d to p l a i n t i f f Bank f o r payment. — 28 — The a f o r e s a i d l i b e l s c o n s i s t i n g of t h e words "Bank Reported Closed", a t t a c h e d to or stamped on each of t h e a f o r e s a i d f o u r checks and t h e p u b l i s h i n g of t h e s a i d s e v e r a l l i b e l s by t h e r e t u r n i n g of each of t h e s a i d checks, as a f o r e s a i d , through banking c h a n n e l s , were each and a l l done and p u b l i s h e d by s a i d defendant w i l f u l l y , m a l i c i o u s l y and without due c a r e i n t h e premises and i n a r e c k l e s s d i s r e g a r d f o r X-6907 13th page, t h e t r u t h and w i t h r e c k l e s s d i s r e g a r d f o r t h e b u s i n e s s * c h a r a c t e r 686 and r e p u t a t i o n and c r e d i t of p l a i n t i f f Bank. — 29 — Each and a l l of t h e a f o r e s a i d p u b l i s h e d l i b e l s r e l a t e d to t h e b u s i n e s s of p l a i n t i f f Bank a s a bank, and n e g a t i v i n g a s t h e y d i d i t s c h a r a c t e r and r e p u t a t i o n a s an a c t i v e and s o l v e n t commercial bank, had t h e e f f e c t of d e s t r o y i n g t h e c o n f i d e n c e of t h e -public i n p l a i n t i f f Bank, and drove away i t s c u s t o m e r s , and d e s t r o y e d i t s c r e d i t w i t h o t h e r banks and b u s i n e s s i n s t i t u t i o n s , and made i t d i f f i c u l t t o obtain credit. The c a p i t a l s t o c k of p l a i n t i f f i s $100,000.00. Home h a s about 13,000 i n h a b i t a n t s , and t h e r e a r e two o t h e r banks i n s a i d City. Being an a g r i c u l t u r a l t e r r i t o r y bank d e p o s i t s u s u a l l y showed an i n c r e a s e i n t h e F a l l when crops a r e h a r v e s t e d and d e b t s p a i d . From i t s o r g a n i z a t i o n u n t i l J u n e , 1930, p l a i n t i f f Bank had t h e c o n f i d e n c e of t h e p u b l i c , d i d a p r o f i t a b l e b u s i n e s s , and earned and p a i d i t s s t o c k h o l d e r s r e g u l a r d i v i d e n d s of 7$ p e r annum, p a y i n g f o r 1929 an 8% d i v i d e n d . On o r about J u n e 1 s t , 1930, p l a i n t i f f Bank was i n a normal and sound f i n a n c i a l c o n d i t i o n f o r t h a t Season, and had no r e a s o n to a n t i c i p a t e any f i n a n c i a l d i f f i c u l t i e s . In f a c t p l a i n t i f f Bank had, a s of May 1 s t , 1930, withdrawn from what i s known a s t h e P a r L i s t , promulgated by t h e F e d e r a l Reserve System, which i n c l u d e s t h e d e f e n d a n t , whereby p l a i n t i f f Bank r e a s o n a b l y expected to i n c r e a s e i t s e a r n i n g s by t h e r e a f t e r c o l l e c t i n g exchange charges which i t had n o t e n j o y e d when i t s name appeared on s a i d Par L i s t . The e f f e c t of 1 4 t h page* £-6907 e n t e r i n g a t a n k ' s name on s a i d Pair L i s t was to a g r e e to r e m i t t o any and a l l "banks, i n c l u d i n g F e d e r a l Reserve Banks, and t h e D e f e n d a n t , t h e f u l l f a c e amount of any and a l l Checks drawn on such bank, w i t h o u t any c h a r g e or d e d u c t i o n (known a s exchange) f o r t h e s e r v i c e i n volved i n such r e m i t t a n c e . On o r about June 1 s t , 1930, p l a i n t i f f Bank had a s u r p l u s and u n d i v i d e d p r o f i t s of a p p r o x i m a t e l y $26j800.00; g e n e r a l d e p o s i t s of a p p r o x i m a t e l y $290,000.00; and s a v i n g s d e p o s i t s of a p p r o x i m a t e l y $105,000.00. By v i r t u e of t h e s e v e r a l l i b e l s h e r e i n complained o f , f o l l o w i n g each o t h e r s u c c e s s i v e l y and p e r s i s t e n t l y , and w i d e l y publ i s h e d i n Rome, t h e c o n f i d e n c e of t h e p u b l i c i n s a i d community i n p l a i n t i f f Bank and i t s solvency was so s e v e r e l y shaken, i f n o t a c t u a l l y d e s t r o y e d , a s t h a t a Slow and q u i e t "run" Was c a u s e d to b e g i n on p l a i n t i f f Bank; t h a t i s to s a y , many of i t s d e p o s i t o r s , h e a r i n g of s a i d chdcks b e i n g d i s h o n o r e d and r e t u r n e d by t h e D e f e n d a n t , w i t h t h e s t a t e m e n t t h a t p l a i n t i f f Bank was r e p o r t e d c l o s e d , became uneasy and a c c o r d i n g l y began to withdraw t h e i r d e p o s i t s i n whole o r substantial part. T h e r e f o r e , b e g i n n i n g i n June 1930, on t h e p u b l i c a t i o n by t h e d e f e n d a n t of t h e a f o r e s a i d f a l s e and l i b e l o u s r e p o r t s , t h e d e p o s i t s i n p l a i n t i f f Bank began to s t e a d i l y s h r i n k , u n t i l on o r November 13, 1930, t h e g e n e r a l d e p o s i t s had been reduced to a p p r o x i m a t e l y $ 1 7 5 , 0 0 0 . 0 0 , o r a p p r o x i m a t e l y a r e d u c t i o n of 40$ s i n c e June 1 s t , 1930; and t h e s a v i n g s d e p o s i t s had been reduced to a p p r o x i m a t e l y $ 8 4 , 0 0 0 . 0 0 , or a p p r o x i m a t e l y a r e d u c t i o n of 20$ s i n c c J u n e 1 s t , 1930. X-6907 15th p a g e . Such s u b s t a n t i a l shrinkages in d e p o s i t s over s a i d s h o r t p e r i o d of time, and when normally an i n c r e a s e of d e p o s i t s would he expected, c o n s t i t u t e d a heavy d r a i n upon the r e s o u r c e s of P l a i n t i f f Bank. I t was f o r c e d to c u r t a i l i t s l o a n s , and i t s c r e d i t "being i n - j u r i o u s l y a f f e c t e d by t h e s a i d l i b e l s , i t was i n e v i t a b l y f o r c e d i n t o l i q u i d a t i o n to avoid a r u i n o u s s a c r i f i c e of i t s p r o p e r t y and assets. Whereupon t h e s a i d Superintendent of Banks took p o s s e s s i o n of p l a i n t i f f Bank, a s h e r e i n b e f o r e s t a t e d , f o r t h e purpose of i t s liquidation. Such e n f o r c e d l i q u i d a t i o n n e c e s s a r i l y brought about a s h rin k a g e o r l o s s in value of i t s a s s e t s , so much so t h a t under t h e p r o v i s i o n s of t h e s a i d Banking Act of Georgia, t h e s a i d S u p e r i n t e n d e n t of Banks l e v i e d an assessment of 100$ on t h e s t o c k h o l d e r s of p l a i n t i f f Bank f o r t h e p u r p o s e of p a y i n g i t s d e p o s i t o r s . By v i r t u e of t h e f a c t s h e r e i n o u t l i n e d , i t i s charged t h e r e f o r e t h a t t h e c l o s i n g and f a i l u r e of p l a i n t i f f Baflk, was the n a t u r a l , d i r e c t and proximate r e s u l t of t h e a f o r e s a i d f a l s e and l i b e l o u s p u b l i c a t i o n s of t h e Defendant of and touching t h e b u s i n e s s c h a r a c t e r , r e p u t a t i o n and c r e d i t of p l a i n t i f f Bank. Such f a i l u r e of p l a i n t i f f Bank, and t h e consequent enf o r c e d l i q u i d a t i o n of i t s a s s e t s immediately and d i r e c t l y e n t a i l e d t h e l o s s of i t s c a p i t a l of $100,000, i t s s u r p l u s and u n d i v i d e d p r o f i t s of approximately $25,000.00, and a s h r i n k a g e , and l o s s i n t h e value of i t s a s s e t s of approximately $100,000.00, b e s i d e s l o s s of profits. X-6907 16th page; P l a i n t i f f Bank wag a comb&ratively small S t a t e bank l o c a t e d in a small C i t y , d i s t a n t some 800 m i l e s from P h i l a d e l p h i a . On t h e o t h e r hand, d e f e n d a n t i s a p o w e r f u l u n i t i n t h e g r e a t F e d e r a l Reserve System, w i t h t h e h a c k i n g of a l l t h e tremendous f i n a n c i a l r e s o u r c e s , power and p r e s t i g e of t h a t system. Defendant e n j o y s t h e s e r v i c e s of t h e b e s t banking t a l e n t t h a t money can p r o v i d e , and h a s a t a l l t i m e s a v a i l a b l e to i t , f u l l , complete, and a c c u r a t e i n f o r m a t i o n a s to t h e s t a t u s and c o n d i t i o n of every bank i n the U n i t e d S t a t e s , b o t h S t a t e and N a t i o n a l . The Defendant a s a u n i t i n t h e F e d e r a l "Reserve System, des i r e s and u n d e r t a k e s to h a n d l e a very l a r g e volume of t h e b u s i n e s s of c l e a r i n g and c o l l e c t i n g bank checks, and h a s or should have a d e q u a t e and p r o p e r f a c i l i t i e s f o r such work. The Defendant w e l l knows t h a t t h e b u s i n e s s of b a n k i n g d e pends f o r i t s s u c c e s s f u l o p e r a t i o n on t h e p u b l i c c o n f i d e n c e , w i t h o u t which no bank can c o n t i n u e i n e x i s t e n c e however sound and h o n e s t may b e i t s management. The Defendant w e l l knows how e a s i l y , and by what t r i v i a l c i r c u m s t a n c e s , such p u b l i c c o n f i d e n c e can be d e s t r o y e d , and p a r t i c u l a r l y t h e Defendant knew t h e t r o u b l e d and u n s t a b l e s t a t e of t h e publ i c c o n f i d e n c e i n banks g e n e r a l l y i n t h e Summer of 1930. The Defendant i s or may be i n c o n s t a n t and almost i n s t a n t aneous communication w i t h a l l of i t s s i s t e r Reserve Banks, i n c l u d i n g t h e F e d e r a l Reserve Bank of A t l a n t a , l o c a t e d about s e v e n t y m i l e s from Rome, Georgia. However, t h e D e f e n d a n t , w i t h a l l i t s r e s o u r c e s , b o t h X-6907 17 t h p a g e . p h y s i c a l and f i n a n c i a l , i t s s5urCi|ti of i n f o r m a t i o n , and i t s f a c i l i t i e s f o r h a n d l i n g i t s b u s i n e s s p r o p e r l y and w i t h due r e g a r d f o r t h e r i g h t s of o t h e r s , however small and i n s i g n i f i c a n t t h e y may b e , s e c u r e d f a l s e i n f o r m a t i o n a s t o t h e f i n a n c i a l and b u s i n e s s s t a t u s of P l a i n t i f f , and w i t h o u t t a k i n g t h e simple and easy s t e p s n e c e s s a r y to v e r i f y o r c o r r e c t such f a l s e i n f o r m a t i o n , r e p e a t e d l y and p e r s i s t e n t l y s p r e a d through v a r i o u s and widely s c a t t e r e d b a n k i n g and b u s i n e s s c h a n n e l s t h e f a l s e and f a t a l r e p o r t t h a t P l a i n t i f f Bank was " C l o s e d " . Such c o n d u c t , i t i s charged, amounts to such a r e c k l e s s and n e g l i g e n t d i s r e g a r d f o r t h e f a c t s , and t h e r i g h t s of o t h e r s a s t o be s u f f i c i e n t to imply a c t u a l m a l i c e and a r e such a g g r a v a t i n g c i r c u m s t a n c e s a s to j u s t i f y t h e i m p o s i t i o n and r e c o v e r y of p u n i t i v e damages i n such stun a s may be awarded by t h e j u r y . For t h e r e c o v e r y of t h e damages h e r e i n b e f o r e s e t f o r t h due to t h e l i b e l s and l i b e l o u s a c t s of Defendant h e r e i n b e f o r e named, p l a i n t i f f Bank b r i n g s t h i s a c t i o n to r e c o v e r t h e sum of $ 2 5 0 , 0 0 0 . 0 0 . Hence t h i s s u i t . (Sgd) P a u l Freeman Alexander W. Smith, J r . Attorneys f o r P l a i n t i f f
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