Full text of Mimeograph Letters and Statements of the Board : Copy of Letter From Albert Agnew, Counsel, Federal Reserve Bank of San Francisco, to Walter Wyatt, General Counsel, re Earl Forest v. Federal Reserve Bank of San Francisco, et al., Number X-6042, Volume 28, Page 447

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COPY

X-6042
FEDERAL RESERVE BANK

OF sAir imiicisco
May 7, 1928.

W a l t e r Wyatt, E s q . ,
General Counsel,
F e d e r a l Reserve Board,
Washington, D. C.

In r e : E a r l F o r e s t v .
F e d e r a l Bank of
San F r a n c i s c o .
et al.

Dear Mr. Wyatt:
For your i n f o r m a t i o n I am t r a n s m i t t i n g herewith
copy of summons and complaint r e c e n t l y s e r v e d upon t h i s
"bank i n the above e n t i t l e d m a t t e r .
The complaint, as you w i l l n o t e , i s i n the u s u a l
form, charging the F i r fit N a t i o n a l Bank of P o r t l a n d with
n e g l i g e n c e i n having r o u t e d the item i n q u e s t i o n f o r c o l l e c t i o n through the F e d e r a l Reserve Bank i n s t e a d of p r e s e n t i n g
i t d i r e c t , and charging the F e d e r a l Reserve Bank of San
F r a n c i s c o w i t h n e g l i g e n c e i n having a c c e p t e d a d r a f t i n f
s e t t l e m e n t , r a t h e r than cash.
The f a c t s i n t h i s case a r e a l i t t l e out of t h e
o r d i n a r y i n t h a t the Bank of Kenton, "by which the d r a f t
was drawn, i s l o c a t e d w i t h i n t h e c o r p o r a t e l i m i t s of t h e
c i t y of P o r t l a n d , b u t a t a d i s t a n c e from the c e n t e r of p o p u l a t i o n which r e n d e r e d the c o l l e c t i o n of checks by d i r e c t p r e e e n t a t i o n , i m p o s s i b l e . The Bank of Kenton was n o t a member of
the c l e a r i n g house, and i t had been the u n i v e r s a l custom not
only of the F e d e r a l Reserve Bank b u t of a l l o t h e r l o c a l banks
c o l l e c t i n g checks to do so by m a i l .
The d r a f t i s s u e d by the Kenton Bank i n s e t t l e m e n t
of the cash l e t t e r c o n t a i n i n g the item ijx q u e s t i o n , was drawn
on December 2 , p l a c e d by the P r e s i d e n t of the Bank i n h i s
p o c k e t and c a r r i e d around by him u n t i l December 3 , when he
mailed i t i n P o r t l a n d so t h a t i t reached our P o r t l a n d Branch
on December 4 , the day a f t e r t h e Bank of Kenton f a i l e d .
I am p r e p a r i n g to p l e a d to the complaint and s h a l l
do so f i r s t by way of demurrer. The S t a t e of Oregon i s comm i t t e d to n e i t h e r the New York nor "the Massachusetts r u l e .
I s h a l l endeavor to have the New:York r u l e adopted. I s h a l l
a l s o claim a m i s j o i n d e r of p a r t i e s d e f e n d a n t . I f I do n o t
succeed i n having the Federal Reserve Bank d i s m i s s e d on the
demurrer, I s h a l l , of course, answer, p l e a d i n g the u s u a l



>

X-6042

—2—

d e f e n s e s , i n c l u d i n g custom.
I s h a l l "be v e r y g l a d to r e c e i v e your o b s e r v a t i o n s on t h e case and those of any of counsel to the
F e d e r a l Reserve Banks who may c a r e t o d i s c u s s i t w i t h me.
'




Yours very t r u l y ,
(S)

A l b e r t C. Agnew
Counsel.

COPY

jF6042-a
IN THE CIRCUIT COURT OF THE STATE OP OREGON
FOR MULTNOMAH COUNTY

Earl Forest,
Plaintiff,
-vs-

SUMMONS

F i r s t National Bank of
Portland, Oregon, a National
Banking A s s o c i a t i o n , and
Federal Reserve Bank of San
Francisco, a corporation,
Defendants.
To F i r s t National Bank of Portland, Oregon, a National
Banking A s s o c i a t i o n , and Federal Reserve Bank of San Francisco, a
corporation, above named defendants:
IN THE NAME OF THE STATE OF OREGON
You and each of you are hereby commanded to appear and
answer the complaint f i l e d i n the above e n t i t l e d
Court and cause a g a i n s t you, within ten days from the date of the
s e r v i c e of t h i s summons upon you, i f served within Multnomah County,
or within twenty days from the date of the s e r v i c e of •
t h i s summons upon you i f s e r v i c e i s made w i t h i n any other county of
the above named S t a t e , and i f you f a i l to so appear and answer or
otherwise plead, for want t h e r e o f , the p l a i n t i f f w i l l teke judgment
a g a i n s t you and each of you for the sum of $3267.85 with i n t e r e s t
thereon at the r a t e of 6$ per annum from December 1 s t , 1926, and
for h i s costs and disbursements herein.




ELTON WATKINS
ADDRESS F a i l i n g Building,
Portland, Oregon.
Denton G. Burdick,
Address Redmond, Oregon
Attorneys for P l a i n t i f f .

COPY

X-6042-a
IN THE CIRCUIT COURT 03' THE STATE OF OREGON

,

41'

FOB MULTNOMAH COUNTY.
Earl Forest,
Plaintiff,
vs

COMPLAINT

F i r s t National Bank of
Portland, Oregon, a National
Banking A s s o c i a t i o n , and
Federal Reserve Bank of San
Francisco, a Corporation,
Defendants.
Comes now the p l a i n t i f f and for cause of a c t i o n s t a t e s :
I.
That a t a l l times mentioned herein, the defendant F i r s t
National Bank of Portland, Oregon, has been, and now i s a National
Banking A s s o c i a t i o n , organized and e x i s t i n g under the 'banking laws
of the United S t a t e s of America, with i t s p r i n c i p a l p l a c e of business
in the City of Portland, Multnomah County, Oregon;
II.
That a t a l l times mentioned herein the defendant, Federal
Reserve Bank of San Francisco has been, and now i s a corporation
organized and e x i s t i n g under the laws of the United States of
America, with i t s p r i n c i p a l p l a c e of business? i n San Francisco, San
Francisco County, State of California;

That s a i d defendant maintains

and operates a branch bank and o f f i c e i n the City of Portland,
Multnomah County, Oregon;
III.
That on or about November 27th, 1926, p l a i n t i f f , for value
(accepted from J . G. Kidwell Company, one c e r t a i n s i g h t d r a f t , s a i d
d r a f t having been drawn on Bank of Kenton, Portland, Multnomah County,



X-6042
Oregon, for the sum of three thousand tro hundred s i x t y seven d o l l a r s
and e i g h t y f i v e cents '($3637.85), payable to the said p l a i n t i f f , I

^

for and in behalf of and to be charged from the account of said
J. G. Kidwell Company;

That said d r a f t was i n words and f i g u r e s

s u b s t a n t i a l l y as f o l l o w s
P l a c e , Redmond, Date 11/27/26. No. 136
J. a. KIDWELL CO.
AT SIGHT
PAY TO ORDER 0?

Barl Forest

$3267.85

Thirty two hundred s i x t y seven 85/100 d o l l a r s ,
To
BAM OF KENTON
Portland', Oregon

signed James Mace
IV

*

That a t the time said d r a f t was so signed and d e l i v e r e d to
p l a i n t i f f on November 27th, 1928 and at the time i t was l a t e r p r e sented f o r payment to s a i d Bank Kenton by the defendant Federal
Reserve Bank of San Francisco, as h e r e i n a f t e r s e t f o r t h , J. Gr. Kidwell
Company, the drawer thereof, had on deposit in
s a i d Bank of Kenton an amount of money more than s u f f i c i e n t to pay,
and subject to the demand of the said d r a f t :
V
That on Monday, November 29th, 1926, p l a i n t i f f endorsed said
d r a f t and deposited the same for credit to h i s account in the F i r s t
National Bank of P r i n e v i l l e , Oregon;

that on s a i d November 29th, 1926

said F i r s t National Bank of P r i n e v i l l e , in the usual course of business,
l i k e w i s e endorsed s a i d draft and forwarded the same for t h e c r e a i t of i t s
account with i t s
/Portland, Oregon correspondent, the defendant F i r s t National Bank of
Pprtland, Oregon, and that said d r a f t was received by said defendant on

November
http://fraser.stlouisfed.org/
Page 2-Conjplaint
Federal Reserve
Bank of St. Louis

30th, 1926;

X-5042-a
vi

L

4 5 2

That a t a l l times mantionad here? n the Bank of Kenton was a
banking c o r p o r a t i o n organized, and e x i s t i n g under t h e g e n e r a l laws of
t h e S t a t e of Oregon, having i t s banking house and p r i n c i p a l p l a c e
of b u s i n e s s i n t h e City of P o r t l a n d , Multnomah County, Oregon, and
n o t w i t h s t a n d i n g t h i s f a c t , the d e f e n d a n t "First N a t i o n a l Bank of P o r t l a n d , Oregon, n e g l i g e n t l y and c a r e l e s s l y f a i l e d to p r e s e n t s a i d d r a f t
f o r payment promptly and i n the due course of b u s i n e s s , to s a i d Bank
of Kenton, but i n s t e a d and on December 1 s t , 1926 t r a n s f e r r e d and del i v e r e d s a i d d r a f t t o the P o r t l a n d branch of d e f e n d a n t F e d e r a l Reserve
Bank of San F r a n c i s c o f o r c o l l e c t i o n :
VII
That on December 2d', 1925, the d e f e n d a n t F e d e r a l He s e r v e Bank
of San F r a n c i s c o , t h r u i t s P o r t l a n d , Multnomah County: Oregon Branch
•F

' p r e s e n t e d s a i d s i g h t d r a f t f o r payment to s a i d 3ank of Kenton a t i t s
banking house i n P o r t l a n d , Multnomah County, Oregon and i n s t e a d of demandi n g and r e c e i v i n g cash i n payment t h e r e f o r , n e g l i g e n t l y t r i t h o u t r i g h t or
a u t h o r i t y and a t i t s own r i s k and r e s p o n s i b i l i t y , s u r r e n d e r e d s a i d s i g h t
d r a f t to s a i d bank, a c c e p t i n g i n c o n s i d e r a t i o n t h e r e f o r , a check or
d r a f t of the s a i d Bank of Kenton f o r t h e sum of $3267,85;
' VIII
That a t s a i d time the d e p o s i t of the
drawer of said s i g h t d r a f t i n s a i d Bank of Kenton was i n an amount
more than s u f f i c i e n t t o pay s a i d s i g h t d r a f t and the amount was thereupon
charged t o , and deducted t h e r e f r o m by s a i d Bank of Kenton;
• IX
That on December 3d, 1926, s a i d Bank of Kenton, on account c£
i n s o l v e n c y , suspended i t s banking b u s i n e s s and was taken i n charge by
Page 3 - Conrolsi.nt




the Superintendent of Banks of the State of Oregon and the sight draft
s e t out in paragraph III hereof and the check or draft referred to in
paragraph VII hereof have never been paid, in whole or part;
. X
That on account of the f a i l u r e of the defendant First National
Bank of Portland, Oregon to present said sight draft for payment to
said Bank of Kenton in the due course of business and within twenty
four hours a f t e r i t s receipt thereof, and on account of the f a i l u r e of
the defendant Federal Reserve Bank of San Francisco to demand and receive
cash i n payment therefor, before surrendering said s i g h t draft to said
Bank of Kenton, and said defendants carelessness and negligence in accepting the check or draft of said Bank in consideration therefor, the
p l a i n t i f f has been damaged in the sum of t h i r t y two hundred s i x t y seven
dollars and eighty f i v e cents, ($3267.85), with i n t e r e s t thereon at the
rate of s i x per cent per annum from December 1 s t , 1926, no part of which
has ever been paid.
:

WHEREFOR P l a i n t i f f demands judgment against said defendants and

each of them for the sum of "$3267.85, with i n t e r e s t thereon at the
rate of 8$ per annum from December 1 s t , 1926, and for his costs and
disbursements herein.
(Signed)

Elton Watkins

(Signed)

Denton G. Burdick
Attorneys for p l a i n t i f f .

Page H - Complaint



X-6042-a
t
State of Oregon
County of Deschutes

:
:
:

ss

I , Earl Forest, being f i r s t duly sworn, depose and say:
That I am the p l a i n t i f f in the above e n t i t l e d action;
that I have c a r e f u l l y read the foregoing complaint, know the
contents thereof, and the same i s true as I v e r i l y b e l i e v e .
(Signed)

Earl Forest-

Subscribed and sworn to before me t h i s 17th day of April, 1928.
(Notarial Seal)

Nelson A. Burdick
Notary Public for Oregon
My commission expires

State of Oregon
County of Multnomah

6/20/31

ss

I , Denton Q. Burdick being of counsel for the p l a i n t i f f
herein, do hereby c e r t i f y that I have c a r e f u l l y compared the foregoing copy of the summons and complaint herein, with the o r i g i n a l s
thereof, and that the same are true and correct transcripts and
of the whole thereof.
(Signed)

COPY




Denton G. Burdick

45^