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COPY X-5514 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA. IN EQUITY. To the Judge of the D i s t r i c t Court of the United States for the Northern D i s t r i c t of Georgia; T. C. Bohhitt, 0. H. Cheek, Mrs. W. S. P h i l l i p s , B. F. Garner and S. L. Veal, citizens and residents of the County of Laurens, State of Georgia, suing in "behalf of themselves and other parties similarly situated, "bring t h i s their "bill of complaint against the Federal Eeserve Bank of Atlanta, a Federal Reserve Bank organized under the Federal Reserve Act of the Congress of the United States, a c i t i z e n and resident of the County of Fulton, State of Georgia, and against H. W. Whitman, as Receiver of the First National Bank of Dublin, Georgia, of the County of Laurens, State of Georgia, and a c i t i z e n and resident of said County of Laurens, State of Georgia, and thereupon complaining say: 1. Your petitioners were depositors and creditors of the First National Bank of Dublin at the time i t f a i l e d and went into liquidation on September 24, 1928, as hereafter stated and during the time of the acts herein complained of. 2. That the said First National Bank of Dublin was heretofore the owner and in possession of real estate i n Laurens -2- X-6514 County, Georgia, f u l l y set out and described, in a certain deed, hereafter referred to as deed No. 1, and recorded in Deed Book 60, page 66 at seq. records of Laurens County, Georgia, b r i e f l y referred to as follows: Deed No. 1. 16 acres in Dublin, Georgia, having seven new dwelling houses thereon, 163 acres in 12th Land District of said County, the Northern one-half of Lot No. 162, 88 acres of the Southwestern part of l o t No. 164, the Northeast half of l o t No. 137 in the same d i s t r i c t and County, one-half of l o t No. 222 in the 17th Land District, l o t s 57, 74 and the Southwest half of 75 in the town of Rentz, l o t No. 11 in Block G, Syndicate Land Lot survey of Bellevue Park, Dublin, Georgia^ a one-half undivided interest in one-half of l o t No. 50 and 96^ acres of l o t No. 49 in the Second Land District, a one-half undivided interest in parts of l o t s Nos. 64 and 47 in the Second Land District, a onehalf undivided interest in 75 acres of l o t 48 in the same d i s t r i c t , a one-half undivided interest in the Burney survey No. 1 in l o t No. 107 in the Sedond Land District, 62|- acres in l o t 77 in the same d i s t r i c t , 2^ acres in l o t 64 of the same d i s t r i c t , l o t No. 10 in Block G, of the map of Bellevue Park, Dublin, Georgia, 9l£ acres of l o t 44 in the Second d i s t r i c t , 10l£ acres of l o t No; 74^ 50 acres of No. 66 in the same d i s t r i c t , another 50 acres in l o t No. 66, Eastern one-half of lot 21, containing 101^ acres in the First District, a tract on the North side of Academy Avenue, Dublin, Georgia, known as the Thomas Peters, Jr. residence, 75 acres parts of l o t s 212, 313 in the First Land District, 121 acres -3- X-6514 i n lots 129, and. 167 in the First d i s t r i c t , tract located on Washington Street, Dublin, Georgia, known as the J. 0. Johnson home place, one-half of that parcel of land in the 1338th d i s t r i c t , containing 202^ acres, known as the Warren Wilkes lands and. *743 acres in the same d i s t r i c t known as the J * Neil McLeod lands, that tract in the 52nd District containing 207 acres, l o t Ho. 67 in Block 5 of the Grier Survey of the f« E. Hudson property, Dublin, Georgia, 140 acres in the 52nd District conveyed to Mrs. Virginia Moore by Beacham and Fritchett, 3 acres in the said d i s t r i c t known as the J. Ira Moore Place, the Oconee Investment Company lands on the Oconee River, the Southwest corner of Block 33 of the Pew Survey of Dublin, Georgia, situated on Franklin and Jackson Streets, fronting 65 feet on Jackson Street and running back an equal width on Franklin Street a distance of 55 f e e t , a tract on the South East corner of Jefferson Street and Cleveland Avenue running East on Cleveland Avenue 165 yds., a l o t 100 feet by 500 feet on Bellevue Avenue known as the T. H. Smith place, lot No. 5 of the J. T. White property in Dublin, Georgia, 10 acres on Telfair Street, a one-half undivided interest in the P a t i l l o Property on North side of Gaines Street, Dublin, Georgia, a one-half undivided interest in the livery stable property situate on the West side of Laurens Street, Dublin, Georgia, one-fourth of an acre on Telfair Street known as the Mrs. Sue Tillery l o t , section No. 1 of l o t No. 277 in the 17th land d i s t r i c t , containing 52.77 acres, part of lot No. 65, Dublin, Georgia, on Jacks on and Bainbridge -4- X-6514' S t r e e t s , f o u r - f i f t h s -undivided i n t e r e s t in a tract of 170 acres i n the 1338th d i s t r i c t known as the E. ?. Beacham Old Place. Also certain real estate f u l l y described in a deed hereafter referred to as Deed llo. 2, recorded in Book 61, page 363, records of Laurens Superior Court, b r i e f l y referred to as follows: Deed No. 2. Part of l o t !?o. 38 fronting on Jackson Street 54 f e e t and running back 187 f e e t , Dublin, Georgia, and a tract on the river road containing 196 acres, bounded on the north by Mrs. Rebecca Johnson, East by Oconee River, South by J. B. Burch, West by River Road. Also certain real estate more f u l l y described in a deed hereafter referred to as Deed No. 3, recorded in Book 61, page 421 e t . s e q . , records of Laurens Superior Court, b r i e f l y referred to as follows: Deed Ho. 3. A portion of l o t 55 in Block 38 lying between the City Hall and the Street and Powel property whereon i s located the business of the Mar shall-Peacock Conpany, Chevrolet dealers, Dublin, Georgia, and a tract on the northwest side of the Court House Square and on the Forthwest corner of Jackson and Jefferson Streets, Dublin, Georgia, known as part of l o t Ho. 59 in Block 42 known as the Henry building, and a tract in Dublin, Georgia, whereon i s located the brick building known as the Parr & Wood Purniture Company1 s place of Business, fronting 23 f e e t on Jackson Street and running back an equal width of 200 f e e t , and improved property in -5~ X-6514 Dublin, Georgia, known as Nos. 211, 213 on the North side of Jacks on Street, fronting 55 feet on that Street and running "back an even width 580 f e e t , and a tract fronting on Court House Square, Dublin, Georgia and being lot 9 in Block 39, of the Guy ton Survey, said l o t facing Jackson Street 30 feet and having a uniform depth of 124.3 f e e t , and that improved property in Dublin known as ITos. 201, 203, and 205 Jackson Street, being l o t at the Northwest corner of Jackson and Laurens Streets, fronting 75 feet on Jacks on Street and running back of even width 115 f e e t . Also certain real estate more f u l l y described in a deed hereafter referred to as Deed No# 4, recorded in Book 61, page 144, records of Laurens Superior Court and b r i e f l y referred to as follows: Deed No. 4. Tract of 7^ acres in Dublin, Georgia, bounded on the East by the Dublin Public School and Washington Street, South by Hudson Street, West by Mrs. Robinson and J. W. Scarborough, North by Autry, Higgins and Foster. Also certain real estate more f u l l y described in a deed hereafter referred to as Deed No. 5, recorded in Book 51, page 312, records of Laurens Superior Court and b r i e f l y referred to as follows: Deed No. 5. Tract fronting 70 feet on the North side of Johnson Street and running back 180 f e e t , and a lot fronting 70 f e e t on the South side of Johnson Street, and a l o t fronting 50 f t . on the North side of Gaines Street, and a lot fronting —6— X-6514 170 feet on Forth Jefferson Street, with a depth of 244 f e e t , and. lot Ho. 5 of a plat of record in Book 24, page 431, and l o t No. 6 of the same plat and survey, and a l o t at the Southwest corner of Decatur Street and Williams Street, and a l o t in the shape of a right angle parallelogram 50 x 100 feet on Decatur Street. Also certain real estate more f u l l y described in a deed hereafter referred to as Deed No. 6, recorded in Book 61, page 123, records of Laurens Superior Court and b r i e f l y referred to as follows: Deed Ho. 6. A tract on the South side of Gaines Street, fronting Gaines Street 64 feet and extending back 205 f e e t . Also certain real estate more f u l l y described in a deed hereafter referred to as Deed Ho. 7, recorded in Book 61, page 423, records of Laurens Superior Court, and b r i e f l y referred to as follows: Deed Ho. 7. Described as l o t 55, Cadwell, Georgia, fronting Dexter and Burch Streets, except the part occupied by the Cadwell Banking Company. Also certain real estate more f u l l y described in a deed hereafter referred to as Deed No. 8, recorded in Book 61, page 576, records of Laurens Superior Court, and b r i e f l y referred to as follows: Deed No. 8. A tract of land situated on the Southwest corner of Jefferson and Madison Streets, Dublin-, Georgia, known as the First National Bank Building. - 7 - X-6514 Also certain real estate more f u l l y described, in a deed hereafter referred to a8 Deed No. 9, recorded in Book 60, page 481, records of Laurens Superior Court, and "briefly referred to as follows: Deed Ho. 9. Two lots in the City of Dublin, known as l o t s 154 and 156 in Block 46 of the Arthur Pew Survey, located on Jacks on and Laurens Streets, and City l o t s 3, 4, 5 and 6 in Block 122, and a l o t on the Bast side of Jefferson Street, fronting 57 feet on that street and 500 acres of land in the 52nd d i s t r i c t , known as the Brantly home place. Said property i s fully described by metes and bounds in the deeds referred to and in a certain legal advertisement hereafter referred to which petitioners w i l l offer to the court to more particularly identify and locate said property, inasmuch a more particular description in this p e t i t i o n would make i t very voluminous. Petitioners show that the property described in the preceding paragraphs was sold to the Southern Realty Company by the First National Bank, this Company giving i t s notes for the same and a security deed over the property for the purchase price. The Southern Realty Company was a corporation organized for the sole purpose of holding real estate belonging to the First National Bank. I t had no assets other than the said real estate purchased from said bank except capital stock of $5000. The security deeds given by the Southern Realty Company were properly recorded on the records of Laurens Superior Court. -8- X-6514 The said First National Bank transferred, conveyed and assigned the aforementioned deeds and the land therein described to the said Federal Reserve Bank on the dates and for the purposes herea f t e r given. form: The assignments being substantially in the following For value received the undersigned, First national Bank of Dublin, Georgia, has transferred, conveyed, set over and assigned, granted and sold unto the Federal Reserve Bank of Atlanta a l l and singular i t s right, t i t l e and interest in and to the within and attached deed to secure debt, together with a l l rights of the undersigned arising under and by virtue of said deed. The under- signed does also grant, bargain, s e l l and convey the lands and i t s interest therein. The First National Bank purported to make the assignment and conveyance to the Federal Reserve Bank to the lands described in Deed Ho. 1 on May 31, 1927, and purported to be conveyed along with two notes secured by said deed executed by the Southern Realty Company to the First National Bank, both of said notes having been dated April 28, 1927 and due December 31, 1927, one of said notes for the principal sum of $280,705.16, and the other for the principal sum of $11,520.00. The First National Bank purported to transfer and convey deed No. 2 and the land therein described to the Federal Reserve Bank on June 26, 1928 and the note purported to be secured by said deed executed by the Southern Realty Company to the First National Bank for $24,790,00, dated May 4, 1928, due November 4, 1928, -9- X-S514 The First National Bank purported to transfer and convey deed No. 3 and the property therein described to the Federal Reserve Bank on June 29, 1928 and the two notes secured "by deed executed by the Southern Realty Company to the First National Bank aggregating the principal sum of $392,564.66 due on December 31, 1928. The First National Bank purported to transfer end convey deed Z7o. 4 and the land therein described to the Federal Reserve Bank on August 31, 1928, and the note secured by said deed executed by the Southern Realty Company to the First National Bank of Dublin for $9,787.75 due September 19, 1928. The First National Bank purported to transfer and convey deed No. 5 and the property therein described to the Federal Reserve Bank on June 26, 1928 and the note secured by said deed executed by the Southern Realty Company to the First National Bank of Dublin for the principal sum of $4,300.00 due on October 1, 1928. The f i r s t National Bank purported to transfer and convey deed Ho. 6 and the land therein described to the Federal Reserve Bank on August 31, 1928 and the notes secured by said deed executed by the Southern Realty Company to the First National Bank for the principal sum of $2,175.00 due on June 28, 1938. The First National Bank purported to transfer and convey deed ITo. 7 and the land therein described to the Federal Reserve Bank on September 13, 1928, and the note secured by said deed executed by the Southern Realty Company to the First National -10- X-6514 Bank for the principal sum of $3,000.00 due December 31, 1928. The First National Bank purported to transfer and convey deed ITo. 8 and the land therein described to the Federal Reserve Bank on August 29, 1928, and the notes secured by said deed executed by the Southern Realty Company to the First National Bank for the principal sum of $175,000.00, due December 31, 1928. The First National Bank purported to transfer ?nd convey deed No. 9 and the land therein described to the Federal Reserve Bank on December 5, 1927, and the note secured by said deed executed by the Southern Realty Company to the First National Bank for the principal sum of $150,000.00 due May 30, 1928. 3. The said First National Bank was a national banking association with a capital stock of $200,000.00 heretofore engaged in business and having a place of business in Dublin, Georgia, and on September 24th, 1928, being insolvent i t closed and discontinued business and was taken in charge by the National Bank Examiner who continued in charge u n t i l a receiver was appointed and took charge. H. W. Whitman took charge as receiver and i s now in charge of the a f f a i r s of the said First National Bank and i t i s on account of the transactions - between the said First National Bank and the Federal Reserve Bank with reference to the aforesaid securities and real estate and other security collateral that petitioners complain as they herein show the -11i X-6514 * 4. That sometime during the year 1927 the First National Bank organized and caused to be organized a corporation known as the Southern Realty Company with the object of this corporation to take over and hold the real estate belonging to the First National Bank and upon i t s organization the First national Bank purported to s e l l this corporation the said real estate, making i t a warranty deed and received back from i t a deed to secure debt fot the purchase price and no money actually changed hands in the transaction* The Southern Realty Company was from i t s inception and continue to be a corporation merely holding this real estate without any other assets except capital stock of $5000* than that which was acquired by this purchase of real estatet The active o f f i c e r s of the First National Bank were also the active o f f i c e r s of the Southern Realty Company and there was no actual change in the possession of this real estate other than nominal. The possession and management of the same continued in the same manner and tenants of the property paying their rent in the same way as they had when the property belonged to the First national Bank but the receipts were entered on the books in the name of the Southern Realty Company but to a l l intents and purposes the property continued the property of the First National Bank and as assets of that bank. -12- X-6514 5. Petitioners show that though the said Federal Reserve Bank was transferree and holder of the real estate set out in paragraph two, that i t did not have the transfers and conveyances recorded in the Clerk's o f f i c e of Laurens Superior Court, the County in which said property was located, u n t i l after said First National Bank had closed and was taken in charge by the Receiver, a l l said transfers and conveyances "being recorded at various dates after the receiver had taken charge of said "baik and good faith requiring the recording of said conveyances, they were purposely and w i l l f u l l y with held from record and though they were taken a t a time when the First National Bank was insolvent and so known to both of the banks, as w i l l be more f u l l y shown herein, and therebynotice to existing and subsequent creditors of the First Bank, in order that said First National Bank might have a f i c t i c i o u s credit to which i t was not e n t i t l e d . 6. Petitioners show that at the time the Federal Reserve Bank received these securities the First National Bank was in a weak financial condition tut the same was not known to petitioners but was known to said Federal Reserve Bank and said Federal Reserve Bank knew that i f the public and customers of said First National Bank knew this vast amount of -13- X-6514 collateral was transferred to and held "by the said Federal Reserve Bank, the record of which would have given such not i c e to the public and customers of the bank, that the customers of said First National Bank both present and prospective ones would have immediately ceased to do business with the bank and ceased making any deposits in said bank and your petitioners and other similarly situated would have been saved loss and damage thereby, Nevertheless on account of they not having this notice and not having knowledge of the condition of the bank they would have acquired by said notice they did continue to make deposits in said bank right up u n t i l the day of i t s closing, the common creditors of said bank thereby loosing a larger amount as w i l l be later shown. 7. Petitioners further show that as early as December 5th, 1927, when the First National Bank transferred and conveyed to the Federal Reserve Bank the security described in deed number nine a debt secured thereby made by the Southern Realty Company for $150,000.00 due May 30th, 1928, both banks knew this debt could not be paid at maturity and was not paid at maturity. Both banks knew that the Southern Realty Com- pany had no assets whatever other than the property conveyed as security and that upon maturity of the debt i t would necessarily have to be renewed both by the Southern Realty Coo- -14pany and. the First National Bank. X-6514 Both banks further knew that not only could the Southern Realty Company not pay this debt at maturity but that the First National Bank who was endorser on the paper could not pay i t at maturity, likewise, on May 31, 1927, when said First National Bank transferred and conveyed to the Federal Reserve Bank the security described in deed number one, the debt secured by said deed being two notes dated April 28th, 1927, and due December 31st, 1927, one of said notes being for the principal sum of $280,705.16, the other one for the principal sum of $11,520.00, both of said banks knew for the reason herein given that the Southern Realty Company could not pay this debt when i t became due and did not pay i t and the First National Bank was not able to pay i t after i t became due, that they knew that a renewal of the same was merely a postponement of the time of final reckoning. Nevertheless the said Federal Reserve Bank continued to acquire and receive security of the First National Bank by taking transfers and conveyances of same on June 26, 1928; June 29, 1928; August 29, 1928; August 31, 1928 and September 13th, 1928, as have been more f u l l y setforth above. The re- sult was that the Federal Reserve Bank became possessor of a l l the real estate holdings of the First National Bank representing securities in excess of one million dollars leaving none of the real estate own by the First National Bank in i t s hand.' I t did likewise take other security from said bank, And whether the sureties of the real estate was taken for a bona fide debt or not, nevertheless the taking over and holding of same and con- -15- X-6514- cealing this f a c t from the customers of the bank misled them and the withholding of same from record was done f o r the purpose of concealing this knowledge from the petitioners and other creditors similarly situated and for the purpose of misleading and did mislead them, and such purpose was in law fraud on p e t i tioners. 8. Petitioners further show that the taking of this large Amount of s e c u r i t i e s was not usual and customary transaction on the part of the Federal Reserve Bank with a bank of the size and condition of the First National Bank and was not taken with a view of same being recti.scounted by the Federal Reserve Bank and paid in due course, but with the purpose and intent of the Federal Reserve Bank acquiring a l l the security and having same at the time that the First National Bank should f a i l in order that the Federal Reserve Bank might be a creditor preferred above other creditors, and the Federal Reserve Bank knowing that at the time had the transfers been known by the public that then the customers of the First National Bank would discontinue their business with i t and for this and other reasons herein setforth the conveyances were fraudulent and as to petitioners null and void; that the Federal Reserve Bank should not be allowed to hold said conveyances but they should be retunned to the receiver for admini s t e r i n g and prorating of the funds received on same among a l l creditors. -16- X-6514 9. Petitioners show that early in the summer of 1928 "both the Federal Reserve Bank and the First National Bank had acquired knowledge that the First national Bank was in a weak financial condition and that the debt held by the Federal Reserve Bank and executed by the Southern Realty Company and endorsed by the First National Bank which had become due on December 31st, 1927, and on May 30th, 1928, as herein shown was not paid at maturity by either the maker or endorser and could not be paid by either and were renewed before the date of maturity in order to keep same from becoming due and remaining unpaid, but nevertheless the holding of such debt by the Federal Reserve Bank at the date of maturity and the i n a b i l i t y of either party at the regular date of maturity of same to pay same was in fact an act of insolvency on the part of the First National Bank and after the commission of such acts of i n s o l vency and in contemplation of insolvency the First National Bank transferred and conveyed a large portion or the whole of these securities to the Federal Reserve Bank to further secure the Federal Reserve Bank for a debt or debts then owing the Federal Reserve Bank by the First National Bank and in violation of Section 5242 of the revised statute of the United States regulating the business of National banks and such was done with a view of preventing an application of the assets in the manner prescribed by law and or with view to preference of the Federal -17Reserve Bank to other creditors. X-6514 Petitioners can not say what portion of these securities or real estate was transferred for an existing debt "but allege that a portion of them were, and e s p e c i a l l y those transfers made near the period of the closing of the hank. Petitioners are not able to obtain f u l l information on this point as information on same i s with held "by the receiver 6f the First National Bank and representative of the Federal Reserve'Bank in charge of i t s business at Dublin, Georgia. Petitioners do allege that a very l i t t l e , i f any, present consideration passed from the Federal Reserve Bank to the First National Bank in the period from June 30th to the day of the closing of the bank, and yet during this period and after the commission of the acts of i n solvency herein referred to and in contemplation of insolvency and in violation of the statute and with the purpose above recited, a vast amount of other security passed from the First National Bank to the Federal Reserve Bank. Petitioners show that at the close of business on June 30th, 1928, the condition of the First National Bank as represented to the Comptroller of the Currency and as published shows loans and discounts of $1,489,966.01, b i l l s payable including a l l obligations representing borrowed money of $47,000.00 notes and b i l l s rediscounted were $506,624.15, which would indicate that at that time the First National Bank had unpledged assets of eight or nine hundred thousand dollars, Petitioners believe that this report correctly reflected the condition of the First National -18- X-6514 Bank at that date, nevertheless at the date of the closing of the bank the Federal Reserve Bank held a s s e t s of the First National Bank of the vast value of approximately $1,200,000.00 for the purpose of securing an indebtedness of approximately $565,000.00. Petitioners "believe and allege on account of facts published and other facts herein s e t f o r t h a great deal of these assets were transferred and conveyed to the Federal Reserve Bank during this period and contrary to law as above setforth. Petitioners can not specify in d e t a i l just what notes, c o l l a t e r a l or other assets were transferred during this period i n as much as such information i s withheld by the authorities of the two banks and by the Comptroller's O f f i c e . They can allege however and believe they can prove that i n cluding i n this vast amount of assets transferred including some of the real e s t a t e above referred to was $30,000.00 i n l i b e r t y bonds of the value of ## $30,000.00 transferred to secure an existing indebtedness in violation of the law above setforth. At the time of the close of the First National Bank the unpledged assets of the bank only amount to approximately $363,000.00. Petitioners believe that no transfers or conveyances were made to any other bank or parties during this period other than the Federal Reserve Bank in as much as p r a c t i c a l l y a l l of the business transactions with any other bank by the First National Bank was done with the Federal Reserve Bank. 10. Petitioners further show as additional evidence of the -19- X-6514 condition of the First national Bank and. of the knowledge of i t on the part of the Federal Reserve Bank and of the purposes and schemes on the part of "both banks to prefer the Federal Reserve Bank and to defraud petitioners that the l a t t e r part of June or the f i r s t of July, 1928, the Federal Reserve Bank selected a man to he in the active charge of the First National Bank and required of the First national Bank that ho be placed in charge of .the o f f i c e of said hank, and this party, H. S. Day, was on July 6th of that year elected Vice-President and cashier of the First National Bank by the directors of that bank and placed in active charge of the bank and he was in e f f o c t , petitioners allege and believe, a representative and agent of the Federal Reserve Bank in charge of the First National Baik after that date, and part of his duties was to protect the interest of the Federal Reserve Bank and to see that the most valuable parts of the assets of the First National Bank were transferred and conveyed to the Federal Reserve Bank and the transfers and conveyances above referred to Under date of August 29th, 1928, August 31, 1928, and September 13th, 1928, were executed on the part of the bank by H. S. Day, as Vice-President and cashier, and J. E. Freeman as Vice-President. It did in fact appear that at the d o s e of said bank as above stated the only assets unpledged remaining to the First National Bank consisted of approximately $363,000.00, much of which was of doubtful value and a great portion of which was -20- X-6514 c l a s s i f i e d "by the receiver as worthless and a great deal as doubtful and a small portion good. It was known at the time that K. S. Day took charge of the "bank that among the assets was a debt owed "by the Dublin Creamery of $105,000.00 which was e n t i r e l y worthless and this asset was l e f t among the assets of the First national Bank along with much other of similar character, while the valuable assets had gone to the Federal Reserve Bank. 11. Petitioners show as further evidence of the way that they were misled and as a part of the scheme to take advantage of them and defraud them, that on i t s assuming the charge of the First National Bank by the said H. S. Day, the First national Bank issued a public statement which was published in the Courier Herald, a newspaper published and circulating in Laurens County, stating that he considered this bank and sect!tin had a great future and he intended to make this bank his l i f e work and the statement coming from the baak that the bank had grown so that the present executive force needed well trained banking help under modern banking conditions now existing with the Federal Reserve Bank and that H. S. Day came very highly recommended by the National Batik Examiner of this d i s t r i c t . This s t a t e - ment purported to be issued by F. 0. Corker, President of the First National Bank, but petitioners allege and believe that this statement was inspired by the officers of the Federal Reserve Bank and they surges ted the announcement and i t was made --21— X-6514 with knowledge on their part that such statement at l e a s t in substance '.vould "be made and petitioners show that the s t a t e ment was calculated to mislead and did mislead the customers of the First National Bank and existing and subsequent credi t o r s , and petitioners give this as a further reason why the conduct on the part of the Federal Reserve Bank in reference to withholding from record the sureties on the real estate held by them was fraud on them and null and void as to them as i t amounted to holding out of tie First National Bank by the Federal Reserve Bank as a sound i n s t i t u t i o n when in fact i t was not and i t knew that i t was not, and that the Federal Reserve Bank then held the most valuable parts of the assets and contemplated securing more of such assets and that the future of the First National Bank was entirely in the hands of the Federal Reserve Bank and at anytime they refused to carry and further extend financial help to the First Hational Bank or to extend the maturity dates of i t s obligations that i t held that the First National Bank would be compelled to close i t s doors. Petitioners further show that the First National Bank since i t closed lias proven to be absolutely insolvent and i t can not and w i l l not pay but a small proportion of i t s indebtedness and a f t e r a year in liquidation i t has paid one dividend of f i v e per cent and that within the l a s t ten days. 13. Petitioners show that there were a great number of depositors -22- ' X-6514 in the First National Bank whose aggregate deposits amounted to approximately $800,000.00 and a great many of them wore creditors, existing and subsequent, to the acts herein complained of and which they claim were fraud and nail and void as to them, and petitioners' bring this p e t i t i o n on behalf of themselves and other depositors and creditors who are similarl y situated. 14. Petitioners further show that they are denied access to the books and records of tiie First National Bank so as to poss i b l y more s p e c i f i c a l l y set forth their cause of complaint and to make proof of same and that i f such condition continue they be granted an order by this court i f need for i t arises, an order requiring the receiver of the First National Bank to allow them access to and an inspection of the records of tbhe bank as may be reasonable at such time and under such direction of the court as the court deems proper. 15. Petitioners further show that they have requested the Comptroller of the Currency, the receiver of the First National Bank and the First National Bank to bring this action and they have f a i l e d and refused to do so. And petitioners further show that i t was a needless thing on their part to make such request inasmuch as they knew that there was no liklihood of i t s being done, that apparently there i s the f u l l e s t co-operation between these parties and the Federal Reserve Bank. And the Receiver -23- X-6514 : :v and Comptroller General apparently entertain no idea of calling on the Federal Reserve Bank to account and to surrender any of the assets or to refrain from the acts complained of. 16. Petitioners farther show that the Federal Eeserve Bank i s advertising a l l of the real estate herein referred to, to s e l l on at public sale/Tuesday, December 3rd, 1929, under a power of sale contained in said deed, and petitioners show that for the reasons s e t forth that said bank should not be allowed to make said sale and change the status of said property until this conyplaint i s hoard. Petitioners show that most of this property i s very valuable and consist of some of the choicest business property in the City of Dublin, and one piece of property i s the First National Bank Building, a banking and o f f i c e building six stories high and a building equipped at a large expense and i s the same property referred to in the transfer to the Federal Reserve Bank of August 29th, 1928. 17. Petitioners believe that the sale of the property under a l l the circumstances would not bring a fair value at this time and the Federal Reserve Bank proposes to s e l l a l l of this property in separate parcels and thereafter to s e l l same as a whole and under such circumstances the Federal Reserve Bank by reason of the amount involved would be the only purchaser and almost at their own price and petitioners show that they are without remedy ex- -24- X-653.4 cept in a court of equity. WHEREFORE, expressly raving discovery from the defendants "but praying that they "be required to make answer hereto "but not under oath, p l a i n t i f f s pray that they he granted such r e l i e f as may he appropriate in the premises, and as a part of such r e l i e f for the court to (a) adjudge and decree that a l l transfers and conveyances herein referred to from the First National Bank to the Federal Reserve Bank he declared null and void and fraudulent as to petitioners, and that said securities on said real estate he returned to the Receiver of the First National Bank to he administered by him for the benefit of a l l the creditors of the hank, (h) that petitioners and such others as may make themselves party p l a i n t i f f s to this action recover of the Federal Reserve Bank for use of a l l the creditors of said hank such notes, collaterals and other assets as may he found to have been transferred to the Federal Reserve Bank in violation of the provisions of law as contained in Section 5242 of the revised statute which transfers were null and void for the reasons herein set forth, and that same be administered by the receiver of the bank for the benefit of the creditors of the bank and that an accounting be had between the parties to determine what assets were themselves transferred in violation of the law, (c) that the court restrain the said Federal Reserve Bank from s e l l i n g the real estate or changing the 9tatus of same until the further order of this court, (d) that subpoena may issue requiring the Fedexal Reserve Bank of Atlanta and the said H. W. Whitman, as Receiver, to make an answer but not under oath to the allegations of this complaint. C. C. C r o c k e t t A t t o r n e y f o r the p l a i n t i f f s . X-S514 ~25»* GEORGIA , LAUHEUS COUNTY Personally appeared 0. H. Cheek and who on oath say that the facts stated in said "bill are true except insofar as stated on information and b e l i e f and as to a l l such excepted matters deponents are informed and "believe same to "be true. (Signed 0« H. Cheek Sworn to and subscribed "before me this 30 day of Uov. 1929 (Signed)E. S. Baldwin Clerk Superior Court Lau.Co.Ga. The within petition i s sanctioned and ordered f i l e d . Let the defendants show cause "before me in Atlanta, Ga., at 10A.M. Dec. 7, 1929, why the injunction should not issue as prayed, l e t service "be made forthwith on the defendants. 1929. (signed) Saal This Dec. 2, H. Sibley U. S. Judge. X-6514 -26- DISTRICT COURT OF THE UNITED STATES OF AMERICA NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION T. C. BOBBITT, 0. H. CHEEK, MRS. W. S. PHILLIPS. R. F. GARNER and S. L. VEAL Complainants. IN EQUITY vs. No. 5 5 0 FEDERAL RESERVE BANK OF ATLANTA and. H. W. WHITMAN, AS RECEIVER FIRST NATIONAL BANK OF DUBLIN. GEORGIA. Defendants THE PRESIDENT OF THE UNITED STATES OF AMERICA TO FEDERAL RESERVE BANK OF ATLANTA and H. W. WHITLiflN AS RECEIVER OF THE FIRST NATIONAL BANK OF DUBLIN, GEORGIA FOR CERTAIN CAUSES offered before the Judge of the District Court of the United States for the Northern District of Georgia, IN EQUITY, you, and each of you - - - - - - - - — - - - - - - - - - - - - , are hereby commanded to be and appear and to cause to be f i l e d and entered for you in the Clerks' Office of the said Court, in the City of ATLANTA Georgia, within twenty days from the day of the date hereof, an answer or other defense to those things which shall then and there be objected to you by the b i l l of complaint of T. C. BABBIT, 0. H. CHEEK, MRS. W. S. PHILLIPS, R. F. GARNER and S. L. VEAL and to do further, and receive what the said Court shall have considered in this behalf, and this you may in nowise omit, under penalty of -27- X-6514 judgment being pronounced against you. "by default. WITH5SS, the Honorable SAI/iUEL H. SI3L5Y, Judge of the D i s t r i c t Court of the United States for the Morthorn D i s t r i c t of Georgia, this 3rd day of -EscsmScr - in the year of our Lord one thousand nine hundred and treaty aijje (Signed) By 0. C. Puller - — ?£3M0RAilDUM,- The defendants - - - a £° required to f i l e their , Clerk - -.Deputy Clerk, - - - - - - - - - answer or other defense in the suit above stated, in the CLSFJE'S OFFICE, on or before the twentieth day a f t e r service of this Writ of Subpoena, excluding the day thereof, otherwise the b i l l may be taken pro confesso. The defendant need not appear personally but may appear by Solicitor. 0. C. Fuller , Clerk
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